- Future Founders
- Huddle and the Fractional Team Revolution
Huddle and the Fractional Team Revolution
Hello, and welcome to Future Founders, a weekly newsletter from Day One that delivers insights and advice for early-stage entrepreneurs.
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Hey everyone - I’m really excited to be debuting a new type of content for the Future Founders newsletter. I’m a big fan and love to read deep dives on founders and startups, and think there’s so much value in pulling back the curtain and seeing how a founder built what they built.
But most deep dives go into later stage startups that are so far down the road that the distance from their inception makes it harder to paint a detailed picture of what really happened. It usually becomes a high level, glossed over recap.
So we’re not going to do that. We’re going to swap out name brand startups for founders who are still in the early stages of building. Many will have raised a round or two, but not much more - and we’re definitely going to focus on bootstrapped founders and those who are super early as well.
I’m also not going to just regurgitate the founding story and what the founders get asked on every podcast. I’m going to use each deep dive to unpack a bigger trend or something cool and important happening in the world of tech and startups.
And so with that, let’s get into our first deep dive:
Huddle and the Fractional Team Revolution
The Fractional Team Revolution
I remember back in the early spring of 2020, I was jamming with a friend on the idea for what would eventually become Day One. It just so happened that this friend - Mike Saloio - was also going through his own founder journey, and he was in the early days of what would become Huddle, a platform that lets founders and companies tap into pop-up teams of builders. We were co-jamming and almost launched our ideas together (but didn’t).
Shameless side note, if anyone is jamming on startup ideas, you absolutely need a braintrust of people around you, which is exactly what happens inside Day One.
Huddle was extremely timely for the early days of the pandemic. People across tech and startups were getting laid off and looking for work. They were starting to work remotely and now had free time to put toward side projects. With all the uncertainty in the world, a lot of folks were making the smart move to diversify their income. And with the craziness of what was happening, people were starting to rethink their priorities, and a lot decided that working for themselves was something they wanted to try.
It’s also an idea that’s still (3 years later) continuing to gain momentum - and I think we’ve crossed a tipping point.
I think about fractional work from both the supply side and demand side, and both have seen explosions. Huddle was built around the supply side boost triggered by the pandemic, they aggregated that supply to make it easier for builders to connect with those who needed their services. And now as Huddle and a number of other startups have entered the market to make it seamless and easy for founders and companies of all sized to access this talent, the demand is catching up.
My prediction is that this market only continues to accelerate.
The rise of the 1-person startup
Here’s what I mean by demand continuing to accelerate.
One of the more popular tropes moving around tech twitter (especially with all the AI craziness) is the idea of the 1-person startup. Usually this looks like a creator-type, someone who builds a big audience, and then uses that reach to launch products or courses or a newsletter. Maybe they lean on AI or an overseas virtual assistant. While that sounds nice and all, it’s not really attainable or practical for most people (because it requires building an audience to tens of thousands).
But I have my own example of a 1-person startup, and I think this example is one that almost every startup founder can emulate.
One of my good friends just closed his seed round for his SaaS startup. He’s a non technical founder (with more than a decade of experience in his industry). He raised a pre seed during Covid, but then even more impressively, closed his seed round just weeks ago.
And he’s a solo founder and the only full time person on his team.
My friend leveraged a fractional CTO and an outsourced design and development team that he could spin up and down as needed. Sometimes cash was tight so he reduced spend. Sometimes they went at it hard. He’s had to learn and play the role of PM, customer success, and sales, so in this example, the founder took on some new roles, and fractionally outsourced others.
This is the way. And yes this flies in the face of so much standard-issue startup wisdom. But you no longer need cofounders (they can be nice to have, but also come with a lot of risk and headaches). You also don’t need a full time team early on. More and more, I think we’re seeing a new optimal path for founders emerge:
Get started on your own (and either keep your day job as long as you can or freelance on the side). Don’t wait around for a cofounder. Be very thoughtful about whether you really want one, and if you do, don’t force anything.
Do initial customer discovery, problem definition, product mock-ups, and sales yourself. I don’t really care what your background is, these are fundamental activities every founder should be doing.
Make a call on how you want to fund your business. If that involves raising outside capital, go do that (see my post from last week highlighting what milestones you should hit before raising from angles or institutional pre-seed investors). If it’s bootstrapping, then just keep going.
When you have the funding (either outside capital, personal capital, or revenue) and the need to expand your team, start with a fractional team and scale them up and down as you go to market and validate key aspects of your business. This team could be a product team, a marketing/sales/social media team, or generalists who fill gaps. At the early stage, if you’ve gotten to the point where growing the team is the right move, I can’t see a reason why starting fractional isn’t better.
This will certainly not be everyone’s path. But I think more and more, these are steps many founders will take.
And yes, we’ve had marketplaces for freelancers for the better part of a decade - from UpWork to Fiverr to any number of smaller players. But those have become the home of commoditized work - which is still important, but this new trend we’re seeing is the rise of highly specialized functions and roles that can operate in environments ranging from startups to scale ups to big tech.
True founder-market fit
So back to Huddle. Huddle was founded by Mike and his cofounder Stephanie Golik. Both had first-hand experience with small startups leaning on fractional teams of builders to get their new products off the ground. Like all founders who have strong founder-fit, they were living at the leading edge of a space for years before the rest of the world caught up.
I met Mike when I was working for Human Ventures, a NYC based venture studio. Mike was running what I’ve always dubbed as a 1-person venture studio, and he had gone on his own journey from corporate life (as a financial analyst, so he made a big switch) to working in/for startups, to going solo and helping founders as a freelancer and agency owner. He would plug in with founders in various capacities to help them launch their startups. But somewhere along the way, he realized that the most often request from founders was “can you connect me to _______” and as much as founders needed help with decks and MVPs, they really needed help finding the right people to build with.
The best founder stories are ones where the founder just “gives in” to what the market wants. And the opposite are the worst, taking ideas and products that you love and forcing it into a market. We know how that story ends. This is not that story. Mike and Steph were both already curating groups of builders to work on startups. They just started doing it officially and calling them Huddles.
So the first instantiations of Huddle were the simplest. Mike and Steph started to bring their builder friends and friends of friends into a curated Slack group. Again the founder-market fit was real - they just had to put up the bat signal to get the core of the community together. Then they just had to do what they were already doing, and cultivate the connections and relationships within this community to make it a place where members would refer their friends… and now the Huddle collective of builders is 1k strong with a waitlist of over 2k builders who want to join.
From there, Huddle kept organically “happening”. A founder friend of Mike and Stephanie’s needed a brand and website, and so Mike and Steph turned to the community, staffed the project, delivered… and in the simplest way, Huddle was born.
Being a market maker in a growing market
So all that was almost 3 years ago. Since then, Huddle has helped independent builders earn over $2m and has helped over 100 startups launch by building their first MVPs, websites, and brands. But this is just the beginning - for Huddle, and from how I see it, how founders and teams tap into fractional talent.
At this point, it’s clear that the supply of highly talented people who want to work fractionally is there.
Companies like Huddle aggregate that talent, and provide the market-making service - things that are best done by a centralized organization. Most freelancers will tell you that the biggest challenge (and in many ways the reason more people don’t ever jump into freelancing) is finding new business. Most freelancers are skilled at their craft - not sales and marketing. So Huddle specializes in sales and marketing and brings in new business.
This creates a virtuous flywheel. Huddlers (the builders in the Huddle community) aren’t locked into Huddle. They can have day jobs, or freelance on the side, or whatever. So there’s no risk in joining Huddle, only the upside of new business with great clients. So the best freelance builders join Huddle.
Let’s sit here for a second. As builders leave full time jobs to go solo, the first group to leave the ranks of full time employment are the most risk acceptant. That group probably includes a cross section from the most talented to maybe not the most talented builders. But as the path to freelance becomes more clear and less risky, the group that jumps next are the best, most talented people. Those earlier in their careers or still growing need/want structure to learn and develop within. But the best are ready to jump and capture more of the value they create. One thing holding many back are the prospects of working on big and important projects… something that Huddle is changing.
On top of having the best talent, Huddle brings the best talent together into teams (Huddles) to deliver projects, and provides a level of project management and coordination that makes these teams even better than the sum of their parts.
So all this leads to a differentiated value proposition for clients. Combined with an engine and expertise in sales and marketing, Huddle is now sitting on a flywheel. More business means they attract more, better builders, who then bolster the core value proposition, deliver great projects that create awesome case studies, which all fuels more business… you can see how this goes.
The case for a fractional team member
So I laid out before how it seems obvious to me that more and more founders will be using fractional teams. But what about bigger companies, or teams within growing startups and scale ups? Is this really the future, or just a fad for startups?
60% of execs say they'll "substantially replace" FT employees w/ ind contractors in the next 3yrs.
I believe this trend is accurate, though I'm not sure about the "substantial" part.
What do you think?
— Gale Wilkinson @VITALIZE (@galeforceVC)
Jun 4, 2023
Conversations like this (and the data behind it) signal that this isn’t a covid trend. In many ways, this is what’s going to shake out as we come out of covid and we find the balance between remote/in-person/hybrid work, and we figure out what we as workers want from our careers.
When I think about why this is happening, I see how many of the reasons a founder would use fractional teams will carry over to other kinds of teams:
When an early stage founder is working through the messy middle of finding PMF, almost every job is cross functional and requires a high degree of contextual awareness, initiative, on top of just knowing how to do the thing, whether that’s talking to customers or designing a website. The talent level needed to achieve this is very high. But if a founder was to hire someone in these early stages, they’re generally too cash constrained to hire for the quality/talent level they need. So like in most things, quality (talent level) trumps quantity, and it’s better to have a high quality part time person vs. a lower quality full time person.
The same complexity and ambiguity means that roles switch and change. Sometimes a cross functional person can handle all the jobs, but in the case they can’t, a fractional team allows a founder to swap people in and out depending on needs.
Similar to swapping people in and out depending on need, founders need to ramp up (and often down) depending on how things are going - the journey is never smooth and having the ability to turn down burn is huge.
I can’t see why a team inside a larger company - especially one that’s building and shipping product, or trying to act more like a startup - wouldn’t find this valuable.
And as marketplace trends go, supply begets demand, and demand begets supply. As startups like Huddle make these flexible, fractional, high talent teams available, more and more companies will build their organizational and operating models around this kind of talent.
Is this the future of work?
I asked Mike what he thinks the future looks like, and how Huddle plays into it. He sees work starting to take on elements of a social network.
Today, social networks are all about content and conversation. To the extent that we “collaborate” and “create” across these networks, it’s all about creating content, having conversations in public, and connecting. I guess it’s called “social” network for a reason.
But Mike sees a social network where people really create and build together. “Professional network” does not do the concept justice, because in Mike’s future the transaction costs come so far down that work gets done by posting and replying - but instead of the outcome being a trivial conversation, the outcome is something net new built for the world.
As a side note, some of this vision overlaps with how web3 folks have viewed DAOs - although in conversations I have with web3 natives, most people have soured on DAOs as an actual functional way to organize work at scale.
We’ve also seen versions of this in companies like Quirky (RIP) that created products with input from the crowd. That model ultimately didn’t work either, but that was over a decade ago.
In the mid term, these networks probably continue to look less like Facebook and perhaps more like a modern day guild. Instead of joining a top tier consulting firm or investment bank or tech company, graduates will apply to join Huddle and have all the benefits of working with top talent, on top projects, but now in much more flexible ways.
That’s a pretty cool vision, and from everything I can see, the world is moving in that direction.
So if you’re a founder or a team lead, I highly suggest you consider building your startup around fractional teams - from engineering to design and product to content and marketing. And lean on Huddle and the crop of other fractional talent collectives to find the best people.
If you made it all the way to the bottom: First off, you rock! Second, I’d love to hear feedback. And third, if you have a startup and want us to do a deep dive and share your story and how it plays into a bigger trend, let us know! Just reply, we respond to everyone 🤟