Why Your Startup Also Needs a BizOps Team

The title of “Business Operations” (or “BizOps”) has become one of the more buzz-y Silicon Valley terms as of late. At IVP, we saw an increasing number of growth-stage startups (many of which are in our own portfolio) recruit for and build out a BizOps team — Slack, Dropbox, CloudFlare, Stripe, Counsyl, NerdWallet, and ZipRecruiter, just to name a few. While this may seem like a new trend, large tech incumbents have long ago pioneered the role of Business Operations; companies like Yahoo, Google, and LinkedIn currently have upwards of hundreds of people on their BizOps team.

What is BizOps?

BizOps teams are generally an internal-facing group and broadly aim to create more value for the company and to improve the profitability of the business.Tech startups are already familiar with the role of Product Managers — people who drive product development by setting feature priorities and collaboratingwith a team of engineers and designers to ship these features. By the same token, shouldn’t other areas of your business have designated “managers” as well?

BizOps is PM for your Business Model

BizOps teams have a “get shit done” mentality and are often tasked with translating business goals (strategy) into tactical operations (execution). For example:

  • We are going international. What are the first markets we should tackle and how will we penetrate those markets?
  • We need to further monetize our user base. What are the most effective and sustainable ways to increase monetization? What are the different levers we can control and what is the expected impact of those changes?
  • We’re looking to accelerate growth. What are the key factors in our growth rate and how can we move the needle?

While BizOps responsibilities are similar across companies, BizOps teams can be structured in different ways. For some, the BizOps team is like Seal Team 6 — internal consultants deployed for specific and shorter-term projects. Because they act as a neutral third party, BizOps teams in this structure don’t interact closely with other business units regularly.

More commonly, BizOps teams are flat structures that are horizontally tied to other functional groups, such as:

  • Sales, where a business operations associate helps the sales team figure out a go-to-market strategy, perfect their conversion funnel, and track their sales efficiency
  • Product, where a business operations associate helps drive product strategy decisions, figure out a launch strategy, and track important user stats as the product launches
  • Finance, where a business operations associate works closely with the FP&A team to determine the key drivers of the financial model
  • People, where a business operations associate works closely with recruiting and HR to accelerate hiring or increase retention

BizOps Evolves as Your Company Scales

For early-stage startups, BizOps allows for a flexible, dynamic, scrappy team to work on a multitude of different types of business problems that otherwise may not fall anywhere else in the company (eg. starting a new office, doing sales hiring, owning the company financial model, etc.) As the company grows, BizOps can prioritize key issues (e.g., growth, monetization) and help balance strategy with execution. And for larger and more mature startups, BizOps provides a cross-functional layer of communication, structure, and organization across the greater company.

Depending on the stage of your startup, here are examples of a few inflection points where a BizOps team may make sense:

  • Accelerating growth: Once a startup has achieved product/market fit, you’ll probably want a dedicated BizOps team to help accelerate your early growth.
  • Starting geographic expansion: As startups go abroad, each new location you enter can behave similarly or differently from your existing geographic footprint — a BizOps team can help figure out your international strategy.
  • Avoiding functional silos: As startups and team sizes grow, it becomes more difficult to get transparency across the organization. A BizOps team can act as a cross-functional layer that keeps your startup’s different departments on the same page.

There are many approaches to BizOps, and it’s really up to founders and CEOs to decide how to utilize BizOps most effectively for their company. Ultimately, the key question is not be whether your startup needs a BizOps team, but when.

This article was originally published on Business Daily.

Zynga + OMGPOP?

Justin Kan, a YC alum and now part-time partner, posted his thoughts on why Zynga’s acquisition of OMGPOP makes sense. I commented with a couple of thoughts of my own:

1) There is probably a significant overlap in the DAU for Zynga and Draw Something, so doubling would be somewhat of an overstatement. Completely agree, however, that this is a quick and dirty way to acquire new users.

2) Saying that casual gamers are fickle is probably as much of an argument against Zynga buying OMGPOP as it is for OMGPOP selling to Zynga.

I’m surprised that Zynga didn’t just clone the game, as it has done with Tiny Tower. Arguably, pretty much every mobile game right now is a re-invention of an older game, so why pay such a high price tag for something they can easily build very quickly?

Judging by the number of job openings at Zynga, the company is aiming to scale quickly, and this acquisition may just be an easy way to gain a team of engineers, designers, and business folks that are already familiar with what Zynga is all about. At the end of the day, what makes this an accretive acquisition is the fact that it’s as much of a talent hire as it is a product integration and user acquisition. 

Recently, someone asked me why Zynga is winning on Facebook, and I responded that I wasn’t so sure Zynga could actually maintain a leading position despite having first-mover advantage. Aside from rising marketing costs and low customer retention, Zynga also faces a highly-fragmented and growing market with a large number of incumbent and disrupters. The OMGPOP acquisition could also be an attempt to consolidate the space and remain a market leader.

As history has shown with RIM and Yahoo, early winners are not necessarily the dominating victors in a nascent industry. I think that Zynga is well aware of this fact and will strive to maintain its leading position through a balance of innovation and business strategy. 

(On a side note, what kind of valuation metric would make sense for an acquisition like this? A revenue or EBITDA multiple? Discounted cash flow? Or something more start-upy like price per engineer?)

Zynga + OMGPOP?