founder – Pavvy Designs

In this series, I speak with people who know what desperate feels like. While now blooming into success, these founders share with me their deeply personal financial struggles and lessons learned on their way back to black.

Benjamin Sehl still isn’t sure if he’s “made it.” But after years of building KOTN from his in-laws’ basement and spinning it into a powerhouse social impact brand with two retail stores, he’ll cautiously admit that he feels successful. And success to him isn’t necessarily defined by finances. Though he and his wife and business partner Mackenzie Yeates no longer live in her parents’ basement, they’re definitely not rich, he says.

Success has taken a different form: the Egyptian cotton basics brand has helped to revitalize the cotton industry in Egypt, working directly with farmers to provide fair wages and a better quality of life. Through KOTN, Ben, Mackenzie, and their partner Rami Helali have funded nearly 700 farms and five schools in areas of the country with otherwise no access to education.

Ben’s exposure to the life of farmers in Egypt have helped him gain perspective related to his own struggles. Here, he talks about running out of money (more than once), securing funding (then losing it), and that time The Weeknd’s fan base nearly shut down KOTN’s pop-up.

In Ben’s words:

I had a pretty great life growing up, I have to admit. I actually had a lot of stuff come fairly easy. That was really fantastic but at the same time, I don’t know if it necessarily prepared me for what entrepreneurship was really like.

In January, 2014, I moved from Toronto to New York because my now wife and business partner, Mackenzie, lived there. I took the first job that came my way. I was swept up in the startup, in the success of it all, but there were warning signs even in that first week. By the time I actually got my U.S. social security number, the company didn’t have any money. I’m three months into living in New York and I haven’t been paid. And, I couldn’t get a U.S. credit card. One night, I remember going out with my friend and I didn’t have enough money for transit. It was midnight in Brooklyn and I ended up having to walk 70-something blocks home. It was pretty dire.

I think being at rock-bottom financially was really helpful in terms of getting my ass in gear.

Six months after I started, the startup where I was working said that they’d have to let me go. That essentially ruined my working career in New York for the rest of the time. I moved home to Toronto in December and ended up moving into Mackenzie’s parents’ basement. I got a job at this really great company three days a week. It was enough money to at least be able to live.

While in New York, I had been thinking about a clothing company as a side project. I had no experience with it and I talked to Mackenzie about it, and my friend Rami who was also fed up with his job. He was really gung-ho about it. Then when I was laid off, I said, “All right, now we have to make this happen.” I think being at rock-bottom financially was really helpful in terms of getting my ass in gear.

After we launched KOTN, we were like, “This is going to be huge now.” But then the reality sets in. We had convinced my wife to quit her job and move back to Toronto and she and I started up a design studio to be able to pay our bills. We just hustled—we lived and worked in that basement for a year and a half putting together all the money we could. Our bed was in one corner, boxes in another corner, and we worked from a shared desk that sat in the middle of the room. Looking back, it was really tough. And needless to say, that arrangement didn’t last very long. But I think in terms of building my character, stripping away my ego, and also just having a lot of fun, it was some of the best time of my life.

We were growing really fast, relatively—around 30% a month—which sounds amazing. It’s like, “Wow, you guys must be rich now.” But it’s actually really tough when you’re making physical products. If you’re growing fast, now you have to make enough product to stay in stock. And when you’re small, people don’t have the patience to wait around for you to come back in stock. When you’re talking to investors, too, they’re like, “You’ve got to get a handle on this stock problem.”

At this point I think I was $20,000 or $30,000 in credit card debt. It was pretty brutal.

We ended up having to borrow money from friends and family. Mackenzie and I put in all the money that we had from our client projects into KOTN. Around that time, I left my other projects and we just went all in. I can’t remember how the heck we had money to do anything. We later moved out of the basement so we also had rent to pay. At this point, I think I was $20,000 or $30,000 in credit card debt. It was pretty brutal.

Eventually, we met a small venture group from this large bank in Canada that was focused on social impact projects. We were talking to these investors and it was going pretty well, but it was our first time raising money and we didn’t know exactly the path to take. Things dragged on for eight or nine months.

Then in October 2016, there were a few amazing things that were supposed to all happen in one week. We had our first big order from [Canadian luxury department store] Holt Renfrew. We told them that we were working on a baby line and that if they wanted to go exclusive with us we could do that (we didn’t have any baby line). They agreed and paid us half up front and we got our people to figure out how to make baby clothes.

We didn’t have enough money to pay for proper packaging, so we ended up hand-making each box.

The baby stuff was supposed to arrive on the Monday, the order was due on a Wednesday, and the funding was supposed to come on the Friday night prior. Friday night rolls around and that ended up just not happening. The committee said, “Actually we can’t work in Egypt. That’s too high of a risk right now.” Boom, it was gone like that.

Then Sunday night comes and we find out that a Russian plane has gone down over Sinai and Egypt Air has now canceled all cargo flights in and out of the country. So we can’t get our package. Monday morning, Rami went with three empty suitcases, filled them up with baby onesies, turned around, got right back on the flight, and flew back home.

We stayed up all night. We didn’t have enough money to pay for proper packaging, so we ended up hand-making each box. We managed to get the order to them 30 minutes before the drop-dead date.

Somewhere in the midst of all of this, we also launched a pop-up. That weekend, The Weeknd, the singer, was doing a pop-up in Toronto and it was going to be in the back of the same space. [The people leasing the space] were really selling to us that this was going to bring in so many people. But it ended up totally not being that. It was a massive lineup of teenagers—fanboys and fangirls there for the Weeknd. We stood there for six hours and actual customers couldn’t get in. I had to go and talk to the guards every time to let people into our space, which was just insane.

Those times, I’d say they were some of the best couple years of my life even though they were so difficult.

That was a period of time I’m never going to forget, it was this yo-yo of insane elation to pure despair, every 12 hours for nine days. Every day was the happiest and saddest I have ever been that whole year. I think that really just put the grit in all of us.

Those times, I’d say they were some of the best couple years of my life even though they were so difficult. It just proves what you can do. Growing up, I had some learning difficulties in school. It beats down on your self esteem and self discipline, and what you think that you can actually handle. Those two years were a sort of turning point in my life. They showed me that you don’t need any of these things that you thought you needed. And the experience helped my wife and I bond in a pretty crazy way, in a way you won’t find in most relationships.

Financially, we’re not laughing, but we’re not in dire straits either. I do feel successful, though. The social impact projects that we’ve done are always a source of pride for me. My worst day today is my best day of five years ago. So, who can really complain?

Illustration by German Gonzalez

My passion for all-remote teams began in 2003 when I founded oDesk/Upwork with my childhood best friend. At that time he was in Greece and I was in California, which inspired us to create a company for remote workers. Today, I’m aware that founders who are embracing remote work face many practical challenges. I started this blog as a platform to share with other founders the lessons I’ve learned from 16 years of building remote teams and companies.

This first post covers the main takeaways from my time at oDesk/Upwork and how I’ve used my learnings at my current company Ergeon.

1. All-remote is easier than part remote

While I did not have the courage to go all remote at oDesk, I realized that in many ways it’s a lot easier to be all-remote than part remote. My current company Ergeon is all-remote. We have 50 team members in over 20 countries. Our Palo Alto “office” is a small conference room with phone booths. The Bay Area staff spends 50% of our time at home or at coffee shops. In one year, our team grew 5x and we did it without experiencing the typical delays due to finding local staff or the need for more office space. The all-remote model also safeguards us against the risk of isolating remote staff in the case of part-remote companies. Typically I have seen companies start all-remote, but as they grow they start hiring local executives. When your senior managers are all local, your corporate culture can quickly slip into the dynamic of headquarter staff vs. remote staff. This can devolve into the remote staff feeling like second class citizens. When everyone is remote, your organization is truly flat and inclusive.

2. Ask people how they feel

When people are co-located, a manager can easily walk around the office and sense the energy level of each team member. This isn’t possible when you are all-remote. You could live stream everyone’s workspace but I am against ‘Big Brother’ surveillance. It can be tough to feel the pulse of your remote staff, but it’s possible to overcome. At Ergeon, I regularly ask my engineering team to share their feelings on a scale of 1–10 to gauge their energy level. I have weekly one-on-ones with my direct reports and fireside chats with the entire team to stay connected. We also use an app called “Leo bot” to conduct employee surveys to help uncover issues related to compensation, job satisfaction, stress, and physical health. I was initially skeptical of these tools and tactics when my cofounder introduced them. Now that I see the positive culture this creates, I wish I had been doing this sooner.

3. Video is the biggest enabler of all-remote

In 2003 there weren’t enough powerful laptops, phones, global broadband penetration, and mature collaboration technology to facilitate an all-remote organization. The only possibility was an all-remote engineering team. Since then, there has been a proliferation of web-based tools (Slack, Trello, Google Meet, Amazon Cloud) that are incredible for collaborative work. Still, video stands out as the only technology that allows people to interact ‘face to face’. Video communication has made huge improvements over the past 16 years. Now Google Meet has amazing new features, such as a tiled layout so you can see multiple faces enlarged, dual-screen sharing and presentation, recording capability, and concurrent audio from multiple participants. It has allowed a much deeper personal connection between people even when they have never met face to face. Of course, I look forward to AR/VR being readily available and taking this one step further.

4. Time zone is a real challenge

At Upwork, many of our engineering talents were based in Eastern Europe. Our biggest headache wasn’t due to different cultural norms or English communication. Instead, time zone differences were a major challenge. At first, I asked the Engineers to follow our US business hours, which meant they had to work until midnight their time. This approach caused burn-out and affected long-term retention. I have since learned to be more flexible and considerate of a remote worker’s time zone. At Ergeon, engineering meetings happen between 6–10 a.m. PT to facilitate a more agreeable time for remote workers. As an added benefit, I can push out a feature during my business hours and have it done when I wake up the next day!

For remote functions like sales, operations, application and QA engineers, which all need to be responsive to vendors and customers, I have had the most success hiring from similar time zones as my business hours.

5. Apply best practices from large distributed companies

I used to think large companies have nothing to teach remote companies. More recently, I realized that in order to build a successful all-remote company you have to implement the processes designed for a much larger workforce as early as possible. I’ve applied this idea to Ergeon; for example, even when we were just 10 people, we held All Hands, Quarterly Reviews, documented processes, and ran boot camps for various functions. Most starts-up begin implementing these practices after they reach 100 staff members. To my knowledge, no all-remote company has grown beyond 1000 staff members, and if our ultimate goal is to grow to the size of a public company, we will need to consult the public companies with 10,000 staff for best practices. Of course, much still needs to be adapted for the remote context.

The tools and processes used for building all-remote companies have come a long way. In future posts, my co-founder and I will discuss more specific topics around all-remote work such as:

How to upskill people remotely?
How to pay engineers in different regions?
How to transition from office worker to remote worker?
How to work effectively given time zone differences?
How to keep remote teams productive?
How to source remote workers when LinkedIn fails us?
How to give stock options to a remote team member?
Why stock options are important for a startups’ remote team?
How to build personal connections while being a distributed company?
How to operate without a physical office?

Interested in any of the above topics? Be sure to follow us here to be notified when a new post is published. I also welcome your feedback, comments at Hacker News.

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