I’ve had many first hand experiences with the excitement and pain of scale at companies that started out with a few founders and soared to over 100’s or 1000’s of employees. At somewhere around 75-100 employees, there is a shift with leadership, teams and individuals and it’s important to plan for it or at least recognize when it’s happening and try to stay ahead of it. I’ve written the below for the CEO/Founder of an early stage company, but most of my advice can be applied to any leader of a scaling organization, even inside a large corporate entity.
Leadership At ~100
As a company approaches 100 employees, the reality that it’s time to let go starts to hit its founding leaders. It is simply impossible to be plugged into everything. At this stage, you now are likely managing managers and more than ever have to empower your leaders to, well, lead! They will not always do things the way you do them or as well as you do and there will always be a few select things that you must own and decisions that only you can make, but at this stage if you don’t have the confidence and the right people to get things done without you being involved, you’re in for a rough ride. In fact, it is when founding CEOs don’t learn to step up into their roles and empower their leaders that investors/board members begin to lose confidence in the founding CEO’s ability to operate at scale; these founding CEOs end up getting pushed out/replaced. Here are a few tips in areas I find to be the most challenging at this stage:
- People: When it comes to employees, there are two areas I see CEO/Founders get tripped up as their companies grow: Hiring and People Management. I am a big believer in staying close to the hiring process for as long as possible in the early stages. In my experience, the first 10-15 employees will set the culture of your company and how you lead them will set the tone for leadership going forward. As you start to bring on more members of your team, however, you can’t hand pick every one. Here’s what I suggest for approaching hiring:
- First 20-30 employees – If you have inexperienced managers, review candidate resumes together and establish selection guidelines for what qualifies a candidate for a round of interviews. Be part of the interview and hiring process as much as possible to set expectations on what makes a good hire at your company (even if the hiring managers are experienced) and serve as a role model to managers who will eventually do this themselves. This is also a great opportunity for the early hires to get to know you – especially if this is their first startup – getting to know the CEO/Founder can be a recruiting super power! Also, if hiring in general is new to you, get help from advisors/investors with more experience; books like Who or The Five Dysfunctions of a Team can be helpful, but the art of hiring is a skill that takes practice.
- 50-100 – This is a transition period where you may sit in candidate reviews for key hires where the team decides whether to make an offer or not and why. Your role is not necessarily the decision maker, but rather to offer guidance and mentorship to the team on how to decide. You may interview the candidates at this stage too, but I suggest this be to either A) help a junior manager resolve concerns they have about the candidate or probe more deeply on areas where they feel less experienced, and B) to help close a candidate and sell them on the business and its potential.
- 100+ – Let go! If guidelines are not set at this point (manifests as bad culture or heavy voluntary or involuntary attrition), then you need to rework the wheel with your hiring team. Otherwise, it’s time to set your team free to make the right calls for their teams’ needs. At this stage – other than your direct hires – you are only on-call as needed for key hires. For example, when VMware was nearing 800 employees, our founding CEO Diane Green was on standby to interview me for the first non-Palo Alto leadership role; both to assess my abilities for the role and to sell me on taking it (and I’m so glad she did!) For the people management side of things, consider the following:
- 0-20 – Early on, just like hiring for the first time, you may be learning how to manage people for the first time. Get help with this and don’t try to figure it out yourself. You will spend more working hours than you ever imagined learning how to navigate people things while running your business, fundraising, etc. Hire a coach or find friends with management experience and lean on them. Read as much as you can and listen to podcasts like Reboot or Masters of Scale. Put your ego aside! Managing is hard, never mind learning how to do it when you’re also trying to launch a company!
- 20-30+ – The best practice for team size is eight (recently termed the “two-pizza team rule” by Jeff Bezos) . If you’re reaching a point where you have more than 8 people working directly for you or for anyone who works for you, it’s time to scale out a management team. Ideally, bring in some managers who know how to manage vs. promoting all from within. I like to build teams with a balance of each to allow growth within the company but also to have role models and mentors for those who are growing.
- 30+ – As you start to have managers working for you, you need to trust them as leaders of their own teams and, similar to setting the hiring guidelines, your job is to set the people-management guidelines. How does one lead at your company? How do you give feedback? How do you establish an inclusive culture, develop employees and create a great place to work? Your job is to make sure these questions are answered and managers in your organization have the support and tools (compensation/equity budgets, training, systems) to manage to these guidelines. A big mistake I see companies at this stage make is waiting too long to hire people experts – both HR and experienced recruiters who get the startup to scale scene. Money invested in these roles early will save you tons of time and money as you scale. The serial entrepreneurs and co-founders of Drift hired their lead people-person as one of their first 5 hires; they learned from past mistakes!
- Bonus tip: Every early stage CEO/Founder I know is shocked to realize the power they wield. Even if you consider yourself to be “one of the people”, everything you say and do is more impactful that you can imagine. A simple eye roll in a meeting could make a subordinate think they’re about to get fired. A “great job” on a new idea proposal could be heard as an OK or even a directive to proceed. You are powerful and potentially dangerous! This means tread lightly. If you do skip-levels (talk to employees of managers that report to you), never be directive and use the time to listen, only. If you like an idea, tell them, but make it clear it’s something they should discuss with their manager. If you are unhappy with an employee that reports to one of your managers, bring it up with the manager and put yourself in their shoes when you think about how to help them with this employee. This can be especially hard if some of these employees used to work for you directly before you hired their manager, but just imagine if your investor or board member went straight to someone who works for you and told them to do something or that they were poor performers. How would that make you feel? Be empathetic and manage your power carefully.
- Product: If you’re a product-centered CEO/Founder (vs. say. Marketing- or Sales-centered), the thought of stepping too far away from product details probably sounds frightening! That said, if you have to be part of every discovery session, design review and test of products or features before they release, your company will never get anything done – or learn how to do it at scale. I have seen countless teams at a standstill waiting for the CEO to review their latest product designs because she was out fundraising or handling 27 other fires that needed to be distinguished. Don’t let this happen! Here’s how to avoid it:
- As early as you can in your company’s lifetime, articulate your company’s True North and product guardrails and evangelize it like crazy to a point where it’s in the DNA of the company. The True North may evolve as the company matures, but keeping it clear and not wavering too often is critical. When I was the CTO at DigitalOcean, our true north was to empower developers to build great software and our guardrail was simplicity. If something new was being proposed and wasn’t to help developers build great software, and/or how it was designed wasn’t simple, it wouldn’t get on the roadmap. It’s the CEO/Founders’ and their leadership team’s job to make sure this is clear to every employee, and if it changes, why.
- Establish a high level product roadmap that extends no more than 12-18 months; you have no idea how your product(s) or the market will evolve beyond that. Keep it at the broad strokes level – major products or epics within product lines and with clear, measurable, outcomes. Your job is to set the tone at the top and at under 100 employees you can stay pretty close to the details, but once teams get bigger, you will rely on this roadmap and the measurable outcomes to both track performance but also empower your teams to execute. As the company scales towards 100+, you will shift from attending routine product meetings and reading PRDs or briefs to trusting that your team knows what to build and can map it to the high level roadmap. If the roadmap changes over time, so will their work. Just don’t thrash too much – it takes time for new ideas to flourish or major product changes to make an impact. Patience is important here!
- Once you have a decently sized product team (20+), you must have great product leaders and designers on your team. At this point, your time will more likely spent getting customer feedback and downloading it to your team, brainstorming new ideas and/or selling what you have. It’s OK to have a passion area that you must stay close to – perhaps a new innovation or a unique, personal area of interest, but the bottom line is…let your team execute!
- Process: Quite simply, as you scale you must focus your attention away from the how and towards the what. At less than 100 employees, you will be thinking about the how related to all aspects of the business (many noted above, but also how to manage funds, manufacturing/shipping if applicable, payroll, insurance…the list is endless!). As you scale and hire experts in these areas, the goal is to let go and empower them to decide the how. Your job is to make the desired outcomes clear. Outcomes are not just financial either – everything from the culture of your company, the reputation of your products/services, and your brand is for you to make clear. As a mom who still shudders every time one of my kids borrows the car, I like to use the teen getting their license metaphor here:
- 0-30 employees = learner’s permit in-hand, understands the basics, but still needs close supervision/training
- 30-75 = passed driving test, but still on probation. Can’t drive during certain hours (equivalent to making all decisions solo), still needs some oversight.
- 100+ = capable of borrowing the car for a weekend road trip with friends. Hand over the keys!
If your leaders feel like you won’t give them the keys, that you are back seat driving, or feel that you’re monitoring their every move, you will not establish trust or allow them to move your company forward. Also worth noting, creating this type of toxic, micromanagement culture of leadership can be a large contributor to CEO/Founder burnout as you try to manage “all the things”.
Teams and Individuals at ~100
I’m going to keep this part simple. The bottom line is that there are people on your team that will grow beautifully as the business grows and there are those who just don’t do well in a mature environment. Some tips on how to stay ahead of this:
- DNA: I’ve seen too many talented people become poor performers once a company started to scale simply because they did not have big-company DNA or because the company did not ensure they were in roles where they could continue to thrive. Think about who on your team has real startup DNA – do they thrive with ambiguity and constant change? Are they scrappy and just get stuff done, even though it may not be polished and perfect, but keep the ball moving forward? Do they break the rules in a good way? Now, what happens as your company grows and there’s more complexity in the business and/or more structure? Will they resent the bureaucracy? Will they refuse to be managed or adopt the “special snowflake” attitude that they know better because they’ve been there longest, have an “in” with the founder or have more equity? OR…will they rise to the challenges that come with growth, respect the structure and be seen as the guru among the team? Pay attention to your early hires as they and the company grows. If you see signs of trouble, decide whether there’s a better way for them to contribute without losing them OR decide it may be time to part ways – the company has outgrown them.
I once had a talented engineer on my team at VMware who was a great prototyper, but not very strong when it came to writing production-level code. Each time we tried to have him follow a project from experimentation to production phases, he would be miserable trying to follow a structured process and the product leads would complain constantly about his attitude and the quality of his work. I was able to carve out a prototyping role for him on my team so we could keep experimenting with new ideas and he could remain happy and productive at the company. Sometimes you can make these things work, but when you can’t, consider how much time you may be wasting trying to force a situation that’s just not going to turn around. Often, the best course of action for those with startup DNA is to go find a new startup and if you can help them get there, even better!
- To Lead OR Not To Lead: Pay attention to first-time managers who hate (or are bad at) managing, but took on the role as your company grew. Some early hires are put into a management role because of budget/hiring constraints that hate it OR that wanted to be a leader, but were really better suited as an individual contributor (IC). Put a process in place at your company at allows upward mobility in both specialist and management tracks and allow them to move between each. Make that a positive thing vs. having someone take an ego hit or be viewed as a failure for giving one or the other a try. In the early days at VMware, we had such fluidity when it came to people trying manager roles (or stepping into one while we tried to find a permanent hire) and either thriving or deciding it wasn’t for them. No shame, they learned, and were always welcomed back as an IC – in fact, several of them from the early days are now in some of the most senior IC roles at the company. The worst is when you lose a great IC who was a bad manager. By the way, I’ve also seen great leaders try to go back to coding/IC roles with mixed success. Point is, ensure you and your team are in the right roles and are given opportunities to be excellent.
- Cross-team Dynamics: As the company grows, not only are new teams forming and new managers leading, but there can also be cross-team dynamics that create tension in the company. Most common, product and engineering teams being misaligned or sales/marketing/support challenges. Pay attention to how these interdependent teams interact and make sure your team leaders are as passionate about how they partner and collaborate with their peers as they are about how their own teams perform. Ensure fiefdoms don’t form and resolve any rifts between teams as soon as you suspect there’s an issue. These issues can be toxic and destroy what may have been a humming organization when it was smaller.
- Compensation & Incentives: As the company grows, so must employees’ careers, compensation and incentives. Be thoughtful about salary structures early on and be mindful that haphazardly compensating new hires early on or bumping people up to retain them will undoubtedly create a need to recalibrate everyone’s compensation down the road. The recalibration process is PAINFUL.
Remember, employees are motivated by three major things: The work they do, the people they do it with and fair compensation for that work. Throwing money or an unearned fancy new title at an unhappy employee will not retain them if the work they do is uninspiring, if they don’t live up to the expectations of the unearned new role and/or the people they work with are not enjoyable. These quick fixes are temporary. Similarly, beer on Fridays or a foosball table in the office is not as compelling an incentive as are equity refreshes and opportunities to take part in new product work or the chance to work with an industry luminary (or letting a poor performing/toxic peer go). Consider Maslow’s Hierarchy of Needs when it comes to your employees: They need the foundational basics (a desk, computer…), they need to feel safe (steady income, a health plan), loved (great co-workers & managers) and to self-actualize (assigned interesting work, able to reach career goals, achieving wealth to reach personal goals or making a social impact).
- Human impact of hypergrowth: Finally, people don’t always grow as fast as their companies and can easily burn out or perform poorly if you’re scaling at hypergrowth speed. The best write up on this particular topic is Khalid Halim’s post for FirstRound. I also wrote a brief piece on how hypergrowth of teams can slow down an organization, here.
Scaling a company can be both exciting and daunting. If you’ve never experienced this journey, it can also catch you by surprise when things start to go wrong. The best recipe is managed growth, with an experienced team, getting help from experts and being thoughtful as you scale.
Got other tips on managing at scale? Please share in the comments!