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The most common questions I hear from startup founders and team members is, “What are the best practices? What lessons have others learned? What’s coming next?”
The purpose of the Maturity Framework Series is to help startup founders and employees anticipate what is coming next. This post will specifically look at the Expansion stage, when a company grows from 30 employees to 50.
Company Stages by Number of Employees
Links to full posts detailing the Early Stage and Momentum Stage.
Expansion Stage: 30 – 50 employees
You’ve probably been at this for a few years. Only a year ago your company was only in the Early Stage with 10 members of the team. How quickly things change. Your product doesn’t look anything like the MVP. Your customer base has grown 10x from that time. You’ve got all engines firing but there is still so much to get done.
Your team is growing in all directions. Work is getting done that the CEO might not know about. That’s a new thing. Metrics are increasing but it’s harder to pinpoint exactly which person or team shipped that new update, found that bug, or closed the newest clients. You have a team that thrives when they collaborate. You’re on your way to building the organizational side of your business.
The organization needs a leader, now is the time to hire a full time HR or People person. Their role is to setup the people-side of the business for success: hiring, compensation, interviewing, reviews, feedback and resolving any issues. The CEO should still be focused on hiring, but now there is someone to lead the charge.
You likely have a laundry list of other hires you want to make in the next 6 months, having someone fully dedicated to bringing on new talent and making sure to retain the existing talent is crucial. Don’t wait until you have 50 people to manage to hire HR, do it when you are 30 FTE and about to hire 20 more people so they can help onboard, interview, source and grow those people. Hiring an HR manager or promoting someone internally from operations should be your 30th hire. If you’re not sure what to look for, you can bring on a HR consultant to help you hire a full time HR person.
At this point, you’ve lost some talent but you are now attracting more applicants. They aren’t all necessary the skill set you need but it’s nice to have talent arriving at your door for a change. There is a brief time period where you believe that it will be easy to fill that next open position. The company is known, you have customers and you have inbound candidates. The unsettling news, the types of hires you want to make now are in a different realm than the one’s you’ve made to date. Things need to change.
Your hiring plan likely includes a VP of Engineering, QA Manager, Head of Marketing, Product leader, HR, DevOps, Engineers, Sales and Mobile. These jobs commonly come up for the first time at a company moving from 30 to 50 FTE. This is new territory for most of your team, what does an excellent QA Manager do, where is the bar set?
Equity and compensation change once again. You quickly realize that if you give 50 people 1% that’s half of the business. You want to attract the best talent but where is the balance to comp and equity compensation? What structures make sense now or will in the future?
Time to step up your hiring game. In order to grow your team, hiring needs to become more of a machine. You can’t ask all of the questions anymore. Instead, you have to make sure the right questions are being asked throughout the rounds of interviews. The right people need to vet new candidates. The bar for new hires should be roughly set, not just a matter of ‘gut’. A process will help save everyone time, it may sound daunting to set up but that’s why you hire someone to run this side of the business. The better your company is at hiring, the easier it will be to expand with customer demand.
Larger teams mean more leadership required. If you have a team larger than 9 people, it should be split into two smaller teams. That means instead of one team leader, you need two. Perhaps you need two team leaders, Engineering Leaders for example, and one functional leader, CTO. There are more layers of management in order for teams to move faster, not slower. The only way to achieve that is by ensuring leaders know what they’re doing.
Hire experienced people leaders. It’s scary to consider hiring someone from outside of your company culture to come in and lead your team. Recruit from companies that have great management training programs like Twitter or GE. Try to instill the culture of management training into your organization.
Adding new hires into management will surface concerns. There will be push back from existing employees that think they would be the best fit for the job or are seeking a title and pay increase given their loyalty to the company. These battles may happen in the open or only exist in whispers among the disgruntled. Be as transparent as possible in your rationale and criteria for people leaders. Don’t cave to the pressure of loud voices at the cost of putting quality management in place. If an existing employee wants to be considered for the role, evaluate them accordingly.
Embrace new people leaders. You’ll promote people from in to fill leadership roles but they may have no idea what they’re doing. Expect that. Build training, seek coaches, find leadership curriculums and use them. Just because a person is talented as an individual contributor (IC), it doesn’t mean they will be great at leading other people in that skill. Plan for it. Coach them through it. If they realize they would rather return to an IC role, consider the growth path for them there.
Most companies revaluate how teams are structured at this stage, not just by adding more leadership, but by dividing up teams. Some structure teams around features, so the team includes one designer, one engineer and one product manager. Others structure teams to revolve around KPIs, so cross-functional teams focused on onboarding vs. retention. Another option is to keep teams split by function, engineering vs. sales vs. design. The setup depends on the company and the people you already have on the team. Team structures will change again when you hit 75+ employees so don’t get too comfortable.
Adding new people to the organization will accelerate the output of the company but not always in the short term. Getting up to speed on how you will construct management teams in order to remove roadblocks will be the biggest priority. It is very easy to add more people and decrease output. Don’t crush your dreams of, ‘if we only had two more mobile engineers we could get this done faster’, by not being prepared to setup the organization correctly.
You will no longer know everyone personally. You won’t have the time or interactions to truly know each person in the company. You can no longer fit your whole team in one meeting at the same time. You should build systems in that can help make sure you’re getting exposure to different parts of the business. One-on-ones with team leaders is a must for CEOs. One-on-ones within teams are a must. Townhalls with everyone present should happen between 15-30 employees, keep those up on a frequent cadence. Provide a tool like Slack, HipChat or Yammer to keep communication lines open.
A clear vision of the future and matching KPIs are required. The company burn has increased with positive metrics, you’re likely in the window to fundraise your Series B or C. Unlike most Seed and Series A fundraises, you have real metrics, historical numbers to compare to and more costs. No longer are things projected purely on speculation, you now have enough of a path to make future forecasts. Putting together the next round of funding will eat into the leadership team’s time and may require additional ad-hoc work from data, design and business teams. The more you can align your weekly metrics with those you’ll use in your pitch process, the easier it will be to streamline.
Opportunity is ahead; make sure on the right path. Growth can mask a lot of management issues. They will likely happen over the coming 6 months, just try to ensure it doesn’t happen in the long term. Over communicate with your team about the reason you’re all here and working so hard. It’s easy to get distracted by job titles, competitors or the quality of the free beverages. Drive home the reason you’re here and working together. Keep the beat of the drum loud and consistent. Your team should be able to recite your mission in their sleep. Don’t shy away from building something together. There are new challenges here but that’s what comes with growth. Make sure to take some time to reflect on how you got here because it’s just the beginning all over again. Appreciate the past behind you and prepare for the path ahead.
Current state of the organization:
Things you’re doing for the first time:
What you’ve already solved:
Software you use:
Who you need to know:
Additional decisions that may start in this stage:
If you have something to add to this list, please share in the comments or send me a line on Twitter.
Next up, the Growth Stage, growing from 50 to 75 employees. To subscribe to weekly updates via email, sign up here.
Footnotes:
*Please note, this outline is based off of trends I’ve seen in venture-backed startups. It very easily could apply to bootstrapped or non-venture funded companies, but not necessarily. In this outline I assume the company has taken funding, whether Seed or Series A
**We’ve invested in a number of companies mentioned in this note. For a full list, visit our Portfolio Page or find opportunities with them through the USV jobs page.
As part of the Maturity Framework Series, today we’ll look at the Momentum stage, for companies with teams of 15-30 employees. Here’s what companies at this size are thinking about*.
Company Maturity Map by number of employees
You can learn more about the Early Stage here.
Momentum Stage: 15 - 30 employees
Your product feels more real than ever before. You have customers using your product, suggesting features, and needing help canceling. So goes the rhythm of a company with momentum. You have money in the bank but are working to find that balance on how fast or slow to spend. You’ve heard not to be ‘penny-wise and pound foolish’ but what does that really mean? VCs invested growth capital, not stay the same capital. It’s time to grow the team beyond the 15 loyal team members who got you this far.
You’ve either found product market fit or are continuing to grow but not exactly how you expected. The previous months of product and customer development help determine who should be hired next. You may be adding more to your engineering team, sales team or community team. Wherever there feels like the biggest opportunity for growth is where you’re staffing up. However, these next hires aren’t exactly the same as the ones you made to get to 10 FTE.
You may finally convince that former colleague from Twitter, Google, Facebook, Samsung, Apple or (insert large tech brand here) to join your team. The hires bringing more experience in a particular area. They have war stories, set processes and advice that sounds very similar to, “When I was at Twitter, this is how we approached building our sales process from scratch.” They have higher salary expectations and will bring more authority than your founder may be used to. The advice “hire people smarter than you” works, but it’s a shift away from the way things have always been done.
Bringing on more specialized talent doesn’t necessarily mean their role on the team will be 100% what their title entails. The VP of Engineering may be managing your team of 7 engineers but they may also be required to ship code 50% of the time. The Head of Sales may be working alongside 2 other sales people but feels more like an individual contributor than a full time manager. Making these hires is an investment in the future team as you’ll need more leaders before you know it. Amazon’s two-pizza rule is popular for a reason, having more than 8 people on one team is too many. If you get to 9 engineers, divide into two smaller engineering teams.
The move up to 30 employees may take a long time as some people will move on as new hires are hired up. The more specialized hires will work alongside your existing team but may scare a few early team members away. The early employees may feel like things are ‘changing’ or becoming ‘too big’. Don’t fight those people who leave. Anticipate it, acknowledge it to your team: Where we are is not where we started, where we’re going will bring more change too. Those who are excited about the future are welcome. Those who are looking to move on, we wish them well.
Teams that grow to 30 will expand the types of roles that are required. At fifteen employees you will likely need to hire an office manager if you haven’t yet. Having someone fully dedicated to making sure the office has everything it needs to be productive becomes a priority. In the early days, even the CEO would run out to refill handsoap, TP or pick up lunch. Now there are deadlines and products to be built, making sure there is a productive environment for the team to succeed is not an after thought. The office manager at this size often have a secondary role in the company too. They may also serve as a temporary executive assistant, QA manager, community manager or HR coordinator. As the team grows to fill those roles, the office manager role will expand to serve the larger company too.
Having the CEO interview every potential candidate may get unwieldy. It’s good for the CEO to agree on new hires, as it should be her top priority, but it’ll become challenging to schedule time with potential candidates, 1-on-1s with existing employees and leave head space for leading the company. It’s best to get to work on a strong interviewing process, even if just a few steps in a google doc, to make sure top candidates get through and mediocre candidates don’t take more time than they’re worth.
You’re still at the point where it’s easy to remember everyone’s name on the team. You may need to change your old policy, everyone in the company going out to lunch with a new employee, to ordering lunch in for everyone as restaurants don’t seat 20+.
Each new hire brings something new to the table, you’re expanding the expertise of your team to become the company you’re all working so hard for. More people with diverse backgrounds brings more conflict. That difference in opinions and experiences is what helps drive the business forward, but it’s something to make sure is propelling the team forward, not sideways.
Over communicating is essential as this stage, it’ll feel like work, it’ll feel like too much but it’s necessary to help keep the team on the same page. Gone are the days where you could all give updates in a daily stand-up. You need to protect peoples time but make sure they understand the message. You should have a weekly Townhall meeting to keep the company up to date on where the company is, what everyone is working on, and the vision of the company (repeat it every week). This drumbeat is essential, especially as the company grows. Make sure to share news, good and bad. If you only show numbers that are positive or always increasing, you’ll build a culture afraid to fail or terrified if you miss goals. Find the balance of transparency at this stage.
When you continue your focus on the team communicating, make sure multiple voices are being heard. Be mindful that a culture that only recognizes the ‘old guard’, or early employees, is demotivating for new employees. Equally, the leadership of your company may need to make themselves more available to new employees. It’s easy for an early employee to walk up to the CEO and ask a question, something they did in the early days, but more intimidating for someone who just started. There are invisible barriers that new employees try not to violate, as a leader, make sure you are creating equal access to your time.
Be the place you want to work. You are building this thing together. There will be great successes and big mistakes. Cherish these, celebrate these because this is the culture you are going to bring with you for the next year. If you think there are people in the company at odds with the growth, don’t be afraid to let them go, they will bring down other team members too. It’s important that there is alliance in where you are all heading together. Having a team of thirty will feel like a big group, but it’s a stepping stone to where you will soon be. Don’t let looking backward to how things were keep you from moving the company forward. You’ve got a lot of ground to cover. Your team is all here for the right reasons, help remove any barriers preventing them from doing their best work.
Current state of the organization:
Things you’re doing for the first time:
What you’ve already solved:
Software you use:
Who you need to know:
Additional decisions that may start in this stage:
If you have something to add to this list, please share in the comments or send me a line on Twitter.
Next up, the Expansion Stage, going from 30 to 50 employees. To subscribe to updates via email, sign up here.
Footnotes:
*Please note, this outline is based off of trends I’ve seen in venture-backed startups. It very easily could apply to bootstrapped or non-venture funded companies, but not necessarily. In this outline I assume the company has taken funding, whether Seed, Series A or B.
**We’ve invested in a number of companies mentioned in this note. For a full list, visit our Portfolio Page or find opportunities with them through the USV jobs page.
As part of the Maturity Framework Series, I wanted to map out a few basic things a startup that is growing from 2 to 15 employees should be thinking about as they grow. We’ll start with taking a look at what should already be ‘figured out’ by the time you reach 15 employees.
Based on the past 2 years of Series A investments, companies at this level usually have team sized between 5 and 15 people. In this outline I assume the company has taken funding, whether Seed or Series A*.
Company Maturity Map by number of employees
Early Stage: 15 employees or less
You’ve been at this for a year or two and you’ve finally made some traction. Your first mobile app is in market, you have a few thousand customers visiting your website or you just closed your first two deals with big businesses. You’re seeing initial traction and you’re moving as fast as you can to keep the firing burning.
Very few people who work in your company are 'domain experts’. Some came with little experience and a lot enthusiasm to build something new. Others were overworked at a previous job with little personal meaning, so took a pay cut for the chance to build something that excites them. The skill sets people walk in the door with aren’t necessarily what they are working on. Former lawyers are now operations managers, musicians are managing the community, salesmen are making hires, and that former VP of Engineering is now a full-stack hacker. Everyone is doing a little bit of everything, no one is only doing one thing.
The team fits around one table and if you need to talk to someone you just turn around and tap them on the shoulder. You don’t need to over-engineer systems to share information because everyone can overhear every meeting in the small office. Even the CEOs phone calls with investors are heard through thin walls and headphones.
You may have some of the best engineers but there’s a lot of ground to cover. You find out about bugs in your code from your friends who are using the 'beta’ or getting a tweet from someone trying to login. The site was down for 30 minutes and you just realized there was an error in that last push. Everyone jumps in to help out. Someone is reviewing the log files. Another engineer is pushing code. One of the co-founders is testing the website on 3 different browsers to ensure the bug was fully fixed. The CEO is reaching out via Twitter to thank the customers and assure them the site will be back up soon.
This group of friends and new faces are building something that is bigger than what they imagined at this size, but still feels like a speck compared to the other 'startups’ out there. It’s exciting and chaotic but you wouldn’t want it any other way.
Current state of the organization:
Things you’re doing for the first time:
What you’ve already solved:
Software you use:
Who you need to know:
Additional decisions that may start in this stage:
If you have something to add to this list, please share in the comments or send me a line on Twitter.
Next up, the Momentum Stage, going from 15 to 30 employees. To subscribe to updates via email, sign up here.
Footnotes:
*Please note, this outline is based off of trends I’ve seen in venture-backed startups. It very easily could apply to bootstrapped or non-venture funded companies, but not necessarily.
**We’ve invested in a number of companies mentioned in this note. For a full list, visit our Portfolio Page or find opportunities with them through the USV jobs page.