Likes & Launch

Maturity Map-Early Stage: <15 employees

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:

Everyone in the company knows everything going on.
Founder or founders are usually doing a lot of different things.
No specialization, anyone can, and does, do anything.
You’re building out an idea, not necessarily a company yet.
You’ve pushed a real product to real customers (not just friends).

Things you’re doing for the first time:

Figuring out role requirements for the next set of hires
Learning the nuances of interviewing
Deciding if you’re open to 'remote teams’
Defining your 'vacation policy’
Adding “Terms of Service” to your product
Putting together a board deck
Setting up one-on-one meetings between Execs & team
Having regular meetings with the whole team
Right sizing equity and compensation
Deciding on Security of employee equipment (2-factor auth)
Figuring out what type of coffee machine to have at the office

What you’ve already solved:

Investors and immediate runway
Founders: who they are and what they do
Domain name, company name, vision
Filled 60% if not more of the board seats
Company structure: likely a C-Corp or B-CORP
Working location: office or coworking space
Business banking - a professional account, not a personal one
Technology stack - dominant language
Milestones you’re going to accomplish in the next 3 months

Software you use:

Payroll - JustWorks, Paychex, ADP or Zenpayroll
Benefits - JustWorks, or Zenefits
Accounting - Quickbooks, Intaact, or Netsuite
Google Apps for email and documents
Dropbox if not Google Drive
Google Analytics for web (free tier)
Flurry Analytics for mobile (free tier)
AWS or at the verge of outgrowing Heroku
Mac books (possibly through business financing)
Zendesk or Desk for customer support
Social media is manageable so no tools
Sticky notes on a wall, Trello or Asana for Product Management
Permissions & software sharing: Github
Careers 2.0 and Indeed to hire outside of your network
If accepting payments, Amazon, Dwolla, or PayPal

Who you need to know:

Local co-working spaces to house your growing team
Real estate connections for your next office
Lawyers to get your documents in order
Local meetup organizers who will let you demo at the next event
Journalists, via Twitter or friend-of-a-friend, to write-up new features
Skilled friends who may be looking for a 'startup job’

Additional decisions that may start in this stage:

Having multiple offices or remote employees
Hiring outside or in-house council, for more regulated industries
Negotiating a lease on a new office

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.

Mapping the Startup Maturity Framework

See the wall. Scale the wall. See the next wall.

After working with 52 companies at various stages of growth, building a small team in Chicago, and talking with startups of all sizes, I’ve seen a clear pattern of organizational maturity emerge.

I wanted to share some of my findings and continue to map out the patterns of organizational maturity in order to better serve entrepreneurs facing those challenges.

For example, Drew Houston, Dropbox CEO, describes it as scaling walls:

“If you’ve never started a company, or worked at a smaller company, you’ll run into a vertical learning curve, Houston says. There’s no way to know everything you need to from the start, so you need to a) gain as much knowledge as you can as fast as you can, and b) plan ahead to learn what you’ll need months down the line. You have to be prepared for a never-ending conveyor belt of challenges.

‘You have to adopt a mindset that says, ‘Okay, in three months, I’ll need to know all this stuff, and then in six months there’s going to be a whole other set of things to know — again in a year, in five years.’ The tools will change, the knowledge will change, the worries will change.’” Article Link

The good news for entrepreneurs and their teams is that by studying multiple companies at once, it’s possible to better set expectations of what’s coming next, what others have done at their transition, and how to anticipate or avoid the biggest mistakes.

Patterns in Hyper-growth Organizations

We’re going to look at the framework for growth. The goal is to innovate on that growth. In terms of methods, the companies I’ve explored are high-growth, technology-driven and venture-backed organizations. They experience growth and hyper-growth (doubling in size in under 9 months) frequently due to network effects, taking on investment capital, and tapping into a global customer base.

Every company hits organizational break-points. I’ve seen these happening at the following organizational sizes:

Revenue, amount of capital raised, type of company, size of audience, product maturity and other factors vary among all of these companies, but the challenges they face at the different organizational sizes are the same.

I plan to dive a little deeper into each Growth Stage in a series of blog posts over the coming week. I’ll cover what new challenges arrive, what pieces of the organization a company should already have figured out, and what decisions should be held off on at that point.

I hope to share some of the things I wish I knew when I was an entrepreneur. And hey, it may help alleviate that feeling that you’re the only one scaling those walls.

Solving Challenges at Scale:

At USV, my goal is to test which methods work best for sharing these best practices and delivering information right when a team might need it. Most of the work is still in progress, so let me know if you’ve been doing any research in this area.

I’ve leveraged a lot of knowledge around networks, as the framework for how we deliver this knowledge:

Source: Why Being The Most Connected Is a Vanity Metric

Instead of building a centralized method to deliver knowledge, the USV Network uses knowledge across the network to share best practices. The next challenge is how to leverage that network to provide advice and guidance before it’s even requested.

For example, if a company has 15 employees and plans to hire to 30 in the next 6 months, helping provide knowledge that they’ll likely need to hire an office manager or they might need to consider more advanced payroll and insurance tools for employees. The team member feels comfortable asking their peers for advice on existing problems, but doesn’t have an easy way to anticipate the challenges ahead.

Connecting peers at all levels helps surface some of these topics but I think we can take it further. The holy grail would be a resource that anticipated what the company needed in advance and helped educated them along the way so they would have the information they needed when they were ready to make the decision.

It’s not ready yet but it’s in the works. If you have thoughts on things that have worked for you, please let me know in the comments or on Twitter.

Scale your perspective to lead

A superior leader is a person who can bring ordinary people together to achieve extraordinary results. Remember this if you are lucky enough to manage a team.

- 8 Wharton MBA lessons that stood the test of time

Part of scaling as a leader is knowing where you belong.

First you belong at the top, you have the vision and the skills to get things started. You hold the information and spread it down within a small team. The team is flat and they all look to you for what’s next.

Then, the grass roots begin. You have to evolve so that you’re highlighting other people. Sharing their strengths. You are still the keeper of the vision but you lead by showing the work of others not your own. Expertise bubbles up, not just a trickle from the top.

Next, you have area expertise, whether it’s marketing, technology, design or data, but are slowly building a team of better experts around you. They may be better than you at the skill that you’re leading them in. That’s what you want. The real way you lead is from way behind. The message is shared through the experts, let them share with the company what’s going on, what’s worked, and what is up next. You lead the vision but it’s told through the people building towards it. Leadership is spreading up and down.

Then you become a leader of people who are leading teams. You’re leading leaders. You are less into the mechanics and more on the showroom floor. Leading with the vision and passing off the vision to the leaders in your company to lead their teams. Everyone has ownership and is expected to lead, title or not.

In order to grow a company, you have to change along the way. There aren’t hard and fast rule to when things change, but it can work out better to move onto the next step earlier rather than later. You have to work to be better at letting others lead.

It won’t be like it used to be, but that’s not where you wanted to stay, now is it?

Universal skills to land a startup job

Working with the USV portfolio means I get to meet a lot of outstanding candidates looking to join one of our portfolio companies. Here are a few characteristics I’ve found to distinguish the great candidates:

Curious
You need to be curious to create things that never existed. You don’t necessarily have to be curious about something related to the job you’re taking on, but you have to have curiosity for something.

What do you love? If you can’t think of anything, it will be hard to build a product out of love. You have to understand it to get better at building it.

Show Hustle

Now, this is not just, “I got one ‘no’ so I’m going to give up.” That’s persistence, but hustle is more that that. Do your research, put your heart into it, cater to that company that has an open position, then don’t stop at one “no”. Understand what they need and work to become the person the company needs.

This is not, let me send my cookie cutter resume to every startup (even when they’re not hiring). Do the work to understand what you’re applying to and why it would be a good fit. There are other candidates doing this, some with outstanding backgrounds too. Don’t get lazy where it’s important. Do the work.

Be Smart

Being smart is beyond just intelligence, it’s working to raise your knowledge, not just what you’ve been given. Logic works. Learning works. Do your research. What don’t you know? What aren’t you good at? Everyone has strengths and weaknesses, understand your own. Then be smart enough to push to the edge of your potential. See what exists there.

Level Up
Become a mechanic. Understand the what, how, who. You don’t need to know everything but you should be excited enough about your industry that you want to know as much as possible. If you want to work as a Product Manager, learn SQL. If you want to work on Design, learn Javascript. If you want to understand social media, start with a side project just focused on promotion. Be hungry for more. If you’re not hungry in the beginning, it’s a long road.

This is why people preach about passion. If you don’t have an interest about something, a let me wake up first thing in the morning and read the news on this topic - then look in a different industry. Every day, ever dinner party, every taxi driver (in SF or Chicago) will want to know what you do. If you aren’t excited about talking about it, keep on moving.

Care

Love to solve problems? Think scaling is challenging? Be excited about that, the thing you do on the day to day. Love talking to people, maybe sales, or customer support. The industry doesn’t matter as much as the mission of the company does. Find what moves you. Serve that purpose in what you do and the mission the company solves.

- Kickstarter, VHX, Soundcloud, Shapeways, Wattapd and Splice empower creators.

- Meetup believes people should build offline communities just like they do online.

- CircleUp, LendingClub, Funding Circle, Coinbase and Dwolla are revolutionizing the way money and banking exist.

- Firebase, Twilio, MongoDB, CloudFlare and Sift Science are creating the best tools to empower developers.

If you’re looking for your next move, we’ve got quite a few jobs worldwide looking for good people. Check out all of the USV portfolio company jobs here.

If you have any additions or questions, happy to discuss in the comments.

Lessons in Hiring: The Bar Raiser Method

(Thanks to RunofPlay for the image, with timely football theme.)

The single most important thing to the USV Network is the people who comprise the 50+ companies.There is so much value built within a single team that is only further amplified when those teams get to work with peers one degree away. The knowledge base expands beyond just USV companies because each person in the network brings the expertise from their current company and every company they’ve worked at prior.

We got a snapshot into Amazon’s ‘Bar Raiser’ method during a discussion on hiring great product managers. Thanks to Douglas Hwang, Product Manager at Etsy, who shared a few insights from his time at Amazon. [Disclaimer: These are my notes from the discussion–not straight from the source.]

A core requirement of the Bar Raiser method seems to require internalizing this core idea:

“It is better to accidentally say no to good people than accidentally say yes to bad people.”

Now, this seems easy in principle, but can come under a lot of pressure in a fast growing company. You need an iOS engineer yesterday and your current team is already working through the weekends. Yes, Jason Fried’s Rework said “Hire when it hurts”, but this is beyond that. No, this is still not a good reason to hire an okay candidate.

Let’s look at it this way, hiring a bad candidate comes at a huge cost and hiring the best candidate is the least cost. So what resources are wasted?

Money: compensation, new setup of accounts, desk space, equipment, free lunches, etc.
Time: HR’s time on-boarding, interviewers time, team’s time getting them up to speed, manager’s time of training.
Morale: Team’s disappointment, lowering the bar of quality, loss of faith it will get done.

Now all of these aren’t deal-breakers, as you grow, you will make bad hires. But the hit to resources will need to be compensated in other ways so just realize you’ll need to overcompensate for morale after a bad hire leaves.

The bar raiser method helps your team be more efficient at the top of funnel (candidates coming in) so that less time gets wasted with bringing on weaker hires.

The hiring process at Amazon can consist up to (and sometimes more) of 7 interviews conducted by 7 different people, with two key decision makers. The first is the Hiring Manager; she will be adding this candidate to her team so she is ultimately responsible for evaluating the candidate for their ability to get the work done. The second key decision maker is the Bar Raiser; who is from a different team and won’t be working directly with the candidate but is responsible for making sure “this person is raising the talent bar at Amazon.” Both decision makers must say ‘yes’ for a candidate to get hired.

The Bar Raiser has an important stake in bringing up the level of talent at the company, which removes a hiring manager’s bias to move quickly to fill a role directly on their team. This method may eliminate candidates who were a fit for the role but wouldn’t find a long-term home in the company.

Does your company have a set method it uses for more efficient hiring?

I’m interested to learn more of what’s worked or hasn’t and at what company size.