Scaling a company, particularly after having received substantial funding, is no easy feat. It requires an entirely new set of skills that are not exactly those that allowed a founder to succeed in finding product market fit in the first place. Whilst nimbleness is always a top priority in any stage of a startup’s life, there are some areas of the startup that start breaking without the right processes to provide structure amongst diverse groups within the organization (if you want to read more about moving relationships into a process check out my post on that here). There is some good literature out there on the subject of how to organize and scale teams to perform better as they are pushed to outperform themselves and their market rivals. One of the classic works in this space is the book Scaling Up.
However, nothing is better than sitting down with founders that have just gone through something to get the modern feel for the hurdles of any challenge. In order to prepare anecdotes for a panel I had at the Collision Conference on this subject (scroll to the bottom for the embedded video), I had the chance to sit down with notable scale-up founders Kristo Kaarmann of Transferwise, Geoff Watts of EDITED, Laura Woo of Shippo, and Andy McLaughlin of Huddle to discuss the topic of scaling and their experiences.
After hearing the war stories and challenges they had in scaling their companies from a small founding team to well over hundreds of employees, I noticed a few commonalities. It should come as no surprise that most of these commonalities revolved around dealing with people. How to find them, hire them, train them, and empower them.
The top 5 commonalities that surfaced during our chats to consider when scaling a company are:
The Evolution of founder from operator to manager — The role of a founder evolves and needs to grow to that of a manager, focusing on hiring people and fundraising. If necessary, hiring an exec coach can be useful to help deal with many of the questions a founder will have during this process.
Geoff shared — “You’ve got to trust your managers and develop yourself as a manager too; you need to get buy-in from people and can’t make decisions unanimously… Everything becomes a teaching moment not an execution moment.”
Laura shared — “You role as a founder changes every 6 months, always expect new issues to come up after you start getting used to how things are.”
The Transition from one team to managed teams — The inflection point of direct involvement operationally to having others take over, seems to hover around 20 people. This means, that at this point, founders start struggling to keep track of all operational matters and needs to get comfortable with a scaleable structure that trusts managers.
Kristo shared — “The philosophy we implemented was sharing a strategy into as many as independent units as possible and giving them autonomy to execute on it. Parallel autonomous teams. Provide guidance naturally, but transition into an independence model, and hire accordingly. Let them (the teams) make decisions themselves.”
For further reading on this, check out Kristo’s blog post on the matter —
The Focus on scaleable hiring — Hiring is a huge bottleneck, so at some point, having an internal recruiter really helps to deal with that process more efficiently. Staff don’t always scale, and so expect some attrition or people you’ll have to let go. Have a way of clearly determining the value new hires bring in and make decisions quickly.
Laura from Shippo shared — “Early employees can sometimes stop scaling, and you need to be able to think about transitioning them out, for if not, they can become toxic. Acquiring talent and hiring can be a full time job. Early on, at roughly 25 people, we hired an internal recruiter, and wished we had got one earlier. Onboarding is critical— keeping culture alive after 25 people, particularly where you can’t talk to everyone any more. Lastly, you need to be comfortable at hiring people that are much better than you, and let them loose on tactical stuff, and you focus on setting the vision.”
The Agreement on and adoption of company values and culture — Getting a company culture down clearly and creating an on-boarding process that instills this in new hires is critical. Once accomplished, it allows founders/managers to provide the teams the manage with the independence highlighted in the previous points on this blog.
Bretton Putter, founder of CultureGene.ai, breaks the process down into three parts:
Define — Surface your company’s unique purpose, vision, mission and values.
Embed — Embed your culture into every business policy, process and function.
Learn — Develop self-managing leaders who experiment, learn and grow.
CultureGene is a culture-first consultancy and culture-centric executive search firm. Feel free to get in touch with Brett here — firstname.lastname@example.org
The Balancing of company culture with the use of scaling tools and processes— Lastly, start creating policies (eg. expenses policy, hiring policy, etc) that allow for you to scale, but don’t let the policies run away and hold your culture hostage (eg. how United Airlines dealt with a passenger because they needed a seat free in their flight).
Kristo shared an example of how he sets guidelines for his staff, but then gives them room to do what’s right, and in alignment with the company values — “we have less than 300 people in customer service and they don’t have scripts; we let them decide how to deal with calls. There are some dos and don’ts but we need to hire people who can do it on their own.”
Hopefully, by keeping these 5 points in mind, you will be able to scale up without any huge hiccups, but more importantly, empower your team to help you achieve your company’s goals.
Below is the video of the panel session I had at the Collision Conference 2017. On the panel with me was Max from Instacart and Vince from Avast.