Your team has been with you since the beginning. You’ve been in the trenches together, through plenty of times when you thought you wouldn’t make it. They’ve been like family. And over the past months or years, you’ve spent more time with them than your actual family. Now, your business has turned the corner. Orders are pouring in, and everyone’s working like a maniac, not to survive, as in the past, but just to keep up with demand. You should be ecstatic.
As much as you hate to even consider the thought, perhaps it’s time to bring in outside managers to help you scale up the company.
You don’t feel good when you have those thoughts. After all, your team has made enormous sacrifices just to get your business to this point. It doesn’t seem right to hire in a bunch of outside managers who didn’t have to work for free that month you couldn’t make payroll, and who probably won’t stay up all night to make sure that crucial demo works.
The fact is that your startup changes dramatically as you scale.
On the other hand, you also don’t feel good when you observe your key team members struggling to manage the business as it grows—whether it’s discovering that the processes that worked at $10,000/month don’t scale to $100,000/month, or whether it’s having trouble enforcing professional behavior with people who have seen you banging your head on the wall at 3:42 A.M. the day before a board meeting.
The fact is that your startup changes dramatically as you scale. A ten-person company is a completely different beast from a 100-person company, which in turn is totally different than a 1,000-person company. The different phases of growth require different skills. Going from $0 to $10,000 in sales requires creativity, flexibility, and sheer unstoppable persistence. Going from $1,000,000 in sales to $10,000,000 in sales requires repeatable processes and a fiercely disciplined approach. Someone who’s great at one phase isn’t necessarily great at another.
Consider teaching, for example. It’s not easier or harder to teach kindergarteners or high school seniors. But the two tasks require a radically different skillset, and it’s unlikely that even the best teachers would do that well if switched from kindergarteners to seniors, or vice versa. So why is it so hard to realize this fact when it comes to running your company?
How do you know when to hire outside managers? Hire outside managers when your business has changed enough to require a radically different set of skills to achieve success. Good people can often scale up one order of magnitude. Great people can often scale up two orders of magnitude. But it is a rare manager indeed who is as effective running a ten-person team as she is running a 10,000-person team.
A ten-person company is a completely different beast from a 100-person company, which in turn is totally different than a 1,000-person company.
Also, it’s important to remember that your original team was compensated for the risks they took. They received both a much larger amount of equity than they would have later on, and got a chance to perfect their early-stage skills. If they go to work for another startup, those experiences are far more useful and relevant than working at a big corporate job (and vice versa). The problems arise when you don’t set the right expectations. If your early team members expect to be named VPs, and to run 1,000-person divisions at the age of 23, they are probably going to be disappointed. Apply the principles of “The Alliance” and define clear tours of duty for your people so that they aren’t surprised by how the business and the management team evolves.
When your company grows beyond the ability of your people to scale, you have to bring in managers with the requisite skills. If you don’t, you’ll sabotage the growth and health of your company, and ultimately cost your people the jobs you were trying to protect.