There are many books for seed-stage startups, but there is less for the start-ups whose number of employees reached 100 or so (I think that’s because the number of the companies is much less than seed-stage startups).
It’s a great book for startups which completed B/C round financing and wish to grow further. Every what is written here is practical and useful.
Let me just keep my personal memo here.
How to manage growth:
- The most successful startups are not product-centric — instead, they’re distribution centric, because all great products can be mimicked. In many cases, raising a big fund thus matters.
- Again, product can be copied easily, and that’s why differentiating the company in anything else is important, i.e., finance, HR, legal, marketing, PR, IR and recruiting.
- Among the above, HR is among them the most important. Need solid HR when the company reached 150 people. The reason is that 150 is the Dunbar number, the number of people a person can directly know.
- M&A matters. The hidden reason of Google’s success is M&A. AdWords, Google Docs, Youtube, Google Maps, etc.
- Matrix organization is a death. Always go to a flat structure of independent teams. Jeff Bezos’s “2 pizza team size” is really right.
Role of the CEO:
- Do what only CEO can do. If you haven’t defined the role, do it now. Don’t spend time on things the others can do.
- Audit your calendar regularly to reduce appointments that you don’t need to go.
- Forget about the way you worked when you started the company. The company is in a next phase now.
- Avoid excessive networking / attending events. “Most of the time press feels great an delivers nothing”.
- Delegate. Don’t have many “action items” remained to yourself after the meeting. Don’t too much jump in all email threads.
- Codify a set of principles and adhere to them. Saying no more often. That’s the way to represent values of the company. Hold regular 1:1 with the key team members. Weekly staff meeting
- Make a guideline about yourself to make it easy for everyone to work with you.
The board exists to (1) help the company and (2) provide proper corporate governance for all classes of stock.
“Your board members are optimally people that you wish you could hire for the company, that are truly out of reach otherwise.”
“What are the key zones of expertise, networks, ways of thinking that add the most value into the company that you couldn’t hire for? Because if you can hire it, great, hire it. But there are a bunch of people you can’t hire. In that case, the board is the way you do that.”
“Board is not just standing as judge and jury. It’s actually people who are collaborating with you. It’s also an extension of your team. The board is a team of people in dynamic collaboration with the CEO, who, in a startup company, is almost always a founder.”
- The larger the board is the harder it will be to manage it and keep it both focused and productive
- Private company boards should be 5 or less
- Send out the board deck at least 48 hours before the meeting
- If you have 3 or more non-founder board members, call board members in advance for a 30–60 minutes 1on1 briefing
- Plan a board dinner the night before, or lunch/dinner right after
Meeting agenda should be
- Big picture summary
- Quick review and discussion of key metrics
- Follow-up items from the last meeting
- Discussion of 2–3 key strategy topics important to the company
The hiring process of the board
I. Write a job spec:
- Experience (Operating experience, Market experience, Functional experience, Involvement with other high-growth companies (optimally as a founder))
- Raw intelligence
- Business and strategic sensibility
- Entrepreneur-friendly orientation
- Respect of investors / VCs
II. Agree on the spec with the key people
III. Create the list of options
III. Spend time getting to know the potential board members
IV. Check personal rapport and attitude.
VI Check alignment of vision
VII. Check reference
Avoid board members with:
- Condescending gray-haired executive
- Micro manager
- People interested in the role for the potential financial reward
- People who simply want to “join a board”
- VC crony
The best board composition changes over time as the company develops and the phase changes.
- JD: Write (1) the job description as much as detailed, (2) the background you’re looking for and (3) traits / skills you don’t look for
- Interview:(1) Ask every candidate the same question, (2) Assign focus areas for each interviewer, e.g., to ask a colleague X to assess logical thinking ability, (3) Sometimes let them make the product
- Post interview: The faster the process the more probability of getting the offer accepted. So do it quickly. (1) Use the consistent scoring system for each position and (2) get reference.
- Post recruiting: (1) Send out the welcome letter to the team members and (2) Send the introduction package/notes
“If this person joined my company, would you join?”
‘The key dynamic is: you’re actually looking for a cofounder who may have a different skill set than the people who are part of the initial “family” or “tribe”. But you’re looking for, essentially, a cofounder.
… (in bad times) Does this person say, “Well, hey, it wasn’t my idea?” that’s a professional manager. A founder goes “No, I know I can make this work. I’m going to make it work. I’m going to take the extra risk, the extra difficulty, the sweat, the criticism. I’m going to play it through.” So those are the traits that you need.’
Key questions to be asked in executive hiring
- Functional area expertise — do they have enough knowledge in the field? Do they understand the major issues and common failure points for their functions? Do people in their organizations respect their opinions and feel they can learn from them?
- Are they right, neither over-hire nor under-hire?
- Ability to build and manage a team in those functional areas: Can they recruit exceptional people? Do they know how to motivate people in their functions?
- Collegiality: Do they play well with other executives who are their peers?Can they put a collegial, mutually supportive environment in place for the company as a whole?
- Traits: Do do they try to do what is right for the company even if it is not in their own best interest? Do they fit your culture?
- Strong communication skills: Are they strong at communication across the company? Can they consistently get other executives and the CEO, on board with team changes, promotions, road maps, goals, etc? Are they able to understand underlying issues and communicate them within their teams? Do they have “cross-functional empathy”?
- Owner mentality: Do they take ownership of their functions and make sure they’re running smoothly and effectively? Do they “own” problems and solve them? Do they understand that they should think like owners?
- Smarts and strategic thinking skills: Do they think strategically and holistically about their functions? Do they think about how their functions can be a competitive advantage for the company? Are they first principles thinkers?
Many companies make mistakes in executive hiring. That’s okay, as long as you learn from them and change things quickly.
Role of COO
- Adding executive bandwidth
- Scaling the company
- Building out the executive team and organizational scaffold
- Taking on the areas founders don’t have time for
- Shaping the culture for the next phase of the company’s life
Criteria of COO
- Maturity and lack of ego
- Chemistry with CEO
- Past experience scaling a company or organization
- Entrepreneurial mindset
- Functional expertise
- Ability to hire
- Someone the CEO can learn from
- Process focus
Definition of the best BD people:
- Smart people with lots of raw horsepower
- Articulate/good communicators
- Creative/Fearless in deal terms
- Able to execute hard things
- Detail oriented
- Structured and can run a deal process
- Part lawyer, being able to pick up
- Able to work well with others across the organizations
- Pragmatic and keep big picture in mind
- Able to understand partner and market needs
- Moral compass
Role of product managers
- Make product strategy and vision
- Own product road map and make prioritization
- Solve problem of the product or its development
- Communication and coordination
Product Executives’ Criteria
- Have the insights and intuition to understand customer needs for a product in a given area
- Ability to prioritize what is more important
- Ability to execute
- Strategic sensibilities
- Top 10% communication skill
- Metrics and data-driven approach
- It is NOT project manager
“Crisp product requirement documents can make a world of difference in driving concise agreement on, and execution of, the product.”
4 types of great product managers
- Business product managers
- Technical PM
- Design PM
- Growth PM
- It’s about pragmatism
- It keeps changing
- Hire executives for the next 12–18 months, not for eternity
Problem of too high valuation
- Follow-on fundraising becomes hard
- Investor mix may shift
- Internal pressure to hit a target valuation could cause bad behavior of the employees
- Employee expectations get too high