Every entrepreneur knows starting a business is very hard. However, what many entrepreneurs find is that growing a business is even harder.
What I’ve learned from my 20 years working inside startups and in venture capital is that founders typically face a common set of challenges as their early stage company shifts into growth mode.
Given my experience, here are tips for how founders can proactively manage and mitigate these classic “growing pains.”
Shift From Optimizing Around Innovation To Optimizing For Repeatability
Early stage startups are designed to optimize for innovation. This is reflected in the organizational structure that is very flat; the culture, which is chaotic with a desire to throw lots of things at the wall to see what sticks; and the early employees who are insanely smart and like to work on hard problems.
When a startup begins to grow, a founder must find ways to shift the balance away from focusing exclusively on innovation to thinking about repeatability and scalability.
What does this involve? First, founders must allocate portions of engineering and product development on features that help improve on-boarding, implementation, and customer training versus just on new, cool innovative capabilities. Second, companies have to design training processes that allow large numbers of new employees to get up to speed quickly without relying on direct apprenticeship from the founder. Third, at this stage, it’s important to implement standard metrics and reporting across the company so that employees who don’t interact with the founder day-to-day can clearly understand if they are making progress.
Begin Building A Leadership Team
Most founders wait too long to hire and build a senior leadership team. As a startup grows and more people are hired, there is a need to add a layer of management talent. One of the struggles most founders face is how to think about building that team. Do you promote the early employees? Many of them have added tremendous value to the startup, but are not necessarily qualified to be a manager. Or do you bring in managers from the outside who have experience, but may not mesh with the startup culture and may demotivate the early superstars who are now not working directly for the founder. Given this struggle, many founders simply wait too long before making these hard decisions and this leads to growing pains and scaling challenges.
My recommendation for founders is to identify those early employees who have an aptitude and desire to be managers. Founders should find ways to give these employees more responsibility and create some informal roles. An example could be a “lead engineer.” In addition, founders inevitably need to leverage a mix of external and internal individuals to build the leadership team, so begin networking early-on to meet future execs that could be your VP of Sales, VP of Engineering or VP of Marketing.
Define And Maintain The Company Culture
The foundation of any great startup is the culture that is reflected in the company values and in the people who embody those values. One of the most common growing pains for a startup is maintaining that culture as the company scales. I often hear founders and early employees longing for the “early days” when the startup consisted of a small, close-knit team that was personally vetted and hired by the founder.
The key to scaling the company is thinking through ways the culture and hiring practices can scale as the company gets larger. It’s important for founders to make sure hiring processes and assessments of “culture fit” are documented with clear frameworks such that folks other than the founder can accurately make these assessments. In addition, it’s critical for the founders to welcome later employees and intentionally build relationships with them such that there isn’t a dynamic where the “old timers” have more voice inside the company. Lastly, it is key for a founder to look at the cultural practices and communication mechanisms inside the company and proactively abandon some of them that may have been critical parts of the fabric in the early days but many not scale as the size and the makeup of the company changes.
All startups want to grow and with growth will come some pain. But many of these growing pains can be effectively managed with some advance planning and proactive management. And by mitigating some of these early on, a founder can more aggressively hit the gas pedal and accelerate the growth of their company.