How to Scale Your Startup: Part 2 — People
This is part 2 of a 4 part series. You can find the intro post here.
If you recall from the last post, I borrowed the metaphor of the “black box” from Andy Grove’s High Output Management to help us think about scaling.
The black box is comprised of 3 parts — the input, the machine, and the output. If we translate this to how to think about your startup, it goes:
- Input → People
- Machine → Org Structure
- Output → Results
In this post, we’ll focus on the 1st part — the input or people aspect.
Why are people important?
Back to the black box that we’re trying to build — there is the input, the machine, and the output. And like anything, the output is only as good as the input. As they say — shit in, shit out. So it is critically important to make sure that you have or are getting the right people for your company.
To make sure you have the best people, you have to find them, indoctrinate them into your company, and then keep them happy / productive. In other words — recruiting, onboarding, and training.
Recruiting
To have the right people on your team is to first find the right people. Too often I see recruiting treated as a low level job or a one time event. Finding the right people and adding them to your team needs to be a huge focus and an ongoing task for founders & entrepreneurs. If there are only 3 parts to the black box (input, machine, output) then it deserves at least ~30% of your time.
“It took us 6 months to hire the first 2 people at Stripe. The next 6 months after that we hired 3–4 people.
In some cases we were having 3 month long conversations with people just to see if they would be interested in joining. And multiple people at Stripe took several years to hire, 5 people took 3+ years to hire.”
— Patrick Collison, CEO & Co-founder of Stripe
Patrick’s quote below is probably on the extreme side, but it’s a great example of thinking really deeply and being patient in order to find the right people.
An added note — evaluating people is not as simple as classifying them as bad, good, or killer. You have to think across 3 vectors — performance, culture fit, and potential.
Hiring a high performer who is a bad culture fit can be like closing an open wound with a staple gun. You might survive, but it will be painful and certainly a short term fix. The inverse is also true — a low performer but high potential & culture fit may not have immediate impact, but may have tremendous contributions down the road. There’s no magic answer here, you just need to deeply think about each person, how they fit in, and what you’re looking for.
Onboarding
Once you spend all this time identifying, evaluating, and convincing the right people to join the team, you want to make sure that they can actually produce results. So make the transition into your organization as easy as possible. Otherwise you risk organ rejection — a loss of a good person as well as lot of wasted time. This is why onboarding is essential.
The purpose of onboarding is not to get basic company info out of the way and lay out ground rules. It is the first real interaction and impression that someone gets with your company. You never get a second chance at a first impression.
The output is to make sure that your new team member walks away understanding the mindset of your company & how your company works. They should know exactly what the company’s mission is, the values that make up the company, the goals, what is expected of them, how they fit in to the picture, how they interact with others, and what is not tolerable.
An example — you spend a lot of effort recruiting a fantastic person. But once they’re in, the mindset of, “they’re already closed, I’m busy, plus they’re good they’ll know what to do” can seep in. And so you throw them into the deep end and expect them to start performing.
Hopeful at best, and disrespectful at worst. Without proper onboarding, you’re taking a promising new hire and throwing them into battle with no gun or training. You risk them getting confused & going in the wrong direction, wasting a lot of time trying to figure out how ‘the company works’, or the worst case — organ rejection, resulting in them leaving.
And you can’t just talk about your values — you have to live it. If one of your values is to have fun, a really stiff & corporate onboarding presentation will cause you to lose credibility. If your values are clarity, a murky & disorganized onboarding flow will also fail.
At Coupa, our 1st core value was ‘Ensure Customer Success’. Customers have been burned for several years by various enterprise software vendors who sell them expensive software that fails to deliver any material results.
We wanted to prove that we were different. So our main focus was to deliver results no matter what. That didn’t mean bend over backwards — but to identify a shared goal and stop at nothing to get that done.
To indoctrinate new hires to this particular value, everyone spent the first 3 months doing customer support*. This really got people to understand that getting customers successful was not just lip service, but that it was the single highest priority. So at the end of 3 months, they all deeply understood our customers, their problems, and that above all — it was our collective job to make sure that our customers were successful.
Training
“At every order of magnitude — expect every process to break.” — Eric Schmidt
At every startup, everything is breaking all the time. Your deployment process, hiring process, sales funnel, etc. So you are constantly rethinking & rebuilding critical processes. You could even say that at every stage of your company, you are building an entirely new company.
If you have an entirely new company at every stage — that means you have to re-onboard & re-acclimate your entire team to this ‘new company’ every time it happens. So as the company scales & grows up, your people have to scale with it in order for their results to match with the new expectations. This is done through training.
Training is, quite simply, one of the highest-leverage activities a manager can perform.
Consider for a moment the possibility of your putting on a series of 4 lectures for members of your department. Let’s count on 3 hours preparation for each hour of course time — 12 hours of work in total.
Say that you have ten students in your class. Next year they will work a total of about 20,000 hours for your organization. If your training efforts result in a 1% improvement in your subordinates’ performance, you company will gain the equivalent of 200 of work as the result of the expenditure of your 12 hours.
To say it again — training is one of the highest leverage activities that anyone can do. And it’s the founders duty to make sure that people are scaling with the company. So make sure to spend the time thinking about a) constantly leveling up your team functionally and b) indoctrinating & onboarding them to the mindset of the company at the next stage.
To sum up — as a founder / entrepreneur, you need to constantly be thinking about a few things as it relates to people — getting other ones into your company, how to properly indoctrinate them, and how to keep leveling them up at everystage.
In the next post, we’ll talk more about what to do once with your people once they’re in the machine, or how to think about organizational structure.
How To Scale Your Startup Part 1: Intro
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* We stopped doing this at some point. I felt that it was an effective tool while we had it.
