Know Thy Phase
In their book “Blitzscaling”, Reid Hoffman and Chris Yea outline 5 key phases of a company’s scaleup maturity: Family, Tribe, Village, City, and Nation.
A large company may appear to be just a scaled up startup, but Chris and Reid argue that the phases are notably distinct from one another.
“In the physical sciences, materials often undergo phase changes… ice melts into water; water boils into steam. As a startup scales up, it undergoes a number of such changes. The most obvious, visible, and impactful change to a scaleup is the number of people it employs”
I had assumed that my small company (Karma), with just 4 full-time employees was firmly in the Family phase. But as I learnt more about the characteristics of each phase it became apparent that a company can be (and almost certainly is) in multiple different phases at once.
“It’s also true that the phases of a scaleup don’t move in lockstep… Consider the example of Instagram: When that company was acquired by Facebook for $1 billion, it had reached Phase 5 in User Scale, but was still in Phase 1 in Organizational Scale with just 10 employees, and Phase 1 in Business Scale with no significant revenues”
As I read what Reid and Chris had to say about hiring in the Tribe stage, it occurred to me that Karma had been facing these challenges since its inception.
“In the previous [Family] phase, you pretty much hired all your employees through your personal network. At this point, however, you’ve run out of smart people you know who are available… your team may know a ton of great people, but there are so many interesting projects besides yours that most people are already spoken for.”
When my brother Clyde and I began working on Karma we left behind careers in professional sport and stand up comedy. We’d discovered a problem that we were passionate about solving, but we realised that we needed a co-founder with strong web development experience.
Half a decade prior I’d been a computer scientist and games programmer, but emigrating and changing careers meant that the number of smart, available, and experienced web developers in our network was precisely zero.
But hiring in the Tribe stage is tricky business, especially for inexperienced founders like ourselves.
“One thing that few startups do (unless they have experienced founders) is to have a rigorous hiring process for people they don’t know. You may think you don’t have time to bother with these niceties, but experienced founders know that it’s useful to put in a little bit of time early on to establish a clear and productive process… It’s especially common for startups to underinvest in reference checking… If I had to pick between conducting an interview and conducting a reference check, I’d pick the reference check”
If I’d read and followed the advice in that paragraph 8 months ago, I’d have saved Karma from the biggest mistake in our company’s history. Interestingly, now that Karma has an brilliant tech co-founder and a strong supporting team, our hiring challenges are more consistent with the Family phase.
Understanding the challenges, principles, and strategies associated with each phase of blitzscaling is important. But what is perhaps equally consequential is knowing which of these phases each part of your company is in, and recognising that these phases are in constant flux.
