Letting Demand Pull You Into Scaling: How to Know When To Go From A Family To A Tribe

They say that if you don’t know if you have product-market fit, you don’t have it. Once you know you have it, however, the question at hand becomes “when and how quickly do we scale?”

When going from a family — roughly 1 to 10 employees — to a tribe — roughly 10 to 100 employees — you are essentially going from one team that does everything to two teams: team #1 focuses on growth and team #2 focuses on helping team #1 do their job.

Founders start hiring more specialized people to take some work off of their plate. You go from wearing tons of hats to focusing on a few. You bring people onboard that thrive in an environment that is well below Dunbar’s number, hoping that some of them will quickly evolve into strong team members that can balance out the inevitable external leadership and executives that will soon come, if all goes as planned.

Instead of core functions like product, engineering and sales, you will start bringing on team members who specialize in finance, HR and customer service. The goal of these teams is to keep the scaling team focused by removing distractions. The same thing happens on a departmental level, also. For example, generalist salespeople go from sourcing their own deals and managing their own accounts to getting handed warm, vetted opportunities by sales development representatives and handing closed deals off to customer success managers.

This scaling, however, only magnifies the underlying state of affairs, good or bad. The only thing worse than shitty execution is shitty execution scaling at an enormous rate. This rapid growth needs to be carefully calculated. It’s crucial to grow for the right reasons and backup your growth strategy with real data that supports your trajectory. While each scenario is different, one of the best things to closely monitor when deciding how fast to scale is demand.

Demand can come in many forms. For PayPal, it was a consistent, daily growth in transaction volume that forced them to scale or fold under the pressure of their own success. For B2B SaaS startups, it’s typically lead volume, or what Jason Lemkin refers to as lead velocity rate. You want scenarios where demand is pulling you to scale rather than your gut, investors or ambitions pushing you to do so.

Once you sense the demand, you can’t simply flip the hiring switch and go on a recruiting frenzy. Instead, let the demand be your north star. Do your best to toe the line of hiring slowly and staying ahead of demand, while always reminding yourself that hiring is the means, not the end.

Picking a number like a million monthly active users or $10 million in annual recurring revenue and basing your hiring and growth strategy off of that is an easy trap to fall into. Take your eye off demand for even a moment or two and you may suddenly find yourself with a large structure being built atop a shaky foundation. As good as it may feel to judge your success on a vanity metric like your employee growth, do the smart thing and let demand pull you into scaling.