Tips for scaling and managing talent as your startup ‘grows up’

Our last EQT Circles event centred on a topic that plagues the minds of many founders — how do I successfully scale my team as my company grows?

The scaling up period, which can include moments of extreme hypergrowth, is typically experienced after hitting key proof points such as finding product and channel market fit. With each new funding round, a company gets another cash injection to increase key metrics and reach another milestone. However, the period of scaling up that follows funding also requires a lot more resource, which more often than not means hiring more people. And — you’ve guessed it — hiring and managing more people can often feel like more problems. Attracting new best-in-class talent at scale is hard, and managing that brilliant talent is even harder.

For a founder, the journey to scale can be one of the most uncomfortable times running the business due to the seemingly infinite number of team transitions happening at once. But having more people on board also means lots of great things can and will happen to a company attempting to take on the world. My co-panelists, Noor van Boven (Chief People Officer at N26, formally Soundcloud and TomTom) and Axel Bard Bringeus (Operating Partner at EQT Ventures, who took Spotify from eight to 60 markets) have witnessed and managed these growing pains first hand and were able to share some of their war stories and advice for startups going through similar experiences. Here are the three key themes that were discussed:

#1: Hit the gas on talent acquisition, but establish checks and balances.

Maturing high-growth companies usually need buckets of new talent. Your company’s growth depends on your ability to continue to attract more great people. The volume of roles and rate at which they need to appear can take even the most organised companies by surprise. Some of these new hires will be familiar (“we need ten more engineers by Q4”), but you’ll also need a different set of profiles to match your companies new maturity milestones. For example, while you may have made it to this point with a team of generalists, it’s highly likely you’ll now need to start building out separate functions. This requires functional specialists to come into the business and seasoned executives to lead those functions. Such hires are bound to be more expensive and can take longer to join than your early team. And then there’s the issue of quality. As your company becomes a recruiting machine, it’s easy to let the once-very-high bar for quality slip. This can have huge consequences further down the line.

Tips:

• Talk to your investors — Get a headstart when it comes to new executive profiles and ask your investors for benchmarking suggestions (note to VCs: there’s a lot of room for more proactive portfolio talent connections!). Have a few conversations to build up a clearer picture of new profiles at the start of your search and ask for introductions to leading executive search firms. These firms can offer key expertise and help you get a sense of the market for specific roles before you start the hunt. Sometimes this results in the role you think you need changing completely
• Make everyone in the company a talent marketer — You may have built up a great in-house talent team and hired a strong leader to head it up, but treating recruitment as a black box exercise rather than a team effort can lead to a lazy approach to talent and inevitable growth challenges. Companies like Stripe have made recruitment a founder-led company priority which, with the right support from a talent team, can result in a high-yield hiring channel via regular network referrals.
• Keep a true, honest hiring bar — Make sure you have someone acting as a bar-checker during the hiring process. Noor adds “this person doesn’t necessarily have to be senior — it can be anyone in the company who is highly engaged and doesn’t have an advantage to hire the person in front of them”.

#2: Cement the foundation for your international offices with your company values.

Opening an office in a new market is a big, exciting milestone for a company, but can also put a large amount of strain on the business. You have to adapt to having teams, customers and operations in two different places, often separated by great distance. When you expand into a number of markets in a short period of time, the pressure multiplies. Unfortunately, expansion playbooks are often created along the journey — after a lot of trial and error — rather than before you get started. Consequently, launching the first set of international offices can feel like a baptism of fire for the majority of founders.

Tips:

• “Think about and communicate your core values early on”- Axel advises. The success of your international offices, particularly the earlier ones, will hinge on the strength of your home office’s foundations and values. If values, norms and a sense of togetherness are absent in the home office, it will be extremely challenging to set the tone for your new team building up operations abroad.
• Choose your landing team carefully — The first people on the ground in any region have a huge responsibility to continue to grow the company in a new market. Where possible, invite ‘culture-bearers’ who have outperformed in the home office to become founding members of the new offices. For local hires, design a set of anchoring interviewing questions based on company values and understand which are non-negotiable for preserving company culture.
• Document the company’s journey so far — To integrate local hires into the team from the offset, communicate the company’s journey up to now and emphasise the common culture. Company folklore as an expression of culture can be a powerful vehicle to pass on norms, customs and values as the team grows. Build a culture of storytelling amongst the team, re-telling the tales of both past successes and difficult times. Find an authentic medium (examples include: employee fireside chats, photos, yearbooks, movies, named days) to capture the stories from the early days and beyond. Weave this into your onboarding and new office environments.

#3: Dedicate a lot more time to talent management.

Bringing new people onboard is just half the battle for a scaling company. Managing and retaining talent is a constant, ongoing people operation. And it only becomes more complex as teams grow. Periods of rapid growth can result in your company will feeling materially different every six months or so for your employees, requiring constant step changes in their performance. This can be a particularly painful phase for early team members who need to find their place in the ever-changing company matrix.

Tips:

• With transparency comes responsibility — Think hard about the internal levels of transparency as your communication overhead increases, which can pose a threat to efficiency. “More companies should talk about what transparency really means” Noor advises. On access to information she adds “information is only relevant if you have the right context, and in a fast-growing company it’s impossible for every employee to have all the context. With transparency comes responsibility, and as a manager you’re responsible for filtering information for your team”. Create and communicate new forums for the team to ask clarifying questions about company decisions.
• Be open about career progression — Have early, honest conversations about career expectations with your team, prioritising those with the most tenure. Overpromising career progression early on can come back to bite you as you scale. Be proactive about resetting expectations and look to find a new fitting space for team members based on what they’re good at and what the business needs, not solely on what they want. Empathise with the fact that hiring above can be a hard pill to swallow, but talk to the career benefits which will come learning from an incoming leader.
• Know when and how to part ways with employees gracefully — Realising that the people who got the company this far may not be the team to carry it forward to the next chapter can be painful for many founders. This realisation is even more painful for the team member, who is likely to be emotionally connected to the business. Create mature, respectful and celebratory exits for parting employees, and strategically invest in your alumni network.

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Going through the first scale up period is never a smooth ride and it’s wise to expect chaos, painful conversations, and goodbyes. However, by putting your people at the centre of every decision and having proactive conversations, you can make it a little (just a little) less bumpy.

EQT Ventures is a global multi-stage €566m VC fund built by founders and operators who’ve scaled some of Europe’s most successful companies. To attend a future EQT Circles event please email lucy@eqtventures.com.