The one list you should be aware of as a first-time founder
When the weather outside is beautiful, I like to take walks while coaching entrepreneurs. On this particular, cool summer evening, I found myself strolling through an industrial area with a talented first-time founder of an enterprise software company. It was almost nightfall and the streetlamps switched on as we were starting another stroll around the block. Our topic of conversation was the ‘basics of management’ since his young start-up had recently grown from a handful of people to a staff of 18.
The leap from under ten to over ten employees and growing from there can be a challenge. Your job as a founder shifts from only building a product to building a product and an organisation at the same time. On top of that, first-time founders have to learn how to do both of these things concurrently, since they usually haven’t ever done them before.
While we walked past the same deserted parking lot for the fourth time, the founder revealed that he implemented ‘flat hierarchies’ because he never learned how to manage properly. That’s why, to him, having no management at all seemed like the most natural solution. In his start-up, employees didn’t have bosses. That practice turned every little decision into a group discussion that frustrated the entire team. More and more, the employees were becoming unsure of the direction the company was going in. In my experience, employees taking responsibility and ownership for themselves is great, but surely not as a result of lack of management.
The Basics in Startup-Land
Our little walk made me wonder about the general ‘organisational basics’ in a start-up. Not ‘getting the basics right’ in a young, growing organisation can feel like peddling a bike in a gear that’s too low. You peddle and peddle but somehow don’t pick up speed and don’t really know why. It’s exhausting and frustrating. Fixing the basics can be the switch to the right gear. Suddenly, you feel all your energy translate into momentum.
When I was a first-time founder ten years ago, I certainly struggled — having started my company right after university with no real work experience. When we scaled from zero to hundreds of employees over the years, I learned a lot about organisational design. Unfortunately, I learned it by trial and error, which is the worst way to learn. It was slow, painful, and frustrated employees along the way.
Because of youthful ignorance, I wasted a lot of energy peddling in the wrong gear. I wish that I would have had a neat checklist of the most basic systems and processes that I should have implemented…
Checklists for pilots, doctors, and first-time founders
Pilots use checklists to land planes, builders to erect skyscrapers and doctors to execute medical procedures. So, here is a checklist for you, dear first-time founder. A list to scale your organisation to more than a handful of people. In my experience, the earlier you implement these ‘basics,’ the easier (and faster) your organisation will scale.
It’s the right gear for most first-time founders and enables you to translate your energy into actual progress. Start out with these basics and adjust the gear to your personal style once you’ve learned how to ride effectively for a while.
The ‘Organisational Basics List’
People / management
- Every employee has a boss who they report to. A boss has a maximum of 8 direct reports. That’s what I told my friend on our nighttime walk.
- The boss and the employee hold a weekly one-on-one meeting that focuses on the employee’s priorities, progress, unblocking issues, and answering questions. This is the most basic service, the boss has to provide to the employee.
- An organisational chart shows the relations between employees and bosses. It is kept current and is made available to everyone.
- Job descriptions are written down and contain responsibilities, goals, and KPIs. In this way, employees know what others are actually doing.
- For every open position, there is a written scorecard which the applicants are evaluated on. When you don’t know precisely what you’re looking for, it will be very hard to hire the perfect fit.
- Make your funnel of incoming applications as wide as possible to have a broad base of options. Aim for 50–100 (or even more) applicants per open position. Avoid situations in which you have to choose one employee out of less than ten applicants. Options and comparison are good.
- Set up a structured interview process. That means, that you ask the different candidates the same questions and try to assign scores based on your scorecard. A good book on this topic is ‘The Who Method’.
- The interview process should involve more than one person to reduce individual biases based on sympathy. The ideal is 4–6 interviewers.
- Before hiring a candidate, call up and check at least 2–3 references (former bosses, former co-workers, etc.).
- When in doubt, don’t hire. ‘Maybe’ means ‘no’ in hiring. This is one of the mistakes I did, time and time again. Shame on me! My initial doubts about candidates almost always got worse, not better over time.
- ‘Hire for attitude and train for skill.’ In the early days of a start-up, drive, intelligence, passion, curiosity, and cultural suitability are more important than specific job experience. This will change once the organisation grows but it’s a good formula for the first 10–20 hires.
- Hiring is a founder’s job. Make recruiting one of your top priorities and allocate enough time in your calendar! Don’t hire people that you haven’t personally interviewed (at least for the first 100 people).
- Remember to ‘hire slow and fire fast’. In almost all situations where I terminated someone, I wish that I would have acted sooner. At least in my experience, things usually didn’t get much better with more time.
- Before terminating anyone, make sure that they receive an explicit warning and enough time to improve their performance.
- After firing someone, the rest of the team is informed about the decision and if possible, the reasons behind it. Usually, transparency is a good thing here.
Training & onboarding
- Every new employee receives a proper onboarding that usually lasts between a couple of days and 1–2 weeks. The onboarding is based on written material that is kept up to date. The boss is responsible for the onboarding.
- New, first-time managers receive 2–10 days of training to learn what their new job is about. Implementing such a program with an excellent external trainer was a game-changer for us!
- Remember that if you promote a senior employee to a managerial position for the first time, they are a junior employee again in their new position. Adjust your management of them accordingly.
- Employees have different levels of salaries which are not disclosed to everyone.
- Don’t pay everyone the same because you think it’s fair. It’s not.
- Salaries are adjusted in regular intervals (for example every six months) and preferably not ‘on-demand.’
Objectives and key results (OKRs)
- Objective and key results for the company as well as key employees are determined in 2–3-day quarterly offsite workshops with the founder/management team.
- Progress on OKRs is being tracked weekly in the one-on-one meeting between bosses and employees as well as in the founder meetings. Holding people responsible and focusing on OKR progress as a weekly habit has helped us tremendously in gettings things done.
- ‘Inspect what you expect’. Make it a founder’s and manager’s job to check whether people are really working on the essential things (OKRs) or are just busying themselves with day-to-day tasks. It’s so easy to get lost in the ‘urgent’ and therefore skip the ‘important’.
- Make sure every product has a product manager. It can be the founder in the beginning, but it’s essential to see it as a separate role.
- There is a product roadmap for the next 3–6 months, which is updated regularly based on new findings. All employees should know where ‘the company is going’ product-wise.
- Establish a regular feedback process to talk to actual customers/users and do one-on-one customer research (at least the founder, product managers, and possibly developers). Don’t develop your product reclusively in an ivory tower or rely on quantitative market research.
- The founder team meets weekly to discuss priorities, important KPIs, progress on OKRs, challenges, recruiting/people topics, and new findings.
- Every boss conducts a weekly staff meeting with their team to focus on the team's priorities, OKR progress, current issues/blockers, and updates.
- There is a regular (somewhere between weekly and monthly) all-hands meeting to inform everyone about progress, priorities, and ongoing projects.
- Every meeting has an agenda. Tasks are being recorded and followed upon. Things are written down! Don’t waste a week of execution because you saved the five minutes it would take to write down the outcome of a meeting.
- Create alignment by clearly formulating the company’s strategy in a written statement which is available to everyone.
- The strategy statement should consist of 1) a diagnosis, 2) a guiding policy, and 3) coherent action steps. Every employee should be able to recount it by heart. The book ‘Good Strategy, Bad Strategy’ is a great resource on this.
- There is a regular strategy review process (usually in the quarterly founder’s offsite).
- Investors receive monthly updates with the most important KPIs and a short, written account about progress/challenges. These updates are a good opportunity for the founder to reflect on the last 30 days and should be done by the founder in person. Bad news to investors is delivered professionally.
- Board/investor meetings are held at least quarterly and are mainly used to tap into your investors’ experiences and network to make progress on your goals (instead of just reporting numbers). Again, this is another good opportunity for reflection.
There you have it. A list to make sure you peddle your bike right and turn your energy into actual momentum. Don’t worry if you don’t score on every point yet. I probably had less than 30% of the list implemented in my first couple of years. However, if I had to start all over again, I’d make sure to apply it correctly from the beginning. Once it’s done right, it will save you a lot of time and sweat along the way. I wish you a happy, effective bike ride!