The Management Team - While Building Usage

So you've built and launched your product. It is well received. You've acheived "product market fit" and it is time to get more users or customers. You've graduated from the "building product" stage and have entered the "building usage" phase. What does this mean for your team?

Well first and foremost, it means you are going to have start building your team. You will need more engineers because you will have to scale the product/service and you will need to continue to build it out, make it available on more devices, and listen to and adapt to the needs of the market. You will need to make sure your product team grows in lockstep with your engineering team and the demands of your users. You will need more customer support/community team members because more users means more users you must engage with and support. You will need to think about a marketing person because acquiring more users is called marketing. You will need to think about business development because you will want to talk with other companies for distribution and for product/service integration. And you may need to hire a sales team if your product has an enterprise/SAAS focus. Finally, you might think about staffing business operations/HR/finance/legal which is probably consuming a fair bit of your time.

The one/two/three/four/or five person team that got your product to market and achieved product market fit is going to grow to at least double that and you may find yourself with upwards of twenty people by the time you are moving out of the "building usage" phase.

Your first management issue is likely to be in engineering because that is where most companies of this stage have the vast majority of their headcount. Your technical co-founder or lead engineer will find themselves managing more than coding. Managing engineering means quite a few things. It means recruiting more engineers. This is a huge time sink but it has to be done. It means retaining engineers. And it occasionally means terminating engineers. But more than building and managing headcount, managing engineers mean making sure the right people are working on the right things, it means making sure the teams are performing well, it means resolving roadblocks. It means creating the right environment for your engineers to be successful.

And many technical co-founders and lead engineers aren't the kind of people who enjoy managing. They would rather be building the product than building the team. You have a few options at this point. You can help your lead engineer become a good manager. I strongly suggest that because everyone can and should become better at managing people. Even if your lead engineer doesn't become your VP Engineering in the long run, this will have been a good investment. But you should also be actively discussing the long term management roadmap in engineering with your lead engineer and if it makes sense, you may have to bring in a VP Engineering who is a great manager and move your technical co-founder or lead engineer into a more technical role. That is often the CTO role.

The other management challenge at this stage is likely to be your own. If you go back to that second paragraph, you will see that many of the hires that are made in the "building usage" stage are going to report directly to the founder/CEO. The additional product hires may report to you because it is likely that you are running product as well. The community team may report to you. And who is leading that team? The business development person, the marketing person, the admin/finance/HR/legal person, and probably all the sales people are likely reporting to you. Have you ever had ten or twelve reports? It is not fun.

A founder/CEO in a management crisis at this stage of the company is a very common thing. In some ways it is unavoidable. None of the teams, other than possibly engineering, is large enough to have its own manager. And so the founder/CEO is mangaing the rest of the business. The best thing you can do in this situation is find other members of the team who have management talent or inclination and invest in their ability to help you manage the team. These is your bench so invest in it and let it help you. During this phase you will find your leaders for the next phase. Just because you have a flat structure and a lean organization doesn't mean you can't be investing in management.

Investing in management means building communication systems, business processes, feedback, and routines that let you scale the business and team as efficiently as possible. I strongly suggest that founder/CEOs at the "building usage" stage start working with coaches. CEO coaches can help you build your own management skills and can help you think about how to build management skills and processes on your team as well. If you have talented managers on your team that you want to invest in, offer them coaches as well.

The "building product" stage is all about individual contributors. And the "building usage" stage continues to be largely about individual contributors. But management starts to creep into the equation at this point. Strong individual contributors are often not natural managers. Some can make the transition. Some can't. And some may not even want to try. This is a very difficult and painful process and a huge management challenge for the founder/CEO.

Next week we will talk about the "building the company" phase when management starts taking a front seat to everything else.

#MBA Mondays

Comments (Archived):

  1. Rohan

    Mark Suster had a post about who to hire at this stage (my interpretation as he spoke of it in terms of funding..)An Office Manager – http://www.theventurealley…. 

    1. K_Berger

      Mark’s post was at a stage earlier than the stage we are discussing here.  I think his point was get an office manager who can take care of all of the little (or medium) stuff competently to let the top guys focus on what needs to be done.Management is not something to be avoided or handed off.  It is important work, can make a real difference in your company, and can allow you to have a true, meaningful impact on the careers and lives of your employees.  You need to find other people to help you manage, which also helps grow them, but not because it is busy work that must be taken off your plate.

  2. Fernando Gutierrez

    How many direct reports do you think is ok for the CEO to have before introducing someone in the middle?

    1. fredwilson

      there is no right number. but north of ten is certainly an issue.

      1. JamesHRH

        When you consider that in mature companies, 7 is a max limit, yes, north of 10 is an issue!

        1. fredwilson

          this is where my expertise breaks downbring on the guest posts!

    2. jason wright

      Reports – frequency and length?Written and/ or f2f? 1-2-1 and/ or group? 

      1. Fernando Gutierrez

        I wasn’t thinking on any type in particular, just an open question to discuss about it.

  3. Danny

    One of the strongest ways to lead is lead by example.  When you are waking up at 5am and having well thought blog posts out by 6am to a community of over 30,000 daily visitors is leading by example.  On the other hand when you as CEO have your employees come in at 9am and you come in at 10am, you are still setting an example albeit a different one than the Fred Wilson example: 

  4. William Mougayar

    For someone who hasn’t run a startup, this is a pretty accurate and detailed description of what actually happens. That 2nd paragraph is the playbook.The thing is that every time you add someone whether it’s an individual contributor, manager or jack-of-many-trades, you disrupt the existing system that was in place, and you have to constantly re-jig responsibilities. My only other advice is to never let the process get in the way of getting things done. “Process engineering” or re-engineering is for big companies that have lots of management layers. It shouldn’t even be in the startup lexicon. Just keep doing it, and adjust it along the way. If you have to build/document a business process, keep it REALLY REALLY simple. #fs

    1. Johan J.

      I realise that many times processes add fluf, no content. But processes should be about “good practices in getting things done”. Especially for big companies, who are under a lot more scrutiny from external parties, which is a business opportunity for everyone who can stay under the radar. South west airlines anyone?Fred mentioned before there are three parties in a startup: Founder with ideas, fixer who goes for getting things done, and finally a processman who helps scaling. Each come in at different time, and when this team is complete they will always try to work out one of the others while collaborating with the other. It’s the task of a CEO to juggle these interests, because each brings something very valuable to the table, but can’t succeed without the other. All part of teamwork, exactly the phase this post is about ;)#fs

      1. fredwilson


        1. Donna Brewington White

          @kidmercury:disqus  Fred’s comment reminds me of a question I had — what if we want to suggest someone’s comment be transported to fredsquare? Is there a way to do this — or signal this?Also, if the comment is edited and the hashtag added during the edit, will it transport over?  For instance, if you try to add someone’s disqus name to a comment during an edit, it doesn’t “take” unless you know the right syntax to use to do so manually.  Can the hashtag be used outside of disqus — such as Twitter or Tumblr?

          1. fredwilson

            you have to ask kid about that. he designed and built fredsquare.

          2. Donna Brewington White

            I was trying to summon @kidmercury:disqus  with that comment or at least get his attention.  Just happened to attach it to your comment because it was an example of what I meant.  

      2. Mark Essel

        In the Google triad, who would fill each role in your opinion?Eric Shmidt-> processman who helps scaleLarry Page/Sergey Brin-> founders with ideas/fixers who get things done

        1. Aaron Klein

          Schmidt was a mix of operator and processPage/Brin are both visionaries

      3. anne weiler

        “process person” to be more inclusive. I assume this person doesn’t have to be male. 😉

        1. Johan J.

          You  are absolutely right, i was more worrying if it was actually fred or some other source i’ve read this 🙂

    2. Modify Watches

      “My only other advice is to never let the process get in the way of getting things done”…Thank You!!!

      1. William Mougayar

        I once held the title of “Business Process Re-engineering Manager” at Hewlett-Packard- the longest title I ever had. And it involved analyzing and mapping processes that WERE getting in the way of getting things done.- posted via

    3. Anne Libby

      The way I like to think about where process is useful:  when there are multi-step operations you need to do repeatedly, and correctly, that you don’t want to re-learn or invent every day.   At home, it would be hideous if I had to learn to make coffee each morning.  At work, there are some functions, like bringing a new hire on board, where little bit of process makes things less painful for all concerned. 

    4. Mihran Papazian

      Hey William, constructive comment. We are at the exact stage described in the above post. But we are in China. And this country is super process oriented and the cultural way of management wants formal things to be more respected by employees/people in general. A super detail process for everything, many departments, many one-task people etc… so for every new peep i’m so feeling this challenge between adapting Western/Chinese management style and not slowing up processes. Super hard process here, i can details much further but anyway i’d rather focus on building my team too 🙂

      1. William Mougayar

        Thanks for your comment & I’m aware of the process orientation in the Chinese business culture. My point is about not applying it to a startup because it stifles innovation & creativity. Nonetheless, best of luck with your venture & looking forward to your success. – posted via

  5. testtest

    “You will need to think about a marketing person because acquiring more users is called marketing”liking that, fred.also, i’d say keeping users as well. marketing is about relationships

    1. fredwilson

      yes indeedthis community has taught me a lot about marketing!

      1. testtest

        you’d be a good marketeer; you’re a splendid raconteur

        1. awaldstein

          Good is not a strong enough term. Fred gets community and brand and market drivers as core to his DNA. Regardless of what he says;)

    2. William Mougayar

      I liked that too when I saw it! Marketing creates the “pull” that you need to get a lot of users.

      1. testtest

        top luxury brands create “pull” in spades. if you want to know how to create wanton desire they’re good to observe.what’s the emotional desire behind them? how can that be replicated online in a different form? etc are interesting questions.

        1. William Mougayar

          Yes Great analogy. I think Path has that magical aura/pull about it. I want to emulate what the top luxury brands do to create pull but I have a much smaller budget, and my celebrity users are the likes of @fredwilson:twitter  @bfeld:twitter @jeff:twitter @howardlindzon:twitter  et al. – posted via Engagio

          1. testtest

            people love celebs. i used to drive traffic from facebook pages to blogs using the celebrity angle. works better then you would think, but not quite well enough for meaningful volumepersonally, i’d build a story around how socially savvy people use engagio. the idea is inherently viral. the tool that makes you cool. you’re “with it”, know the hot new sites people visit, and never miss a beat.

        2. JamesHRH

          Most luxury brand communications that focus on emotional positioning fail.Brand = attribute. Attribute creates emotion.When major brands lose focus on their core attribute, they lose focus on their core customer and, usually, bad things happen.

          1. testtest

            have you an got an example please james?

          2. JamesHRH

            I don’t have the inventory of examples that I used to – I don’t see as many ads and it is not as much of a work requirement to be up to date on the market.I can tell you that the recent Porshce campaign, where they show a 911 and call it a school bus and a snowmobile or whatever (intended to highlight the car as either practical or sensible) is bizarre.Porsche is German engineering focused on racing style performance (Benz is German engineering focused on being wealthy, BMW is German engineering focused on driving not racing, Audi is a BMW for less money, etc.)I have a ocular / plastics surgeon friend who is into Porsche. He may drive his kids to school in the 911, but that is not why he owns it.Porsche’s problem is that they do not invest in racing anymore, in areas where the consumer can understand that they are leading racing. So, they cannot market their core attribute properly.

          3. testtest

            thanks, i see what you mean.i read a similar example in the book Cashvertising. if you haven’t read it, you must! it borders on giving you evil powers when advertising.  

          4. LE

            @jameshrh:disqus Porsche’s new campaign is “Porsche Everyday”. idea is simply to show that you can use the car to drive your kids to school. The 911 has rear seats (cayman and boxster don’t) and those 911 rear seats only fit children. I recently purchased a 911. I didn’t even know that until I took delivery and tried to sit in the back seats.  I assumed it fit adults.Porsche is one of those brands that has such deep desire and loyalty that you are willing to make all sorts of compromises to own one and reexamine why you thought you needed a SUV or a sedan. For me personally it doesn’t have anything to do with racing and I would suspect that is the case with the majority of buyers.  

  6. abhic

    Thank you for painting this picture with such detail. I am yet to cross this bridge, in earnest, but I believe that Jim Clark’s advice is pertinent here – Never lose focus on what your customers (or users) really want. It is sometimes seductive to put in people between the founders & users/customers for management reasons. This shouldn’t’ be delegated (or outsourced) when the product is yet to form fully.

  7. kpak

    Great advice! Any suggestions on how to find good CEO coaches? And is getting good coaching remotely a possibility when there is no local alternative? 

    1. fredwilson

      remote can work. but i prefer face to face. i can make a few suggestions for you. email me via the contact link at the bottom of the AVC blog

    2. William Mougayar

      @jerrycolona:twitter is the one.

      1. Brad

        What dies Jerry do?

          1. Shawn Cohen

            I wish @jerrycolonna would blog more often:) #fs

          2. fredwilson

            me too. he’s coaching a lot of people though. and that is time consuming. and if you caught his comment about his exercise regimen, you’ll see that he invests a fair bit of time in himself too, which is something he advises all of his clients to do as well

        1. fredwilson

          he has a coach

          1. William Mougayar

            Are you 2 competing on funny spelling errors 🙂 ? dies Jerry vs. does Jerryhas a coach vs. is a coach

          2. fredwilson

            i interpreted it as “does jerry”and so i replied “he has a coach”

          3. William Mougayar

            that was funny to me.- posted via

    3. kenberger

      exc question. I’ve coached a number of startups over the years and really can’t think of many people willing, able, and incentivized to do this. I shrug when I’m asked this question, so far.I’m suddenly thinking of the Woody Allen line:”Those who can’t do, teach. Those who can’t teach, teach gym.”

  8. Mark Essel

    Know your team and their individual aspirations (certainly not everyone wants to manage), and know yourself. Businesses may scale, but people can only be stretched so thin before something snaps.I appreciate this message because it speaks to the pulse of a transforming business, and how integral communication and coaching can be along the road to becoming “real”.#fs

    1. fredwilson

      i love the #fs tag!

      1. William Mougayar

        Hey @kidmercury:twitter . Maybe any comment that gets more than 10 Likes or some threshold goes straight into Fredsquare? Just a thought.

        1. Ed Freyfogle

          Agree, agree, agree. The simpler the dynamics of the game, the better.

        2. Mark Essel

          Damn good idea.

          1. Donna Brewington White

            Couldn’t have said it better.

        3. kenberger

          I’ve been nagging forever to have a “BoAVC” (best of avc) flag option for posts. disqus could provide this to all blogs it tenders. Maybe FS swoops in and provides this functionality in meantime.

        4. kidmercury

          glad to see people using the tag! i’ll merge all the #fs tagged comments for each of fred’s post into a single thread that corresponds to fred’s blog post. i did want to do something like pull in X number of likes, but i don’t have the technical chops for it……if we can get that data into RSS feed format, i can definitely import it — i agree it is the way to go.  

          1. Dave W Baldwin

            Think establishing bar for number of replies would be better than likes.  Of course that may mean disqus would need to expand some since there are still some who don’t realize replying via your email avoids the issue of ending string of replies on AVC.

          2. William Mougayar

            Have you thought about working with the Disqus API? – posted via

      2. LE

        An idea I’ve been kicking around is “tellceo”. Essentially how does an end user of a product communicate with the right decision maker an idea that they feel would be helpful to the product or service the company is offering. You see that happening with people giving @disqus feature requests here among other things. Not a complaints forum. A features or request forum. A twitter for ideas or helpful thoughts. Take #fs. How is a person who didn’t read the @kidmercury:disqus  guest post supposed to know what that means?  Or someone who starts reading next week or next month? They won’t.  Or that there is an avc group on linkedin?So my #tellceo would be there should be a faq on this blog. Or better @disqus should enable rollovers to define things for those not in the know. Or a @disqus  popup icon on each and every post that offers helpful information.

        1. Donna Brewington White

          Something to this, I think.

        2. fredwilson

          such a great ideai’m not great at adding new features to this blog thoughmost have come from the community lately

          1. LE

            “not great at adding new features to this blog”There is a blindness that people get when they are to familiar with something. Same reason someone would notice something in your neighborhood or apartment that you wouldn’t.That’s why it’s so important to have the thoughts, ideas, and reactions of people less familiar with your product or service.  And also a reason it’s important to have people of less intelligence review your product, ux etc.  I used to show marketing pieces to “children” to see if they could get the gist of what we were selling. If the test failed we changed the piece.

  9. Danny

    Fred you inspired me to write this post which is something I have understood for a long time, and I would like to hear your thoughts: The path to Eternal Greatness:…

    1. fredwilson

      thanks. i will check it out

  10. 2joshis

    “managing engineers mean making sure the right people are working on the right things”I think this is true not just for engineering but other functions as well, during the early fluid stage better to have organization tailored around available people, rather than fixing an organization and then pigeon holing people in.

  11. awaldstein

    To me, marketing is an applied perspective on building your community and customer base.It’s important to think about the skills needed as managing community and building the sales funnel are connected but not the same.Finding marketing people who bridge the intersection of traditional skills and a bottoms-up, market-first net-based world is key. The answer usually ends up defining a small team rather than one individual.#fs

    1. William Mougayar

      In my book, EVERY employee is a marketer…just as EVERY employee is a sales person! Each in their own way, and with their own messages. #fs

      1. awaldstein

        Yes…perfectly true as an ideal. And true to some degree across all of the people in the company.But marketing is not simply the ability to be communicate clearly.

        1. William Mougayar

          Agreed…that’s why I said “in their own way”…I meant they have to be good communicators to create that extra pull, not meant to be doing the full cycle of marketing or closing. I think you and I agree on that.- posted via

      2. Alex L

        The challenge, at least from an engineer’s perspective, is not having engineers actually be responsible for marketing.  Engineers have a ramp-up period, where once overcome, their productivity skyrockets.  And if that ramp-up needs to be overcome throughout the day because of marketing/sales responsibilities, their productivity will take a huge hit.  Every meeting or shared responsibility is an interruption from building product, which is much more than just an hour here and there.That said, in a small team everyone needs to contribute to the marketing effort.  Everyone needs to put their thoughts into the sales deck, the website, the blog post they’re writing.  Ideally, though, those non-engineering times are blocked together throughout the week, to minimize the ramp-up period.

        1. Mark Essel

          This conversation thread is excellent, thanks @awaldstein:disqus @wmoug:disqus for kicking it up and @alexlod:disqus for calling attention to the “hidden” cost to ramp up time for the product team.

      3. JamesHRH

        Ambitious. You need to have a short list of sales questions & objection answers to accomplish what you are suggesting ( & it will still take tons of repetition).Same with marketing: 2 or 3 core positioning statements drilled into people is likely your best approach.

        1. leigh

          disagree w/ 2 or 3 positioning statements –most big corps have these silly painted signs with their values or core positioning painted all over their building floors — doesn’t mean anything.They have to create culture that employees feel part of and want to help build over time 

          1. JamesHRH

            Leigh – argh, the vagaries of posting without a full coffee quota. i don’t espouse ‘positioning stmts’ but, 2 or 3 things to say about the company’s position in the market.’We are focused on ……’ etc. 

      4. Donna Brewington White

        And every employee is a recruiter.Everyone MUST know the story.  It needs to be ingrained.  Story is at the heart of marketing, sales and recruiting.#fs

    2. leigh

      customer driven to community driven 🙂

      1. William Mougayar

        I like that statement. It says a lot. It used to be done as event, ie let’s bring out customers at a Community event. Now, it’s continuous online. – posted via

        1. awaldstein

          Actually it can go further. Now the distinction between between off and online is blurred and vanishing fast. – posted via

          1. William Mougayar

            True. In our focus online, we often forget the physical world. Making them hum together is ideal. – posted via

  12. andyswan

    This is a REALLY good roadmap.   Two thoughts:1.  Stay as flat as you can for as long as you can.  The more talented your talent, the less they need to be managed.  The more self-motivated, small, and clear-of-vision the teams are, the less they need to be managed.  2.  The best entrepreneur I ever worked with went to every trade show and responded to every client email he got all the way to a $600m buyout. Don’t “manage” your way into being disconnected from clients or product….they ARE your ship.Oh…and your core team….they’re “made men”.  If they want someone on the team gone…no questions asked…they’re gone the next day.  There’s no room for couples counseling in your startup.#fs

    1. awaldstein

      So true on #1. Best team I ever had never needed to be managed only pointed in the right direction.

    2. Brandon Marker

      Great point on #1

    3. anne weiler

      Can “made women” also be on the core team? 😉

      1. andyswan

        Of course just a mob reference haha

        1. PhilipSugar

          That was my favorite part about your comment.

    4. Donna Brewington White

      And this, Andy, may lead to some of the best advice on startup hiring: finding people who are self-motivated, clear-of-vision and have demonstrated the ability to work successfully with autonomy.  #fs

  13. WinkieBoy

    We are just transitioning from the “building product” stage to the “building usage” phase…. just in time Fred. Thanks!

  14. Kasi Viswanathan Agilandam

    Apart from organic growth issues … the adrenaline also starts changing the way you look at your product. It is the adolescent period of the start up … you find every other services/product matches with you as well as compete with you as well as compliment you and you want to date with every one on the campus and have as much user as you want …starting to mis-focus, loose direction, loose control because of the testosterone secretion(the smell of the success from the distance).This is the stage where you ought to “Stay focused as a LASER and have the vision as the SUN-light”.

    1. fredwilson


  15. Alex L

    This post is spot on.  I started at Cloudera as an intern the day the company was founded, and was hired full time as the third employee.  Their growth looked exactly like this, and so did their challenges.The biggest pain point, in addition to the Mike, the CEO, having so many reports, was having engineers act as both a manager, with direct reports, and as an engineer, with lots of product responsibilities.  These dual manager/engineer leaders ended up having two full time jobs, which usually made them fall short in one or both of the jobs.  They’d either do one job well and the other job poorly, or they’d do both jobs poorly.  And I observed all of them become extremely stressed and annoyed with the tug-of-war going on in their priorities.  However, I don’t really think this pain is avoidable, and I think the Cloudera guys grew the team flawlessly.  Eventually an engineering team needs to hire middle managers, which unavoidably changes the culture and dynamic of the team.  And until they hire middle managers other people will need to step up to the plate.Lastly, Cloudera is an enterprise software company, which means that in the early days all the founders, in addition to having their responsibilities and reports, needed to do tons of sales.  Tons of sales.  And engineers, who needed to be building product, needed to be pulled into sales calls and onsite visits.  This spread the engineering team even thinner, causing the same stress and challenge.  Again, an unavoidable growing pain when you don’t have a technical sales team.Anyway, great post, Fred.  Thanks for sharing.

    1. fredwilson

      great point about the founder/CEO needing to go on sales calls

      1. PhilipSugar

        Never “outsource” that.

  16. Brad

    With our product getting ready to launch, your post was just in time.

  17. Trish Burgess-Curran

    I absolutely love the focus on continued learning and advancement for the whole team, from individual contributors to the CEO/President. On the one hand, building loyalty and investing in your best people is so important!  Given that only a few companies (large or small) are good and consistent at investing in their people, it will be a great advantage when competing for talent! On the other hand, having a CEO/President that reaches out for help in the shape of mentoring and counseling is also a way of leading by example.

    1. fredwilson

      you are going to love matt blumberg’s guest post which is coming in two weeks

  18. laurie kalmanson

    building a product vs building a companyit’s a hard day when the ceo/founders tell the second third and fourth waves of hires that a layer of management will now stand between themxlent points also re founder talents != managementsmart companies have a path to promotion that includes people becoming experts/mentors/teachers in what they are good at, not just promoting to the level where they don’t do that anymore because they have become paper pushersnewspapers used to do that badly: reporters advanced by becoming editors and managers, but the talents and skills are not the same.

    1. fredwilson

      yupand even harder if some of those hires wanted to be in that layer of management

      1. laurie kalmanson

        yup. and then the next thing happens.ot: interesting stat here: vanishingly small percentage of millennials are in old school big corps; i think that’s less by choice and more because there just aren’t many entry level jobs there — so people are inventing their own ways and signing onto things that are new. link:…while this creativity is awesome and great for those who can, in places where there’s critical mass for those things to happen (and virtual tools can make that possible in lots of places) the future for people who used to be able to make a living by lifting things and carrying them and putting them someplace else doesn’t look good. and those people still need jobs.

  19. JamesHRH

    There must be 12 Golden Rules here ( I will bang out 6 ):- individual contributors are critical early but a headache if you succeed- engineers who can manage are rare- leaning into everyone to be better with people, even if long term they are not managers- short term overload on CEO a requirement- prepare people to be ‘hired on top of’Terrific post just crammed full of experience.

    1. fredwilson

      blog post cliff notesgenius

    2. karen_e

      Corollary to a couple of the above rules: For those whom you can’t afford coaching, purchase ye a copy of Emotional Intelligence 2.0?

      1. JamesHRH

        I am on you today like Tim Tebow takes a knee!I would recommend an Enneagram book or an outside offsite. A little flash of personal self awareness plus the insight that other people are not exactly like them usually assist technical people a lot!

  20. John Best

    Great post. Growing pains can be pretty divisive.Organic growth is all very well, but even weeds grow organically. Without vision and steering, there is the danger of stunting growth and development due to the emerging management-skills gap.I completely agree about coaching a CEO. Leaders aren’t necessarily managers and vice-versa. Working with CEOs (and indeed as you point out founders as department cornerstones) to develop management skills, or to recognise where to add a layer of management can be crucial during building usage for the long-term.

  21. Miljenko Hatlak

    This is excellent description of one of the most crucial stages in growing up your company.In a product build up phase you still have a chance to change your strategy, to pivot your product and to postpone some steps you are about to take in building product usage stage.It involves introducing bunch of new people into your organization that as a consequence  brings noise into your small but presumably organized team.Founders, whether they want it or not, are about to lose much of control out of his hands. Some people can handle it without any problems while other will go through really stressful period.

  22. Wesley Verhoeve

    Well timed and very helpful article Fred! Thank you.For CEO coaches, how do you suggest going about finding one? Mostly reaching out to mentors and others in the same field? 

    1. Rohan

      Jerry Colonna – Nominated CEO coach of AVC community. 😉 http://www.themonsterinyour…  🙂

  23. Rob Hunter

    “Strong individual contributors are often not natural managers”.  I feel like that’s something those individual contributors don’t often understand without experience – almost every development lead I’ve worked with has at some point said “this’ll be great!  I’ll be able to mentor for 30% of my time, and still code 70%!”  In reality, those numbers seem to be reversed.

    1. PhilipSugar

      It is why the top producer should always make more money than the lead.

  24. Brandon Marker

    We are currently in this phase. I agree with everything in here, and would extend the management conversation to relate back to the first phase.While building you should start to give the team members that show leadership potential small projects and tests. Prepare them for the next phase.Once you start to scale and hire they are already respected by the beginning team members as a leader and the culture will transfer to those new hires. He or she can now quickly take the team under their wing.

  25. karen_e

    “You will need to think about a marketing person because acquiring more users is called marketing.”I don’t disagree with this statement, but as we all know, in this forum, we are often perplexed about marketing (Hi Seth! Hi Arnold!). It might be useful to know how professional service industry people have “unpacked” the big vague world of marketing into six bite-sized domains. (I work for a 100-y-o architecture/engineering/interiors firm and have five direct reports in marketing and graphics). While this kind of work is very different from web-based startups, I think can be helpful to put on “cross-industry” glasses once in a while.The Six Domains of Marketing 1. Market Research – this includes understanding the competitive landscape and SWOT analyses of our people and firm.2. Marketing Plan & Budget – what are you going to do this year, and what’s it going to cost?3. Business Development – developing clients and strategic partners as you describe above. In our world, functionally, we see BD as a subset of Marketing.4. Statements of Qualifications and Proposals – this is the biggest chunk of our work in terms of time. It is the main customer acquisition piece.5. Promotional Activity – this is the other biggest chunk of our work in terms of time; also of money. Includes trade shows, newsletters, email marketing, awards efforts, media/press, photographing/documenting our work, speaking opportunities at conferences, etc.6. Information, Resource, and Organizational Management. Marketers are the keepers of project data so that we can speak intelligently to future customers about past projects. Business development owns the customer database; marketing owns the project database and the image database.Again, this list is specific to my industry. Most of the thinking comes from the Society of Marketing Professional Services ( it’s helpful!#fs

    1. JamesHRH

      Karen – thanks for the list.It is a great example of someone desperately trying to stop a bad water main leak with a screwdriver.No industry group has gotten more lost than the service business, when it comes to trying to make marketing fit their businesses.Everything in this list is sales. None of it is marketing, unless you take the view that ‘everything is marketing’.Marketing is positioning. In services businesses, positioning can only be achieved through a unique process (see history of Big 6 consulting firms) or a unique set of services (usually centred on a product specialization).There is no other easily disproved, valuable attribute that you can associate to a service firm ( a friend runs Calgary’s first web site design firm – after 15 years, it is a relationship business, that easily disproved claim is of 0 value).Other than that, services firms grow based on relationship growth (new sales & new services) or acquisition (which is really just a unique kind of relationship growth).There really is no need for marketing in the services arena.As an aside, a friend of my wife once came up with this ‘positioner’ for the white shoe law firm that they both worked at (back in the day):THINKING INSIDE THE BOX SINCE 1896!Law and accounting firms went through a spasm of “branding’ efforts in the 1990’s (all a waste of time). This tag line, at least, accurately described what the firm did and, what I liked best about it, was so true that the firm could never use it (if you see ‘thinking inside the box’ as having the requirement to not be self aware and transparent).Still makes me laugh, while I type this…… BTW – the thank you at the front of this comment is not meant to be snarky. Markeing is a huge distraction in the services industry and is the type of gong show activity that makes @fredwilson want to give marketing the Ol’ Yeller treatment.If your career is hallmarked by leading the movement that made all services firm everywhere drop marketing and branding and return to focusing on selling / delivering unique services for clients, you will go into the marketing HoF!

      1. karen_e

        As you know, a theory is only useful or not useful — not right or wrong. I have found it very useful as a framework over the years. I do see where you’re coming from …. I think the history of the word “marketing” in our industry comes from the fact that architects, as a historically elite group, could never tolerate the word “sales”.A chacun son gout!

        1. JamesHRH

          I think we have a philosophical divide! Or maybe we are using two sides of the same coin.Theories exist to be proved or disproved – that’s why they are valuable.However, there are as many ways to get things done as there are people on the planet (although you can group them!) – so I agree, to each their own.

          1. karen_e

            [To each his own refers to the choice of word marketing or sales. I can respect another’s taste, but I stand by my industry’s choice to use the m-word.]”(D)rop marketing and branding and return to focusing on selling / delivering unique services for clients…!” This is your phrase that is more interesting to tackle. In my mind, and in my work, branding is the story-telling that has to happen in order to leverage sales or create an environment where the sales process is almost unnecessary (that’s the big dream, isn’t it?)If I could make a sketch (#disqus_feature_request), I would draw a simple loop between the two words: “the work” and “the story.”Letting the work inform a good story about a firm and then placing that story to help get more work, well, that’s what we do. To do without a marketing department works fine for very small firms; though plenty of them are in desperate need of someone to watch the care and feeding of the six domains I outlined above.Gotta go back to the story-telling. Thanks for the theoretical fun! 

          2. JamesHRH

            You are right about stories and work. Those are the basics.And I said ‘unless you are a “everything is marketing” type’.Its not theoretical, as much as philosophical.Loose ends tied up – always good.

          3. leigh

            lol marketing least respected thing in start up land and yet most of the successful ones haven’t just focused on product and unique services — they have built great brands.  I’ve linked to this before, but you might like my presentation on what big brands can learn from start ups —…

          4. FAKE GRIMLOCK


          5. JamesHRH

            Yes, but a theory can be minted ‘proven’ until it is disproven (i..e, it provides reliable results until we come up with  better theory that provides more reliable / better results).

      2. Matt Straz

        I have found that, given the choice, most people would prefer to buy things that are artful and beautiful — and that includes startups. In fact, they are willing to pay a premium for such things.Marketing and positioning is essential in this regard.

        1. karen_e

          Agree. You have to love the Fast Co design blog.

        2. JamesHRH

          Most people end up buying what they can afford.If its beautiful, that’s a nice to have.I am a huge Apple as a value purchase proponent, but Apple market share is very low. Most people buy on price.

          1. Matt Straz

            The goal of a venture-backed startup is to sell for the highest price, not the lowest.Startups that ignore marketing and positioning do so at their own peril, particularly when the market is flooded with solutions.

      3. Rohan

        Thinking inside the box. Reminds me of the Seth Godin note about thinking around the edges of the box.“Don’t think outside the box, because outside the box there’s a vacuum. Outside of the box there are no rules, there is no reality.  You have nothing to interact with, nothing to work against. If you set out to do something way outside of the box (designing a time machine, or using liquid nitrogen to freeze Niagara Falls), then you’ll never be able to do the real work. Think along the edges of the box, because that’s where things get done. That’s where the audience is, and that’s where you can make an impact.”

    2. awaldstein

      Thanks Karen.I don’t have time to jump into this polemic today but wanted to let you know I’m listening as always to you.More and more I’m boiling everything down to a simple idea…that the culture of the consumer has changed. And that in a world that is customer and market driven, most companies, be they product or services, have not yet adapted to this fact. And there is no simple methodology to do so.Time this shift to any one of a number of markers but once scarcity of access to goods is gone (which it is), the game is inside out. 

      1. ShanaC

        Why hasn’t it changed though?

        1. awaldstein

          There’s always a gap. Always a chasm. Always a leap.Evolution is always seen as a sudden revolution, an overnight success and change. The interesting and inspiring aspect of business today is that the driver is from the bottoms up, from the market in, rather than the top down.For a generations, the change agent was companies and technology. Innovation being driven from inside out to the mass market.No more.The internet is about people not companies. Companies are playing catch up with their customer populations. And it will continue to be so.What a kick this is. The tables are turned. Once your take scarcity of goods and distribution away what do you have? Scarcity of customers? I don’t think so. More like scarcity of connections and a crazy gulf in trying to figure out how to close this.It’s never been more fun to approach the world with a marketer’s eye.

          1. Carl J. Mistlebauer

            Arnold,I find it fascinating that all of the sudden we are talking about “customers” and “connections” as if they are new.If you want to know how to “bridge the gap” then study the history of Sears and Roebucks, most importantly their President and Chairman from 1928 to 1954, Julius Rosenwald.In 1929 he was asked how it felt to have so many people working FOR him and he replied “….people work WITH me….”In 1933 he put up $7 million dollars of his own money to guarantee the loans that Sears had provided for the homes that they sold as kits; then he turned around and sent them all letters basically saying, hey, we know things are tough send us what you can when you can.  Sears did not foreclose on a single of their 100,000 mortgage holders and no one got kicked out of their homes.He came up with the idea of “satisfaction guaranteed or your money back” and his motto was, “sell honest merchandise for less money and more people will buy.”Here is my all time favorite quote:  “”Treat people fairly and honestly and generously and their response will be fair and honest and generous.”Nothing says, we are loyal to you….Or, you can check out General Robert Wood who took over from Rosenwald and who made Sears the number 1 retailer in the world, he believed that his greatest accomplishment at Sears was the employee savings, profit sharing and pension plan (which was at one time the largest owner of Sears stock).  How many CEO’s today would claim as their greatest success their employee retirement plan?Here is a quote from him: “The price of leadership is unceasing effort; we cannot get smug and self-satisfied, we must always keep learning, we must keep improving our methods, our organization, if we are to retain our leadership.”The crazy gulf that you refer to occurs because we forget what we have already learned. Lets not forget that Sears pioneered mail order retail, which was realistically not all that different from ecommerce..

          2. awaldstein

            What a great comment. Thanks.Although I’m not certain I agree.I do believe that companies who believe that they need to earn their customers respect and dollars are always on top. Been so forever. Still true today.But to think that business and people have not changed over time, even though core values are still core values is not how I look at things.When goods and services were scarce, the relationships between vendor and distribution and store and customer were completely different. We as customers where limited in where we could buy.There is not scarcity of distribution and access channels and that has shifted the center of the equation from company and channel, firmly to the customer. So…yes, I agree that core values exist. No…I don’t believe that all is the same. In fact, I believe that the consumer landscape and how we approach it as business people is completely different.Thanks for this push Carl.

          3. Carl J. Mistlebauer

            If you go looking for a difference you will find it but if you think about it the fundamental question has always been, “How can I get the consumer to BUY?” Then the secondary question is, “How can I get the customer to buy from ME?”Yes, at one time when goods and services were scarce the retailer had a false sense of an upper hand; it was hubris. Because at one time customers actually had the upper hand (before consumerism became an addiction) due to the fact that they could actually elect NOT to buy.At one time a company like Sears had their own factories that produced only their goods; thus the concept of VALUE was ingrained in a brand and its products.It had to be to entice the consumer to buy.I think that the shift, which obviously has occurred with internet access and big box retailers on every corner, is a shift BACK to enticing the consumer to buy.To me the problem is that the “value” matrix has changed as we sober up from a 30 year consumerism binge.

          4. FAKE GRIMLOCK


          5. FAKE GRIMLOCK


          6. awaldstein

            True Grim but of course the real work for companies start once the one liners are printed on the Tshirts;)

          7. JamesHRH

            Authentic connection has always been scarce.Now, there are just 100000000x the number of ways to connect.

          8. awaldstein

            Maybe more scarce. Certainly many more avenues for connection. But connection and engagement may well be the new currency for success. There is no way around it. Likewise the focus on community models. 

    3. Donna Brewington White

      I was hoping one of you marketing pros would jump on this one.  Would it be fair to say that the end goal of marketing is to acquire more users?  Simplistic but true?Keep at it.  You will educate us yet.

      1. JamesHRH

        Peter Drucker – the purpose of all organizations is to attract and retain customers (although they may call them voters, donors, etc.)Absolutely.

        1. Donna Brewington White

          Ah, Drucker…moment of silence.

  26. kidmercury

    i think this post is based on the assumption that engineering-focused companies are the way to build internet startups; suster recently did a post on investing in a content company, i think that will have very different dynamics. i think the bubble 2.0 has led to an overvaluation of engineering talent. i also think it signals the end of the application layer and the onset of the governance layer. the application layer favored technical talent, though i think the governance layer will favor political/sociological/community organizer talent. on a related note, i also wonder how much of a management layer is really needed. i don’t think organizations are going to get bigger; i think “networks of small teams operating small communities” is part of the shift away from the application layer, away from IPO-driven financing models in the western economy, and most radically (humor me, if you will), away from the nation-state model of governance. craigslist is often cited as an example on this blog, and i think it is especially worth considering in the context of this post.  #fs

    1. Marcus Oberholzer

      On your “related note”, I like your concept of “networks of small teams operating small communities”, but I think that runs the risk of too many people going in too many different directions. Seems like there would have to be a management-type presence (call it a “layer” if you must) to communicate consistent direction, vision, and messaging.

    2. fredwilson

      lots of good thoughts in this comment kidi think UX/UI talent is most needed at the application layerbring on the “governance layer”!!!

    3. JamesHRH

      As cool as it is that @fredwilson:disqus is going back to coding, I think the ‘everyone will code’ rant that is popular is over blown.I don’t know how to build a car, but that does not mean that I do not grasp its innate value nor does it mean that I cannot create business value by developing new models of transportation, etc.

  27. scott_mcleod

    Thanks-I found this post really useful 

  28. Prashant Gandhi

     When does the founder /CEO need to start building / thinking towards this ? I expect the transition from building product to building users isnt a flick of switch, but a gradual transition. Are there specific milestones that one needs to think about ?

    1. NicolasVDB

      As Fred mentioned, the transition happens once you’ve achieved product-market fit; it’s like the proverbial love of your life: when you see it, you’ll know it  😉

      1. JamesHRH

        That is, uh, not the topic that is famously associated with KIWISI (Know It When I See It).

        1. NicolasVDB

          Really?French romanticism didn’t make it to our favorite province across the atlantic?

    2. fredwilson

      the founder/CEO needs to start thinking about this stuff as soon as they can free up some headspace to do itbut certainly 3-6 months before entering the next phase

  29. Shawn Cohen

    At the startup I work for, it’s been interesting to the different level of commitment between founders and executives/managers who were brought on later. This lower commitment level is probably hard for a lot of founders to understand but it’s a stark reality between someone who’s been hired and someone who’s started the company.

    1. JamesHRH

      This is a sound insight Shawn. It is what it is and wishing it were not will not change it.

      1. Shawn Cohen

        Thanks James. It’s an intriguing principle to me: I’ll stay up all night working on my own passion but on somebody else’s stuff? Not so much.

        1. JamesHRH

          Nothing wrong with self interest or ego. Unchecked it’s a problem, but a healthy self interest / ego is a good thing, IMO.

  30. Dave W Baldwin

    Great post.I’d add in the paragraph about recruit/retain/eliminate the fact as you add in those who were not part of the vision process more likely thinking comfort vs. the bigger goal.  Be fair if they do not perform up to needed level but do not give away the store in order to recruit them.The other is the difficulites in cross communication.  It is easy for those in sales to blame those in production and those in production to think of those in sales as a lower evolutionary peg. 

  31. panterosa,

    I love this post and all the comments – super informative. Especially of interest to me are the comments about coaching and office management. I started coaching before even starting my new company, since I had many work options to choose from. It has paid many dividends in quality of life and quality of choices.My next layer actually would be office management, even though I work alone, or perhaps because I do. Without a tech partner, nor engineers, but just me as an engine of content, design, marketing and so on, for me the logical step is to get real help so I am not drowning in minutiae. 

    1. Donna Brewington White

      Office management…good point.I love this post by @msuster:twitter :The Controversial First Role to Hire After Your “A Round”

  32. kidmercury

    all the #fs tagged posts are being collected here:…except the irrelevant/unintentional ones. soon you’ll get a slight boost to your fredscore for all the #fs tagged posts that are incorporated into fredsquare university……thanks for helping us learn!

  33. Poundcake

    Did you intend this as a Tumblr pre-mortem or is that just an odd coincidence?

    1. fredwilson

      can you elaborate? i’m not sure i understand the question.

      1. Poundcake

        Your post is great. It also happens to read as an almost exactly chronology of what happened at Tumblr the past year. Is that intended?Tumblr was obviously surprised by its growth spurt, which led to these changes happening in a bit of a panic mode. Reactive instead of managed.Investing in Tumblr was, at least in part, rolling the dice that explosive growth would come at some point. But the management team was totally unprepared for it — both in terms of skillset and, in the case of John, previous management experience.WIthout focusing too much on the negatives, given that successful companies must inevitably transition through the period you document in your post — what do you do to set them up to succeed? Looking at Tumblr, it seems like there was almost maximal risk in place against them pulling through this stage intact.

        1. fredwilson

          Tumblr reminds me of twitter in many ways. The situation you describe is one of them

          1. Poundcake

            @JamesHRH:twitter I’m not talking about engineering. You can’t hire the “scaling people” needed to manage a huge site until you know what you’re scaling, of course.Marco had no idea how to scale Tumblr, admitted it, and moved on like a champ. In contrast, Ev had no idea how to scale Blogger (Google bought Picasa to solve the image hosting problem). Then Ev repeated the mistake by demonstrating that he had no idea how to scale Twitter, either.I’m specifically asking about management. You invest in a company. In order to break out, it has to scale.Yet nobody in the company has any experience building a company or growing a company. Not tech, people. Growing from 10 to 60 heads in ten months presents a huge risk along every possible axis.Do you consider this simply cost of doing business in an innovative space? Or, since you’ve documented a pattern that at least six of your investments have gone through, what can be done to make the whole process a little less insane?

          2. JamesHRH

            I am not talking about engineering either.I don’t know Ev or Marco, so I will not make a comment. I have seen many, many people continue in a role where it is clear that they do not know what they are doing, and that they know this to be true (its called not caring enough and it is everywhere).If what you are saying about Marco is true, he is a pro.And, while I will let Fred speak for himself, I will SHOUT AT YOU that:: the USV philosophy to invest in traction & team, with THE BELIEF THAT WEB SERVICES WILL REQUIRE NATIVE REVENUE MECHANISMS THAT THE TEAM MUST DEVELOP THEMSELVES borders on AMAZING.Personally, I am not a fan of confusion at the executive level. I like to be prepared – and, no, I never went to Scouts.I was trained that the optimal startup team was a group who could lead 300 people ( or more ) but was willing, able and keen to do it themselves until they needed to manage people.BTW, there are tons of examples of ‘business at scale’ people failing abysmally at startups, after saying something similar to ‘HOW HARD CAN IT BE?’.Startup preparation is not a easy thing to define. But, given USV’s track record, it must be a KIWISI thing for them.

          3. Poundcake

            @JamesHRH:twitter From my perspective USV has quite a bit of money tied up in companies that share some common flaws: lots of users, difficulty servicing those users, and almost comically-weak management. USV also tends to be first to spot amazing, interesting founders who start great things just ahead of the web/culture curve.But since the same problems keep happening over and over, which obviously adds huge risk, my question to Fred is whether this impacts the way he views founders and if he’s doing anything to smooth the process. I trust he’ll cover it next Monday.

          4. fredwilson

            “tied up” is the wrong way to put itwe have capital at work in these companies and the value of that capital has increased orders of magnitudes in the four to six years it has been invested

          5. JamesHRH

            @poundcake – Fred practices, fom what I see, what he preaches: patience, founder bias, theme. I think your ‘innovative space’ comment is close to the mark. Fred is waaaay ahead of the curve: he has the personality, experience & intellect to exel at being a DEW Line of big trends.If you are a deeply prepared, high innovative, pro founder, would you choose USV or a traditional VC who thinks they can do better or find someone better (even though your industry did not exist before you invented it?).I get your issue, but it is an obvious outcome from the model & the professional error to make……IMO.

          6. fredwilson

            there is no formula. founders are people and they own a big piece of the company and often the team is incredibly loyal to them. you can’t just move them out and replace them. you need patience, persistence, empathy, and a lot more.

        2. JamesHRH

          Not to blow sunshine up USV’s skirt, but they invest with the expectation that a native revenue model will be developed, post-investment. That takes courage.You don’t bring in the scaling people during that process – the thought of that gives me the chills.So, I would bet that is where TWIT & TMBL give @fredwilson:disqus a lot of the same feelings – the process is similar.

  34. BillMcNeely

    Wow 12+ reports? The Marine Corps did a study a number of years ago and found that the number of people a person could directly influence was 3. 

  35. Richard

    Read Gary Null’s Book “Know Who Your Are” to get a good feel of the type of DNA/personality that you need to add to your company.   

  36. vruz

    Artisans are for shipyards. Captains are for vessels.You need both. The best long lasting ships are in constant reconstruction.

    1. fredwilson

      i love that line vruz

      1. vruz

        Thanks. Isn’t this what Jack, Ev, Biz and Dick have been doing?Ships who want to sail for a long time must do it exactly their way.Of course it’s a bonus to be lucky to have the flashiest, most brilliant and articulate CEO ever, it works for a while… 3 years?  5 years maybe? But that magic eventally wears off. (I call that the “new kid on the block” syndrome)If you want to build a company to last 10-100 years, betting on the flashy CEO *only* is a lousy strategy.

  37. Donna Brewington White

    All weekend I looked forward to this post and was not disappointed.Have just had a couple of hours of reading the comments. The wisdom in this community never ceases to amaze me.This series needs some sort of packaging for distribution.  Note I did NOT suggest a book!

    1. fredwilson

      i wrote it while listening you and tyrone DJ in the indie while you work room on turntable yesterday around 5am eastern time

      1. Donna Brewington White

        Haha! Saw you there. Figured you were being quiet for a reason.

      2. Donna Brewington White

        Proof positive that it is possible to actually WORK while in that room. Takes discipline. But sometimes the reason I’m in there in the wee hours is that it helps keep me alert enough to keep working.

    2. JamesHRH

      I have decided that books, today, are like mountains.Writing one is like climbing the other: its an achievement, but it is all about the writer / climber. Not much in it for anybody else!

  38. David M. Blanke

    This part really interested me:”Investing in management means building communication systems, business processes, feedback, and routines that let you scale the business and team as efficiently as possible.”So critical.To get more specific, how do you know when it’s time to bring in a senior-level CFO and/or COO?

    1. fredwilson

      i like VP Ops and VP Finance first

      1. Donna Brewington White

        What do you think of these two roles combined as a hybrid role.  

        1. fredwilson

          very good early oni call that role “the utility infielder”

  39. jason wright

    I’m curious about reaching the stage where the product needs building out to availability on more devices. With a mobile app product is there now a general consensus about which OS and device is the one to  build an MVP for at the earliest stage? Android seems such a fractured gaggle of handsets, and many startups seem to begin with the iphone and then build out to Android.

  40. Management Consulting Toronto

    The management team is crucial for the well-being of a company. Because they have to take the best decisions in order to accomplish whatever needs it may require. Not to mention they are the ones responsible for everything that the company does, whether good or bad. Building a professional team requires a lot of skill and dedication, which must be achieved in the shortest time possible.

  41. Giles Farrow

    This is one of the most challenging times for any founder.Fun, hard work gets replaced by lots of hard work and having to spend time on stuff they never wanted to do.Try and find at least 1 or 2 people who will take work off your plate – look for the right attitude above all else

  42. Jevgenijs Kazanins

    Fred, many thanks for this post and looking forward to the next one!Perfect timing for us, and apparently, despite the startup hipe, there’s not much advice on the Internet on the transition from building product to building usage. 

  43. Jevgenijs Kazanins

    Fred, many thanks for this post and looking forward to the next one!Perfect timing for us, and apparently, despite the startup hipe, there’s not much advice on the Internet on the transition from building product to building usage. 

  44. PhilipSugar

    I think this is the biggest challenge as you scale.  When you are under 10-20 people, you not only know what everybody is doing, but you literally know their bathroom habits.My belief is that everybody knows everybody’s salary and where they stand in the organization.  I’d like to think you could keep salaries private but you can’t and have to operate that way, and those that don’t know where they stand are blissfully unaware for a reason answering the question: “is ignorance bliss?” in the affirmative.So getting rid of the bottom performers brings everyone else up.  I agree with you when you say: not person, because it really depends on how the person views the situation.  I cannot be the top performer in a charity organization (because I don’t have the time), but I need to be better than the worst person.

  45. Brandon Marker

    I like this. People that subscribe to the belief that the bad apples will eventually weed themselves out just allow the embers to burn and potentially flame up. Terminate people that need to go. And do it yesterday.

  46. ShanaC

    Umm, best ways to fire someone?

  47. jason wright

    Where does the term ‘firing’ (to fire) come from? It sounds medieval, and rather more unpleasant than the modern version.Unfavorable circumstances can result in a person giving a mediocre performance. It can be akin to observing a Shakespearean tragedy when a talented person is in the wrong job/ position/ company or under the wrong kind of manager/ boss/ ogre or with the wrong kind of colleagues/ back stabbers/ losers.One can deploy all the recruitment techniques in the world but there’s still no guarantee of a good fit. A smart employee will know when it’s not right and would be best advised to fire the company by walking away asap. Writing a ‘I fire you’ letter to the company is so good for self confidence and esteem. Try it one day – recommended.

  48. Rohan

    I think he means an organization that doesn’t really care about performance.Where they’re keeping people with no requirements/expectations.. sort of like giving them charity.

  49. PhilipSugar

    Something you don’t get paid for… group, little league, boy scouts, community group, etc.Look, I’d like to be the superstar, but realistically I can’t.  Does that make me a bad person?  I don’t think so, I think I positively contribute, but I’d like to think I’m self aware, and I realize that I perform to a level better than the worst quintile.  If you got rid of the lowest performers I would have to step up my game. 

  50. PhilipSugar

    No, see my comment above.Most people view a job as a job.  (not here) I hate to say “I’m not making a value judgement” but I’m not.In my judgement you cannot effectively raise children unless one spouse has this viewpoint.So for many, they will perform higher than the bottom, get rid of the bottom, you bring the middle up.  Those that don’t know they are the bottom: “you can’t fix stupid”My societal belief is that you don’t bring people at the bottom up by giving them things or trying to put them in top performing organizations, you do it by reseting their priorities.That is why when I tell people that the majority of people that live in shitty neighborhoods deserve to live there, it drives people nuts.  Flame on!  (seriously….let that last one go but I had to say it)

  51. PhilipSugar

    I like to think of it this way.  How much cash.  Cold hard cash do you have to get out of your wallet to pay the person.  Think of it this way.  At the minimum you get up from your desk every two hours and give them a hundred dollar bill.  Think of what you expect at the store when you give up a stone.

  52. leigh

    Find trying to redefine the right pple to hire in the first place helps.  Being a services start up in an industry filled with established players, our first few hires of Jr.s sucked.  We thought they were looking for the excitement and sacrifice that comes w/ star-ups but truth was, they all wanted security and job titles.  Totally changed up the questions we were asking in interviews went a long way to getting rid of the mediocrity.  

  53. Donna Brewington White

    Charlie, to further elaborate on this, as you probably have seen, superstar performers generally want to work on a high performance team.  It is harder to keep your star performers happy when you are allowing mediocrity to exist on the team.  It may not affect their motivation because they are internally motivated, but it may affect morale and retention. Plus, they will begin to lose respect for your leadership.Also “nice” is not always really that nice in the long run.  I am not suggesting a lack of kindness which is different than niceness.  Some “niceness” is actually a form of dishonesty and an unwillingness to confront.  Utbay, ouyay owknay isthay uchmay etterbay anthay emay!  (You said you like when people speak latin to you.)

  54. Rohan

    True that. Thanks for the clarification.I misunderstood. 🙂 And Philip.. flame on indeed! 

  55. leigh

    “you can’t fix stupid” :)ps. minority of pple who live in shitty neighbourhoods deserve to live there

  56. LE

    “the majority of people that live in shitty neighborhoods deserve to live there”What I’ll call the “stoner” barrista at Starbucks told me today that he likes fish and is really good at setting up fish tanks. He enjoys buying the fish and little tank gizmos and cleaning tanks is no big deal and fun etc. So I said “that sounds great, you should start a small service business to do that locally here – I’m sure many people would hire you (it’s an upscale area) to do that for them either in their homes or office” (like there are plant services). I then proceeded to start to tell him how he could go about easily marketing that skill to earn some extra pocket cash. He said “oh” and then gave me my drink.

  57. Donna Brewington White

    You can’t fix stupid.  Priceless.

  58. PhilipSugar

    I know its not popular here but I feel naked if I do not have at least one Ben on my person.  Ben is a very persuasive guy, much more so than any logo on a piece of plastic.. 

  59. Josh Haas

    Have lots of extensive (and documented) conversations ahead of time about how they are doing so it isn’t a surprise…  but then once the decision is made, keep it short and simple.

  60. leigh

    Agree with Josh.  I’ve always given pple a 360 review leading up to a firing — most pple i’ve fired have been in the wrong job or admittedly not passionate about the company or the work — helping pple see that ‘this’ is just not the right fit vs. they suck goes a long way to softening the blow and as well, remaining on good terms (and in my biz someone you fire today, could be your client tomorrow).oh and giving pple a fair exit deal helps a lot.  (I could write an entire book on how NOT to fire pple)

  61. PhilipSugar

    I’m not sure about that.When you know you know.Trying to grind somebody down I think in the long run causes more animosity which if you are so afraid of the legal system can work against you.You have to be fair you have to be just but you don’t have to be long.

  62. PhilipSugar

    I’m not sure.  I’ve run the gamut from long drawn out stretches to on the spot.  For a 20yr plus career like mine that is over 50 people, not a proud accomplishment because that is 50 personal failures of mine.In all of those, I’ve never had employees say Wow!!  What happened??”   In every case it was “Well that was about time”Now admittedly what are you going to say?  I have a strict policy of no talking bad about those who left, they just aren’t on the team anymore.

  63. leigh

    not sure about which part? writing reviews and leading up to something doesn’t have to be long and drawn out. I usually fire pple within the first 3 months of hiring them (if they are going to get fired).- posted via

  64. leigh

    mostly try to get an idea if they are truly into start up culture so probably less about questions then answers…..i.e.– what other companies are you looking at? (if they say, you and big consulting company or big Agency — bad answer — us and product start up or other small companies much better)– what do you see as your path for success in the next 3 to 5? (if they give linear answers with a ladder involved, probably they don’t want to work with us)- posted via

  65. Matt Straz

    Not such a fan of the cavalier approach here to reducing everything to handing out hundred dollar bills. It’s crass and not a particularly enlightened way to run a company.People who join early stage startups are a different breed, otherwise they would just go work for big companies with nice salaries and benefits. It’s our responsibility as entrepreneurs to help them grow with the company.Not every hire will work out but you have to make the effort.Agree that a firing means that the entrepreneur made a mistake.

  66. LE

    From your comment below:”versus people that work for me and have had the opportunity to grow their career who has better job security”People who work for large companies sometimes forget that those firing decision will be made at a level far removed from them. In a smaller organization it’s not as easy to be heartless because many times the person either reports to you or you actually interact with them. Nothing is going to save someone if business is bad of course and they aren’t doing their job. But it’s much easier to have that happen in a large corporate layoff than in a smaller company, as your comment shows!

  67. LE

    Another comment you made:”I know its not popular here but I feel naked if I do not have at least one Ben on my person. Ben is a very persuasive guy, much more so than any logo on a piece of plastic.”Reminds me of the time I was working for a tech company and had to bring a heavy machine into an office building for a demo. The guard wouldn’t let the four of us in the front entrance and insisted we go around to the loading dock and we were late.  The other guys proceeded to start walking out and I pulled out a $20, handed it to the guard, and continued walking to the elevator with the machine on the cart.

  68. PhilipSugar

    I obviously do not hand out $100 bills.I have put up my house to make payroll and not taken a paycheck.As far as working for a big company, ask people that get caught up in a big layoff and are not hire-able because they were a cog in a machine and had no control over their destiny versus people that work for me and have had the opportunity to grow their career who has better job security.

  69. Donna Brewington White

    In principle I agree with the heart of what you are saying about helping people grow with the company and making the effort to help a hire work out.  I’m just not sure that most startups have the management strength to rehabilitate poor performers or the leeway to move people around to try to find the right fit.  There is a difference between a poor hire in terms of the wrong fit for a certain job and someone who is a mediocre performer.  The former you can do more with.And, yes, firing in this context generally means a hiring mistake — often one that could have been avoided.  Hiring can be complicated.



  71. andyidsinga

    That sounds like a pretty good way Charlie.i once got fired when i was a teenager. worked for a dairy farmer and came in one morning three hours late – you cant milk cows three hours late! Anyhow, he was quite stern and yet also respectul as he gave me a brief lecture and handed me my last check. Ive never forgot it – made me take other peoples businesses and livelihoods a LOT more seriously.

  72. Donna Brewington White

    Kid can fill up fredsquare university with your comments alone.  Good stuff.

  73. LE

    “I call them into the office and have another person there.”Question: Is the other person packing heat?Anyway, seriously, the way I always handled this to say something that they could take back to their partner (spouse, sig other etc.) that would be the “positive” takeaway that would allow them to have pride and save face.   Supernanny did this with sucky parents. “Mark, Diane the love you show for your children is something that I rarely see. You are truly amazing in your commitment to their [insert something]. Unfortunately … [insert shortcoming].”

  74. K_Berger

    If you are good at giving honest feedback regularly, not just when things start to go bad, then you usually get to the point where the people who have to go know it already.  Then when have to tell them it is time to go, they usually say it themselves. Often they are just waiting for you to bring it up (most people won’t just quit on their own even if they know they should).Every time I have ignored my gut feel and just kept things status quo, I have regretted it.Here’s a great line I picked up from a manager of mine years ago.  “We give people the benefit of the doubt, but when there’s no doubt, there’s no benefit.”

  75. Donna Brewington White

    “if they give linear answers with a ladder involved”Leigh, I thought that was a particularly astute observation made below as to a red flag for a startup hire. I am going to have this more at the forefront of my thinking.  Although, sometimes, I’d think that they just may not know another way to think about or verbalize career growth.  What if they articulate this linear thinking and yet give evidence of strong inner drive and a history of creating their own opportunities within an organization?  #fs

  76. Donna Brewington White

    I don’t think it is heartless to fire someone for poor job performance — or poor job fit.  It can actually be an act of kindness.  Giving someone accurate feedback provides them with the opportunity to seek ways to improve…or find something that is a better fit with their abilities or lack thereof.  

  77. PhilipSugar

    The point is if you are a big producer it is known and you won’t get fired unless you cannot play nice with others.  As a matter of fact small companies will tolerate this type of behavior much more than big ones because they depend on the gal who just gets stuff done.Big companies, you are right it can be a person you never met that is determining your fate.

  78. Donna Brewington White


  79. LE

    Great Advice.An “if/then/elseif” clause (or case/switch statement) is always good with any dealing in any situation.  You can cut any deal upfront that you want in order to create the drive in someone to rise to the level of performance (or expectation) that you want and to keep them there. It’s a benefit for them as well. Complacency is not good for any party in any transaction I’ve found. One of the benefit of cutting a % of your workforce every year. That uncertainty creates a positive drive.

  80. Donna Brewington White

    If you could have a team of self-aware people, that would be amazing.  Having a self-aware boss is a good start.  An excellent start.

  81. fredwilson

    not everyone wants to be their own boss. i have to remind myself of that all the time. i have had so many experiences like this over the years.

  82. fredwilson

    early and often is best for most things, including feedback

  83. Donna Brewington White

    As someone who recruits and gets it right a lot of the time but not all the time, I will say that many, many fires are a result of poor hiring.  Maybe I am an idealist, but I do believe it is possible to get hiring right.  Most of the people who have not worked out, I can look back and see what went wrong in the recruitment/hiring process.However, a good hire does not always mean that the person will stay 5+ years.  In a situation like a startup, you may have to reconcile to the strong possibility that your staff configuration will need to change as the company evolves/scales. #fs

  84. jason wright

    Startups – ordered chaos! 🙂 

  85. Donna Brewington White