Posts from Management

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.

We have a portfolio company that will remain nameless that does something I want to call out as super awesome. Every board meeting, as homework after the meeting, they ask each board member to fill out a simple Google Form with two questions; three things we are doing well and three things we need to do better. They've been doing that every board meeting that I've been to.

They use this information as part of their continuous feedback loop to improve their management of the business and in turn improve the business. Based on their progress since our investment, I'd say it works pretty well.

This is one example of a larger theme I am noticing in our portfolio and the startup world at large. Companies are using simple web tools to get continuous feedback on their performance. They are using this kind of approach to do performance reviews of everyone in the organization, they are using this kind of approach to get feedback from their customers, and they are using this kind of approach to get feedback from their Board, investors, and advisors.

This makes a ton of sense. Startups are rapidly changing systems. If you use an annual review cycle, you aren't getting feedback at the same pace that you need to adapt and change the business. Doing this kind of thing continuously matches the frequency of the feedback loop with the frequency of the business.

I've written in the past about continuous deployment and how I have seen that work really well at some of our portfolio companies. Continuous feedback leverages many of the same principals and has many of the same advantages. If you haven't tried this approach, you might want to. From what I've seen, it works.

I did a few posts on this topic back in 2004 when I was just starting to get this blogging thing.

the original

the followup

the second followup

These posts were inspired by my friend Brad Feld's initial post on the same topic.

So it's not surprising that when Brad, Amy, The Gotham Gal, and I got together for dinner in Paris this past weekend, we got to talking about board meetings. Brad is frustrated with them. I am too. There is too much reporting and not enough discussing going on. And there isn't enough face to face interaction.

One of our portfolio companies has a board of five and the directors are in three locations. Last month we had a meeting where all but one of the directors was in the room. It was the best meeting we have had in close to a year. Near the end of the meeting, I put a fairly meaty strategic topic on the table and we did not have enough time to do it justice. The founder/CEO suggested we reconvene a few weeks later with everyone in the room.

That reconvention happened last week and we had every director in the room and no agenda. We got right to the "big meaty strategic topic" and talked it over for two hours. That was a terrific meeting, by far the best meeting we have had in the company's history.

So what can we learn from this story?

1) get everyone in the room

2) less reporting

3) more discussing

For this to work, the board has to commit to face to face meetings. The CEO has to keep the Board up to date in between meetings so reporting doesn't have to happen in the meeting. And the Board needs to understand the business and the market well enough to be able to have a substantitive discussion about the key issues the business is facing.

None of these are easy to accomplish. Everyone is busy and not enough investors make the committment to understand the business well enough to participate in a serious strategic discussion. If anyone is to blame for bad board meetings it is the VCs and other non management directors who are not doing their jobs well enough. And I plead guilty as charged in this regard. I can and should do a better job as a board member on many of the boards I am on.

But ultimately it is the entrepreneur's board and the entrepreneur's problem. They need to call bullshit on bad meetings, bad boards, participating by phone, and so on and so forth. And everyone in the startup sector should wake up to the fact that too many board meetings suck. We can and should do better. For our companies, for our management teams, for our investors, and for ourselves.

I'm a fan of 360 reviews for companies of all shapes and sizes. I was talking to the CEO of one of our portfolio companies yesterday about his company and he said "we have about 50 employees. is it time to do 360s?" I told him that he was well past the point where he should start them. He asked for some suggestions for web software to use. I gave him a couple suggestions, but I'd love to get more suggestions in the comments.

My partner Albert wrote a post last week about assessing CEO performance and I left a comment suggesting that a regular 360 review process is the best way to do that. In the case of the CEO, the review should be shared, and ideally presented, with at least a subset of the board in person.

For senior management team members, the CEO should be with the senior manager when the results of the review are presented. That gives the CEO the opportunity to discuss the findings and provide guidance, coaching, development goals, and more.

And the senior managers should do the same with the members of their team.

I've seen compaies use management coaches to run these processes and I think that is a great idea if you have a mangement coach you like to work with. A strong HR team can also do this for most companies.

I think companies as small as 10 employees can benefit from 360 reviews and I strongly recommend them to our portfolio companies. When I see a CEO or a management team resist the idea of 360 reviews, it can be a red flag to me. I like to think that everyone can and should get feedback on their performance, be open to it, and that they will certainly benefit from it.

Matt Blumberg, founder and CEO of our portfolio company Return Path makes a compelling argument for getting a Board of Directors together for your company regardless of whether you take outside capital (and thus are required to do so). Matt says:

Boards create an atmosphere of accountability for an organization, which drives performance (and many other positive qualities) from the top down in a business.  Budgeting and planning, reporting on performance, organizing and articulating thoughts and strategy – all these things are crisper when there’s someone to whom a CEO is answering.

I agree with Matt with two big "ifs." The first is if the Board is made up of strong individuals who understand that a Board's role is oversight, not day to day management. There is nothing worse than a Board which meddles. Matt's Board, which I have had the pleasure of serving on for a decade now, is among the best I've ever served on. And so Matt's perspective is based on that assumption.

The second "if" relates to who controls the company. If you control the company and cannot be fired, then your Board doesn't have the thing that ultimately creates the accountability that Matt talks about. Boards that are just rubber stamps are worthless. And there are many out there. I won't serve on one and I would not recommend having one.