MBA Mondays - Business 101 for startups by Fred Wilson

The Management Team - While Building Usage

So you've built and launched your product. It is well received. You've achieved "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.

From the Comments

Charlie Crystle added:

Great post.

At this stage you also have to be very ready to move people or move them out entirely.

I've found that firing a mediocre performer makes everyone more effective, and in some cases the role is simply subsumed.

Think about the drag a mediocre performer puts on great people: the number of ineffectual or needy emails, the number of conversations, the need to respond to all of these, the distractions, the lack of delivery, and in some cases the tone.

It's really important to stay on top of performance and make sure nobody is serving as an obstacle to others' success. That makes the growth a lot easier to manage, because you're not bogged down with the burdens of the mediocre performer. (notice I didn't say mediocre "person") #fs