High Growth Handbook: Scaling Startups From 10 to 10,000 People

by Elad Gil

The CEO: Sets the overall direction and strategy of the company and communicates this direction regularly to employees, customers, investors, etc. Hires, trains, and allocates company employees against this overall direction while maintaining company culture. Raises and/or allocates capital against this overall direction. Acts as chief psychologist of the company. Founders are often surprised by the extent to which people and organizational issues start to dominate their time.

However, you will find that in practice you have little time in a high-growth, rapidly scaling company to think deeply about those points until you hire a strong executive team and manage your own time properly.

The very best executives tend to be a combination of a router (i.e., they send items on to other people for execution and end meetings with few to no action items for themselves), a strategist, and a problem solver (i.e., someone who can identify when the team is off track and dive in to help).

You need to build some pattern recognition for when someone is starting to flail (they seem overworked and rumpled, they’re late to every meeting, etc.) or when people have more slack in their time. You will learn to iterate on the size of responsibilities, teams, or projects you give someone and build confidence in their skills as they continue to add to their stack.

Someone now “owns” an area you used to run, but after 4-8 weeks you find you are still doing most of the work or weighing in on every decision, however small.

You also need the ability to take a step back and look at the big picture.

Every press opportunity. Do you really need to talk to Dog Life Monthly Webzine for their “SaaS entrepreneurship” issue?

Every event. Choose the one or two highest-impact events to attend or speak at in a given quarter.

If you have a significant other, make sure at least one night a week is held for date night—and really do something together that night.

In a skip-level meeting, you meet with employees who work for your reports or are further down in the organizational chart. Often extremely bright junior people may have their fingers on the pulse of the market, or may be alert to key new ideas or information.

One thing I’ve observed is that you can’t make too many things at a company mandatory. You really have to be judicious about the things that you’re going to require, because there just can’t be that many. There’s probably something related to performance and feedback. There’s probably something related to whatever your planning process is. And then there’s a few day-to-day tactical things, like a launch review. But you can’t have that many and you can only have one at each level.

And that’s why you want to have some high-level metrics that everyone’s steering toward, operating principles, a documentation of plans, and then a set of processes that you follow.

Claire: Right, and just saying, “This is about context and communication, not about control” is so important. You literally have to state the obvious and make sure people know that.

Whereas once you have traction with some core product, you should fairly quickly be able to get to key targets or metrics that matter as indicators of progress.

The key to me is having two documents. The first—at Stripe, we’re calling them charters—articulates the long-term view of why this team or this product or this company exists, what its overarching strategy is, and what success would look like over even a three-to-five-year period. And then the second is a shorter-term plan: “Okay, in the near term, then, what are we trying to get done?” That can look like a results-based management model or an OKR—objectives and key results—model. But it’s some way that a team can say, “This is where we’re going long term. And on a quarterly basis, this is where we’re focusing. We’re hoping to move X and Y metrics.”

Claire: I think a charter needs a re-look roughly annually. And the goal-setting and OKRs is probably more like quarterly or bi-annually, depending on what kind of product you have. One thing that we do annually now—in addition to the charters—is set company metric targets for the coming year. We’re adjusting the plans against those targets every quarter too.

I think adopting some planning framework early will serve a company well. I was giving a talk recently at a startup, and they asked what operating processes I thought should be in place when. I told them that I’m not going to tell you which operating processes you should put in place. But I will tell you that you need them, and you need them sooner than you realize. The analogy I drew was to games, or sports. I said, “You know why playing a game is fun? Because it has rules, and you have a way to win. Picture a bunch of people showing up at some athletic field with random equipment and no rules. People are going to get hurt. You don’t know what you’re playing for, you don’t know how to win, you don’t know how to score, and you don’t know what the objectives are.”

But organizations need constraints and objectives to optimize against, so that people can actually independently make decisions.

Elad: One challenge is if you have one or two people on the executive team who haven’t worked in large organizations before, sometimes you’ll end up with resistance in the executive team itself to adopting these processes. Then six months after they’ve been adopted, they’ll say, “These are great. I wish we’d always done these.” But it’s often quite painful early on.

The first one is, what are things that only the founder/CEO can do and which are existential to the company? What must they spend time on? One of those is often recruiting additional leaders. Others would be, in most companies, articulating the product vision and setting cultural standards. Figure out what those are, and figure it out quite transparently with the rest of the leadership team. Then do a big self-awareness exercise across that leadership team, in terms of skills, capabilities, past experience, strengths. See if you can deploy the group against your needs and objectives, and be really ruthless about what the CEO and founder has to be involved in. Part of that will be them weighing in on what they want to be involved in versus what they have to be involved in. And ideally, you want that documented, their preferences on how they’d like to be involved and their role description in terms of where they have to be involved. Instead, though, this stuff often goes way too organically and becomes opportunistic. “Oh, we hired this person. They have this background so we’ll have them do this.” You’ve really got to think through it as a group and you’ve got to connect it to the company’s strategy and products.

I also like to make agreements on “how we do things” that we then agree to vary/make exceptions on as a group versus everyone inventing their own process/frameworks.

I use my intuition a lot with talent management and I’ve been told I am a good “read” on people. Again, I work hard not to judge or jump to conclusions but I will put forward hypotheses about your team members and your job is to make sure I really know the people.

The best board members will play key roles in company strategy; sourcing, hiring, and closing senior executives and key hires; fundraising; operations; and governance.

“Your board members are optimally people that you wish you could hire for the company, that are truly out of reach otherwise.” —Elad Gil

But the ability to change the curve means taking a risk that a founder would take. That requires moral authority, but it also requires mental willingness—including risking hearing that, “You really screwed up, you’re doing this really badly.” You have to be willing to go through that in order to make it happen.

Managing your board effectively can help you and/or your company: Get strategic and operational feedback on key areas. Source and close candidates, particularly executive hires. Assess talent at the company ongoing. Get help with fundraises, and ensure that your board members are aligned to help you close additional capital. (This isn’t always the case!) Be coached as CEO. Ensure the right person is in place as CEO.

But really the only universal job description of CEO is making sure the company wins. And so deciding what the company is going to do and making sure the company gets that done—that’s the most critical part of the job.

And the annoying thing to many CEOs is that the way you make it happen is incredibly repetitive. It’s a lot of the same conversation again and again with employees or press or customers. You just have to relentlessly say, “This is what we’re doing, this is why, and this is how we’re going to do it.” And that part—the communication and the evangelizing of the company vision and goals—is time-wise by far the biggest part of the job.

The hard part of getting users and getting revenue is that it means spending your time building stuff and talking to users—and the implication is you should do nothing else.

And so I think if the company is not doing well or if the environment is really hard, it becomes much more urgent that the CEO—who should never lose sight of the financial performance of the company and the cash flow of the company—is really looking at that all day.

As a general operating principle, I also don’t think it works super well—most of the time, there are occasions when it does—to go into a board meeting and say, “Hey, I’m really struggling with this idea. What should we do?” Not only because boards don’t like that. (And in general they don’t; they want confident leadership.) But because in a board meeting, you usually have all these weird dynamics of different VCs trying to impress each other. You’re actually just much better off to have individual conversations ahead of time when you really want open-ended brainstorming. You’re likely to get better results.

All sorts of things will magically just get done. People will get hired, deals will get closed, process will tighten up. It can be a wondrous experience. You will kick yourself for not hiring an experienced, high-capacity executive sooner. Unfortunately, things could also go badly. The executive is a bad culture fit, or is too senior for the role and spins his wheels. Time is wasted and progress lost on a poor fit—or even worse, some of the best people on your team quit when managed by someone who’s not working out.

When hiring executives, look for people who have the experience and background that would make them a good fit or hire for the next 12–18 months. Anything shorter than that and they will not be able to scale sufficiently far relative to the time it takes to hire them. Anything longer and you will over-hire and end up with someone who is a bad fit for the job.

1. Functional area expertise. Do they understand the major issues and common failure points for their functions? Do people in their organizations respect their opinions and feel they can learn from them? Are they right for the current scale and trajectory of your company? You can over-hire for a position, as well as under-hire, given the phase your company is in. For example, do you really need to hire Ruth Porat, Alphabet’s CFO, to manage the finances of your pre-revenue 10-person team?

2. Ability to build and manage a team in those functional areas. Can they recruit exceptional people? Can they build a recruiting culture within their teams? Do they know how to motivate people in their functions? The incentives for a salesperson are different from those for a product manager. Can they effectively manage people from their function? Managing designers, for example, requires different approaches than managing a customer support team. Do they understand how to build out an organization with multiple layers if needed? How deep of an organization have they managed in the past, and how does that fit your current needs (again, think 12–18 months here)?

3. Collegiality. Do they play well with other executives who are their peers? Can they put a collegial, mutually supportive environment in place for the company as a whole, as well as their function? Do they try to do what is right for the company even if it is not in their own best interest? Do they fit your culture? Each cul...

4. Strong communication skills. Are they strong at communication across the company? Can they consistently get other executives, and the CEO or founders, on board with team changes, promotions, road maps, goals, etc.? (Exec-to-founder communication may be its own magical art, depending on how introverted or opinionated the founder is.) Are they able to understand underlying issues and communicate them within their teams? Are they able to communicate to the board, external partners or customers, and other major stakeholders? Do the...

5. Owner mentality. Do they take ownership of their functions and make sure they are running smoothly and effectively? Do they own problems and solve them? Can they engage in “black box” abstraction of their functions so the CEO can engage on them, but does not need to be involved day-to-day? Do...

6. Smarts and strategic thinking skills. Do they think strategically and holistically about their functions? Many people don’t realize that almost every function can act strategically. It is a good exercise to ask yourself as CEO, “What does a strategic X org look like?” (where X can be HR, ops, product, etc.). Do they think about how their functions can be a competitive advantage for the company? Most companies are only good at one or two things, which is often enough to be successful. But companies that can tackle more than one thing well tend to outshine everyone else (e.g., Apple with hardware design, supply chain, and marketing).31 Are they first principles thinke...

For senior executives, executive recruiters can be very beneficial. And what I mean by that is if it’s a C-level officer, or a VP or above, executive recruiters really know how to surface candidates. They don’t know how to get you directors or more junior managers. But if you’re actually aiming at the high end, I think an executive recruiter can be very beneficial for two reasons: One, they have a network. They know who’s on the market, who’s looking around for new opportunities. They also know reputations. They’ve probably performed reference checks on these people before. And you can avail yourself of that.

“One of the things you should always ask is, ‘If this person joined my company, would you join?’” —Keith Rabois

However you source candidates, one key criteria for any executive is their ability to attract and become a magnet for talent. So when you’re doing reference checks, you really want to understand: Does this person have a pool of amazing people that will want to join a company? Can they immediately upgrade the entire talent of the organization because they’re so talented that other smart people really want to work with them?

That’s something you can tell from reference checks. And you should thoroughly do reference checks on executives, without fail. There are sometimes excuses why individual contributors don’t get reference-checked to death. But with executives, there’s no reason ever for hiring someone without thorough reference checks.

Now, that said, your job as CEO or founder is to help them be successful. I think taking the obligation personally and doing everything in your power to make your new executive successful is part of your job. And some founders don’t do that. They just assume, “I’ve hired this person and this person will get up to speed and start doing things.” But I think carving out 10, 15, maybe 20 percent of your calendar to help make this new executive successful is an incredible

We teach, and I subscribe to the view, that you want to pull the trigger on an initiative or an executive hire when you’re about 70 percent confident that it’s the right decision. Below 50 percent is kind of reckless. But if you go for 100 percent, you’re waiting too long and you’re probably losing candidates.

Elad: Are there any early signs of somebody not working out? Keith: Yeah, usually the signs are that they don’t take ownership of decisions. Now that can be somewhat CEO- and founder-driven, too. Sometimes giving them license to start doing stuff requires a direct conversation. They may be a little bit too nervous of rocking the boat. So that’s one, they’re too passive, in effect.

Another lesson that I learned from Brian Chesky—one way to think about when to upgrade executives—is that a really great executive is about six to twelve months ahead of the curve. They’re already planning for and acting on things that are going to be important six to twelve months in the future. A decent executive is delivering in real time, now to one to three months in advance.

It’s like great software architects for companies. When they have scaling issues, they already have their silver bullets in their pocket. They’ve already thought through, “If we went on Oprah today and got 10X the amount of traffic concurrently, what would we do? I’d do this first. I’d throw this CDN at it, then I would do this. And I’d have this hardware over here. Servers take long lag time, so I’d have to have those.” They have all that stuff in the back of their brain.

Under the worst possible circumstances or the best possible circumstances that I foresee in the next three to twelve months, what are the lead times associated with those various things? So I have those tools at my disposal when I need them, and I can just snap my fingers.

It does require a diagnosis of your organization. Also, what are the key risks to the business? What are the most important two or three things? You want the things that are one, two, or three to report to the CEO. Fundamentally, what makes or breaks the company should probably be reporting to the CEO. Because ultimately the CEO is responsible and accountable for everything. So if you do the rank prioritization of what gets you from point A to super successful, what are the two or three key levers? You want those two or three levers pretty close to your span of control.