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

by Elad Gil

Keith: The traditional advice derives from High Output Management—you know, Andy Grove in 1982—which is at most seven. Or five. Five or seven. The reason why is that you want to do a certain number of 1:1s at a weekly pace, and you want to do about one a day. So that means five or seven or something like that. I think if you can get down to three to five, that’s ideal. If you have to go four to seven, that’s definitely possible to scale. So anywhere in those ranges can work. Elad: I feel like a lot of the executive teams I see these days have a dozen people reporting into the CEO. Keith: That’s crazy. That’s totally crazy. That being said, you may have to deal with that for a period of time

Some organizations allocate a full day to this, and they go very deep. I’m not sure that’s a great idea. It does depend upon how tightly aligned your organization needs to be to function well. I tend to think one to three hours is more than sufficient, especially if you have tools in place—metrics tools, KPIs, dashboards—so that everybody really understands the business before they’ve even shown up to the meeting.

Box, Facebook, Stripe, Square, Twitter, and Yelp are all companies that chose at one time or another to hire a COO as a complement to the founders, rather than replace the CEO with a “gray-haired professional operator.”

Optimally, you want someone who will come in to complement, operationalize, and execute your vision as a founder.

The responsibilities of a COO, for example, might include: 1. Adding executive bandwidth. The COO can serve as a business partner for technical or product-focused founders. 2. Scaling the company. High-growth companies have special needs around scaling and implementing simple processes (e.g., recruiting infrastructure, corporate governance, etc.). 3. Building out the executive team and organizational scaffold. COOs are often responsible for executives and teams in areas founders don’t understand well (e.g., finance, accounting, and sales). They can help in screening and hiring executives for product, engineering, and marketing as well.

But I ended up realizing that it was actually just my job to make sure that we got all of the problems solved, not that I had to personally solve them all.

So somewhere in the 60- to 90-day time period, the new COO should implement a few things that make everybody go, “Oh wow, this is cool. This is helping. We now have this new process that makes us perform a lot better and has reduced wasted effort in the wrong areas.” Having some early wins to show immediate value, and getting to know the company and the culture—that’s all super important early on.

you’re trying to find some overlap where some kind of core competency can be grown or monetized more. So, for example, Minted’s design community is the key asset we’re trying to parlay into new verticals. And hopefully, hopefully, our customer base too. Hopefully we’re saying it’s the same customer who’s going to continue buying other things from us.

I knew if I went too long or too far in stationery, I would have the Zappos problem. I like them a lot, but I always know Zappos as shoes, even though they’ve been trying to sell accessories and other things for a very long time. I just can’t get them mentally out of the shoebox, if you will. I didn’t want that to happen to Minted. So I had to move a little earlier in the expansion of what the brand stood for.

What we’ve found is, if you’re going to think about a GM, look for a GM who leans toward naturally solving problems together, who’s happy to collaborate, versus the personality who wants to really run their own island—that makes things much harder when you’re running a business where there’s supposed to be this integrated customer presentation, a holistic presentation of the brand and the company. It’s much easier when you have people who are very collaborative at the top of those internal businesses.

It’s a little bit of a personality test actually. I’ve had to develop interview questions to try to suss out who would be good as a GM in this kind of model. But that’s one of the really, really important attributes: whether they’re truly willing to make collaborative decisions about the business with the CEO and with other GMs. What I asked this person was, “What would you want from me as your manager? What kind of interactions do you want?” You can tell from the answer whether the person really wants to have anything to do with you or thinks that you have something to add.

Mariam: Just to understand this person’s communication style is really critical. But then you can get all this other stuff out of it. “What do you want from your peers?” is another one. Either question will suggest whether the person really thinks their peers or their manager has any value to add at all, or is simply there to exist. So you can get a lot out of asking them about what they plan to seek.

looking for shorter-term returns, which might mean lower beta projects, things that pay off in the year that you do them. That’s a very tight screen for what you might pursue. Paying it off within twelve months is a tall order, I should say. Not a lot of projects qualify.

Instead, hire someone who has led a 50- to 100-person team and can scale up your org to the right level over the next 12–18 months. Either that person will grow with the team or you will need to hire someone new in the future.

Should you have cross-functional product and engineering organizations or verticalized product units? Should international be distributed or centralized? These sorts of questions come up all the time as companies grow, and some companies flop between structures over time (Oracle supposedly flips its international org every few years).

Relatedly, reporting is an exercise in tie breaking—i.e., you want people who are likely to disagree to eventually report in to a single tiebreaker (this may be the CEO, or it may be someone lower down in the org).

Announce and implement the re-org soup-to-nuts in 24 hours.

“What’s working well? How do you think you could accelerate the company’s efforts? And what are the one or two priorities you think need to be addressed immediately?”

really think you need to be explicit about that, that the challenge is not in preserving the culture but in having it evolve the right way.

Part of the point of hiring this person is to change the culture. If this person has no effect on the culture, they’ve probably failed. You’re hiring a senior sales leader because you want the company to sell more, and you want the company to become a culture that is better at selling things.

Briefly speaking, I think there are five top responsibilities of a CEO: being the steward of and final arbiter of the senior management; being the chief strategist; being the primary external face for the company, at least in the early days; almost certainly being the chief product officer, although that can change when you’re bigger; and then taking responsibility and accountability for culture.

In many ways it’s harder to create an organization with the kind of focused, determined, disciplined, non-complacent mindset that you need today than it was 20 or 30 years ago. That’s just a structural headwind that we all face.

In marketing, it’s a best practice to have shared services. You need a structure where every business line works with this one team to help support their campaigns—like an ops function or a creative function. Something that’s not 100% vertical, but that really is shared among all the business line leaders. I think that’s a great way to set things up from the beginning.

Your internal PR team or your agency should start things off by media training you and any other members of your team who will be officially representing the company and/or speaking to press.

Acknowledge the problem In general, once you are in a negative press cycle, it will run its natural course. Rather than fight the press cycle itself, try to expedite its coming to its natural resolution as quickly as possible.

To me, the importance of PR and communications more broadly is that it gives the company a voice and helps create credibility, or build on their credibility. PR gives the company a way to communicate their purpose. It also helps humanize the company. And given where we are now as a society and what’s going on in the world, that’s really important. I’ve also seen good PR programs help tremendously with recruiting and morale.

I just think challenging—and discussion and debate—is a lost art. But it’s so important.

However, the ultimate role of product management is making or suggesting trade-offs between the pristine, platonic ideal of beauty that the design team wants, the technical pizzazz engineering desires, the “just give me some shit I can sell” of sales, and the “this may be risky” of legal (these examples are all purposefully exaggerated).

Ultimately, product management will collaborate closely with, and at times have a natural (collaborative) tension with, engineering, design, and sales. Engineering will feel that since they are building everything, they should have the power to make product decisions. Design will think product management is redundant with design (these are very different functions,) and sales will wonder why product can’t ship faster and why the PM is always trying to keep sales people away from engineers (it is so engineers can focus on building the product without spending all their time on one-off sales requests).

If a PM’s time is spent solely on checklists and project management, they either (i) have a weak engineering management counterpart they are covering for, (ii) are not empowered to do their job by company management, (iii) do not understand their job, or (iv) are not respected by their peers and cannot do more important work.

When hiring product managers, you should select for the following skills: 1. Product taste. Product taste means having the insights and intuition to understand customer needs for a product in a given area. What product features will wow a customer or meet their core needs? If the PM is joining you from another industry they may not know the specific needs of your customers. However, they should have the skill set and tool kit to quickly learn about your customers and their needs.

2. Ability to prioritize. What is the value of a proposed product feature versus the engineering work needed to accomplish it? What is more important—a new product for the sales team or a feature for customers? Should pricing be optimized for consumers or small business owners? What is the 80% product that should be launched immediately and what singular customer problem does it solve?

3. Ability to execute. A big part of product management is convincing and cajoling teams and different resources to get the product to launch, and then to maintain the product and support the customer base. Product managers will partner with engineering, design, legal, c...

5. Top 10% communication skills. Much of the job of a product manager boils down to understanding and then communicating trade-offs to a diverse group of coworkers and external parties.

6. Metrics and data-driven approach. You build what you measure. Part of the role of a product manager is to work with engineering and the data science team to define the set of metrics the product team should track. Setting the right metrics can be hard, and even the right metrics can sometimes drive the wrong behavior.

3. Design product manager Most commonly found working on consumer applications, design-centric product managers are more user experience-centric. Some companies will convert a designer to be the product manager for a consumer product. While designers are often incredibly talented at user experience and visual design, they may not be trained in making the trade-offs needed to run a business (e.g., advertising models, pricing, etc.) or may want a product to be pixel perfect (which means it will take longer to ship the product). In general, it is good to retrain design people who become product managers to focus more on pragmatic trade-offs between beauty and marketing. Design PMs spend the most time with internal engineering and design teams and tend to spend less time on outward facing or business-centric tasks.

While project managers may be great at organizing and driving a schedule, they often lack the ability to prioritize features or ask the larger strategic questions.

1. Product insights. What products do you use daily? How would you change X product? How would you design X product for a specific set of users? What features would you add? What would you drop/discontinue? If you were starting a company from scratch, what product would you start with, and why? For example, how would you design a mobile phone for children?

For all hires, reference-checking is incredibly important. For product managers, it’s even more important. With an engineering candidate, an interview can reveal if she is technically competent. For a product manager there is no easily testable metric of competence. Instead, past work is the strongest single indicator of whether someone may be successful again in the future. Informal backchannel, pursued appropriately, can be especially enlightening.

The best product managers have a history of launching products or features that would otherwise have gotten stuck, successfully negotiating with engineering and design to make trade-offs that contributed to the success of the product, and creating a big strategic viewpoint that drives business success.

Ambiguity arises largely due to designers thinking, “I own the design, why is product telling me what to tweak?”, engineers thinking, “I own the technical aspects of the product, why is product asking me to stop working on feature X?”, and product sometimes stepping on either function’s toes. In reality, product management should be viewed as the function in the middle that needs to make holistic trade-offs on all aspects of the product and represents the voice of the user (while making the proper business trade-offs).

Instead, CEOs should look for a VP product who both understands product management processes as well as has a complementary or similar vision for the product and its road map.

Think strategically and articulate that strategy. The VP product should be able to lay out a compelling product strategy that includes a strong understanding of (i) who your customers really are, (ii) what it means to win in your market, (iii) how to differentiate as a product and company, and (iv) how to build compelling and remarkable products for your customers.

Many companies have a weekly product review meeting. This is attended by a common set of key executives to review progress on a given product and provide feedback on strategy, direction or launch readiness. A set of product teams will come in and

Product reviews may also be used to check in on post-launch metrics or success of the product or check in on user feedback or adoption. The teams attending the product review usually include the product manager (who is responsible for organizing and driving the review), the design lead, the tech lead and key engineers, and then other members of the core team needed for a fruitful discussion (this may include sales, BD, support staff, legal, or other stakeholders).

While Google’s reputation is that of organic growth, in reality the company bought placement on the Firefox homepage, as well as paid hundreds of millions of dollars per year to have Google search toolbars distributed via download with other applications and also paid laptop manufacturers to set Google as the default search engine. Google then used its search customer base to bootstrap other products and distribute Maps (Where2 acquisition55), Gmail, Chrome, Docs (Writely and other acquisitions), and other products.

1. Build a product so good that customers will use you over an incumbent. Build a large user base on the back of this first product.

The smartest companies realize they are also in the distribution business, and will buy (or build) and then redistribute a range of products.

Common stock is often discounted from the last preferred stock price.68 This is on the order of 30%.

Elad: You mentioned that you think companies should go public as soon as they can. What are signs that a company is ready? How do you know that it’s time? Keith: I think predictability is one. Meaning you can easily forecast your next quarter, your next six months. That means that, underneath that, you understand the levers of your business. There’s a business equation of X x Y x Z, and you have precisely mastered that equation. You know exactly how what you do in one part of the company affects the next part which affects the final result, which is, let’s say, your contribution margin. Once that’s well understood and the N is large enough so that the variance is rare, then I think you’re ready to be a public company, assuming you’re at some level of scale, which probably means about $50 million in revenue.