Imagine a basket weaver working from his home in a rural village. The monthly market is coming up in a distant town, and he wants to make the most of it. So, he packs as much of his wares as he thinks he can sell onto his cart, hitches up his donkey, and heads off. It’s more than the donkey usually pulls, but he’s moving, so the weaver assumes it’ll be fine. Halfway into the trip, though, the donkey’s not looking so good. Despite plenty of carrots and the occasional stick, he slows down, stumbles, and eventually collapses. The result? The weaver arrives a day late and barely sells a thing.
What do basket weavers and overloaded donkeys have to do with startups?
I’ve seen too many founders do the same thing. Let’s say you’ve found product-market fit and had some initial success. Investors are starting to notice you, and they’re saying you’ve got a unicorn on your hands — as long as you move fast. So, you decide to turbo-charge your growth by adding more features, expanding internationally, and taking on partners. If the growth comes through, it’ll justify the huge capital raise you need to truly dominate the market. But soon, like the basket weaver, you’ve piled on so many new projects that they overwhelm your organization’s ability to deliver.
Every org has its limits
If you keep stacking all your new growth plans onto the same organization, eventually it will slow to a crawl or topple over. Your engineers will be pulled in too many different directions. Projects will fall through the cracks. Your support functions won’t understand the priorities on the front line. As you push the donkey harder, the result will be burned out employees, inter-departmental frictions, and broken promises to investors and customers.
Simply adding more people won’t solve the problem. That’s like expanding the cart: it helps, but only up to the limit of the donkey’s strength. You can add a few engineers, customer success staff, and marketers to help carry the extra load for a little while. Eventually, though, the whole organization needs a major overhaul. Trying to do that in the middle of a growth push is like trying to replace the donkey and cart with a Tesla Semi while it’s fully loaded and you’re racing to the market.
It takes time to upgrade
When founders draw up ambitious expansion plans, they don’t always think a great deal about the organization they’ll need to execute those plans — or to cope with the business volumes they’ll have if the plans succeed. Too often, they assume that the next big round of funding will take care of the problem because they’ll have the money to hire all the people they need, including seasoned operators.
What they don’t realize is that by then, it’ll be too late. As the organization grows, the way it operates has to evolve — a team of 50 people working out of a single office is a fundamentally different process from hundreds collaborating across multiple teams, offices, and time zones. The irony is that accelerating your hiring only makes that evolution tougher.
There are multiple steps to transform from a nimble org that gets things done quickly to an org that can scale without falling over, and these steps take time. You’ll need to learn how to integrate senior execs who come from very different backgrounds. You and your co-founders will have to work through the ‘psychodrama’ of giving up parts of your founder roles to create the space and autonomy that seasoned execs expect. You’ll need to come to terms with the fact that the people who were great in the early days may not be such a great fit going forward, and that your recruiting will need to focus on very different types of people. You’ll need to revamp your performance evaluation system to reflect the differing priorities and needs of a complex organization, probably placing less emphasis on getting shit done and more on building smooth processes and scalable teams. You’ll need a super skillful talent acquisition team that works seamlessly with line managers to onboard and integrate new people. And you’ll need to develop a culture that is supremely good at collaboration, supported by a few people who are skilled at defusing conflicts.
These steps not only require your time and attention, they need the involvement of many people, and some trial and error. No matter how big your Series C funding is, money alone won’t solve the problem. If all your energy and resources are focused on maximizing growth, these things won’t happen. Even if you recruit some great new talent, the risk is that you end up with an organization that’s less than the sum of its parts. Instead of collaborating toward shared goals, people will be working against each other, fighting turf wars, or working on projects that never see the light of day.
So, how do you balance the need to grow with the need to upgrade your organization?
Slow is smooth & smooth is fast
This is one of the watchwords of the Navy Seals, who know a thing or two about working under pressure.
The temptation to go as fast as possible is strong in the startup world, and in the early stages, it may be the right thing to do. But speed doesn’t always equate to long-term success. The longer you put off upgrading your organization, the more likely you are to become a big, mediocre company.
Why? Because throwing money at growth generally works. It will make you big, but it won’t make you efficient, effective, or competitive. It definitely won’t create an org and culture that continue to attract the best talent after the temporary sheen of hyper-growth has worn off.
In the short term, org scaling problems are largely invisible to outsiders, but they’re always obvious to everyone who works there, and they will come back to bite you. So, whatever you’ve promised to investors, you better assess whether you can achieve it without killing the donkey. If you’ve already overpromised, you can try to do it all and fall short, disappointing your investors and compromising your future ability to raise money… or you can go back to your investors early and say you need to back off a few of your goals and invest in building a high-performance organization. The more experienced your investors are, the more they will appreciate and support you in this move.
First mover advantage is all well and good, but it’s no guarantee of long-term success — remember Netscape? This HBR article does a good job of exploring the half-truths of first mover advantage.
It’s a choice
There are plenty of founders who have built big companies by prioritizing growth over everything else. The decision to balance growth with sustainability and the quality of your org is ultimately a personal one.
If you naturally lean toward the balanced approach, I hope you will have the courage of your convictions. Once you make the commitment to building a truly scalable, high-performance organization, you’ll not regret it. In those critical periods when you need to drive growth above all else, you’ll have the capacity and resilience to do it, and your people will understand. And the more you plan your organizational development in advance, the less you’ll have to slow down to execute it.
Remember the photo? Your org is the donkey. Try not to kill it.