Zihao Xu spoke to Brian Mitchell about hiring, growing and when to start hiring specialists rather than generalists. Here’s what he learned.
Back in the beginning, when there were perhaps just two of you, you needed to be able to get stuck into everything — you needed to be generalists. But now your team’s pushing 200-strong and you need functional specialists to keep moving ahead. Somewhere along that timeline you needed to make the transition. But when? How? Who?
Getting it right
I’ve seen businesses get this wrong and it can be existential. At early stage you can wing it, which can encourage creativity, but with scale you need to move towards operational excellence. In order to get past due diligence at exit, acquirers need to see order and rigour. You can’t take a company public on Quickbooks! People are of course key to this. Certain DNA suits companies at certain stages. Some are more suited to early stage chaos rather than later-stage stability.
What are the indicators for bringing in more specialists? When does this typically happen?
It’s relevant in most stages, but probably most critical between Series B and Series C, at maybe 150 to 200 employees. By this point you can’t be a big company acting like a scrappy startup. Band-aids won’t work here. But even going from a 10-person organisation to a team of 50 will have its challenges. There are two key drivers of change: breadth and depth. For the former, the organisation will start to struggle with the sheer volume of customers, suppliers and product issues. For the latter, your original generalist individuals may just lack the experience and skills to push their functions to world-class levels. Not dealing with depth may hold back progress, but inability to deal with breadth can destroy the business.
There are other indicators too. Feeling pain from lack of structure, rising stress levels and certain functions stagnating are just a few, as are the growing need for a COO or readiness for pushing out a second product.
What are the key challenges that companies face when trying to make the transition?
Those who built the company with you can often struggle to transition into a specialist role. By the point of transition these people are probably in very senior roles, so when you do bring in an external specialist, people can feel threatened or fear losing influence. It’s possible there will no longer be room in the organisation for a generalist. This can be a highly emotive situation and it could feel like a betrayal to let certain people go. It’s undoubtedly hard. The rest of the organisation can also be affected when people’s roles change or become obsolete, especially when these are key figures in the business’ culture.
How can a company best deal with these challenges?
It’s best to start setting the tone in the business as early as possible. By their nature, startups are super dynamic organisations, always evolving to meet new challenges. Emphasising this to the whole organisation from the start means that, when the time does comes for change, it’s no surprise.
Over-hiring into certain positions can be a good idea: getting the person with five years’ specific experience for the price of a person with two, for example. Selling them the right vision for the business will help achieve this, being sure you set out the expectation that they’ll need to begin being more generalist and scrappy, letting the business “grow into them”.
When you’re thinking about the trajectory of the business, consider the key individuals. Who in the team can make the transition to specialism? Try to set them on that path early. Invest in their training, and make it clear what you expect of them. This is the best option for people who are integral to the founding history and culture of the company. For those who can’t make the jump to be a specialist and leader, try to engage them in the process of hiring someone above them. You can pitch it that they’re choosing their own coach to bring them to the next level. Or you can move them to another part of the organisation. But no matter which role they end up in, some people’s DNA just won’t match a specialist role and they will probably leave. If you’ve done a good job of setting the tone around this early on then your organisation should not suffer too much from it — people will understand that it’s the growing pains of the journey to becoming a large and effective organisation.
What should a company avoid?
Quick decisions that come out of nowhere. Just moving a senior executive into another part of the organisation without warning could start rumours and erode trust. When your business is developing, your culture is too. A strong sense of identity can get you through really tough times, so try to have people at all levels who can almost be proxies for the founder and act as touchstones for the culture of the business. Occasionally it might even be better to retain someone imperfect in a leadership role if replacing them now means that you lose the trust of the team in the longer term.
Any final pieces of advice?
I would encourage every company to build a Day-One programme. It should get people excited about the vision of the business, confirm that they’ve made the right decision by joining and set out a roadmap with clear milestones and projected evolutions. Make it clear that being part of this will give the new employee an invaluable education in how to scale a successful startup. This should ensure business resilience, whether for the generalist-to-specialist transition or for any other challenges you might face along the journey.