For my friends in the beverage industry – great piece on how Arizona Iced Tea went directly to their future customer base to build the brand.
One of the toughest moments in one’s work life is failure. Losing a startup, being asked to leave – these are really tough moments. They whack our confidence, they make us lonely. And we often downplay – or don’t realize – how tough they actually are. Their impact can be felt for months in ways only our closest friends can sense.
I had breakfast this morning with a good friend who is shutting down his startup and going through this experience. After we discussed the startup closure, he mentioned that he has an opportunity to investigate a job at a bigger company. He asked me whether he ought to pursue it, even though he doesn’t need it financially right now. He is torn because, while he doesn’t have a startup idea, he’s never worked in a big company (although he has an MBA), and he just imagines it would be awful.
To my surprise, I couldn’t have said “yes” more quickly. And I was reminded of the old rule of physics: a body in motion tends to stay in motion, while a body at rest tends to stay at rest.
It’s true that sometimes we need a break. Self-reflection is a great thing. “Sharpening the saw”, to borrow from Stephen Covey, is absolutely necessary.
That said, when I’m down, I’ll always choose a chance to get a “win” over a vacation. As I said to my friend, you’re going to be licking your wounds for 6 months, so why not be “in motion” along the way? Do a big trip, take a job, go become world-class at something. Get a “win”. Ignore the fear of “taking a step back”. These things aren’t permanent, you’ll meet interesting people, you probably won’t hate it and, even if you do, you’ll learn something about yourself.
Motion begets motion.
So get to it.
Please take a moment to read my guest blog today at Evisors – http://blog.evisors.com/start-ups-the-glamorous-life/ – covering the choice of whether or not to join a startup.
Over the last couple of months I’ve been working on two of my favorite things: Helping build new companies, and traveling.
On the first front, check out MackWeldon.com. This company, founded by my friend Brian Berger, hits three of my core investment theses:
a) High NPS company in a low NPS category: Underwear is the epitome of a bad category. Most guys simply don’t care about their underwear, and they avoid paying attention to it – yet it’s a multi-billion dollar category. Yet MackWeldon customers absolutely love it.
b) Reinvent the sales process: Underwear is fit-once, repeat-purchase. The web is perfect for this. Other categories like this: Soap, contact lenses, khakis, all of which have seen huge web disruption (soap.com, 1800contacts, bonobos).
c) Education as part of the marketing: When you’re introducing a brand with a major functional component, education helps, and few vehicles integrate education into branding as well as the web. MackWeldon has done a bang-up job of delivering the product benefits through their rather swanky website.
I was reminded today of something I’ve seen consistently among fast-growing small companies: At about 40 employees, the wheels start to fall off the bus. CEO’s I’ve spoken to have described it as “the chain of command gets blurry”; “it’s just harder”; “not everyone has the same passion anymore”; and “I suddenly had to think about the company differently”. There’s something about the 40-employee mark at which point the complexity of managing the company increases dramatically.
What’s going on here?
In consulting we would call this a “spans and layers” problem. (For a good article on this concept, I’ll plug my former employer, Bain & Company, and their article here). While this is typically applied to larger companies, I’d argue that the principles are equally relevant to startups.
Spans and Layers theory holds that a person in a “skill-based” management role can sustainably manage – not oversee, but truly invest in managing and developing people – a maximum “span” of 6-8 direct reports.
Your average small to mid-sized company has 5-ish departments: Product (incl development, supply chain); sales (incl distribution); marketing (sometimes in sales, sometimes solo); finance (small, sometimes twinned with ops); and operations / general administration. A company is maxing out its management capacity with three total “layers” at 36-46 people: senior leadership (1 person), department management (5), and staff (6-8 reports / senior manager = 30-40). In other words, with 40 people and 3 layers, people are beginning to run at full capacity.
It’s important to remember that these calculations certainly aren’t hard-and-fast laws, and they’re not true in every situation; in the Bain article, they note that “task-based” managers – such as factory floor supervisors – can manage 15+ people effectively. And as always, aggregated studies have to be taken with a grain of salt, as every company is unique. What’s useful about the theory, however, is the focus it puts on the management workload.
Spans and Layers thinking explicitly acknowledges that good people management takes time. In startups – often fast-growth knowledge-based environments, where you’re often hiring highly-educated, less-experienced workers hungry for training – great management can pay huge dividends. Applying the 6-8 direct reports rule makes logical sense.
Under this thinking, when you’re approaching 40, it may be time for another layer. And that fourth layer – for a new hire, the CEO is your boss’s boss’s boss – feels like a long way away. It’s clearly manageable, and all larger companies have grown through it, but doing it well requires time for your team to adjust, focus, and stretch themselves – real management thought and effort.
Typically companies really want to avoid that layer, since it risks creating too much “telephone” in the company. The downside is the company feels stress: overstretched management and under-led teams; strange dual / matrixed reporting relationships and funny titles; and turf wars, as managers realize they need to increase their employees’ autonomy but haven’t figured out how to let go accordingly.
If you see this coming – and especially if you’re starting to feel the pain – you can prepare. If you’re not already, start thinking carefully about organizational design, and engage your senior management team accordingly (this is a great topic for a few hours off-site).
And don’t hide this challenge from the rest of the company. “Layers” don’t have to be bureaucratic or evil – if done right, they’re liberating, since managers will have more reasonable management workloads (and invest more in their people accordingly). Engage your employees so they’re aware of the stresses this presents, and so they can ensure the culture isn’t lost as the company gets bigger.
Have you faced this problem? How have you handled it? Does “spans and layers” thinking apply?