The Crane herd

Scaling pains

Hiring for roles outside of their area of expertise is one of the biggest challenges start-up founders face.

The early phase of a software start-up is usually characterised by rapid product experimentation, selling to “friends and family” and a lack of formal structure or processes. During this phase, hiring enthusiastic generalists typically works very well for founders.

Once the business starts scaling however, the pace of everything increases, including the volume and complexity of paying customers.

It is at this stage that organisational gaps, a lack of specific skills and process shortcomings can start to negatively impact paying customers, with things like slow deployments, product quality issues or low user adoption generating negative customer sentiment and even a loss of existing revenue.

A founder’s natural instinct when faced with these kinds of issues is to fill the organisational gaps by creating a Customer Success function and to bring in the domain expertise they lack by hiring the most tenured Customer executive they can find.

This instinct to hire in a tenured executive makes total sense, but it is not always the right one (and can be costly to the business and its culture).

Scalers

Tenured senior executives tend to be “scalers” — their skill set being focused on taking something that is largely understood and mostly working, and then refining and amplifying it. Scalers will typically come to a start-up with a Customer Success “playbook” based on their many years of experience (and often heavily informed by the way their previous company did things).

Because they lack the necessary domain expertise, founders often find the idea of a ready-made playbook to be incredibly attractive, as on the surface it appears to be the most expedient way to overcome the current challenges and head off future ones.

The issue however is that Customer Success is contextual — what it takes to make a customer successful varies considerably depending on the product or service, and if the start-up hasn’t yet figured out the basics of what they need to be doing with customers to generate business value (a “Success motion”), then a tenured senior executive is usually ill equipped to address this fundamental gap.

This is because scalers have usually spent many years away from the “coal face” of customer problems. The size, scope and complexity of what they have been managing means their focus has mostly been on internal orchestration and alignment, process, budget and hiring. If they have had a long tenure with one particular company then they are also generally conditioned to that company’s way of doing things which may not be compatible with the start-up’s product, service or its customers.

As a result, scalers that land in an early stage start-up will often look to address the lack of a “Success motion” by steadily hiring back members of their previous team to help figure it out. What usually ends up happening though is the reverse — with these new hires bringing their bias towards the scaler’s playbook with them and through weight of numbers and influence with the scaler, altering the character and culture of the start-up.

It is often at this point that some of the early hires who have built up valuable institutional knowledge about the business, its product and customers begin to leave because of what they perceive to be a “takeover”. Customers can also begin to suffer because the processes, programs and engagements that are now being delivered come from the playbook of a different product or service and so do not match their needs.

Builders

Whilst they may not have the long tenure in the executive ranks, “builders” possess the ideal skill set for a founder who does not yet have version one of their “success motion”.

Builders are typically team leads, managers or even senior individual contributors that are much closer to the customer “coal face”. In many cases they are “player managers” — running a team as well as owning their own book of marquee customers.

The reason why it is important for builders to have people management and hiring skills is because a very large part of building an effective success motion is figuring out (and hiring for) the core skills that are required to drive business value quickly with customers. In some cases, the core skill may be technical, in others it could be project and digital change management, and in some start-ups, having a team with specific industry or regulatory experience is the key to unlocking customer value quickly. By bringing in members of their previous team, scalers greatly increase the risk of a mismatch as their previous team’s skills are generally attuned to that company’s product, service and customers.

The ideal builder is not just someone in or on the cusp of management, but someone that has also been in a few similar start-up businesses that are slightly further along in their scaling journey than the founder and her start-up are now.

Whereas a scaler may have their executive experience measured in decades, the builder’s experience is usually measured in years, with two to three-year stints in a number of similar stage businesses not being uncommon.

Their variety of experience and familiarity with the scaling stage of the journey usually means builders are pre-disposed to experimentation and iteratively working out what is effective and ineffective with customers. They can usually figure this out quicker than someone working from an existing playbook because the breadth of their experience has made them adept at recognising patterns and at lateral thinking, applying relevant parts of their experience from different companies, products and customers to accelerate the creation of the start-up’s Success motion.

For founders, builders also present far less risk. Not only are they materially less costly to hire, if they excel and develop in the role, they become ideal candidates for future executive positions. If not, the founder still has the ability (when the time is right), to hire in a scaler above them to coach and develop them further, whilst refining and amplifying the version one playbook that they have been instrumental in building.

Founder checklist

Whilst there are scalers that do have the ability, experience and inclination to be builders, they are very few in number, hard to find and always in high demand.

For founders that have determined that a builder is better suited to the stage their business is in, they should seek out people with a solid track record of working closely with customers in a few different (yet similar) settings, that are consultative and curious by nature, have good people management experience and know how to source and hire for the appropriate skills.

These attributes coupled with good commercial acumen and a strong entrepreneurial bent should serve the founder and the business well and may well produce the scalers of the future.

Investor & Venture Partner @crane_vc . Alumni @slackhq @zendesk @yammer @salesforce and others.

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