Listen here: https://lnkd.in/g99UfAv
⚡️ I was pleased to be featured on The Orbit Shift Podcast by Freshworks for Startups. Jayadevan P K (JPK) and I spoke about:
🚀 Blitz-scaling and its drawbacks
🚀 The two types of founders; the mule-drivers and the prophets
🚀 Hiring new leaders and how to attract talent to an organization
🚀 How to structure an employee equity ownership plan
🚀 The need to re-think OKR’s
🚀 Building the people function and hitting the ‘Dunbar Number’
“In the startup world, there’s generally too much to do. Not enough people to do it. And even if you have what seems like bottomless resources, you need to make some choices.”
One of the choices that a startup needs to make is about what kind of talent it needs and at which growth stage. Andrew Bartlow unravels this for us.
Andrew Bartlow has 25 years of human resources and talent management experience at companies across various sizes, maturity stages, and industries. He is the co-author of Scaling for Success: People Priorities for High-Growth Organizations. Andrew leads Series B consulting, which helps businesses articulate their people strategy and grow fast, even as they deal with change. He’s worked with clients like MasterClass and many others to help them overcome challenges at a hyper-growth pace.
We talk about his book and how startups can scale their people functions. We drill into the archetypes of founders, how startups should hire different people at different growth stages, how startups can attract talent, using equity to attract talent and how to frame a performance management system.
Q. In your book Scaling for Success: People Priorities for High-Growth Organizations, you talk about the two kinds of founders, the mule drivers and the prophets. How do they affect the company?
Andrew: Those are two tongue in cheek, but real archetypes of founders and leaders. The mule driver sits on the cart, and you have the animal that’s pulling the cart, and you can compare that to the founder or leader who hires a team and tries to drive them forward. They might care for the mule. They might treat it well. But ultimately, the driver of the mule cart decides on the direction, what gets done, and everything else. The team gets them there. This is one style of leadership that can be successful in certain limited situations. The founder as a sole-decision maker has some benefits. Decisions happen fast. You don’t need to drive to a consensus. But it can create bottlenecks. Your team doesn’t get to make a lot of decisions. They don’t get a lot of freedom and independence, and innovation is impacted. This is rarely appealing as an organization grows, more decisions need to be made, and things get more complex.
The other archetype is the prophet. Imagine the long flowing robes and the waving beard standing on a mountain. The prophet is a visionary, creative, and motivator. Several startups and high growth organizations are led by this big picture thinker who can attract talent but doesn’t really get into the details. They might have a deep network, access to capital or a fabulous idea. But they can’t or don’t want to get deeply involved in the execution. Once again, there are some pros and cons to this. You can attract talent as a prophet, build a team around you and set the vision for what you’re trying to achieve. But the downside of a prophet-led organization is that it often wanders a bit. The prophet doesn’t often make tough decisions and get into the weeds. Prophet-led organizations can have great talent but don’t often execute on their full potential.
Aspects of these archetypes can be helpful in an organization. But if you go too far to an extreme, it spells trouble for an organization’s future.
Q. When bringing new people into your company, you also talk about the need to hire people who are appropriate for each stage.
Andrew: It starts with the awareness that there is such a thing as a better fit in the ‘storming and forming’ phase of an organization. In the initial funding, product design, team building stages that might be more creative chaotic. That might be a great fit for some people.
Whereas later, as you’re deep into the growth stage of your organization, well on your way to IPO with thousands of people, the skills that were prized in the early stages — creativity, moving fast, quick decisions might be dangerous when you have more groups that need to be coordinated and more people that need to know what’s going on. There’s structure around how decisions are made.
In his book ‘High Growth Handbook: Scaling Startups From 10 to 10,000 People’, Elad Gil suggests that you should be hiring for about 18 months into the future. Coincidentally 18 to 24 months is typically the amount of time between venture capital fundraising rounds. That’s typically a new plateau or a new stage of growth, the different rounds of funding that takes you to the next stage.
Q. What are the ways by which a startup can attract talent?
Andrew: A huge challenge for high growth startups is attracting talent because there’s such competition. Many organizations try to compete on culture, but I find that to be less of a factor. It can hurt you, but rarely does it enormously help you.
The mission and the purpose of an organization can be big attractors. If you have a specific mission or purpose that is appealing to a population segment, do everything you can to emphasize that. That will help you attract great talent.
Otherwise, if you are XYZ Software as a Service startup technology company that doesn’t have some special higher mission or purpose, the more common problem is how do I get my next five engineers? How do I attract a sales team? Employer branding can help. I view that, though, as table stakes. It would be best to have a basic profile, free profile out on LinkedIn, Indeed, and Glassdoor. Do that. If you haven’t done that, you lose a lot of credibility in the employment marketplace because before coming to work for you, potential workers will check you out.
Beyond that, startups can sell the opportunity, sell the experience, talk about the equity opportunity and the growth potential of joining the company. Growth for the financial rewards, but most importantly, the career growth opportunities. If a company’s growing quickly, then many workers will have more opportunities to be promoted or take on larger roles than they would at a stable, mature organization.
The big opportunity that we have now in the world of remote work is that talent pools are less geographically constrained than they’ve been before. You had all these Silicon Valley companies competing with each other for the same talent in the past. Now that remote work and distributed work is more widely accepted, and frankly, more widely expected. The talent pools are worldwide that creates this huge opportunity for startups to attract workers.
I also suggest once you’re hiring 20 or more people, you would benefit by bringing recruitment in-house so that you can vet talent and help them get onboarded so that your company can grow and thrive.
Q. You also touched upon selling the equity opportunity in your book. There’s a whole section about rewards. Would you please walk us through a broad framework of how to think about this?
Andrew: Let me mention a couple of resources first. The Holloway Guide to Equity Compensation is useful. It has many valuable resources. Regarding equity, you’ll often reserve around 10% for the non-founder employees of an organization. As you raise money, the investors typically take about 10%-15%, maybe even 20%, on the high end of equity in an organization with each round. Pretty quickly, the investors will gain control of your company if you’ve gone through four, five, six rounds of funding. Reserving at least 10% of equity for your employee population is something worth thinking about early on.
A lot of founders in high growth companies wrestle with how broad-based the equity grants should be? Should everybody participate in some way? Or do you reserve that for a smaller group of senior leaders in the organization? Ultimately, that’s a decision that the founders need to make. Personally and professionally, I would shade towards being really thoughtful about who values that equity. Is a front line, less technical worker really making an employment decision based on the equity that they could receive? Probably not, but your VP of engineering probably is. So think about who values it before you give it.
There are other ways for an organization to allow everyone to participate in the upside: profit-sharing schemes, cash bonus programs, etc. So think about who should participate in the equity plan and start with a bucket of 10% and how will you distribute it. If you distribute it across a lot of people, then you’re not able to award as much to the really senior people or really critical people that will be making employment stay or go decisions based on the equity upside.
Q. What are your thoughts on performance management goal setting and the famous Objectives and Key Results (OKR) framework?
Andrew: It’s interesting that OKRs, which stands for objectives and key results, have become popular in startup management. Let’s talk for a moment about where it came from.
Andy Grove, in the 1970s, with Intel, popularized this practice and wrote books about it. Interestingly, it’s popping up now in the 2010s and 2020s. Intel in the 1970s had 10,000 plus workers. It was already a mature business, and OKRs were an appropriate method to identify the goals for a certain team or individual. They could establish stretch goals because there was stability and maturity in that organization.
In the startup world, with dozens of employees and with the objectives and goals of the organization changing sometimes overnight. Work is being done in teams more often than by individuals. The objective nature of OKRs and the mathematical calculation behind the 70% is your goal, and 100% is the stretch goal. At an individual level, I find it to be administratively burdensome and out of date. By the time that you publish it, it’s ultimately an unhelpful distraction.
OKRs, as implemented at Intel and as often implemented by many startups, don’t meet the goals that they are designed to help a company achieve. It’s about helping a company ensure that people are working on the right things, tracking progress, and keeping people aligned. But, if you have this administratively burdensome, bureaucratic exercise that takes you forever to complete, it ends up not being that helpful to the organization. Because the goals, priorities and objectives are changing so fast, it doesn’t work.
I encourage organizations to have a lighter form of goals and a lighter form of performance management. Clarity is the magic wand. It’s valuable for an organization, no matter its size, especially early when it’s more chaotic and things are changing faster, to be really clear about what you’re trying to accomplish. But do that at the company level, not necessarily at the individual level. If you really need to have a little more granularity around the organization’s goals and priorities, then do that at the functional or department level.
But if you’re trying to do OKRs with multiple objectives quarterly for every individual, chances are there’re a lot of wasted calories being spent there. That’s generally the concept that I’m trying to get across: use the right tool for your company right now. Don’t try to lift and shift, some supposedly best practice, that’s a better fit for a different type of organization at a different stage of its evolution.
Q. If our listeners want to buy your book, where can they go? And where can they follow your work?
Andrew: You can find the book at Columbia University Press or Amazon. My consulting firm is Series B Consulting. I also run an educational program for HR leaders at high growth companies. I call it the People Leader Accelerator.