Growing Your Startup Tech Product Team
Artificial Game Rules I'm focusing on here:
- largely software company - high ($250k) Revenue Per Employee
- largely product not custom-services - high margin
- (relatively) low-touch sales (Atlassian not WorkDay)
- tech isn't Rocket Science (e.g. streaming video)
The Startup Growth Stages are roughly:
- T=0.0yrs: 2 CoFounder-s start BootStrapping for relatively brief time
- T=0.5, numEmp=2 (incl/just the 2 CoFounder-s): raising OPM (Seed Capital, $0.5-1.0M) to pay themselves plus ~2-3 Early Employee-s to accelerate Customer Development
- T=1.5, numEmp=5: raising Series A ($1.0M-$3.0M) enough to hire a few more people for long enough to get to Product Market Fit?
- T=3.0, numEmp=10: raising Series B ($2M-$8M?) from Venture Capital to accelerate growth and get to Liquidity Event
- T=7.0, numEmp=40: Liquidity Event ($10M rev, $100M value)
- See Startup Growth Stages for some examples.
- If goal is IPO, then probably need revenue of $100M, which means you'll have to grow much faster, even if you push out the "deadline" to 8-10yrs from founding.
- Or you could hope for Buy-Out from BigCo, but a risky bet to take.
- Or you could go for an LBO to buy out your investors while taking on lots of debt. See 2013-10-30-KickstarterNonexitPayback
- But I will still stop my org-structure planning at numEmp=40.
Scenarios for the first 2-3 people, BootStrapping:
- I think your Founding Team, framed as the people with roughly equal big chunks of Employee Equity and power, should be only 1-2: the Hacker and/or the Hustler.
- If the 2 of you had/developed the idea together, and are likely to have the same risk profile, etc. etc. etc. then being equal-equity CoFounder-s make sense. Mark Suster notes how rare this really is. So in most cases, I agree that his model of having a single true Key Founder who "pays" his CoFounder with significant-but-not-equal equity (and power) makes sense.
- The Key Founder might not be the person who "had" the original idea, if the other person had and will-have more to do with turning the napkin into a business.
- If the Hustler is the Key Founder:
- He owns (by "owns" I mean he's ultimately responsible, and the lion's share of it):
- His non-equal Hacker partner will be responsible for product planning and development:
- making sure the Lean Canvas is practical (executable with slowly-increasing resources)
- creating/refining/defending Product Roadmap
- building the MVP himself
- possibly hiring part-time designer to get things a notch above BootStrap-CSS.
- creating process/system for turning assumptions into experiments, running experiments, tracking results, updating Lean Canvas...
- This person's title should be Chief Product Officer.
- I used to prefer Chief Technology Officer, but now I think that's wrong, because this is probably not the deepest-techie of the eventual organization, but rather someone who hits the sweet spot of fitting the market strategy/vision to the realities of execution.
- He's at high-risk of getting demoted or canned before Liquidity Event, thus needs some sort of compensation (add a year of vesting if pushed out?)
- If the Hacker is the Key Founder:
Once raise Seed Capital:
- next couple hires will still be techies
- head-Hacker responsibilities:
- still OutSourcing the fanciest bits of design
- other hire(s)?
Once raise Series A:
- hire 3 more techies
- hire a User Support person who also takes over Community Management
Alternative path for start through Series A
- Hustler is product visionary, Hacker is deep-tech-executer
- upon Series A, hire CPO. Hacker-founder reports to him, with title VP-Engineering and/or Chief Architect. Adding Product To Your Startup Team.
Once raise Series B:
- hire or promote Vp Engineering to keep the product-dev process fluid with good quality. He reports to Chief Product Officer, and Chief Architect reports to him.
- office manager, HR
Feb'2020: I know longer agree with that structure above, because
- each two-pizza team should include QA and Designer within it; if total size=8, that makes 5 devs
- so maybe 3-4 teams of that
- I don't want them reporting to a VP-Engineering.
- Maybe a Dir-Product who has a strong Engineering background?
- or maybe the PMs report directly to the CPO, and each team has a very-senior-dev (most-senior of which is Chief Architect)
So updated numEmp=44:
- office manager, HR