In case you missed our posts from the previous weeks, we have been summarizing what founders should focus on at each stage of their startup’s journey. Priorities and strategies change as a company grows – starting with finding product-market fit after a seed round to figuring out distribution between Series A and Series B. And that brings us to the B Round.
After raising your B Round, it’s all about building the organization. We have found that this is usually the toughest phase for founders. They have been the leaders for the company since the start and now need to build a leadership team around them. This means transitioning from maker to manager.
Suddenly, you’re no longer providing day-to-day hands-on management – you need to be more focused on providing indirect leadership and setting the framework for the company… making sure that everybody in a fast-growing organization understands the vision, making sure that everybody lives and breathes the culture, and making sure that your leadership team is best equipped to do their best every day.
This means investing in your people at all levels and investing in yourself.
Focus on company culture and vision
In the early days, the first handful of employees likely formed a single tight-knit group and the management structure was pretty flat. You’ll probably cross 100 employees during this stage; different groups will evolve and layers will be added – and it becomes all the more important keep everyone aligned to the central mission.
One of the most important things a leader can do is to make sure the whole organization understands the company’s vision, priorities, and goals. We’ve found that most CEOs underestimate just how often the vision needs to be repeated. Stewart Butterfield advised to “Repeat the message until you are sick of hearing yourself talking about it.”
Invest in your people
While it is now pretty common for young founders to work with coaches, leadership development has typically been limited to executives. Shopify has done a really good job in making sure their company leaders are nurtured and developed at all levels of the organization.
They brought on a part-time coach when the company had around 60 employees, and then full-time when they reached 160 employees. They’ve been offering one-on-one coaching for executives, ad hoc mentoring for 1st and 2nd level managers, as well as “at scale” leadership workshops for all company managers.
You don’t necessarily have to bring coaching in house. LifeLabs Learning offers a good series of workshops and some of our portfolio companies have used Sounding Board for scalable, and affordable, 1:1 coaching.
Invest in yourself
We can all learn from what Stewart Butterfield has done (and continues to do) at Slack. In conversations with Stewart, we are always impressed by how self aware he is about his own strengths and weaknesses. He actively seeks feedback on how he can further improve himself. This has been critical because when a company scales as quickly as Slack scaled, its leaders need to scale equally fast.
Great leaders are made, not born – although we tend to see just the end product and not the hard work that led to the success. Scaling from founder to manager is going to take a whole village – coaches, mentors, peers, feedback from your company and direct reports. Most importantly, you need to look at feedback as an opportunity to grow, rather than criticism.
Hiring after a B Round
During the earlier phases, you have mainly been hiring generalists rather than specialists. But at this stage in the company’s growth, founders can no longer wear all the hats. Now is the time to hire a great VP Sales, VP Marketing and VP Product.
In general, you should be looking for candidates that have seen it and done it before, but are still flexible enough to adjust their playbook to your company’s specific situation. We have seen many situations where VP’s that came from “big brands” cannot adjust to the limitations and necessities of a Series B startup: budgets and teams are usually way smaller, playbooks are still evolving, and it takes more work to chase customers (people aren’t automatically coming to you because of your brand yet). Keep in mind that not every hire will work out and you might be back to leading some of these functions.
For those of you who have experience leading a Series B company, is there anything you would add? What do you see as the biggest priorities after raising a B round?