This was presented to the Point Nine Saas Summit in Berlin in October, 2013.

1. SCALING T EAMS
Point Nine Saas Summit
Oct 27, 2013, Berlin
http://www.michaelrwolfe.com
@michaelrwolfe
michael.wolfe@stanfordalumni.org

2. T he
Start
YOU ARE HERE
Product
Market
F it
Scale
Trying to
get here

3. Notes:
Most of the companies here have achieved
some level of product/market fit and are now
starting to scale. Everyone is to be
congratulated – very few people ever manage
to get a company started, much less get
customers and raise money.
This is why I hate to ever see a company that
got this far not get to the next level – it is such a
squandered opportunity and is often avoidable.

4. SCALE:
“Maintain excellent
execution during
rapid growth in
customers, revenue,
and people”
( And WIN )

5. I’ve been through it
2002 – co-founder

6. 2007 – 175 people, $50M bookings

7. 2007 - $350M acquisition,
I became GM of the group, then CTO of Enterprise Group

8. 1996 – employee #2, VP Engineering
2000 – 1,200 people, $ 180M run rate, $10B IPO

9. First web analytics company, Saas-based
1995-1997, employee #2, grew to 150 people
1999 acquisition, ~$200M

10. Also
2x Entrepreneur in Residence
Computer science, teaching, mentor
at StartX
Several advisory boards and boards
of directors
Quora, blogging
Currently on sabbatical in Barcelona

11. Notes:
I’ve been through the scale phase of a company
three times, plus have been involved in many
more. I also had one company that did not
succeed.
I’ve seen lots of things that have gone wrong,
but I’ll talk about some things I think almost
always work. Most stories and photos are from
Vontu.
(thanks Joseph Ansanelli for the photos and for
helping build a great culture there)

12. T he bad news
What got you here
won’t get you there
• New skills
• New people
• New ways of doing
things

13. T he good news
• It is under your control
• The solutions are well
known and apply
across companies
• Boards have a strong
bias against replacing
founders

14. Notes:
One of the first things that trips up companies
is that what they had to do to get started will
not necessarily help them scale. In fact, it often
works against scale.
The good news is that when companies start to
scale, lessons learned at other companies apply
pretty well – people are people.
And, your board, employees, customers, are all
rooting for you to succeed.

15. What helps you
scale

16. You must kick ass in three areas:
Product
Understand your customers
and design and deliver the
product they want
Customers
Help customers find you, try
you, buy from you, and say
good things about you
People
Get the best people, keep
them engaged and aligned
around a few key priorities

17. People
Customers
The right
founding team
can get you
started
Product
Start
P/M F it
Scale

18. Notes:
A good founding team and a few great
employees can get you pretty far – for the
companies at this conference, it has gotten you
to product/market fit.
Since you are one happy family sitting in the
same room together, the “scale” issues aren’t a
factor.

19. The companies that
scale excel at all
things people
People
Which lets them
keep getting better
at everything else,
without founders/
CEO as the sole
drivers
Customers
Product
Start
P/M F it
Scale

20. Notes:
The companies that successfully scale tend to
be relentlessly focused on getting the best
people and keeping them engaged and working
on the right things.
Which should let you keep kicking ass at
product and customer, even with rapid growth.
In other words: not only will you be hiring a ton
of new people to do new things, most things
you are doing today will be done by someone
else soon!

21. • Recruiting
• Training
• Management
• Planning
• Communication
• Culture

22. Notes:
A good way to envision what you are trying to
build is to imagine what you’d like people to say
about your company.
It doesn’t matter what you *want* to happen
and *think* is happening in your culture if the
people in your company don’t feel it.

23. “When I interviewed, the people I met were
totally charged up, in sync, and I was never
asked the same question twice”

24. Notes:
Many companies focus a lot on their engineering
processes and customer acquisitions processes, which
is good.
But too few really focus on the recruiting process,
which is actually more important.
You should write it down, debate it, and constantly
improve it.
Make sure that anyone who interacts with your
company walks away with a positive experience – even
if you don’t hire them, they will tell their friends!

25. “I had to answer some tough technical
questions, do a presentation, and they
checked tons of references, including ones I
didn’t give them!”

26. Notes:
Interviews are quite unreliable for figuring out who will
fit in at a company and be a top performer.
Create a recruiting process that is tough to get through
– hard technical questions, role playing, lots of
references, and probe deeply on backdoor references.
At Vontu, each candidate gave a presentation to the
company as a final step – it really solidified the culture.
See
http://michaelrwolfe.com/2013/10/19/should-i-trustmy-gut-with-hiring-decisions/

27. “The founders took the time to sell me on
the company, told me the history, and
answered my questions”

28. Notes:
The best candidates already have jobs and
need a reason to join your company.
The founders needs to be very involved with
recruiting almost every new team member,
which means taking time to sell on the vision
and ask questions.
Everyone in the company will spend a day a
week or more recruiting – more than 50% of
your time if you are a founder or manager.

29. “On my first day, my computer was set up, I
had a checklist on how to get up and going,
and I had several orientation sessions already
on my calendar”

30. Notes:
Most of the money and effort in your company
goes towards getting the best people in.
So why not kick ass at what happens next –
when someone joins they should have a
computer, a checklist of things to do to get set
up, and have some orientation sessions
planned.
You would not believe how far this goes in
solidifying the candidate’s decision to join the
company in those fragile early days.

31. “When someone isn’t working out, we take
care of it quickly and professionally.”

32. Notes:
I’ve never known a great company that wasn’t
good at handling bad hires. And, no matter how
good your recruiting processes are, at least 20%
of your hires will be mistakes.
You never want to fire someone who thought
he was doing a good job, so start the feedback/
coaching process for new employees early so
you can start to build a strong groundwork.
But don’t let that process be an excuse for
procrastination – once you know for sure it is
the right thing, do it.

33. “We have a flat organization, but I sit down
with my manager regularly and get and give
feedback and coaching”

34. Notes:
Flat organizations tend to work the best for a long list of
reason. Beware creating management positions just to
accommodate people who think they should be
managers.
Anyone who is a manager should be primarily focused
on recruiting, training, and managing their team, even if
they still have individual contributor responsibilities.
“Player/coaches” are common in the early phases, but
they tend to flame out as you grow.
See
http://michaelrwolfe.com/2013/10/19/do-i-really-needto-do-1-1s-with-my-team-members/

35. “We’re always getting trained on something”

36. Notes:
In terms of bang-for-buck, training is one of the
most effective things a company can do.
“Training” can be as simple as a short PPT and
an hour meeting. But the effects can be magic.
It forces you to write stuff down – pretty soon a
primer for your company emerges.
It also performs a social function – getting
people across departments working together,
especially if you do regular offsite events (we
did quarterly)

37. “It is clear who is responsible for every
decision and how others participate in that
decision”

38. Notes:
One of the most powerful things a company
can do is be explicit about who makes what
decisions in the company.
Often, when employees complain about
“process” and “bureaucracy”, what they are
really complaining about is slow and obscure
decision making
See:
http://michaelrwolfe.com/2013/10/25/how-canwe-make-faster-and-better-decisions-at-mystartup/

39. “Everyone knows the strategy, goals, and
the numbers. We replan often and review
the board meeting notes each month

40. Notes:
The strategy of the company and the major
priorities and objectives should always be
known by everyone in the org.
Replan often – at least quarterly.
Walking the company through the board
meeting notes after each meeting is a good
discipline.

41. “We hire and reward people according to
the culture. When someone violates their
co-workers’ trust, they are out.”

42. Notes:
Culture is “what is happening” at your company,
not “what you want to happen”
The dials you have to turn to impact culture are
1-who you hire, 2-how you reward people, 3how you behave
Get rid of good performers who are poor
cultural fits, especially if they are disloyal to
their teammates.

43. “We celebrate our victories every week,
and people hang out across departments”

44. “People love
that place. I’m
going to try
to get a job
there”

45. Notes:
Once you become known as a well-run
company with tough hiring standards, a buzz
develops around you.
People want to join your company – even
people who were rejected by your recruiting
process tell their friends that they should join
you.
It is hard to detect or measure this, but the
“word on the street” about your company is
perhaps the largest determiner of successful
recruiting

46. "OK, sure, all good.
Why doesn’t every
company do
these?”

47. “A man may conquer a million men in
battle, but one who conquers himself is,
indeed, the greatest of conquerors.”
- The Buddha
“Some of the greatest battles will be
fought within the silent chambers of
your own souls”
- Ezra Taft Benson

48. Notes:
Few people would disagree that these are all
good things to do in theory. But I walk into very
few companies that do them.
Let’s take some time to ask why they don’t
happen.

49. “We don’t
have time”
Four little words that kill
companies

50. “We don’t have
time to:”
Interview a lot of
candidates for a role
Onboard and train new
people
Have meetings
“We do have
time to:”
Spend hundreds of hours
dealing with a bad hire
Make mistakes, miss
deadlines, lose deals
Waste time working on
the wrong stuff

51. Everyone
You
Leader
Optimize for
the whole
company over
the long term
Individual
Contributor
Just come in
and do your
own work
Today
P/M F it
Future

52. Notes:
Practically every company has said “we don’t have time”
when debating investments that have longer-term
payoffs.
This often represents a difficulty transitioning from
“individual contributor mode” in the early days to
operating through your team.
It can represent inexperience – if you haven’t yet seen
these things in action you might not completely
understand their power.
Your job as a leader is to prioritize these investments
and drop your focus on your own day-to-day
productivity – it will take some time to pay off, but it is
powerful when it does

53. “I can’t delegate that”

54. Hire people better at it than you, train
them, and turn them loose
Give people a chance and let them fail
a few times

55. Notes:
Really important decisions about product and
customers seem very hard to delegate.
First, you need to get the right people in place.
Once you do, train them – you should never have a
piece of information that drives your decisions that
the people working for you don’t also have.
You need to trust them and let them make some
mistakes. It is an investment.
And you need to be clear about where you want to
give input – your “founder magic” needs to be
represented, especially with product decisions, but
insert that magic at a few well-defined points, not
arbitrarily

56. “I just dread difficult
conversations”

57. Don’t worry – everyone does (unless
they are psychopaths)
It gets easier with practice
Read this book

58. Notes:
Any startup founder regularly wakes up at
night, dreading a set of hard discussions she
needs to have – firing people, making a hard
decision, cancelling a product, giving someone
critical feedback.
You need to develop habits to “seek out” this
pain and hit it head-on. No, it doesn’t get easy,
but you will feel a (perverse?) satisfaction that
comes from doing something that was hard.
“Crucial Conversations” is an amazing tool to
give you a framework for these talks.

59. “We don’t want it to feel like a
big company”

60. This is probably what they meant:
Clear direction and focus
Empowered people
Transparent communication
Rapid decision making

61. Notes:
Lots of companies resist meeting and process –
they don’t want to lose the magic of being a small
company.
Effective scaling is precisely the ability to get larger
without losing that magic. Letting the culture evolve
without guiding it is where red tape is born.
That means evaluate these techniques and others
on their ability to make faster decisions, remove
roadblocks, provide transparency, and make
people closer.
Also note that you *want* to become a larger
company – if you do have employees who don’t
want the company to grow, you may have a
mismatch.

62. Above all
The goal is not perfection – just
make progress every day
It is a marathon, not a sprint

63. CREDIT S
• Joseph Ansanelli – Vontu CEO/co-founder, chief photographer
• Margie Mader-Clark – Vontu VP HR
RECOMMENDED READING
•
•
•
•
•
•
•
•
Jerry Colonna – www.themonsterinyourhead.com
Jason Lemkin -www.saastr
Joel York - www.chaotic-flow.com
Hubspot blog and culture preso
Ben Horowitz - www.bhorowitz.com
Joseph Ansanelli - www.ansanelli.com
“Crucial Conversations” – Kerry Patterson
My Blog – www.michaelrwolfe.com
– See posts on decision-making, 1-1’s, hiring, others

64. SCALING T EAMS
http://www.michaelrwolfe.com
@michaelrwolfe
michael.wolfe@stanfordalumni.org