COO MasterClass: Building High Output Startup Teams

“How do we build a high output team to support our startup scaling 10x or 20x?”

By Collin West

This week we explore how to build the right team and scale your startup. Whether you are pre-product launch or raising a $100 million dollar Series D, your ability to recruit, train, and retain top talent will separate your company from the rest of the pack.

I spent some time with our friend and Ensemble Advisor, MasterClass COO Mark Williamson, and asked him to share tactics on how the best founders and executives think about team building. In particular, founders and venture capitalists alike are asking…

How do we build a high output team to support our startup scaling 10x or 20x?

This is easiest broken down by startup stage:

Team Building at Seed and Series A

In the earliest stages, it’s generally obvious what is missing in your team.

You have to hire engineers, designers, product managers, marketers, the list goes on and on. Seed stage startups need people who can roll up their sleeves and do the work. Everyone in the company needs to be focused on building the product, attracting users, and starting to generate revenue.

By Series A, when you have more money in the bank and are thinking in a longer time horizon, it should still be clear what hires need to be made.

“After closing your Series A, you should recruit talent that compliments the founding team,” shared Mark. “You can look at your org chart and see what you’re missing – whether that’s a VP of Product, Sales, or Finance.”

The balance at this early stage is building the teams in the right order and at the right rate. You don’t want to overinvest in one area, and leave other groups behind.

Team Building at Series B and Beyond

After Series B, it’s no longer as obvious how to build out your team. Should you create a business development team? If so, how large? Do you need a corporate development team? Who should that team report to?

Depending on your business model, customers, and market, these answers will change. There are some similarities, however. Companies at Series B and C will start to formalize processes and build some hierarchy.

For instance, engineering might be split up into teams that report to a single technical lead. Technical leads would report to the team lead, most likely a VP of Engineering or Chief Technology Officer.

This functional organizational structure (individual teams that report to a single VP or C-level exec) works up until about the Series D. “At or around the Series D, you want to switch from a functional organization to a matrix organization,” said Mark Williamson. “It’s at this point you think about entering a new market or building your second product.”

To build and launch a second product requires a lot of resources from your existing teams. You will need to pull in user experience research, product managers, designers, engineers, data analysts, and more. Moreover, the resources that you need will change.

In the beginning, the focus is understanding customer problems and building user stories. Later, you will need design and engineering resources. Then you want marketing, customer success, and other functions to scale and support your new product.

So, what is the correct way to organize this talent?

“You need to create a distinct group that acts like a startup within your company. You want the second product to roll up to a General Manager that knows every detail of this new product,” shared Mark Williamson.

The new startup team can pull resources in as needed, then integrate people back into the main organization. This structure allows for quick, efficient decision-making while still giving people a title and place within the overall company.

Put simply, the matrix design works because you need different resources over the product lifecycle and you don’t want to create too many silos in your company.

Making the Tough Decisions

Every founder starts as the person who does the work. He or she comes up with the idea, validates it in early conversations, convinces friends and colleagues to join, builds the first version of the website, scrapes together funding, and much more.

As the company scales, founders and executives need to transition. The biggest pitfall is that most people do not realize that they need to make this transition away from doing the work themselves to leading people who do the work. “You have to stop doing everything that made you successful to begin with,” said Mark.

At inception, the founder has to do everything themselves. By Series A, they have to start to relinquish this control and hire competent leaders around them. Then by Series B and C, there has to be a shift from doing all the work to delegating all the work. Mark Williamson shared: “You need to ask yourself how do I hire and empower other great decision-makers?”

We recommend that startup founders and CEOs work with an executive coach to help gain this perspective. Self-awareness is key, as the founders themselves will often become bottlenecks as the headcount and number of responsibilities grows.

Mark has a helpful sports analogy to help founders remember their roles: “At Seed and Series A, you’re an all-star player. At Series B and C, you’re the coach. By Series D, you’ve become the general manager. And by Series E and beyond, you’re the owner of the sports team.”

Conclusion

To get a company off the ground, founders have to scramble and do everything themselves. They have to value the idea, recruit a team, convince investors, solve problems, and learn to manage expectations.

As a company grows, founders have to transition from the person doing the work, to manage people doing the work, and ultimately managing other managers. This transition might seem obvious from the outside as the product, revenue, and headcount grows – but it can be challenging for founders.