Why people are key to scaling your startup

If you analyze any problem for long enough, it ends up sounding like a people problem. That’s what I’ve learned most in the past seven years at Intercom. And it’s usually your fault.

What follows are my talk from Intercom’s tour last year and a loosely edited transcript of it. Short on time? Here are five quick takeaways:

1. During the founding stage, the wrong co-founders can cause your company to fail. Make sure to find people you’re aligned with and establish who does what early on.
2. Your early hires will strongly influence the success of your company. As much as your co-founders, your early hires need to be bought into what you’re doing, why you’re doing it and how you’re doing it.
3. As your company grows beyond your co-founders and early hires, you’ll need to scale your teams. Beware of the epidemic of collaboration, common management mistakes and dysfunctional teams.
4. Managing performance is one of the hardest things to do. Ultimately in a company, every individual is evaluated on their behavior and their impact. And all behavior scales.
5. Great companies are composed of three ingredients: the people, the product and the profit. If you can get the people right, you’ll get the product; if you can get the product, you’ll get the profit.

If you prefer audio, we’ve also released my talk as a special episode on our podcast. You can subscribe on iTunes, stream on Spotify or grab the RSS feed in your player of choice.

You’ll move away from building your product

Scaling a company inherently means getting further away from our initial skill set, the actual abilities that got us up and running in the first place. Product folks love to be really close to the product. We see every problem in our business as a product problem. If people aren’t signing up, if the marketing page isn’t working, if no one is sharing the product on Twitter, we just assume it will be fixed with a better product. Whenever we diagnose one of these problems we jump in and fix it directly. And we get the feedback quickly and it feels like job done. It’s gratifying.

The challenge for us all is that as our ideas flourish and our ambitions scale, we get further from the thing we’re actually good at. The thing that made us excited enough to start this thing in the first place. And the distance is necessary. We literally can’t do everything ourselves, and we have to get help from other people. So we fight to hire the best and brightest that we know (or at least who reply to their InMails and DMs). And tada – a few say yes and we have our very own product team.

What happens next? Well conveniently it turns out they just build the exact thing customers need, exactly as we wanted it created. Nothing really goes wrong. Right?

Not quite – the reality is usually a bit different. As we get further away from the product the same problems still present themselves. This is where you’re supposed to empower the team but sadly in these early days we can’t help ourselves. We roll our sleeves back up again, but this is where it goes wrong. We all want to use our core skill. Engineers who become managers try to code their way out of having to manage people. Designers try to design their way out of managing people. Product managers try to whiteboard and bullshit their way out of it. ;)

If you do that enough, you choke up and burn out. You used to be great at one job, now you’re terrible at two or three, and everyone sees it. You’re still trying to build the product when you should be building the team that builds the product. And that’s when it hits you.

“No matter how it looks at first, it’s always a people problem.” – Gerald M. Weinberg

Going back to our founding stage

That’s what this talk (now essay) is about: people. Lessons I learned about people, through all the stages of Intercom, starting at the start. Four of us signed the incorporation documents for Intercom Inc, in August 2011. In the past seven years, we’ve added more than 400 people to our company, assuming that it’d get a lot easier when we could spread the work around.

Narrator: It doesn’t.

There can be founder fallouts

While this hasn’t happened to us at Intercom, I’ve seen it happen so many times from the sidelines that I’d be remiss to not mention it.

The general advice for starting a company is you should definitely have more than one founder. “Don’t do it alone,” they say. “You need someone else to share the burden,” they say. Fun fact: do you know what one of the majors causes of startup failure is? Those other founders. :) Rare is the startup advice that survives first contact with reality.

Founders fall out for all sorts of reasons. One founder didn’t realize it was hard work. They thought it was all tech parties, TechCrunch columns and retweets. One wasn’t as committed as the other. They thought they could make it work without working hard. Maybe they lied to themselves or each other about their actual motivations or work rates or raw ability. Maybe everyone thought they were in charge. Maybe the relationships weren’t strong enough to survive the arguments. And there will be arguments.

“Startups do to the relationship between the founders what a dog does to a sock.” – Paul Graham

It’s best to start with a hierarchy

When I meet a company where I have any questions about the founders, I first look for hierarchy and responsibilities. Who’s actually in charge? Who is directly responsible for what? If they don’t have good quick answers, they’ll have bad, long fights. I’ve never seen it work well when there’s ambiguity about who is responsible for what or who is the CEO.

Eoghan, Ciaran, David and I worked together for three years pre-Intercom, so we hit the ground running. We already knew who did what and where our strengths and weaknesses lie. We all knew who was ultimately responsible for what pieces so we rarely stepped on each other’s toes. Hierarchy is easy to start with, but I’ve seen other companies go through agony to retrofit it. And they almost always have to retrofit it.

Startups, you see, love to reinvent things. Management and company structure is always high on their list. They love to blog about their success doing it too. “We’ve gotten to 28 people, without a single manager!” etc. Flat companies, managerless companies, or holacratic companies, whatever the structure, there always comes a point when the preachiness and blog posts seem to stop.

There's a certain headcount above which the blogposts on "no managers", "flat structure", "no hierarchy" and the like seem to just… stop.— Des Traynor (@destraynor) November 21, 2015

I’ve literally had founders of manager-less, flat companies ask questions that reduce to “How do you get people to, y’know, do the work?”

I don’t mean to sound all down on flat or holocratic companies, and please dear reader, bear in mind this is a transcript of a light humoured talk, but the key question I always ask is: “Are you getting something valuable from having no management, or are you just avoiding hard decisions?”

Best to make those hard decisions before you hit the next stage.

Your early hires

Your first few hires are so influential in the success of your company. I have said before that a product needs a core group of features that share a vision and work together well. Similarly, a company needs a core group of people that share a vision and work together well.

In both cases, when you hit traction, the decisions about what you add and where are the most important ones you’ll make.

When building product, it’s really easy to go off course. While you simply add things that roughly seem to do the job, you can easily forget what you were building in the first place.

When you start adding more and more features and begin to lose track of what you were building in the first place. pic.twitter.com/ciKsywxkXV— daryl ginn (@darylginn) February 27, 2017

The point is that early hires can pull your company in the wrong direction too. Your early hires need to be aligned with your shared vision.

Be wary of misalignment

You need to align your team around 3 things:

1. What are we doing?
2. Why are we doing it?
3. How are we doing it?

Your founders are aligned (hopefully). Your first few hires are likely from within your network, probably friends, so they’re aligned almost by default. Then you hire someone who’s mostly in agreement with you, but definitely differs on a couple of things. Maybe they’re keen to go a certain direction with the product, but you think, “It’s close enough.” Often, this outlier is right and this is a positive change to your company strategy, but that change needs to be a deliberate decision, not an accident. Eventually you’ll hire someone who disagrees either quietly or silently on something that isn’t a positive change to the what, why, how.

As you scale you might use this one edge case to justify others, because you haven’t seen the cost of it yet. Before you know it, you have whole chunks of the team working on the wrong thing, or for the wrong reason, or in the wrong way. This is when you learn the truth of alignment: Misaligned people mis-align people. And it’s not their fault, it’s yours.

Mistakes to be wary of with your first hires

Forgetting to keep people aligned is the biggest mistake you’ll make in your early hires. But the bad news is that you’re gonna make loads of mistakes. Here’s a few more:

• Hiring on reputation without verifying ability. It’s easy to fake the superficial. Be wary that a stellar-looking LinkedIn profile might be hiding a poor track record.
• Thinking you can add “great people” later. Don’t assume that you can compromise on quality because you’re unknown. Great people want to work with great people.
• Making excuses for assholes. The one redeeming quality of a true asshole is that they’re usually terrible at hiding it. You just need to be open to listening out for it while ignoring how desperate you are for a hire.
• Hiring people who can’t adapt to change. Everything this year will be different next year. If someone isn’t ok with the fact that the hierarchy, roles or responsibilities are going to change frequently, then they won’t enjoy working in a fast growing company.
• Forgetting about new hire onboarding. It’s easy to forget that new hires don’t even know where their desk is, let alone what the company strategy is. Invest in your employee onboarding earlier than you think. It’s an easy way to maximize their chances of success.

Avoiding those mistakes will get you through your first 10-15 hires, but at some point you look around and realize, “Wow, we’re big now!” This is when you start to think about how your teams work together.

Scaling your teams

Your company will naturally evolve from one team to many teams to many teams of teams. You need to get away from the idea that everyone should be involved in everything, otherwise you get an epidemic of over-collaboration and cyclical discussions waiting for an ambiguous consensus.

The epidemic of collaboration

The relationships and conversations get complex quickly. When we were a group of four, there were six unique relationships in total. Every one of us had three people we worked with. This scales quickly. There’s 15 relationships in a group of six people. And a group of 14 has 91 unique relationships. It’s n*(n-1)/2 if you’re curious. The point being that, even as a small company, the complexity of everyone jumping on the same thing increases.

The problem you see here is one of “inter-dependence” vs “independence.” Interdependence is slow, but everyone is always on the same page. Independence is productive but can feel frantic. Speed is what you need when you’re starting out.

The lessons here, especially if you’re in that 9-20 team size, are the following:

• Fight for independence over interdependence. This might mean breaking teams up into smaller groups with clearer autonomy, authority and accountability (Note: those three always have to travel together).
• Don’t pre-empt these break-ups. That’s the management form of premature optimization. It’s easier and smarter to let things go wrong and then fix them, because they never go wrong the way you think they will.
• Lastly, not everyone will love this transition. Some of your early hires will fight to artificially preserve a culture that is no longer fit for purpose. Don’t do this. Your company is an organism that evolves, not a relic that needs preservation. Patrick Collison wrote a great piece about this in the High Growth Handbook.

Management mistakes

Now you have teams and management and you’ve grown from one team, to a few teams, to teams of teams. The job now is about bringing in good managers and identifying good and bad teams. So, as you’d guess, you’ll probably screw all this up too. :-)

The four lessons I learned the hard way in management:

• Assuming your best Xer should be “manager of X” (X= any skill set)
• Not learning how to interview managers or how to value management experience
• Not training those you promote to management for the first time
• Not identifying dysfunctional teams early enough

Let’s drill into the last one.

The five dysfunctions of a team

This piece is clichéd but for a good reason – it’s important. How do you evaluate a team? Patrick Lencioni has done more on this than anyone, and says dysfunctional teams share one of five things:

1. Trust. If a team doesn’t trust each other, it’s not safe to express uncertainty.
2. Conflict. Without conflict, the least offensive idea wins.
3. Commitment. Can people commit to ideas even if they don’t like them?
4. Accountability. Do they hold each other accountable? Do you hold them accountable?
5. Results. Do they have the information they need to know how they’re performing? Is the information easy to get and objective?

When you see a team that isn’t performing, you should spend your time diagnosing which of these things it is, and what was missing that led to the problem. Similarly when you see a team that consistently kicks ass, do your best to understand what makes it work and why. In other words don’t just promote the manager to now have many teams and expect repeated success.

Managing for performance

There is one thing no one ever talks about: managing performance. Now I say no one but what I really mean is “No one in the happy-go-lucky I’m Crushing It, You’re Crushing It, We’re All Crushing It, Let’s Crush Things Together” world of startup advice.

Yes, this means firing people. For whatever reason no one in our industry ever wants to talk about this, except for Rands, God bless him, and as a result everyone is terrible at it. I think it’s worth being a bit more open about this.

Performance improvement plans

As a product manager, when you release a feature, you have a hope of who will use it or how valuable it is. If you release it, and it’s not quite there, for whatever reason, you work out why it hasn’t gotten good adoption, or why its score is poor. As a PM you put together a plan to ensure that it gets to where it needs to be. You do this early, you don’t waste time and you’re objective. You also take all circumstances into account as to why the feature might not have succeeded after initial release, or after being ignored for a long time.

Similarly when you hire someone who’s yet to find the right standard, or if you have a team member who hasn’t kept pace with the company as you’ve grown, you need to have an open, honest discussion about how to get them back there, again taking all circumstances into account.

This is what the dreaded Performance Improvement Plan looks like. The worst manager mistakes here are to avoid that chat, and just randomly fire them one day, or worse: never fire but also never give the feedback. Let the person languish without a positive future in the company, pissing away years of their career.

Talk about this as early as possible, both as a leadership team and then with individuals.

Behavior versus impact

Ultimately in a company, every individual is evaluated on their behavior and their impact. It’s important to be transparent about it.

At the start there’s you, the founder, you like to think you’re perfect. We all do. You’ll hire a few waves of people who are generally “in or around” where you need to be. And you’ll make some knowing tradeoffs: “X could be nicer but is a phenomenal engineer” or “Y isn’t our strongest engineer but is a cultural pillar for the company.”

There will come a hire or two that will tell you where your limits are. The worst behavior you’ll tolerate? That’s your actual standard. The lowest impact you continue to employ? That’s your standard. Like all limits, you’ll only know them when you’ve gone past them.

All behavior scales

One thing to know about behavior is that it scales: the good and the bad. If you address bad behavior early on, it never gets to scale. These decisions can’t be made case-by-case; they must be made value by value. It’s the only way that scales. If you see something you don’t like in your company when you’re 10 people, it’ll be a horrendous problem when you’re 100. Problems aren’t wine; they don’t get better with age.

People, product, profit

So those are the people lessons I’ve learned this far at Intercom, from four people to 400+.

It’s funny how our industry celebrates growth and idolizes founders who achieve it, especially the younger less mature ones. They star on the 20 under 20 lists, get their faces on the magazines and for a brief period, they can do no wrong. But then we act so shocked when it turns out that the 20-something college kid who’s never had a job, never had a boss, but ended up being “CEO of a large company” does a not-great job creating a good environment for 1,000 people to work in. We didn’t need Hercule Poirot to point this one out. There will always be people problems, so best to get ahead of them.

All growth decays eventually and all products will get disrupted. If you saw my talk from the 2016 tour, you know my thoughts on that. It’s worth asking yourself, what are the lasting impressions you’ll leave behind when all is said and done?

Intercom has the metrics: the customers, the revenue, the products, you name it. But that’s not all that a good company is made of. As Jim Barksdale says, great companies are composed of three ingredients: the product, the profit and the people.

All are essential. And the more I think about it, the order matters a lot. If you can get the people right, you’ll get the product; if you can get the product, you’ll get the profit.

As you cross each year as an employee in Intercom, we make you a custom comic. We call them inter-comics (forgive us). We do this to celebrate and acknowledge people’s massive contributions and to reflect the ways in which we’ve all gotten to know the person well.

We hang them on the walls of our offices. When I walk past these comics, I remind myself there’s something that lasts longer than products or blog posts, or a tour talk, and something that matters more than dope metrics and MRR. The media narrative for every startup is to simplify every story down to founders and their vision, but that’s a gross simplification of what it actually takes to make a company.

Intercom would be nothing without these people. I’ve spent about a fifth of my life working on Intercom, and when I think about why I still love it, it’s because I get to meet and work with all these amazing folks. That has been the honor of my career.

It’s all about the people. Thanks for reading.

(This is the bit where people usually clap, but it’s now a blog post, so I guess, maybe y’know, tweet?)

If you enjoyed this article, check out our other talks from the 2017 Inside Intercom world tour:

• Brian Donohue’s Builder beware: marketing tension in product-first companies
• Emmet Connolly’s Design in Interesting Times
• Jeff Gardner’s How to tell your company story
• Sabrina Gordon’s Growing your customer support team
• Greg Davis’s Myths of product market fit
• Matt Hodges’ Aligning product and marketing
• Sharon Moorhouse’s 5 lessons learned from growing a support team