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Learners vs Guides: Building Your Leadership Team
This is an expansion of a post that I wrote on LinkedIn last year that got a lot of responses and continues to generate great conversations with leaders and founders. Given all that discussion, I wanted to deepen it and build a better permanent home to hopefully reach and help more founder/CEOs and leaders. The writing in this post is entirely focused on founder/CEOs that are growing their company past 50 employees, but a lot of these lessons apply to leaders in bigger companies who are scaling their team past 50 people as well.
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I've spent a lot of time with founder / CEOs that are struggling with scaling their companies and their businesses. Anytime I talk to a CEO who grew past 50 employees within the last year, I say: “does everything feel like a messy shit show?” And the answer is always the same: yes. Also, “thank god you said that, I thought it was just me!” I wrote a post over here about why I think scaling past 50 employees is so hard. So, this is a post about the single most important thing you can do to make it easier, smoother and more fun to scale past 50 employees (and on to hundreds or thousands).
Here it is:
Have a strong leadership team.
Well that sounds obvious.
Let me explain what I mean.
When I say a strong leadership team, I mean a team filled with folks who have seen this rodeo before. And to be clear, I don’t just mean having a leader at the head of each major department, I mean having a team of people around you who have seen scale far beyond your current stage. You need MOST of your leadership team to NOT be overwhelmed by your current stage OR the next stage that is coming.
I call these leaders — the ones who have scaled something before and can see around the corners — “guides” as opposed to folks who are doing it for the first time who I call “learners.”
Btw, as a CEO, you also fit in to one of those two categories — you are either a learner CEO or a guide CEO. You have either seen this rodeo before or this is the first time you have led a team of over XX employees AND managed all these different functions.
The rest of this post is written for the learner CEOs. [I promise I will try to write a post at some point for learner leaders and how to navigate all of this as well.]
The four most common mistakes (in no particular order) that I see learner CEOs make re hiring leaders is
hire “guides” that have seen one step ahead, not 5-10 steps ahead
assume they can scale with a leadership team full of learners
hire their “guides” too late
assume that they can “solve all the problems” with just one hire
[As a side bar, you’ll note that I didn’t include (5) hire the wrong leaders. That is because hiring the wrong leaders is a mistake that both experienced and inexperienced CEOs make. Hiring executives is one of the hardest things you do as a CEO and everyone makes mistakes. There are ways to become better at it (I wrote a blog post about it over here) and I’d argue it’s one of the most important skills a CEO can have (so work on getting good at it!), but regardless of how much experience you have, you are still going to occasionally hire the wrong person. The thing you HAVE to get good at is identifying, ideally as early as possible, that you hired the wrong person and having the courage to fix it (usually meaning firing the person).]
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Ok so let’s walk through the four most common mistakes / patterns one by one.
Mistake 1: hire “guides” that have seen one step ahead, not 5-10 steps ahead
This really comes down to “What is the definition of a guide?”
When I say guide, I mean someone that has seen 5-10 steps ahead of where you are today, not 1-2. As an example, if you are 50 employees, you probably need a guide or two who have seen 200-500 employees. If your business is $5m, you should be looking for guides who have built businesses that were $20-50m.
The faster that your business is scaling, the farther ahead you need to hire. If you are more than doubling your revenue every year, I’d suggest hiring for 10 steps ahead, not 5. These things happen faster than you realize.
When I talk to founders that are crossing 50 employees and excited about the experienced leader that they hired that has been at a company with 100 employees, my heart sinks. The truth is that when you are scaling, particularly scaling rapidly, almost every leader has an expiration date. My rule of thumb is that most execs last 18 months if your business and company are growing relatively quickly. That is certainly not always true but it is an average that is good to keep in mind. So if you “under-hire” — hire someone that has only seen 1 step ahead, not 5 — then you are just shortening the expiration date on that leader. It is likely you will have to hire their boss or replacement sooner (which equals more pain for you).
And yes, before you ask, it is DEFINITELY possible to hire guides that are “too big” or to “over hire”, meaning they don’t know how to operate at the size and scale that you are today. Those are the “destructive” hires that you see founders and VCs write about on Twitter — e.g., someone that brings in too much process too early or simply can’t “build” or doesn’t understand the difference between the first 50 sales and then next 100, etc. I have made this mistake and you probably will too. That is the delicate balance to watch carefully when hiring, and it is probably an orange or red flag if the person has NEVER seen your current size and scale before in any form (this can include starting something at a big company, being on the board of a small company, operating previously at a small company, etc). See also the point above about hiring the wrong people... The most important thing is that you learn to identify it quickly and fix it.
Mistake 2: assuming you can scale a company with a team full of learners.
My definition of a learner is leaders who are managing the biggest team and biggest business they’ve ever managed.
Let me just be very direct: you cannot scale well with a leadership team made up entirely of learners. Full stop.
You absolutely can pick a few learner leaders to invest in, but if you are a learner CEO, then you need a leadership team filled mostly with guides.
If you are a learner CEO, my rule of thumb is that you get one learner leader “bet” on your direct team, and the rest should be guides that can help you and the rest of the company avoid a whole bunch of painful mistakes and learning. I generally believe that “bet” should be in your area of competence and focus. If you are a natural product person, you can have a learner “bet” as your head of product. If you are a natural marketer, you can have a marketer “bet” as your CMO. I have seen that pattern at a lot of scaled businesses.
I know it's scary to layer wonderful people who have helped you start the company with experienced leaders, but instead of thinking of them as replacements, think of them as guides that are going to help everyone learn and grow, including you.
If you are skeptical of the value that more experienced leaders can bring (versus the team you have today), one of the best exercises you can go through is to ask your board or investors for introductions to the 2-3 best CXOs (defined by the role you are considering hiring for) of a business that looks like yours might in 3-5 years. The two important parts of that sentence are “business that looks like yours” and “in 3-5 years”. As I talk about in that post on exec recruiting, all CMOs (as an example) are not created equal — the hardest part about hiring is defining what CMO means for your business and team — and with these intros, you want people that basically fit the following sentence: “This is the best person in your industry that has run this part of a business like yours at 10x the scale. You could never get them to come work for you but you will learn a lot from talking to them.”
Schedule 5 of those conversations, use them to talk about problems you are worrying about and get advice / brainstorm, and usually, you will see what I mean by guide or, more importantly, you will understand that some of the pain you are experiencing as a CEO is because the people that are working for you are not ahead of you in terms of identifying and solving problems. They are either next to you or behind you, and that is the difference between a “learner” and a “guide”.
Mistake 3: Hire your guides too late
I have worked with a bunch of companies that didn’t hire guides early enough and let me tell you, the pain is... ugly. The pain usually comes in the form of “mess you have to untangle” -- big, complicated shit shows that take a lot of time and money to unwind. It is NOT what you want to be spending your time on as your business and opportunity increase in velocity. These messes can come in every form — scaling on bad engineering infrastructure, not having a compensation framework for your 100s of employees, hiring internationally without being intentional about it both culturally and legally, etc.
Just to be clear: I really really believe in Paul Graham’s “Do Things That Don’t Scale” principle when you are trying to figure out your product and your business, and trying to find the elusive “product / market fit”. Scaling your infrastructure — sales, engineering, etc — too early is also a mistake (that I have made :), but my general rule of thumb is that once you cross $5-10m in revenue and are growing in a somewhat predictable way and / or 50-100 employees, you NEED to be thinking about scale or you can REALLY handicap yourself down the road.
One of the most painful experiences as a CEO is the moment when you realize that you are behind. When something that you thought was an ember or a coal turns out to be a raging fire. This can happen surprisingly quickly when you don’t have a lot of experience — you can go from thinking “I’m worried about XX” one week and 1-2 weeks later, you realize that the problem is way worse than you thought and you need to fire or layer the leader of that organization. As you get more experience, you get much better at identifying this early: you get the spide-y sense that something isn’t right and instead of second guessing yourself or ignoring it (which is what you will do the first 5-10 times as a learner CEO), you will listen to your gut and you will make a plan to monitor the situation or test your theory that something isn’t working.
But let me save you some pain so you don’t have to discover this for yourself... When you cross 50 employees, you need to either have or start to search for a couple leaders with experience. That experience should be 5 steps ahead of where you are today, not 1-2. Even one guide will make a big difference, but one is not enough.
The calmest CEOs that I talk to in the 50-250 employee stage are the ones who have hired a couple great, experienced leaders. They are calm because they feel like they have guides to help them through whatever is around the corner.
Mistake 4: assuming that you can “solve all the problems” with just one hire
I get a lot of calls from founders who think they need a COO. They usually think they need one because their board told them they do or because they’re in pain and they know they need help. They get put in touch with me to figure out what a COO is.
I start all of these conversations by asking “what do you mean by COO?” 30% of founders have a clear definition but most say something like “You know, the person that can help me build and scale the company.” There is a longer conversation here about the role of a COO that I will save for another blog post, but let me just make one thing very clear to all you learner CEOs out there:
There is no silver bullet hire.
There is no single exec you can hire that will solve all the problems for you. There is no successful company on EARTH that has one leader who is the guide. Even though Mark was super duper lucky to be able to hire Sheryl at Facebook (this was at 400 employees, btw), he also had to find and hire amazing leaders in engineering, product, finance, legal, etc. Yes, she helped him with some of those hires, but he became an amazing executive recruiter over time. He was already pretty special to be able to recruit and retain Sheryl, but he continued to learn and grow over time. It is one of the things that people truly do not understand about what makes Mark so special as a founder/CEO — he is one of the best exec recruiters I have ever met (this skill extends to acquisitions but that is a story for another day). He is also the single fastest learner I have ever met, but that is a different point.
Ultimately, as a CEO, you will need to get good at finding and hiring exceptional leaders. There is no short cut. And now is a great time to start.
Here’s the true test: if you are the CEO of a 100+ employee company and your leadership team around the table is a group of people that you can learn from, that you’re a little intimidated by (“why on earth are these people working for me?”), and that gets along well (solve problems together without a lot of mediation from you), you are in a GREAT spot to scale as well as possible.
That’s the goal.
Ok, excited to continue the conversations about this. You all know how to reach me.