Startup org design: Design power centers intentionally
Hi! I’m Molly. I write about what it actually takes to lead inside growing, changing companies: the frameworks that help, the honest truth about what it feels like, and the messy work of shaping a career that actually fits.
Lessons is where those ideas live — both the writing and the conversations around it. (If you want to learn more about how Lessons and the community work, you can read more here.)
I’ve met more than one founder / CEO whose story goes something like this: their company reached $10M ARR with minimal investment in marketing or sales because they had a great product and an active community. Their profit margins were healthy, with most revenue coming from a high volume of low-revenue customers.
Then someone – usually the board – told them they needed to hire a CRO or a VP of Sales. And they get introduced to someone who was “an amazing leader” at this other company. They hired that VP of Sales and that leader built out a 20-person sales team. Six months later, the sales reps were meeting their quotas and selling larger deals to larger companies, around $10k ACV… so far so good.
But under the hood, the company’s unit economics didn’t look so great anymore. The margins on those $10k deals were much lower and the sales staff threw off the company’s burn rate. The founder thought of this as an initial hump and started asking what other investments sales might need to get to the next stage… Unwittingly, this founder / CEO has made a definitional mistake that will have a long-term effect on the health of their business.
This post is not about the dangers of hiring a sales leader too early. It’s about how this founder, by hiring an early executive, made an investment. They went all in on one function – sales – while unintentionally building a functional blind spot into the company’s leadership team: marketing. It’s also about the fact that they ignored the natural motion of their revenue – a high volume of low-revenue customers – when thinking about what leader to hire first.
Hiring is emphasis.
Bringing on an early executive means you’re placing a bet. Every leader comes with biases about what to focus on and who to hire, and also blind spots. Your early leadership team is the blueprint for your company’s functional bias and the strategies you will try as you grow.
Before you build your leadership team, determine which functions your company needs to be most extraordinary at. Then, design power centers around them and use this to guide who you hire and in what order.
When I say “power center,” I mostly mean a leader or function that is a locus of resources and decision-making authority. But it can also mean that other leaders report to this person (like product reporting to engineering or vice versa).
Companies work more efficiently if it’s clear who is responsible for a decision and whose agenda trumps the others. If you don’t designate power centers, they will spring up organically as a result of who was hired first, who is most senior, or who the CEO listens to. We’ve all seen it: the buck stops with so-and-so executive, even if it is not explicit.
One of the most powerful things you can do to accelerate your company’s growth and reduce wasted energy is to design your org carefully including where you want the power to sit.
Often, when we draw org charts, they look like this:
Picking your company’s functional strengths often means forcing a choice between:
Sales versus Marketing: who is truly running and driving the business?
Product versus Eng versus Design: who drive the roadmap?
Operations versus People versus Finance: who is helping you operate the company?
GTM org versus Technical org: who is in the driver’s seat on deciding priorities?
Designing conscious power centers could mean an org structure that looks more like this:
I’ll explain this picture below and share some exercises to think through your org design as you hire your first leaders. The goal is to make your bets on the functions most likely to get you to $100M.
