This guest post by Charles Moore is very special for me.

I had the privilege of meeting Charles as a classmate at Stanford Business School in 2007. I was instantly impressed by his ability to synthesize complex thoughts into simple sentences and make everything look well, simple!

Last year, I was looking for an executive coach who would work with me in the areas of strategic thinking, strategic communication and stakeholder management. I knew that Charles had turned into a full time executive and business coach in 2020. So I asked Charles if he would take me on as a client. And he did. Our professional engagement lasted six months during which he really impressed on the power of simplicity when it comes to strategic thinking.

As we head into the second half of the year and many of you are putting on your strategic hats for half yearly or annual planning, I hope this post by Charles really resonates with you on how you can make your planning more effective by going simple rather than complex.

Strategic Simplicity

-Charles Moore

Last fall, I took a sabbatical from my work as an executive coach and strategy consultant. I spent that time reading (and re-reading) a ton of books and numerous articles on strategy and strategy processes.

That decision was driven by having observed several teams with experienced, intelligent leaders who were driven to improve. Yet many of these teams also had strategy processes that didn’t look anything like best practice. 

When I say “strategy processes,” I don’t mean the fancy frameworks and advanced analytical techniques that you might learn in an MBA program or consulting firm; rather, it’s the basic blocking and tackling of asking on a regular basis: Where are we going? How are we doing? And what do we need to change to get there faster?  

So what causes the gap? That was my core research question. 

Obviously there are various and complex answers. But one of the most important: the most strategically effective teams and organizations have simple, focused strategies. 

The benefits of simplicity and focus come up over and over in the strategy literature.

For example, in In Search of Excellence, Tom Peters and Robert Waterman write: “One of the key attributes of the excellent companies is that they have realized the importance of keeping things simple despite overwhelming genuine pressures to complicate things.”

The authors’ specific focus in the point above is about having simple organizational structures, but they also find that the leading companies they profiled had simplified priorities. They write: “the excellent companies focus on only a few key business values, and a few objectives. The focus on a few key values lets everyone know what’s important, so there is simply less need for daily instructions (i.e., daily short-term memory overload).”

In Playing to Win, A.G. Lafley and Roger Martin similarly argue for simplicity when choosing what organizational capabilities to build. They write: “Companies can be good at a lot of things. But there are a smaller number of activities that together create distinctiveness….”

Harvard Business School professor Zeynep Ton’s research suggests that simplicity in scope can create a virtuous cycle of performance. She writes in The Good Jobs Strategy that model retailers offer less than their competitors. “Offering less makes operations more efficient and accurate, which in turn improves customer service and hence sales. Since improving operations helps employees do a better job—sometimes in ways the customers can see with their own eyes—employees feel greater pride and joy in their work. [...] This, in turn, contributes to greater dedication and lower turnover, both of which are good for service, sales, profits, growth, continuous improvement, and return on investment.”

HBS professor Frances Frei and scholar Anne Morriss extend this point to focusing a company’s product or service offerings. In Unleashed, they write: “Your first job as a strategist is to be better than your competitors at the things that matter most to your customers. [...] A major lesson of our decade of research on service companies...is that organizations that resist and try to be great at everything usually end up in a state of ‘exhausted mediocrity.’”

For his Master’s thesis, former head of the U.S. Special Operations Command, Admiral William McRaven, wrote an exploration of what allows a smaller force to defeat a larger one when the odds are against them. One of the six components: a simple plan that limits “the number of tactical objectives to only those that are vital.” 

Aside from the military-specific benefits of having a small number of objectives, the core reason to focus on a simple plan has to do with the human dynamic. The more things people need to accomplish, the more their attention is divided. And the more moving pieces, the greater the coordination burden. 

As anyone who’s prepared food for a dinner party knows, adding 20 more people is way less complex than figuring out how to get just one more dish ready at the same time as everything else. 

So simplify, simplify, simplify. Fair enough. 

But McRaven also writes: “Simplicity is the most crucial, and yet sometimes the most difficult principle, with which to comply.”

So why is simplicity so hard for organizations?

Some ideas:

Adding “just one more” seems harmless.

It’s easy to say we’re committed to focus and simplicity, but it’s harder to follow in practice. This is especially true if the “just one more” activity we’re adding to our plates comes from a positive motivation, like What else can we do for customers? And as Leidy Klotz showed in Subtract, we’re wired to feel more competent when we’re doing more. 

Moreover, performance management systems may also provide an incentive for leaders to grow and to add more. After all, one gets promoted by (looking like they’re) doing more than the next person, not by strategically doing less. 

What we miss, however, in that expansion of activity is that it comes with coordination costs that slow down existing activity. And if the “one more” uses up our collective slack, that can create other negative consequences.

It looks “smart” to have a complicated plan.

In The Knowing-Doing Gap, professors Jeffrey Pfeffer and Robert Sutton write that when results aren’t immediately obvious, people decide who’s good based on who sounds smart. Therefore, they write: “Appearing smart is mostly accomplished by sounding smart; being confident, articulate, eloquent, and filled with interesting information and ideas; and having a good vocabulary.” In that sense, having a simple, focused plan goes in the opposite direction of the incentives.

Peters and Waterman, in In Search of Excellence, cited their “smart-dumb rule” for why managers come up with overly complex plans. “Many of today’s managers—MBA-trained and the like—may be a little bit too smart for their own good. The smart ones are the ones who shift direction all the time, based upon the latest output from the expected value equation. The ones who juggle hundred-variable models with facility; the ones who design complicated incentive systems; the ones who wire up matrix structures. The ones who have 200-page strategic plans and 500-page market requirement documents that are but step one in product development exercises.”

I’ve also talked to nonprofit leaders who claim that coming up with a new strategic plan—almost always with something new to do—is what it takes to attract funders. No one is interested in a “we’re just going to keep doing what we’re doing” message. 

Choosing simplicity means saying “no” to others.

Frei and Morriss call the decisions to focus one’s strategy—deciding to be great at a limited number of things—“dare to be bad” decisions. It’s daring both because one has to have faith that the tradeoff really has value and because it’s saying No to customers. They write: “These kinds of decisions take real courage, particularly for the leaders among us who do not like to let anyone down.”

Beyond that, simplicity also sometimes means telling some team members what they’re working on isn’t a priority. It’s easier to let them continue that activity, regardless of the value. 

Simplicity may also mean choosing between powerful internal constituencies (e.g., which business to invest in), even though both have reasonable cases.

In the nonprofit sector, simplicity may mean saying “no” to funders or board members. 

Basically, implementing simplicity and focus means having other people dislike you. However, as Ishan points out, there are ways in which you can say no in a manner which is both thoughtful and polite.

So what’s the solution?

There aren’t easy ones, for sure!

There are ways that organizations seek to tactically prioritize activity, but I won’t focus on those here. 

Instead, from my reading of the literature, what seems most important is not the systems of focus and simplicity, but building the common belief in the benefits of focus and simplicity. Strategic leaders will always be fighting against the tendencies to do more, unless everyone authentically believes in the power of doing so. 

Surely, having routines that support focus and simplicity are part of building that belief—i.e., it’s just what we do here—but building the belief likely requires an ongoing campaign to win hearts. 

A strategic plan doesn’t deliver focus and simplicity. 

Leadership does.

Charles Moore is an executive coach and strategy consultant who has worked with executives across the for-profit, nonprofit, and government sectors. Then again, he just signed up for a culinary class this fall at the local community college, so he's basically the next Michelin-starred chef. 

It was around the time that she was looking to build her leadership team for India. Her thoughtfulness around intentional hiring came out within the first few minutes of our interaction. Fast forward to 2022, I have really come to admire Parul’s intellectual curiosity in whatever she is doing- from starting a new office to starting a new business line, from thinking what matters to students to thinking what matters to her in her next gig.

I am glad Parul is sharing views on hiring practices as she helped scale the team to 200+ employees. She talks about how hiring remains a priority through different stages of the company, while the hiring needs keep on evolving very quickly as the company grows. I hope you find the guest post immensely useful, as you think of your team building for scaling up the business.

- Ishan

Hire Right to Scale Up

- Parul Gupta

For leaders, building the right team has always been an essential pillar of scaling a business. Today, it is more critical than ever as the global economy reels from a massive talent shortage due to the great resignation. In this mad scramble to fill roles, what's easy to miss is that the "right team" can look quite different depending on business maturity. 

This topic is one close to my heart. If I were to pick one contribution that I am unabashedly proud of, it would be the exceptionally talented and mission-driven team at Springboard. Since its inception in 2013, the team evolved from two founders to 200+ full-time employees supported by a globally distributed freelance community of 1000+ domain experts. The business grew to a $40+M run rate through a portfolio of products and market launches, each achieving different maturity levels. 

In this post, I share learnings from seeing teams operate at different levels and what I consider essential traits in three stages: a new business, a maturing business, and a new business in a mature business. 

New business

If you're an early-stage startup searching for your first product-market-fit (PMF), you're here. I also refer to it as the 0->1 phase. The discovery process is full of ambiguity and uncertainty, and a lot can change about the business in short periods. 

In this phase, you need self-driven, entrepreneurial people who embrace chaos rather than be intimidated by it. The hours are long, the pay sucks, yet some strange inner drive keeps them doing whatever it takes. True innovation requires analytical and first principles thinking, the courage to try new things, and a growth mindset when faced with failure. It's ok if they don't have relevant experience or skills, but the right attitude is non-negotiable. 

Further, at this stage, you need makers, not managers. There's enough work to go around, and resources are scarce. Everyone pulls their weight and some more. The team leans towards a bias to action over excellence. They might not be the best at every task, but they can do each one needed to ship. 

Finally, it's essential to assess core values, trust, and collaboration. There's no room for "this is not my job" nor for titles and territorial conflicts. An interview we added to Springboard's hiring process quite early was a "values round." Usually taken by an interviewer on a different team, this round wasn't about functional skills or experience. Instead, it aimed to understand the candidate's mindset about collaboration, feedback, failure, etc., through informal dialogue. We often heard from candidates that this round showcased our focus on culture and became a strong selling point for them.

Maturing Business

Post-PMF growth stages cover a large spectrum – a team going from 20->100, 100->500, and each stage after that has a different flavor. Ambiguity gives way to repeatability as jobs become well-defined and need to be optimized. 

It's time to hire functional experts who can leverage their experience and best practices to push towards higher quality, better efficiency, and larger scale. As roles specialize and clear boundaries start to emerge, you'll need an intentional shift to hiring for strength and not lack of weakness. You will also need to ruthlessly prioritize must-haves vs. nice-to-haves and discern what's coachable to fill roles expeditiously. 

As teams grow, you'll need more formal people management. A natural tendency is to promote early hires to managers. However, manager responsibilities differ considerably from ICs, especially for specialized technical roles. Not everyone will enjoy being a manager. If your early hires do not have experience managing people, an intentional conversation about what it entails and whether it fits with their strengths and goals will help. If they are eager to give it a shot, support them. The transition from doers to new managers is surprisingly non-trivial. Proactively investing in training & development will save everyone much heartache. And if either side senses a mismatch (off the bat or after the transition), it's better to address it openly. 

This stage is where your HR/People team will come into existence and mature like all other functions. You'll make your first hire and add expertise gradually. At Springboard, adding stage-appropriate expertise in recruiting and HR systems helped us streamline considerably. E.g., hiring playbooks, rubrics, and interview training were game-changers for holding a consistent bar across a growing number of interviewers. Similarly, using an ATS helped us take the same data-driven approach to candidate funnels that we adopted for our growth funnels. Our People Team leaders were valuable partners in the aforementioned manager training and career conversations as well.

New business in a mature business

When growth in the core business plateaus, companies need to look for new levers that can augment (or even disrupt) the core. Of the three stages discussed, setting up a "new initiatives" team for success is arguably the trickiest because of the conflicting dynamics of new and mature businesses. Org design and resource allocation are as critical for success as team traits. 

As in 0->1 teams, bias to action and first principles thinking are paramount; generalists often a better fit than specialists. Unless your company has the resources to spin up an independent skunkworks team, intrapreneurial teams have to be scrappy with limited resources. These teams depend on internal shared resources for support, where continuity of context, relationships, and culture helps get things done. At Springboard, a repeatable, successful team configuration was tenured entrepreneurial generalists moving laterally to lead or co-lead new initiatives.

Most importantly, these initiatives need people who can question long-standing beliefs (at the risk of being unpopular) and break new ground. They are forces of nature who can withstand the naysayers and counter forces exerted from the larger core of the existing business(es).

In summary, there isn't a single talent playbook that works for all scenarios. A business's trajectory might not always be linear through these stages. Failure to cross the chasm might necessitate a pivot, sending you back to the drawing board. Macro-environment changes might necessitate layering on new businesses sooner than expected and even sunset a mature product line. The best thing leaders can do is adapt their hiring philosophy visibly when crossing over into a new stage. In the absence of this reset, the org's default behavior is to stick to existing playbooks, leading to wrong decisions despite the best intentions. 

It’s time for a Guest Post again- this time by Ethan Winchell, Co-founder and COO of Truework. I came to know him last year, thanks to a warm introduction by a mutual friend. Ethan is building a fascinating company in Truework, that helps to verify income and employment status of employees and help to close loans and rentals faster. I really enjoyed learning about the company from him and how he and the team are solving a real identity management problem that not only consumes time and but also gives heart ache to everyone involved in the process - the customer (like a loan seeker), the bank and the employer of the customer.

In this week’s guest post, he explores Organization Design as a lever to scale up the company in its early stages, especially after it has found a product market fit.

Ethan is truly building a company for scale and I hope you enjoy reading his take on why to focus on hiring and goal setting.

Design Your Org For Success

-Ethan Winchell

You can find many tweets, blogs, and newsletters that discuss the difficulty and importance of finding product/market fit. Indeed, Marc Andreessen has famously said that until you have it, nothing else matters. 

It’s all true!

After you’ve found product/market fit, fewer tweets and blogs, but still quite a few, talk about the power of category creation and brand narratives. That process is incredibly powerful.

And, you might even find a couple mid-twit memes on Twitter that look something like this:

Once again, great advice! 

So, what is the post going to be about? A collection of links and memes about product/market fit? Not quite. 

Despite the foundational necessity to create product/market fit, the power of the right product/market fit to create a massive market, and the enduring value that can be created out of a continuous focus on creative innovation, these things do not happen by accident within a company! 

At a small company, the innate structure of the early founding team often means they happen somewhat organically. As a company begins to grow and scale, however, they need to be intentionally created. I call this process organizational design, and once a company reaches roughly the Series B/C stage (which is also usually the time the number of employees passes the Dunbar number), it becomes an essential pillar of a company’s foundation. 

Done correctly, the right organization design sustains your early product/market fit to build an enduring business that is capable of both (1) reliably harvesting cash on some predictable future basis and (2) creating new innovations that replace or expand existing product/market fit over a long period of time (ie generations). 

Organizational design is a wide ranging concept that includes things that can be reductively called “HR tasks” but require c-suite/exec team buy-in to truly be worth the effort - Hiring, onboarding, training, performance reviews, peer feedback, and goal setting to name a few. Other things I’d put in this bucket lack a more “traditional” home, but sometimes live within FP&A and/or BizOps teams - decision making, project scoping, retrospectives, dash-boarding, etc. 

These things need to become company competencies (or hopefully points of excellence) to achieve ongoing, repeated success and yet, from my observations, they are usually treated as afterthoughts. Or, if not afterthoughts, as something as an immutable byproduct of something like “culture”, rather than something that can be intentionally designed. 

Because, as I’ve previously written, focus is your best friend. I’ll simplify the above to highlight two things that done well vault you into the top percentile in organization design. Focus on hiring and goal setting.

Hiring, I’ll spend slightly less time on, as that is a fairly well worn topic in the startup advice annals. But, hiring is an important part of designing your organization. You’ve likely heard many of the pieces of advice that I emulate day to day - meeting/interviewing (almost) every one, advocating for slope over intercept in hiring panels, and holding talent to an incredibly high bar even if it means moving slower and refusing to cut corners. If the tools are simple enough with hiring, the pragmatic challenge is more mundane, there are no silver bullets, and it is incredibly time consuming. If, however, your executive team makes time to hire the best people, you are half way to designing your organization for success. 

So, nice, you’re halfway there, now to go all the way…goal setting. Goal setting done correctly provides the necessary context and alignment for each and every person in your organization to just “make stuff”. As Elon Musk said, “Every person in your company is a vector. Your progress is determined by the sum of all vectors.” So, “make stuff”, but make sure everyone is making stuff that is accretive to each other - that’s goal setting. Goal setting done right provides clear coordinates for everyone to aim at, it clarifies ownership around projects to allow for clear decision making, and codifies hypotheses (check out Ishan’s earlier blog on North Star here as you think about goal setting). Some simple things we’ve done to improve our organizational design is quite simply to just focus more on the goal setting process, whether that is a new project (every project should 100% have a clear, written goal and exactly 1 owner) or temporally triggered (quarterly or annual OKRs). 

Hiring and Goal setting, taken together, provide an incredible environment in which organizational design can flourish. Hiring the best people and giving them the right goals means that whatever the next product or market related challenge that emerges involves, you will have built an anti fragile system that can adapt to the task at hand, and likely succeed. 

I added Guests Posts as a new section to Scale It Up in 2022. As the readership of the newsletter has grown, it felt timely to add this section to bring occasional posts from our members, and share their experiences with the community.

The guest post this week is from Jules Maltz, a dear friend and fellow Stanford Business School alum, who is currently a partner at IVP. IVP is a leading venture capital firm which was founded in 1980s and till now has invested in more than 400 companies (of which 130 have gone public!).

Having known Jules for more than a decade, I have always seen him to be a very intentional investor, who is continuously figuring out ways to help his portfolio companies to scale up.

During my own job search last year, Jules offered me very thoughtful connections to his portfolio companies, where he sincerely believed that there could be really good mutual fits. And one such introduction turned into a full time role for me at Tala and fit very well with my own career goals. At that point, one of Jules’ fellow partners at IVP rightly summed Jules’ networking super power by saying “Jules is perhaps the best undercover executive recruiter in the Silicon Valley!”.

In this week’s newsletter, Jules has analyzed what it takes to run a great Board meeting. Having been a board member to 40+ companies, he has observed companies through different stages. He strongly believes that the needs of companies continue to change as they evolve and therefore their asks from their Board Members should continue to change as well.

The framework laid down by Jules is really a strategic way to think about the lifecycle of a company and its changing priorities, as the company company goes from stage to stage- something that every entrepreneur should be thinking about!

I hope you enjoy reading Jules’ take on how to get the Board to help scale up your company!

If Maslow Ran a Board Meeting: A Startup Hierarchy of Needs

- Jules Maltz

Almost every company struggles with Board meetings. The usual issues consist of: we didn’t get through the slides and it felt rushed; the Board wasn’t engaged enough; or the Board was too engaged and asked bad questions (What’s our web3 strategy, anyway?). The current, post-pandemic, virtual world compounds these challenges by making it hard to have a flowing group conversation and stay focused for hours.

I’ve been involved in over 40 Boards over the last 15 years and I know Board meetings can be frustrating, but they are also tremendous opportunities. You are gathering smart people from both inside and outside your company for a few hours to talk about the essential things in your business. Board members should leave the meeting understanding your company better, and you should gain new perspectives that help you make better business decisions.

So why do some Board meetings go off track? It’s not for a lack of recommendations. There are some amazing resources on Board meetings, including what should be in your Board deck, how not to surprise your Board members, and who should be in the meeting.  But what’s missing from many of these recommendations is that each company differs in its stage of development and immediate challenges. Rather than a one-size-fits-all approach to Board meetings, the best meetings are tailored to each company’s specific needs and to where the company is along its hierarchy of needs. 

In 1943, psychologist Abraham Maslow created a framework to understand human motivation. At the bottom of the pyramid are physical needs (food, water, shelter, etc.). Once a person has satisfied those needs, they can more easily move up to safety/security, then belonging/love and finally self-actualization and transcendence. It’s not a perfect representation, but it illustrates that until your basic needs are met, you can’t focus on your higher-level goals.

Similar to Maslow’s pyramid, startups have a hierarchy of needs. By understanding where your startup is on the pyramid, you can focus your Board meetings on the right topics and make sure you reach your ultimate goals.  Here’s a proposed startup hierarchy of needs (starting from the bottom and going up):

Stage 1:  Cash

“Cash is oxygen, and oxygen is life.”  I will never forget this quote by Mark Leslie, former CEO of Veritas and one of my favorite teachers at Stanford. Startups don’t fail because they get the product wrong or hire incorrectly. They fail because they simply run out of money. Mark’s point is that as long as you have money (oxygen), your startup has time to fix its problems with the product or the team and live to fight another day. If you have a Board meeting and your startup has a short cash runway (usually less than six months), your #1 topic should be cash and how you plan not to run out of money (equity or debt fundraising, headcount reductions, pricing/product changes, etc.). Your head of finance should be the star of the Board meeting and your Board should help with funding intros and creative ideas to extend your cash runway. One company I worked with sold off an existing business line to fund the growth of its new burgeoning SaaS business. Cash is your food and shelter equivalent, and until you solve your liquidity problems, nothing else matters. Fortunately, given the plentiful capital environment today, most startups aren’t in Stage 1 for long, so you can hopefully move on to the next stage.

Stage 2: Product-Market-Fit

The concept of product-market-fit, coined by Benchmark co-founder Andy Rachleff, another one of my favorite teachers, means that you have built a product that meets the market's needs. Customers are pulling the product out of your hands because you’ve created something valuable that they want and are willing to pay for (with their time or money).  Most startups are at this stage so most Board meetings should focus here.  Achieving product-market-fit also means you are building a healthy business model with strong underlying unit economics. If you have poor marketing or sales efficiency (low LTV/CAC, high payback period, etc.), high churn, or low engagement/NPS, you likely have work to do on your product-market-fit. Your Board conversation should focus on diagnosing the problem and outlining your plan to fix it. One company I worked with that struggled with churn spent most of a recent Board meeting going customer-by-customer outlining the reason for each churned account, and specifically how changes in the product would address these deficiencies. Your Board meeting stars should be the heads of product/engineering who are building your product and/or the go-to-market leaders responsible for selling.  Once you feel good about your product-market-fit and it’s scaling well, you can move up to the next stage.

Stage 3: Building Your Team

As soon as you have product-market-fit, it’s time to scale.  Paul Graham , co-founder of Y Combinator, defines a startup as a company that is uniquely designed to grow fast.  Growing prior to product-market-fit can be a great way to end up back in Stage 1, desperate for cash, but once you’re seeing market pull for your product in a large market, you usually want to grow as quickly as possible. As you start to scale, you’ll likely notice that some of your former star individual contributors are struggling to hire and manage teams. It’s time to think about bringing in outside leaders who have operated at larger companies beyond your startup’s current scale.  A significant part of your Board meetings should focus on how your existing functional leaders are doing (ideally in an executive session just with your Board) and where you need to make changes or hire for new positions. Great CEOs rely on their Boards to help source potential candidates or provide search firm introductions, interview and assess candidates, and eventually convince them to join your startup.  You should spend a meaningful part of your time (and your Board meeting) focused on open senior positions and report on your progress with the same urgency and accountability as you review your financial results. It’s also a great time for you to solicit feedback on your own performance and how you can improve (the best CEOs are constantly asking their Board for feedback). I see many companies at this stage get Board meetings wrong and spend too much time talking about Stage 2 or Stage 4 areas when scaling the team is the most critical open item.  It’s also my favorite place to help, so enjoy Stage 3 and put your Board to work. If you don’t have the right Board at this stage, consider recruiting diverse, independent Board Directors to help. The star of the Stage 3 Board meeting should be your HR leader (who you have hopefully hired by now) or you as the chief executive ultimately responsible. Even the most successful companies rarely leave this stage completely as you are constantly building and upgrading your team.  Once you have most of your future leadership team in place though, you can start to move up the pyramid again.

Stage 4:  Finding Your Next S-Curve

Startups win because the technology landscape changes quickly, leaving legacy companies unable to adapt. Dominant historical companies like IBM, Yahoo, AOL or Nokia failed to adjust their existing technology and business models to new paradigms, creating room for startups to supplant them.  In 1962, the sociologist Everett Rogers came up with a theory for the diffusion of innovations. Originally applied to agricultural technology, he postulated that the rate of adoption for new innovation starts slow, accelerates rapidly, and finally tapers off, creating the shape of the letter S (see image below).  Startup growth is often similar. Once you’ve achieved product-market-fit, you’ll likely accelerate rapidly, but eventually slow down due to market size constraints, competition, or changes in your customers’ needs. The best companies aren’t complacent riding their existing S-curve, but instead quickly start searching for the next business line or innovation that will propel them forward. Many of the highest performing companies like Apple, Salesforce, Alphabet, and Meta have been focused on this stage for the last decade, unsatisfied with their current dominance and always searching for large, adjacent businesses. CEOs at this stage focus their Board meetings on product initiatives that will drive new S-curves, often giving them the same time and attention they did when they discovered product-market-fit in Stage 2. M&A can also play an important role as companies look for new business lines through acquisition. The stars of your Stage 4 Board meetings are again the internal product and engineering teams, as well as occasionally corporate development. I’ve also seen CEOs get personally involved by having new businesses report directly to them to make sure the company is focused on what will propel it in the future.

Stage 5:  Nirvana

If your business has (1) plenty of cash; (2) clear product-market-fit with compelling unit economics; (3) an incredible and complete leadership team; and (4) is successfully building its future business lines, congratulations, you made it to the top of the pyramid! Nirvana is defined as a state of perfect freedom, the highest happiness, and liberation from all suffering. If you are here as a startup, you can spend your Board meetings doing whatever you like. Want to talk about naming rights for the new Warriors stadium? Sure. Get the Board’s input on changing your name and logo? Great. Listen to the band Nirvana during the meeting? Of course, and I recommend the MTV Unplugged album!  Just remember that the only thing harder than making it to Nirvana is maintaining it. I hope you all make it and stay at this stage, and if you do, please invite me to the Board meeting!

The Startup Hierarchy Of Needs

Final Thoughts

Just like Maslow’s original hierarchy of needs, the startup hierarchy of needs isn’t perfect. Many needs overlap and intersect. Humans need food and shelter, but to get food and shelter, we depend on love and relationships with others. For startups to raise growth capital they frequently need to demonstrate product-market-fit, which in turn requires the right leadership team.  While the relationship between stages sometimes goes in reverse, the more you master the lower stages, the easier it is to get to the top. Companies with adequate cash resources have more time to achieve product-market-fit and demonstrate compelling unit economics, which in turn makes it easier to raise more capital. Strong business traction then helps you attract top leaders from larger companies who can further scale your startup and expand into future business lines to ride new S-curves.   

The startup hierarchy of needs is most useful for aligning your company and focusing your Board. You’ll have more productive Board meetings if you agree on what stage you’re currently in and spend time in the meeting accordingly. Board members should also follow the hierarchy and focus their questions on helping the company master its current stage (if the company is running out of money, it doesn’t matter that you don’t like the head of marketing). While your current stage in the hierarchy should take most of your meeting time, you can still cover content from other stages. Reviewing the cash position and key business metrics (if strong) at the start of the Board meeting is a great way to remind Board members that you have passed stages 1 and 2 and will spend most of your time on the leadership team and future business lines. You should also cover topics outside of the hierarchy of needs.  Boards have an important legal function and shouldn’t neglect industry regulation, annual budgeting, employee NPS/culture, and diversity, equity and inclusion.

Remember, Board meetings can and should be fun. They are a great way to get incredible people together to help you solve some of the most difficult problems. You and your Board members should come into the meeting with an open and curious mind. See it as an opportunity to learn from each other, overcome the challenge at hand, and eventually make it to the top of the pyramid. 

Jules Maltz is an investor at IVP and lives in San Francisco. He has been in venture capital since 2004 and has attended over 500 Board meetings. He currently works from a foldable desk in his basement spare bedroom and misses the free coffee and cookies from in-person meetings.

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-Ishan

The reason for starting Scale It Up was to share learnings from my experiences with a larger audience. However, as I wrote in my last post where I reflected on this writing journey, I am humbled to see all of the subscribers who have joined to form the community at Scale It Up. You are an accomplished lot of inspirational entrepreneurs, seasoned executives, stellar investors, aspiring leaders and fresh and ambitious graduates from all around the world!

As this community grows, it feels timely to dive into the wealth of experience that each of you bring, and share it widely. Therefore I’m adding “Guest Posts”, a new section on Scale It Up. Here you will find occasional posts from our members, on what it takes to scale up!

And who else better than Kirthiga Reddy to write the inaugural guest post. Kirthiga is a dear friend and a mentor to me. I have learned a lot about having a bold vision and clarity of thought from her, by having a ringside seat to her career.

I met her for the first time in 2010, when she became the MD for Facebook in India & South Asia. Over the next 8 years she scaled up the regional business to several $100Mn+, and it’s now $1Bn+. She also built Facebook’s SMB APAC business and worked with some of Facebook’s largest clients on their emerging markets strategy.

Kirthiga is currently the President of Athena Technology II, the third in a series of all women-led SPACs bringing leading talent, access to capital and transaction experience to enable a market leader to access the equity capital markets. She serves on the Board of multiple public companies including WeWork and Pear and is a Founding Investment Partner of F7 seed fund. She was SoftBank Vision Fund’s first female Investment Partner, where she managed a portfolio of $5Bn+ focused on enterprise, health tech and frontier tech investments.

To me, she is someone who is always scaling up herself, the teams she works with and the people she cares about. Her recent post on the “21 firsts”she did in 2021 is a testimony to that!

I hope you enjoy reading her take on what it takes to scale up as the first ever guest post on this newsletter!

Power of Big Bold Vision

- Kirthiga Reddy

In his book, The Habit of Winning, Prakash Iyer tells the story of a woman walking down the streets of Rome. She sees men working with bricks. To paraphrase Iyer, the woman stops one of the bricklayers and asks, “What are you doing?” The man looks up, visibly frustrated at being disturbed. He replies, “Can’t you see? I’m putting bricks one on top of another,” and resumes his work. The woman walks a bit further and asks the same question to another man. He smiles and replies, “I’m building a wall.” When the woman asks a third person, she is met with a beaming smile. The man shares,  “I am building the tallest cathedral in Rome.”

This story has stayed with me for decades. It has been at the heart of my approach to “Scale it Up” for businesses, organizations, and even myself. In Iyer’s story, each individual is performing the same activity. However, their perspectives are vastly different, influencing the way each person approaches their work. 

When I was Managing Director of Facebook India and South Asia, starting as their first employee in India, our first charter was to build one of the four global operations centers that together now serve over 3.5B people. People were tasked with reviewing objectionable content that was not permitted on the platform—hate speech, violence, and more. Machine learning and AI were central to tackling this challenge. For content that the systems couldn’t address, however, manual review was required.  The tasks involved in this were repetitive, and they required intense focus. It was easy for the energy to run low, and we had to constantly remind ourselves of the larger vision: This work was central to the principles of trust and safety, and the mission to “give people the power to share and make the world more open and connected.”

As leaders, much of our conversations center around the “what” and the “how.” I frequently have to remind myself to spend more time on the “why.” This is even more important for Generation Z — 60% of Gen Z want a job that will impact the world. More on this small yet powerful word “Why” in an earlier article by Ishan.

In addition to the global operations charter, we were also working on the India market charter. It took months of discussions across the organization and with key global stakeholders leading to our big bold vision of “100-100-100.” 100M users, $100M in revenue, and 100M people positively impacted through our community efforts in our first four years of operations. Facebook, like most other multinational companies, was initially organized functionally. For example, functions like the User Growth team, HR, Finance etc. reported direct-line to regional or global leaders. Operations and Sales reported locally. The 100-100-100 vision was deeply cross-functional, and one that bound all of us together.

At the time we outlined this vision, India did not even have 100M people on the Internet, and Facebook had no committed plans to build a local sales and marketing team, so this was a big, hairy, audacious goal (BHAG) in all regards. Give or take a few quarters, however, we hit each of these goals. The last 100M in community impact was measured through initiatives like Safety Check in situations like disaster management. 

In my current role as an investor, I have the privilege of working with founders and entrepreneurial teams across multiple industries who are using disruptive technologies like AI, data, automation, and web 3.0 to transform the way people live and work. Disruption is never easy. There are inevitable ups and downs: the naysayers; the clients, partners, investors, or other stakeholders who need more convincing than one may believe is needed. The big bold vision provides an anchor across functions—staffing, HR, finance, legal, engineering, product, sales, marketing, operations, analytics, and more—to, as Al Pacino says in Any Given Sunday, “win inch by inch.”

At a personal level, I have adopted the practice of defining a big, bold vision for myself and sharing it with others. I am so grateful to Carolyn Everson for institutionalizing this practice at Facebook. At the start of each new year, I visualize what I want to look back on at the end of the year. I then write it down. Research shows that you are 42% more likely to achieve something if you write it down! Why wouldn’t we want to take those odds? :) My vision for this year includes Athena Technology II SPAC completing the business combination with a transformative company at the forefront of today’s new age economy, and in doing so, lifting the tide for women in business, tech, and finance. We will be ringing the NYSE opening bell today, January 5th!

COVID has taught me to live life with no regrets. Every brick I lay down is fueled by big, bold visions of the cumulative impact over the decade(s). I also leave room for serendipity. As we start the year, I would love to hear from you: What’s your equivalent of the tallest Cathedral in Rome? Define it, share it, and celebrate every win!