How to Keep Your Job As Your Company Grows

I know a change is going to come

If you’re an early employee at a startup, one day you will wake up to find that what you worked on 24/7 for the last year is no longer the most important thing – you’re no longer the most important employee, and process, meetings, paperwork and managers and bosses have shown up. Most painfully, you’ll learn that your role in the company has to change.

I’ve seen these transitions as an investor, board member and CEO. At times they are painful to watch and difficult to manage. Early in my career I lived it as an employee, and I handled it in the worst possible way.

Here’s what I wish I had known.

I had joined MIPS Computers, my second semiconductor company, as the VP of marketing and also took on the role of the acting VP of Sales. During the first year of the company’s life, I was a fireball – relentless in creating and pursuing opportunities – getting on an airplane at the drop of a hat to fly anywhere, anytime, to get a design win. I worked with engineering to try to find product/market fit (big endian or little endian?) and get the chip designed into companies building engineering workstations – powerful personal computers, all while trying to refine how to find the right markets, customers, and sales process. I didn’t get much sleep, but I was having the time of my life.

And after a year there was good news. Our rent-a-CEO was being replaced by a permanent one. Our chip was nearing completion, and I had convinced early lighthouse customers to design it into their computers. I had done amazing things with almost no resources and got the company on the radar of every tech publication and into deals we had no right to be in. I was feeling 10 feet tall. Everything was great… until the new CEO called me in for a chat.

I don’t remember much about the details, but I do remember hearing him tell me how impressed he was with what I had accomplished so far, then immediately the visceral feeling of shock and surprise when his next words were that now the company needed to scale, and I wasn’t the right person to do that… Wait! What??

For a minute I couldn’t breathe. I felt like I had been punched in the gut. How could that be?  What do you mean I’m not the right person??? Hadn’t he just listed all the great work I had done? He acknowledged it was a lot of progress but offered that it was a flurry of disconnected tactics without a coherent strategy. No one knew what I was doing, and I couldn’t explain why I was doing it when asked. “You’re just throwing stuff against the wall. That doesn’t scale.” I was speechless. Wasn’t that what the first year of a startup was supposed to be like?

Scrambling to save my job, I regained the power of speech, and asked him if I could be the person to take the company to the next level. And to his credit (which I only appreciated years later) he agreed that while he was going to start a search, I could be a candidate for the job. And to top it off he got me a coach to help me understand what taking it to the next level meant. In preparation I remember buying all the management books I could find and reading what little literature there was at the time about how small company management transitioned into a larger one.

And herein lies the tale….
I vaguely remember going to lunch with my coach, a nice white-haired “old guy” who was trying to help me learn the skills to grow into the new job. The problem was I had shut down. Even as we were meeting, I was obsessively thinking about the change in my role, my title and my status. “I don’t get it, I did all this work, and everything was great. Why does anything have to change?”  But I never shared any of how I felt with my coach. To do this day I am really embarrassed to admit that I have no idea what my coach tried to teach me over multiple lunches and weeks. As we went to lunch, all I could think about was me and how I was being screwed. I literally paid zero attention. In my righteous anger I was unreachable.

I shouldn’t have been surprised, but yet again I was, when a month later the CEO said, that the report from the coach said, “I had a long way to go”. The company was going to hire a VP of Marketing. I was devastated.

I quit.

It’s Not About Change – It’s About Loss
If you had asked me a decade later what had been going on in my head and why I handled this so badly, I would have simply said, that: 1) I was resistant to change, and that 2) I had made this all about me and never once considered that our new CEO was rightAll true – to a point.

It took me another decade to realize if I had been really honest with myself it wasn’t about fighting change at all. Heck every day something new was happening at our startup. I was agile enough to keep up with innumerable changes and I was changing lots of things myself. It was actually about something much more personal I wouldn’t admit to myself – it was that these changes made me fear what I was losing;

  • I felt a loss of status and identity – I had been judged inadequate to continue in my role and my stature and the value of my skills and abilities had dropped.
  • I felt a loss of certainty – I was now competing to hold a job I thought was mine forever in the company. At least that’s what I thought my business card said. Now I was adrift and didn’t know what the future held.
  • I felt a loss of autonomy – Up until now I used my best judgment of what was needed and I was doing what I wanted, when I wanted it. I was fine making up a strategy on the fly from disconnected tactics. Now we were going to have plans and a strategy.
  • I felt a loss of community – we had been a small tight team who had bonded together under extreme pressure and accomplished amazing things. Now new people who knew none of that and appreciated little of it were coming in. They had little trust and empathy with us.
  • I felt the process lacked fairness – no one had warned/told me that the job I was doing needed to change over time, and no one told me what those new skills were.

What was going on?
Researchers have found there’s a link between social connection and physical discomfort within the brain. “Being hungry and being ostracized activate similar neural responses because being socially connected is necessary for survival. Although a job is often regarded as a purely economic transaction, the brain experiences the workplace first and foremost as a social system.”

Looking back over the decades it’s clear that the new CEO was right. Even though these losses triggered something primal, I did need to learn discipline, pattern recognition, time management, separating the trivial from the important and the difference between tactics and strategy. I needed to learn to grow from being a great individual contributor to being a manager and then a leader. Instead I walked away from learning any of it.

I probably added five unneeded years to my career.

What should I have done?
Today it’s understood that all startups go through a metamorphosis as they become larger companies. They go from organizations struggling for survival as they search for product/market fit, to building a repeatable and scalable business model, and then growing to profitability. And we are all hard-wired for a set number of social relationships. This mental wiring defines boundaries in growing an organization – get bigger than a certain size, and you need a different management system. The skills needed from employees differ at each stage.

What I wish I knew was that if you’re an early company employee, it’s not likely that the skills you have on day one are the skills needed as the company scales to the next level. This sentence is worth reading multiple times as no one – not the person who hired you, the VC’s or your peers -is going to tell you when you’re hired that the company will likely outgrow you. Some (like your peers or even the founders) don’t understand it, and others (the VCs) realize it’s not in their interest to let you know. The painful reality is that products change, strategies change, people change…things have to change for your company to stay in business and grow.

What should my CEO have done?
When my CEO was explaining to me how the company needed to change to grow, he was explaining facts while I was processing deeply held feelings. The changes in the organization and my role represented what I was about to lose. And when people feel they’re going to lose something deeply important, it triggers an emotional response because change feels like a threat. It’s not an excuse for my counterproductive behavior, but explains why I acted out like I did.

Startup CEOs need to think about these transitions from day one and consider how to address the real sense of loss these transitions mean to early employees.

Loss of status? It’s almost impossible to take away a title from someone, give it to someone else and still retain that employee. Think hard about whether titles need to be formal (VP of Engineering, VP of Marketing, VP of Sales, etc.) before the company finds product/market fit and/or tens of people – as you can almost guarantee that these people won’t have those roles and titles when you scale.

Loss of Certainty? Startups and VC’s have historically operated on the “I’ll deal with this later” principle in letting early employees know what happens as the company scales. The common wisdom is that no one would want to work like crazy knowing that they might not be the ones to lead as the company grows. I call this the Moses-problem – you work for years to get the tribe to the promised land – but you’re not allowed to cross over. The company needs to give formal recognition for those individuals who brought the tribe to the promised land.

Loss of Autonomy? This is the time you and your employees get to have a discussion about the next steps in their career. Do they want to be an individual contributor? Manager of people and process? Special projects? These shouldn’t be random assignments but instead, offer a roadmap of possible choices and directions.

Loss of Community? Your original hires embody the company culture. Unless you have them capture the unique aspects of the culture, it will become diluted and disappear among the new hires. Declare them cultural co-foundersHelp them understand the community is growing and they’re the ambassadors. Have them formalize it as part of a now needed on-boarding process as the company grows. And most importantly, make sure that they are celebrated as the team that got the company to where it is now.

Loss of Fairness? Just telling employees “a change is going to come” it is not sufficient. What are the new skills needed when you scale from Search to Build to Grow – from tens to hundreds and then thousands of people? How can your existing employees gain those new skills?

Lessons Learned

  • VC’s, Founders and CEOs now recognize that startups grow through different stages: Search, Build and Grow
    • They recognize that employees need different skills at each stage
    • And that some of the original employees won’t grow into the next stage
  • But while these changes make rational sense to the CEO and the board, to early employees these changes feel like a real and tangible personal loss
    • Loss of Status and Identity
    • Loss of Community
    • Loss of Autonomy
    • Loss of Certainty
    • Loss of Fairness
  • CEOs need to put processes in places to acknowledge and deal with the real sense of loss
    • These will keep early employees motivated – and retained
    • And build a stronger company
  • For employees, how you handle change will affect the trajectory of your career and possibly your net worth

This post appeared in AngelList

17 Responses

  1. This was a very interesting article 🙂

  2. Compelling read. I went through the same transition when I joined a company transitioning into growth stage as VP Sales. After a year and a half and despite relentless work in establishing a global sales network and presence that the founding team did not do well (the company supplies timing products that require thousands of design ins, while the CEO came from the ASSP field where one or two key design wins define success for the company) I was fired after the company failed to achieve the revenue targets that the CEO promised the Board. Even though this was a dismissal and not a ‘loss of title’, all the feelings of identity loss were exactly the same. And while I can justify everything that I did and look at the eventual path that the company took, that is still a debate that only really matters to me, and doesn’t reflect the decisions that companies have to make as they scale.

    I am lucky in that I have been able to re-invent my career a number of times since then, but I still think about the mismatch between ambition and ability in organizational life.

  3. Great article. Honest. Painful. Been there, felt that…

  4. I have lived this as VP of Marketing–twice! The second time I realized that my skill set was not about the product–it was launching startups and getting them ready to scale, not scaling them. Once I had that realization finding the next startup to launch was straightforward.

  5. Brilliant! This is the best thing I’ve ever read from you (and I endeavour to read everything you publish)! Informative, deeply personal, and powerfully enabling – emotionally, tactically, and strategically.

    I intensely dislike and distrust the term (and function) “HR” — and instead use/enact the term “HDD” (and HDDS – as in ‘Human Dynamics and Development’ and ‘Human Dynamics and Development Systems’).

    I suggest (as I think you do) that (especially) FROM THE START founders/start-up firms embarking on the ‘Search-Build-Grow’ adventure find a way for a dedicated individual and/or service to provide HDD functions precisely focused on providing for, engaging and transforming the very issues, challenges, information, support, tools and cultural frameworks necessary for the individuals’ (and their organizations’) transformation and success on that tremendous arc your powerful article outlines.

    Simply put, independent of scale or domain, ‘failing to plan for’ results in actively ‘planning to fail’. True too in the role, status, autonomy and other changes occurring in the Search-Build-Grow trajectory.

    Best regards and thank you so much for sharing so succinctly such a tremendous set of both actionable and (my word) actable insights.

  6. Hope you realize you posted excellent advice. Must read for all employees I say.

  7. Honestly while you have long struggled with the loss of identity, title and what you could have done wrong, I would actually say this is more of a cautionary tale of bad management and CEOs than anything you did wrong. Do companies change? Yes for sure. Do startups go through a metamorphosis as they become larger? Hell yeah. But nothing a company does should result in what happened to you.

    Ok, so you are not what the company needed at the moment, they should have turned around and guided you in the new direction. No not putting your job up for grabs, but to instead change the role to be in line with the new direction. Point out what you are doing that needs a tweak to be scalable.

    I honestly think that any CEO or management position that makes such hard changes like this and screw over the earliest employees should instead take a hard look at themselves. In many ways, you are more the company than an incoming CEO outsider is. I don’t believe they should keep people who are dead weight by any means, but they should keep those who are faithful, experienced and show a willing to change than threatening their job.

    I am sorry it has caused years of bad reflection on what you did wrong, but it sounds like they just screwed up. It is more common than you think.

    As a cautionary tale, I saw a company I worked for do this many times over and purged their company of all their experience. Now they are almost bankrupt. So many employees that we have a support group where we are all friends and we are all hoping that the company goes under. It looks like it might collapse within a year at most. Good.

  8. Obviously written by someone who knows of what he speaks. One of the best analyses of the challenge of growth for early stage employees that I’ve read. And advice to VCs and new leadership is well taken. Unfortunately it requires long-term thinking and a willingness to be honest with employees (consequences be as they are) about the realities of growth. Would also note that as often as I’ve seen early stage employees pushed out, I’ve seen late-stage leaders come in and make huge mistakes that had they had more blocking and tackling acumen developed in an early stage enterprise, they would’ve been able to foresee.

  9. Very good for me to read this (every month, I suppose) having joined as employee #1 a fast-growing, changing, evolving company… Great read that I’ll definitely be sharing onwards. Catch you soon!

  10. Really useful and important Steve. Thanks.

  11. > What I wish I knew was that if you’re an early company employee, it’s not likely that the skills you have on day one are the skills needed as the company scales to the next level.

    I can imagine one more rationale for why one might act the way you did: if you lose track of the dynamically shifting success criteria (because you’ve got your head down grinding towards yesterday’s criteria), then you’ll be surprised when you fall behind according to today’s criteria. One reaction to this is to reject today’s criteria. This is easier than accepting reality because according to yesterday’s criteria you’re doing better than anyone else (most other people are on the right page and behind according to yesterday’s criteria). But reality always sets in eventually…

    Maybe the underlying problem was that you lost touch with the reality of your company, or underestimated how much any company’s direction (at any stage) can shift when a new leader takes office.

  12. This was an outstanding read. Thanks

  13. Thank you for another insightful piece, Steve. It is particularly timely for me, and I would like to ask you the following: What’s your advice for an employee who is currently in the situation you are describing, and the CEO has not followed the process you outlined here?

  14. Thanks for sharing (yet again) another painful episode on the long journey to your ultimate success, Steve.

    Your poor reaction at MIPS to the new CEO’s generous and reasonable offer – by mentally shutting yourself off from the paid coaching and, let’s face it, a last chance re-evaluation – has resulted, all these years later, in a priceless “teachable moment.”

    I instantly recognized myself in your confession, especially when you stated,”To do this day I am really embarrassed to admit that I have no idea what my coach tried to teach me over multiple lunches and weeks. As we went to lunch, all I could think about was me and how I was being screwed. I literally paid zero attention. In my righteous anger I was unreachable.”

    As we’re both now in our 60’s, I can certainly relate to your statement of genuine regret. However, like yourself, I’ve been able to make peace with the mistakes that my younger and (more) immature self made during many various episodes of “righteous indignation” in my past. How? By eventually coming to the realization – and appreciation – that the discovery of the those genuine regrets has served to shape my CHARACTER.

    I believe in the power of real regret to help us grow. To me, any person “of a certain age” that has no real regrets, has no real character. Furthermore, the quality of those regrets are the strongest indicator possible of the quality of their character (hint: “I’m sorry that I didn’t invest in Facebook/Apple/Google etc.” doesn’t count). IMO, the only regrets that truly count are RELATIONSHIP REGRETS

    Hopefully, this little 5-minute clip will help to explain:

    Semper Fi

  15. Hello Steve, This article is a miracle, a life-saver, came right in time. Thank you so much for thinking about it and writing it.

    Really appreciated.

  16. From my experience in key roles in four startups and as mentor / advisor to more than a dozen others, this post represents beautifully the reality that no one sees until it hits them in the face.

  17. Hello Steve…This article addresses such an important problem faced by startups.

    I am the first one to accept that i have failed to address this issue in the startups led by me. To start with, no one wants to address the elephant in the room i.,e the employee (who has been with the company since start) might not have the skill set to lead the company at its new stage. Secondly, when the issue is addressed – it is done in the right manner. There is so much to learn from what you wrote.

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