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

Customer Development is Not a Focus Group

On first description, hearing the “get out of the building and talk to customers” precept of Customer Development leads people to say, “Oh, I get it. Customer Development is all about gathering a list of what features customers want by talking to them, surveying them, or running “focus groups.”

It’s not.

One of the times I screwed this up it left a legacy of 25 years of questionable design in microprocessor architecture.

Little Indians and Big Indians
At MIPS Computers, my second semiconductor company, I was the VP of Marketing and defacto head of Sales. As the engineers were busy rearchitecting the original Stanford MIPS chip into a commercial product, one of my jobs was to find out what features customers wanted.  One of the specific requests from our chip architects was to find out whether customers would want the chip to have data stored as big-endian or little-endian.

“Endianness” refers to the byte order of data stored in external memory. Data can be stored with the most significant byte at the lowest memory address – big-endian, or it can be stored with the least significant byte at the lowest memory address – little-endian.

Different computers used different endianness. The leading minicomputer of the day, the DEC VAX, used little-endian, as did microprocessors such as the Intel 8086 (used in the IBM PC) and the Mostek 6502 (used in the Apple II.)  On the other hand, the Motorola 68000 microprocessor (used in the Sun and Apollo engineering workstations) and the IBM 360/370 mainframes were big-endian.

The term “endian” came from Jonathan Swift’s Gulliver’s Travels. In it the Lilliputians argue over how they should eat their hard boiled eggs. One group ate from the little end first – little-endians while the other ate theirs from the big end – big-endians. This turned into a dispute over the “right way” and led to war – just like it did for generations of computer architects.

Just Add Every Feature
As I surveyed potential customers on which version of “endiannes” they wanted, prospects who had their data on VAX minicomputers or IBM PC’s were unequivocal. “It has to be little-endian or we won’t design your chip into our systems.” And when I heard from those who had data on Sun or Apollo workstations or IBM mainframes, the answer was equally unambiguous. “It has to be big-endian or we’ll never adopt your microprocessor.”  I still remember the day I talked to Ram Banin, the head of engineering of Daisy Systems (a maker of Electronic Design Automation workstations) and he said, “Steve, you’ll never make every potential customer happy.  Why don’t you tell your engineers to build both byte-orders into your new chip?”

What a great idea. Now I didn’t have to decide or figure out whether one set of customers was more valuable than the other. I ran back to the company and said customers had told us, “We have to do both little and big endian.” The reaction from the chip circuit design guys was, “OK, we could do that. We can put both little- and big-endian in the chip, and it won’t cost us more than 1,000 gates.” The reaction from our software guys was a little less kind.  “Are you out of your !? *x! minds?  Do you understand you are doubling the amount of work you are going to make for generations of software engineers?

No, not really.  I was just in marketing.

All I had done was proudly go out and get customer input. Isn’t that what I was supposed to do?

No.

Customer Development is about Testing the Founder’s Hypothesis
Any idiot can get outside the building and ask customers what they want, compile a feature list and hand it to engineering. Gathering feature requests from customers is not what marketing should be doing in a startup. And it’s certainly not Customer Development.

In a startup the role of Customer Development is to:

  1. test the founders hypothesis about the customer problem
  2. test if the product concept and minimum feature set solve that problem

This is a big idea and worth repeating.  Customer Development is about testing the founder’s hypothesis about what constitutes product/market fit with the minimum feature set. Thereby answering the questions, “Does this product/service as spec’d solve a problem or a need customers have?” Is our solution compelling enough that they want to buy it or use it today?  You know you have achieved product/market fit when you start getting orders (or users, eyeballs or whatever your criteria for success was in your business model.)

The time to start iterating the product is if and only if sufficient customers tell you your problem hypotheses are incorrect or point out features you missed that would cause them not to buy.  If you’re lucky you’ll find this out early in Customer Discovery or if not, when no one buys in Customer Validation.

The Jury is Still Out
At MIPS I was out collecting feature requests.

We put both byte orders into the MIPS chip. It’s been there for 25-years.

Lessons Learned

  • Startups begin with hypotheses about a customer problem or need
  • Founders talk to customers to discover and validate whether the total solution solves that problem or addresses that need
  • If, and not only if, there are no “buy signs” from the customer or customers repeatably point out missing features, does the product change
  • Collecting feature lists and holding focus groups are for established companies with existing customers looking to design product line extensions

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