Books for software engineers and managers

High Growth Handbook

Scaling startups from 10 to 10,000  people

by Elad Gil, Investor or advisor to Airbnb, Coinbase, Square, Stripe, and  others

Categories:
CTO,
Product Manager,
Tech Recruiter,
Startup Founder

Most successful tech companies are distribution-centric, not  product-centric

A great product doesn’t matter unless customers know about it, have access to it, and use it.

Many startup founders go wrong here. They see a customer need, a crappy product serving that need, and think that they just need to build a better product – which shouldn’t be that hard!

Then they experience frustration when their now competitor wins the market because of a superior distribution channel.

Marc Andreessen rephrased this by asking, “Would you rather have another two years’ lead on product, or a two years’ lead on having a state-of-the-art growth effort? I think the answer for a lot of consumer products is actually that you’d rather have the growth effort.”

Network effects and data moats deteriorate faster than we  expect

Ask the Myspace people how network effects worked out for them.

More recently, product managers and founders often believe in data moats, notably that AI can learn faster with more data, which gives the company a competitive edge. But data moats are very rare.

R&D isn’t about percentage of budget, it’s about who specifically is doing the  work

The best R&D is produced by the most skilled and competent people, often out-producing larger teams of less skilled people. Marc Andreessen suggests that you really need a great product manager and great architect to arrive at a great product.

Work grinds to a halt when people don’t know who the deciders are, which frequently happens in high-growth  companies

During high growth, individual roles and team structures change rapidly, which introduces confusion around decision making.

In startups, the game we play is “default  mortality”

Assume your startup will die. Now your job is to do everything possible to keep it alive.

Hired CEOs need a founder’s mentality, otherwise they’ll be focused on asset management and not  growth

Reid Hoffman makes the point that when you hire a CEO externally, you should really be looking for a founder’s mentality. Basically this person needs to be a late-stage founder.

Without a founder’s mentality, the CEO is likely to focus on keeping things running along the current trajectory, not accelerating growth.

Hire executives that will be a good fit for the next 12-18  months

Don’t project too far out with executives because you don’t know how they will scale, or how your company needs will change.

Notably you want to avoid hiring for levels that aren’t necessary yet and will be difficult to supplant. For instance, don’t hire a CTO if you just need a Director of Engineering because a CTO is really hard to replace or inject a layer above. One potential solution here is to use more non-standard titles like Head of Engineering.

A great executive is planning and acting 6-12 months in the  future

These executives are asking what will be an issue around the curve, and they’re already solving for it now.

Unlike Design, Engineering is not a good place to start with junior-level talent because the work quality isn’t face  visible

If you hire a bunch of junior engineers, they may create insurmountable tech debt that limits your company’s growth – even preventing you from seeing what’s possible because you’re so trapped in the current structure.

In high-growth companies, you have a new company every 6-12  months

Headcount is growing rapidly, the product is changing, culture is shifting. As a leader you must be intentional about your growth. A good rule of thumb is to limit headcount growth to 50-60% in a given year.

High Growth Handbook

How strongly do I recommend High Growth Handbook?
7 / 10

High Growth Handbook is a series of interviews with industry leaders with experience scaling teams from double digits to thousands of employees. Each interview loosely focuses on a single topic.

Examples:

  • CEO hiring and mistakes: Sam Altman, President of Y Combinator
  • Product distribution: Marc Andreessen, co-founder of Andreessen Horowitz
  • Culture: Patrick Collison. Co-founder and CEO of Stripe
  • Diversity and hiring: Joelle Emerson, founder and CEO of Paradigm
  • Board and CEO transitions: Reid Hoffman, co-founder of LinkedIn