Scaling Teams

Introduction

Growth is never by mere chance; it is the result of forces working together.

James Cash Penney

Leading a fast-growing team is a uniquely challenging experience. Management techniques that seemed so effective last month can suddenly fail in surprising ways. The adjustments you make might carry you six months into the future, or maybe only six weeks. Meanwhile, your new team members have an increasingly difficult time coming up to speed, and you wonder whether all the effort you’ve put into recruiting might actually be slowing down the team.

Such experiences can be humbling, but they can also be thrilling and rewarding for those who successfully navigate the inflection points that come from rapid growth. Looking back on our own careers, we wish that we had been given a practical guide to those inflection points, to help us see the warning signs of dysfunction before they grew into full-fledged crises. Rather than pivoting rapidly in response to scaling problems, we’d prefer to have used proven solutions from successful companies, adjusting them to the unique challenges of our own situation. This book is the toolbox we wish we’d had, and we hope it proves useful to you.

Who Should Read This Book?

We wrote this book for leaders of technology companies, particularly those involved in product development: software and hardware engineering, product management, design, QA, and so on. Our advice will be most helpful to teams ranging from 10 to 250 members, either in the context of a startup company, or a newly formed team within a larger organization.

We have focused on the needs of teams experiencing a dramatic increase in size, often referred to as hyper-growth. While there is no strict definition for what distinguishes “hyper” from normal growth, it’s most often used to describe increases greater than 50% in a 6- to 12-month period. During times of hyper-growth, scaling challenges are amplified, with less time to react and craft solutions, but we expect that teams with slower growth will be able to apply our suggested strategies as well.

Leaders of teams that interact closely with product development, such as technical sales, marketing, or customer success, should also find value in this book. And we hope our suggestions are useful to leaders in fields outside of technology as well.

Why We Wrote This Book

Although we the authors, Alexander Grosse and David Loftesness, took different paths to engineering leadership, we share similar experiences of how growth can overwhelm an otherwise high-functioning team:

Alexander’s story

In 1999, I was hired by a startup as a senior software engineer. After a few months, I came to the office and found a letter on the CTO’s desk stating that he had quit, effective immediately. The CEO turned to me and said “Congratulations, Alex. You are the CTO now.” At first, I was in full panic mode and had no idea what to do. So I spent the coming months concentrating on the technical work, as I had no clue what other things needed to be done. When the dot-com economy crashed, we went bankrupt. I later read an article outlining the typical mistakes that startups make. Each point the author made applied to our startup…

David’s story

I joined Geoworks in 1993, my first job out of college. One year later, my boss, a Director of Engineering, asked me to manage the team I was working on. As a dutiful and ambitious young software engineer, I accepted the challenge immediately and set to work trying to emulate what I’d seen my boss do—hold one-on-ones and team meetings, build project schedules, hire more engineers, and work like crazy. I really had no idea what I was doing, but did my best and tried to keep things moving forward, making many mistakes along the way. After a period of explosive growth, Geoworks’s momentum faltered. I eventually had to lay off almost half my team, many of them good friends, one of the worst experiences of my career. Looking back, I can’t help wondering what might have been… Had we managed our growth better, could we have kept our key clients, continued to grow, and become the successful company we aspired to be?

After we met and compared notes, we recognized a shared ambition: to provide future leaders with the guidance we lacked early on, and learned mainly through hard-won experience.

The content of this book is based on that experience, from managing rapidly growing teams at a number of different companies. But the combined experience of two people can only cover so many situations, so we also interviewed founders and executives from a number of different high-growth companies. And we incorporated and referenced the written work of dozens of other industry leaders whose ideas have influenced our careers.

The Context for Growth

We have all heard stories of high-flying technology companies that doubled, tripled, or even more in a very short time. In his book The Hard Thing About Hard Things (HarperBusiness), Ben Horowitz recalled that his company LoudCloud grew from 4 founders to 200 employees in less than 6 months, and then grew to 600 in less than a year!

Such growth is an impressive achievement, but no matter how talented their leaders are, teams that grow by 300% in 12 months almost never see a 300% increase in the output of the team. Typically such rapid growth leads to diminishing returns (see Figure P-1).

Figure P-1. Rapid growth leads to diminishing returns

For reasons we will explain, the challenges that come from growing fast often limit the productivity gained from each new employee, and side effects can even lower the overall effectiveness of the team. Kate Heddleston describes an extreme case:

When the new Senior VP of Engineering took over at a major Silicon Valley tech company a few years back, the first thing he had to do was freeze hiring. The company had been growing rapidly and their engineering team had hired aggressively, but they had reached a point where each new engineer they added to the team decreased overall productivity.¹

How frustrating would it be to expend effort and money recruiting and training a new employee, only to decrease the output of your team!

But this begs the question—how fast is too fast? The answer depends on many factors, particularly the size and maturity of the team in question. A 10-person team with a well-established on-boarding and mentorship program could probably triple in size over the course of a year without much difficulty. But for a less prepared team this could be a recipe for chaos, and would certainly not be sustainable over the long term. We hope that the advice and techniques in this book can help you significantly raise the effective growth rate limit for your team.

A rule of thumb derived from our experience and from conversations with leaders of hyper-growth companies is that once your development team is larger than 20, trying to double the team in less than a year is likely to lead to trouble. Expect to waste time on personnel issues, product flaws introduced by poorly trained new hires, flagging morale, and inefficient meetings instead of moving your product forward and keeping customers happy.

Hiring: One Option Among Many

A commonly observed pattern in technology startups is that they try to solve every problem through hiring. Instead of understanding why productivity has slowed or product quality is slipping and then crafting an appropriate solution, many companies simply crank up the hiring machine and “throw people at the problem.” Unfortunately, the complexity of managing a larger team often makes the problem worse, or introduces new ones.

Alex once worked at a company with a buggy product and unhappy customers. In response, the company hired more developers and focused them on fixing bugs. But these new hires lacked insight into the overall system. They ended up causing more problems than they fixed, leading to even more hiring and a downward spiral of quality.

A better approach would have been to suspend hiring and understand why quality was slipping. Were new employees not getting the training they needed? Was the development process that worked for 5 engineers starting to break down at 25? Perhaps instead of hiring, adding rigor to their development process or training in better testing techniques would correct the problem. If so, the team would then be in a much better position to resume hiring once new hires could contribute without reducing the quality of the product.

Despite our focus on scaling teams, we recommend considering alternatives to hiring first. Process improvements, organizational changes, or canceling unnecessary projects may allow you to meet your goals with fewer new hires. This costs less, simplifies your job, and adds less risk to your business. In our experience, the complexity of managing a 100% growth rate team is more than twice as difficult as managing a 50% growth rate team.

If after looking at alternatives you decide that you still need to hire, then the rest of this book is for you. Sometimes you simply can’t deliver what the business demands with the team you have. And it’s clear that another month of “crunch mode” will cause your old-timers to burn out and quit. When you reach this point, we hope to prepare you for the challenges that come with a fast-growing team and help you manage it more effectively.

Structure

In Scaling Teams, we cover strategy, tactics, and stories of growth across five dimensions. These are the areas where we’ve seen the greatest challenges during hyper-growth:

Hiring

Chapter 1, Scaling Hiring: Growing the Team
Chapter 2, Scaling Hiring: Interviews and Hiring Decisions
Chapter 3, Scaling Hiring: How to Close, On-Board, and Beyond

People management

Chapter 4, People Management: Getting Started
Chapter 5, People Management at Scale

Organization

Chapter 6, Scaling the Organization: Design Principles
Chapter 7, Scaling the Organization: Delivery Teams
Chapter 8, Scaling the Organization: Reporting Structure

Culture

Chapter 9, Scaling Culture

Communication

Chapter 10, Scaling Communication: The Complexity of Scale and Distance
Chapter 11, Scaling Communication: Communicating at Scale

Hiring is how you build the foundation of the company. You must hire people to grow. Ideally, your new recruits share your vision and values, and have the talents needed to help the company succeed. Hiring poorly is often worse than not hiring at all, and investments in the other four areas are unlikely to make up for it.

Next, we address people management. Hiring provides the raw materials for your team, but people management is needed to ensure that team members are happy and productive over the long term. An effective manager uses coaching, feedback, work assignments, dispute resolution, and other techniques, adjusting their approach based on the needs of each individual.

If hiring and people management are the essential ingredients of productivity, organization acts as the framework for boosting and channeling that productivity. An effective organization removes barriers to delivering work output, bringing together the right team members to solve challenges for the business.

Finally, culture and communication are the glue that keeps the other three dimensions together. A strong culture includes aspects of the other dimensions and helps reinforce the best parts of them. Communication provides the necessary context for the team to be effective in the other dimensions.

In the the book’s final chapter, we tie together the warning signs and the most essential guidance from the preceding chapters, and propose building a scaling plan to help you navigate the growth challenges ahead.

How to Read This Book

We tried to write a book that could be read cover to cover while still allowing the reader to drop into a single section of particular interest. If you’re considering whether to add a layer of management to your team, for example, we invite you to drop into the chapters on people management as soon as you finish this introduction.

Because every organization is different, we don’t often prescribe one-size-fits-all solutions. Many factors can influence the direction to go when things break: the size of the team, the growth rate, the number of offices (and time zones), the number of remote employees, and so on. In the few cases where a specific approach is likely to work, we describe it in more detail. In the other cases, we broadly cover possible solutions and provide examples of how other companies have approached the same issues.

A time-pressured reader might focus on Chapter 12. There we list our scaling essentials, the most important things you can do to prepare for rapid growth. It also contains a collated list of the warning signs from each chapter. Reviewing the warning signs, finding those that are evident on your team, and applying the suggested remedies would be a very surgical way to make use of the recommendations in this book.

Acknowledgments

Scaling Teams would not exist without the contributions, feedback, and support from our many friends, colleagues, and family members. Alex and David are overwhelmed with gratitude. We would like to extend our heartfelt thanks to:

• The reviewers who convinced O’Reilly that our proposal wasn’t crazy talk and that our final draft was worth printing. They called bullshit when needed, gave us insightful suggestions, and made the book better in so many ways: Kellan Elliott-McCrea, bethanye McKinney Blount, Mike Loukides, Marcy Swenson, Kevin Goldsmith, Oren Ellenbogen, Alexander Kong, Anna Sulkina, Kevin Way, Naomi Chin, and Dillion Tan.

• The colleagues and friends who let us interview them, pick their brains, or quietly jot down the smart things they said about scaling teams. They gave us illuminating stories and examples, and helped us expand our limited range of experience to cover so many other situations and challenges: Mike Krieger, Marcy Swenson, Chris Fry, Raffi Krikorian, Michael Lopp, Eric Bowman, David Noel, Jesper Pascal, Oren Ellenbogen, Kevin Goldsmith, Phil Calcado, Duana Stanley, Kellan Elliott-McCrea, Dale Harrison, Nick Weaver, Laura Bilazarian, and Marc Hedlund.

• Many more colleagues and friends who reviewed drafts of the book or contributed in other ways. We’d like to highlight specific contributions from each one, but they all offered many helpful comments, perspectives, and suggestions, so you can mentally append the phrase “and many other things” after each one: Joy Su suggested tech talk rotations; John Kalucki improved the logical flow; Glen Sanford fixed the sports metaphor for predicting manager success; Penny Campbell made myriad outline improvements and suggested the section on how the behavior of leaders influences team culture; Sylvain Grande helped us improve the initial structure of the book; Joanne Yee turned many overly obtuse phrases into readable prose; Joe Xavier provided the perfect summary of the people manager role; Mike Sela reminded us that poor management and the absence of management are not the same thing; Ryan King provided veteran insights on core values and culture; Aaron Rothman reminded us that recruiting requires closing; Scott Loftesness fixed the sequencing of the people management chapters (thanks, Dad!); Stefan Gross-Selbeck suggested a better structure for the “Scaling the Organization” chapters; Soren Thompson helped clarify several sections in “Scaling Organization”; John Sturino added some important concepts to “Delivery Teams”; Ben Linders improved “Scaling the Organization”; Jan Lehnhardt provided valuable input on diversity in “Scaling Hiring”; Erik Engstrom contributed two stories and valuable input to “Scaling Hiring”; Charmilla Kasper helped with diversity in the hiring chapters; Oliver Hookins survived providing our first top-to-bottom in-depth review, which was hugely valuable; Peter Vida reviewed “Scaling Hiring”; Philipp Rogge gave a great review of “Scaling the Organization”; Simon Munich-Andersen reviewed the whole book and provided useful and motivating feedback; David Parmenter gave us a lot of advice on the overall structure of the book; Sonya Green and Robert Slifka provided the tree metaphor that connects values and culture; and Mike Pierovich provided a perfect quote for the “People Management” chapters. We’ve probably missed a few of you. Please accept our apologies and our gratitude.

• Many people were present for the origin of the book, when David and Alex met at the Hive Summit 2015 in Yerevan, Armenia. They provided encouragement and support then and along the way: Laura Bilazarian, David Singleton, Lennon Day-Reynolds, and Dale Harrison. We are grateful to the Hive Group, the Tumo Center, and the Armenian tech community for hosting us and providing such an inspiring beginning to our journey. And ultimately, it was Raffi Krikorian who invited us to the 2015 Hive Summit and set us on the path that led here.

• Special thanks to Laurel Ruma for sponsoring this project and convincing us to work together as coauthors; Tim Howes for the idea of breaking down scaling challenges into discrete dimensions; Robert Hoekman for help turning ideas into wonderfully readable prose; and especially Colleen Toporek, who wrangled our words, our ideas, and our schedules with a gentle confidence that we sorely needed.

• David cannot express how much support and patience Penny Campbell provided throughout the writing process, not to mention her numerous corrections and additions. Thank you, Penny, and thank you, Z and L, for putting up with your busy and distracted dad for so many months. This book is dedicated to you. I know someday you’ll read it and send me improvements for the nth edition.

• Alex promises to spend more time with his family for the foreseeable future. Without the support of May-Britt Frank-Grosse and the patience of our three kids, this book would not have been possible.

¹ Kate Heddleston, “Onboarding and the Cost of Team Debt”, Kate Heddleston’s blog.