A few years ago, a landmark Stanford study came out showing that people tasked with remembering one digit made much better decisions than people charged with remembering seven digits. The two groups were each presented with a choice to eat calorie-laden cake or healthy fruit. The seven-digit crowd ate 50% more cake. The culprit: Cognitive load.
“When you give people cognitive load, they lose will and concentration,” says Bob Sutton, organizational behavior expert at Stanford’s School of Engineering. The challenge is that your company is bound to add cognitive load and gain complexity as you grow. The reality is you do need more roles, more hierarchy, more process. It's unavoidable. It's also a lesson Larry Page learned the hard way when Google entered hyper-growth in the early 2000s.
“When Google got up to about 400 people, he started longing for the good old days when they didn’t have all these annoying managers around,” Sutton recounts. “So he got rid of all of them, because he’s Larry Page and he could, but suddenly he had one executive with 100 engineers reporting to him. That didn’t last very long.”
The takeaway is that you have to find a way to deal with added complexity that acknowledges and incorporates human limits. “Put in just enough structure and process that you feel like you’re giving up ground grudgingly,” Sutton says. “Push until things crack, but not until they break.”
In a recent Stanford Entrepreneurship Corner talk, and his brand new book Scaling Up Excellence: Getting to More Without Settling for Less — co-written with Stanford Professor Huggy Rao — Sutton outlines the lessons he’s learned from interviews with dozens of business leaders who have guided successful rapid growth.
In 2009, Airbnb was close to going bust with revenue flatlining at $200 a week. Since then, over 9 million people have used it to find temporary housing. Etsy was founded almost a decade ago, but doubled its valuation with its last two rounds of funding.
The gradual but ultimately huge success of these entrants to the marketplace space has paved the way for Uber and Lyft’s breakout growth, and the explosion in startups with marketplace models: Postmates, Getaround, Taskrabbit, and more — quickly eclipsing the old guard represented by Craigslist.
Marketplace startups are unique because they aren’t just serving one base of customers. They connect buyers and sellers, service providers and consumers. They have to make sure users are having a good experience with each other as well as their company. As head of product for fashion marketplace Threadflip, it's remarkable to me how much of this is based on our ability to inspire and maintain trust. And while "trust" sounds like a subjective term, building it is highly tactical.
Oren Jacob grew up in a family of storytellers. His parents were teachers who were constantly hosting family, friends, colleagues, passersby from around the world — each with their own story to tell. So it’s not surprising he’s built his career around compelling narratives.
After spending 20 years at Pixar working on films that revolutionized visual media, he is now the co-founder and CEO of ToyTalk, an interactive entertainment company that enables kids to converse with and learn from animated characters. In fact, the company just released its second season of The Winston Show today.
All of this work required continuous and creative pitching. At Pixar, it was about developing movie pitches for $100 million stamps of approval. And now, at ToyTalk, Jacob has helped raise over $16 million to make their groundbreaking vision a reality.
In all of these situations, storytelling has been a crucial part of making pitches memorable and resonant. Whether you’re talking about your product or your company, Jacob recommends several specific storytelling tactics to both appeal to your audience for the first time, and to forge successful long-term relationships.
Kim Scott had one thing to do that day. She was going to price her product. It was the year 2000, she was the founder and CEO of Juice Software, and she had blocked off her whole morning to make this decision.
The moment she stepped off the elevator, she was met by co-worker after co-worker who needed and wanted to talk to her — one about a health concern, another about his kid excelling at school, another about a disintegrating marriage. She comforted, celebrated with, and listened to each one in turn. She didn’t, however, price the product.
“For a minute I thought, this is where the assholes really have the advantage,” says Scott. “But that’s not right either. Good managers give a damn.”
This is just one piece of advice Scott discovered during the last 20 years, and has carried with her through leadership roles at some of the biggest and influential tech companies in the world. Most recently, she advised Dropbox and Twitter. At First Round’s recent CEO Summit, she shared what she believes to be the most important management lessons she’s learned.
Maynard Webb looked out the window to the eBay parking lot. CNN’s van was still there, camped out, waiting for another site-wide outage.
By the time Webb stepped in as president of the company in 1999, the world’s largest auction site was going down so often it was a national news story. And as more and more dot-coms flamed out around it, it seemed doomed to fail. Webb’s job: turn things around.
His first day may have turned into all-nighter (one of many to come), but he eventually led the company to stability and major growth. This experience, combined with the time he spent on salesforce.com’s board, and at Yahoo, among others, has earned him the nickname Mr. Fix-it. And for good reason.
When it comes to crises, there’s no one better to learn from than the man who has kept his cool through some of the most dramatic mishaps and turnarounds the tech world has ever seen. In this exclusive First Round Review interview, he offers advice at startup scale.
I was fresh out of college and had just joined footwear startup AND1 as employee No. 10, when I found myself in a knock-down drag-out argument with the CEO. It was an unusual place to be at age 22 with little experience behind me. But instead of shutting me down, CEO Seth Berger chose to listen.
AND1 managed to create an environment where feedback could be offered in any direction, and where everyone was expected to make an impact. Looking back, seeing this dynamic in action so early on made all the difference for me.
Since leading a team as creative director at AND1, I have founded my own fitness gaming company, and now, as a partner at First Round, I give founders feedback to help them maximize their potential. Below are the lessons I've learned for giving (and oftentimes getting) criticism. Because, let's face it, while we spend a lot of time talking about how important it is, we're rarely good at it.
“Everyone at some point has gotten a job only because they knew the right person — and those are usually the better jobs.”
This is Patrick Ewers, early LinkedIn director and relationship-building expert. Today, he makes his living teaching tech's most successful professionals how to get what they want by forging the right connections. What’s different about Ewers is that the bulk of his advice can’t be found in Networking for Dummies-style guides. It’s designed to be simpler, more genuine and effective at the same time. Case in point: You’ll never hear him say, “Fake it till you make it.”
Whether they admit it or not, most people are uncomfortable with the concept of "networking." Whether you’re standing alone in a sea of people at a cocktail party or sending a note to an old colleague asking for an introduction — these interactions are fraught with pressure and anxiety, even for those who have risen to the top. While Ewers’ philosophy does require discipline, it’s all about removing these mental blocks so you don’t miss out on opportunities.
His tips aren’t just for introverts either.
Katia Verresen's new client had a big problem: He needed to find 3 to 4 extra hours in his day. This, of course, seemed like an impossible feat for an oversubscribed startup founder, but his ability to fundraise and recruit the best talent depended on it. By the time he met Verresen, executive coach to many such founders, he was drained, pessimistic, dreading every week before it started.
Even though tech culture champions sleeplessness, overtime and burnout, Verresen has seen how this mindset can lead to failure. To turn it around, her first order of business is to collect as much data on her clients as she can and funnel it into a plan with one goal: Maximizing energy. Physical energy, emotional energy, and mental energy. These are the components of successful execution that are too often overlooked.
But the proof is in the pudding. After adopting Verresen's recommendations, her exhausted client said he felt like he had 60% more energy during the day, had a more hopeful outlook, and — by getting more done in the morning — found the four hours he needed in the evening. "Most importantly, he remembered that this was his for the taking," Verresen says. "He found control over his life so he could enjoy it again, while also closing on the funding he needed and building out his executive team."
Her method has turned Verresen into one of the most sought after coaches in the business.
“One of the most scalable organizations in human history was the Roman army. Its defining unit: The squad — eight guys. The number of guys that could fit in a tent.”
This is Twitter Engineering SVP Chris Fry on history’s greatest example of successful hyper-growth, and the tactic that made it possible: stable team building.
The moment your organization hits 40 engineers, this should be the number one thing on your mind, he says. When you’re small, everyone sits in one room and everything works. As you grow, things start to break. “That’s when you need to take all your engineering knowledge and apply it to your team, and you want to end up with a modular system where teams become the unit of scale,” Fry says. Getting bigger doesn’t have to mean getting slower.
After leading engineering at both Salesforce and Twitter during their hyper-growth stages, Fry has seen how team structure can make the difference between zero products shipped and fluid productivity. “With the team structure the Roman legion created, they were able to dominate 500 years of history and create a distributed network that ruled the Western world. If you can create a similar structure, you can rule the world too.”
He shared his tips for building this structure at First Round’s last CTO Summit.
When it went public in 2011, over a decade after the company’s founding, Pandora employed fewer than 40 engineers. With this skeleton crew, the company built products for 70 million monthly users on the web, iOS, Android, Windows Phone, a thousand consumer electronic devices, and in over 100 types of cars. It also generated half a billion in revenue — laying the groundwork for its $7 billion valuation today.
Compared to Twitter and Facebook, with their armies of engineers, Pandora is one of those rare Hail Mary success stories that keeps entrepreneurs and investors betting on long-shots. From day one, it pushed against constraints that these other companies didn’t have. Namely, the fact that it had to hand a huge chunk of its funding over to the music industry, leaving it with a scrappy budget that forces companies to stay lean and get creative.
That’s how the Pandora prioritization process was born. In an exclusive First Round CTO Summit talk, Tom Conrad — the company’s CTO since 2004 — broke down how the company figured out the exact right things to build fast and literally demanded buy-in from stakeholders (albeit with fake money, as you’ll see).