In the final How to Start a Startup lecture, Sam Altman talked about the really important things startups must do after finding product-market fit.
In the beginning, it seems like everything you do leads up to launching. And after that, it may seem like it’s all leading up to product-market fit.
But the thing is, if your company is truly innovative and ambitious, you’ll never run out of big benchmarks. That’s the exciting part!
In this self-hosted final lecture of his How to Start a Startup course at Stanford, he said that once you start to hit 20-25 employees and have found product-market fit, “Your main job shifts from building a great product to building a great company and it stays there for the rest of your time. This is probably the biggest shift in being a founder.”
(For more startup advice, check out How to Start a Startup: The Book. It’s the ultimate reference guide to creating a successful tech startup.)
When you’re just powering through the first 12-24 months of your company, it’s fine if everyone reports to the founder. But once you get an office and your company starts to expand to multiple, distinct departments, you’re going to have to create a new management structure. The good news is that the best ones are simple.
First, you need to hire some senior executives. Altman said that founders often think it’s too early to do this, but when they finally do it, they wish they had done so sooner.
With executives in senior positions, you have people with more experience to take the reins in areas where you and your team may not be extremely proficient. Also, they become the people that employees report to instead of you.
Altman said, “All you need is for every employee to know who their manager is and for everyone to have exactly one manager. Every manager should know their direct reports.” With this simple system in place, there should be enough clarity to avoid any confusion.
Also, as you hire more employees, it becomes even more important to have your mission clearly stated. Altman said it’s as simple as writing down how and why you do things so new hires know your company values from the get-go. As he put it:
“You, as the founder, get to basically write the law.”
Altman has encountered several “failure cases” to avoid as your company shifts to a new management system for more employees:
1. Being afraid to hire senior people
As the company scales, you’re going to need senior execs, as opposed to the beginning stages where experience doesn’t matter as much. Don’t wait too long to hire because when you start to need them, you’ll really need them.
2. Going into “Hero Mode”
Founders can have a habit of what Altman called “extreme leading by example.” This can lead you to take over jobs you should be delegating. If you get stuck in “Hero Mode,” Altman said to let things fall behind a little while you look for a new hire. Don’t stay in this mode until you burn out.
3. Bad delegation
This kind of goes back to Hero Mode. Your leadership style should not be to ask someone to do research and then come back to you with information on which you base the final decision. Altman said, “That’s how most founders delegate. That does not make people feel good and it certainly doesn’t scale.” Ask people to make decisions themselves and trust them.
4. Not developing a personal productivity system
The early stages of your startup are the prime time to start deciding the best way for you to work, personally. You need to make sure you’re keeping your priorities in check while also keeping tabs on the work of your employees.
In the early days of your startup, Altman said that you don’t need to make an effort to focus on productivity because small teams are naturally more productive. But as your team grows, he said,
Featured image was taken from the video of Altman’s lecture at Stanford.