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Continuing our MBA Mondays<\/a> series on The Management Team, we are deep into the guest post phase. This guest post comes from AVC regular Phil Sugar<\/a>. I’ve never met Phil, but his comments here at AVC tell me that he’s a very experienced entrepreneurial manager. And so I reached out to him to ask for a guest post. And he responded with this post below. There are so many great lines in here, I’m tempted to reblog a bunch of them.<\/p>\n Best Friends, Buddies, and Co-Workers<\/strong><\/p>\n Since there is no way I am going to be more insightful than Matt or JLM about management process, I am going to go through three early stages of company growth and describe some of the management challenges I\u2019ve faced at each. \u00a0As Fred pointed out in his original post, a company\u2019s management evolves. \u00a0This is purely environmental, it\u2019s going to happen and you are much better off knowing what to expect.<\/p>\n At a very early stage: a couple of gals in a garage, nothing gets done unless somebody goes out and does something. \u00a0No customers are going to call, no partners are going to want to meet, no bankers, lawyers are going to reach out. \u00a0Everything is outward. \u00a0Nothing happens unless you do something and frankly anybody calling in to you is probably suspect but that\u2019s another post. \u00a0You know exactly what each person is doing because there are so few of you.As the company becomes a leader in its market with a hundred or so employees, everything is incoming. \u00a0Everybody wants a piece of your time, everybody is calling. \u00a0You have departments with managers that are larger than your original company. \u00a0Managing is critical because of the leverage; the difference between a dozen well managed people in a department achieving goals and a dozen people going in different directions is huge, people specialize in very distinct areas.It is a gut wrenching challenge to go from one to another. \u00a0Once you decide to make the leap from one stage to the next, going back is excruciatingly painful if not fatal. \u00a0You can\u2019t hope to meander from one stage to the next because it is a chasm. \u00a0It doesn\u2019t mean you have to go to the next stage, many companies are better off not leaping, they are a \u201clifestyle business\u201d serving a small market, but you better know, not hope the market is big enough to go to the next stage. \u00a0Once you scramble these eggs it\u2019s tough to go back, the producers will burn out and the management layer will try to hang on for dear life when you\u2019re caught in the middle.<\/p>\n I\u2019ll start with three management philosophies that stay constant for me. \u00a0Understand that once a company gets past 100 or so employees, my skills don\u2019t apply I\u2019m the guy leaving so the company can scale.<\/p>\n I am in charge of recruiting. \u00a0I will have somebody managing the process as we grow; departments do the interviewing, but bottom line, if my people are better than your people I win. \u00a0College football is a great analogy. \u00a0Look at the top coaches. \u00a0They always win because they have the best talent. \u00a0In college the players pick the team, in the pro\u2019s the teams pick the players. \u00a0You bet Nick Saban goes on recruiting trips. \u00a0Don\u2019t for a second be lulled into the notion that you are picking employees. \u00a0They are picking you and you better be the one they want to pick. \u00a0You better have an on-boarding process and it better be good. \u00a0My biggest legacy is the network of people I\u2019ve hired and what they\u2019ve gone on to do.<\/p>\n I go on as many sales calls and customer visits as I can. \u00a0I\u2019ve been told that once I hire a Head of Sales, I should stay out of the process. \u00a0I totally disagree. \u00a0I am not going to be the one managing the process, but I want to hear what the market is saying directly. \u00a0A salesperson can\u2019t be objectively assess the market, they are too close, their livelihood depends on the sale, same for the VP. \u00a0They have to be optimistic, they have to try and make the fit whether it\u2019s pushing the company to do something or pushing the customer to accept something. \u00a0The best information you are getting from them on your market is second-hand hearsay. \u00a0I\u2019ve sat on boards and watched as projections get trashed as sales get pushed from one quarter to the next and the CEO sits by helplessly, not knowing why as they weren\u2019t on the calls. \u00a0I am not going to be that guy.<\/p>\n The top producer makes more than the manager. \u00a0If the only way people think they can make the most money is to manage you lose your best producers in sales and development, and they generally don\u2019t make good managers, they are just too good at doing. \u00a0This is the only way you can keep the producers happy, it\u2019s the same in pro-football: great players make more than the coaches. \u00a0The very important corollary is that everybody knows everybody\u2019s salary no matter how hard you try, so you can\u2019t fake it.<\/p>\n Best Friends: \u00a0When you are a handful of people trying to make something out of nothing there are no management challenges. \u00a0Everybody knows what everybody is doing and everybody does anything. \u00a0The real challenge is do you have a team with the right skill-set to complement each other and just get the job done and is the market there? \u00a0Nothing less than total blind commitment works at this stage. \u00a0If you achieve your goal, get traction and the market smiles on you remember these people. \u00a0They are the team that you came on the field of battle with against great odds and succeeded. \u00a0You don\u2019t leave the field without them. \u00a0You help position and grow them.<\/p>\n Buddies: This is when you have up to twenty people. \u00a0People say you can only manage eight, but I think if you\u2019ve hired great people that can stretch to twenty. \u00a0You are going to have department leads but they aren\u2019t really managers as much as they are the leading producer or a manager that is back in the role of producing. \u00a0In this stage the biggest challenge is getting the right mix. \u00a0You need people that are willing to work their tail off to get to the next level and you need people that are used to working at the next level that are willing to go outbound because they believe in the vision. \u00a0I.e. roll up their sleeves and code, carry a bag etc. \u00a0\u00a0A big challenge is some of those senior people don\u2019t fit into your current salary structure because of their work history. \u00a0The lesson I\u2019ve learned over and over is to either pay the salary and move other people up or not pay the salary. \u00a0Paying the salary and not moving people up means: \u00a0\u201cI put in huge sacrifices and now you bring in some guy from outside and pay him what?\u201d<\/p>\n You are going to have to start tracking commitments because there is going to be interplay between small departments. \u00a0Don\u2019t run the company with email, setup a process. \u00a0Set the stage where the only people that can make commitments are those that are delivering. \u00a0Sales can\u2019t be committing for development, development has to take sales input. \u00a0Orchestrate between the departments. \u00a0Don\u2019t let one area dominate over the others. \u00a0That\u2019s tempting to do especially in the area where you are strong.<\/p>\n Keep administration as simple and lean as possible, try and think how do I make things simple and cheap? Not we need to act big and big is complicated and expensive. \u00a0Remember your biggest strength is your agility, don\u2019t lose it. \u00a0You can make the wrong decision three times and get it right on the fourth faster than BigCo can make a decision. \u00a0Keep meetings short and tight, there should be minimal meetings of internal employees only, nothing happens inside your office. \u00a0\u00a0If you are like me you need to find a good operations person, one that manages all of the details.<\/p>\n Co-Workers: Now you\u2019ve decided to make the mad dash from 20 to 100 employees. \u00a0The reason it\u2019s a mad dash is because you will have to put in all the overhead of formal departments and management but you won\u2019t have the revenue and people to offset the cost.<\/p>\n People are going to try to build fiefdoms. \u00a0Keep it lean, keep it flat. \u00a0Always make sure that you have one less person in each department than people think you need. \u00a0Keep politics out of it. \u00a0Make sure people realize that if they complain about somebody without going directly to them first, they most likely might be the person in trouble.<\/p>\n There are going to be resentments if people get passed by, hopefully they\u2019ll be few; there are going to be issues where the first employees feel like it\u2019s not the place it once was because what was a company where you could go grab a beer with friends at a table, has grown past the stage where buddies can just show up to a bar, and has graduated to the point where you need to plan events for employees.<\/p>\n Hopefully the vast majority of those that were with you at the early stages can look back and say: \u201cLook what we\u2019ve built and how I\u2019ve grown!!\u201d<\/p>\n <\/p>\n This article was originally written by Phil Sugar and Fred Wilson on February 6, 2012 here<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Continuing our MBA Mondays<\/a> series on The Management Team, we are deep into the guest post phase. This guest post comes from AVC regular Phil Sugar<\/a>. I’ve never met Phil, but his comments here at AVC tell me that he’s a very experienced entrepreneurial manager. And so I reached out to him to ask for a guest…<\/p>\n
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