GenuineVC David Beisel's Perspective on Digital Change

March 26, 2007

In the early days of a startup, it’s always all hands on deck. There are a set of founders or founder(s) with an early team, and the roles of who does what and when is often decided by whoever has free bandwidth to address it. These individuals apply their skillsets to whatever needs to be taken care of today with little (if any) thought to process. Results are paramount. Accordingly, people’s roles become fluid and partially interchangeable. They get things done in small ad hoc groups or “tribes” that form and dissolve in lock step with the necessary tasks at hand. And that’s a good thing – in those very early days, it’s imperative that the organization is nimble and flexible to react to the marketplace as it commences in building both a product and a corresponding business model.

At some point, however, a startup team needs to evolve from building a small-team endeavor into building a company with a strong organizational structure. A number of events could serve as a catalyst for this transition: a round of institutional investment, the introduction of a new senior person on the team, or significant growth in the number of people within the company. But maturing from a tribal mode into a healthy functioning organization is often a very challenging process.

Changes in responsibilities and how people relate to each other (especially when process is introduced) is difficult to digest, especially when it seemed to be “so much easier to get things done in those early days.” No longer is a jack-of-all-trades individual supremely valued, but rather those who are concentrating and performing on a specific role. A salesperson cannot be heavily involved in product management process, nor a product manager spend much time on (or be apt to) sales. Everyone used to do a little bit of everything, but that becomes no longer desirable, let alone feasible.

The first key for handling this transition is for everyone in the organization to realize that this process is happening. Startups go through growth, and with that growth comes change. Period. The difficulties in this transition usually arise as cultural ones, and that affects everyone in the company. While some growing pains are inevitable, once there is consciousness as to what is happening, people are able to more effectively communicate about it. I think it’s incumbent on a startup’s leaders to understand this dynamic and address how it affects both specific individuals and the company as a whole.

A question I like to ask early stage startup CEOs – are you in tribal mode, organization mode, or somewhere in between? The only bad answer to this question is “I don’t know.”

  • Ben Saren

    David, great post and great timing. We, at Citysquares, are in the process of facing some of these questions right now. We’re in the middle of some activities that are going to have a significant/positive impact on our future. Yesterday, myself and my 2 colleagues sat down and had a conversation about this same topic. We’ve been a tribe for 16 months now. And we’ve all worn multiple hats and still do. But that’s about to change, not terribly much, but it is going to change. We’re going to be more specialized. Additionally, once we start hiring, a culture is going to sprout up. The seed has been planted in the soil, and now it’s going to form roots and start to take shape. This is perhaps the scariest part – wanting to control the culture, direct it and mold it into something I want it to be, instead of nurturing it so that it blossoms into something special more naturally. Anyway, quite a few metaphors there but you get the point. Answer to your question: Citysquares is in tribal mode, and we’ll probably remain there for a few more months even as we hire, but as you pointed out, that will definitely change when we hire a senior manager, and an org-chart will be necessary.

  • andyskipper

    Absolutely spot on, and perfectly timed. The company I’m working with at the moment is just beginning to structure itself internally, and although there’s some resistance, it’s happily accepted that the annoyances are all worth it in the grand scheme of things. Certainly, the new processes we’ve put in place are making development, discussion and the rest a lot quicker and easier. And you know what? Because of the swathes of free software and web applications available, the process has been made a lot less stressful than it could have been. So, thank you, Web 2.0, for making our lives so much easier!

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