Perspectives

It’s Elementary: Startups Gaining Independence

This is part three of Growing Up is Hard: a series on the stages of startup evolution and how they mimic human development stages. ICYMI: part one and two.

Summer is over, and it’s back to school time. My last article in this series on the growth stages of people and companies left off with the transition to elementary school — our first piece of real independence. Spending five full days away from parents is a big step, and this a significant time of growth and development. In case you missed it, fifth graders are using social media and have boyfriend/girlfriends. I’ve had a child in elementary school for the last eight years, so I’m also quite familiar with this age. I’ve also led a few companies that hit this stageーand independence is scary.

Your First Report Card

Academically, elementary school is a time of standardization: students are required to demonstrate mastery of a certain set of grade-appropriate skills. Throughout the year skills are added, and children are graded on a “rubric”: a 1-4 scale of meeting expectations. 3 (meets expectations) is the goal,  and occasionally a 4 (exceeds expectations) is attained. As an engineer, I appreciate the organization and process of learning here. Skills build upon each other, classwork introduces new knowledge, homework reinforces it, and exams assess mastery.

In startups, the equivalent of elementary school is being post-Series A, when your company has to start showing some real traction. Pre-Series A, getting to product-market fit was all that mattered. Reaching this point is hard enough, but now you have to start mastering a few areas of your business. How repeatable is your sales process? Can sales reps consistently hit their number? Have you built a well-oiled renewal process (assuming you have a recurring model)?

These are like the skills in the elementary school rubricーthey will pave the way to further advancement. The moment you have customers, you should begin to think about establishing a customer success organization. Make sure your customers are getting value out of the product, cultivate references, and identify areas to expand if possible. The sooner you do this the better. It’s all part of growing up and a good skill to master.

The After School Program

Some parents put golf clubs in the hands of toddlers (Tiger Woods’ parents did, anyway), but most of us don’t start with scheduled activities until elementary school. Sports, dance, gymnastics, music, artーthere seem to be a million things to chauffeur our kids around to. Each parent has his/her own philosophy around activities.

Personally, I value exposure over depth. The reality is that we can’t predict in advance what our kids will both love and have a natural aptitude towards. However, there is a delicate balance between trying things and giving up. Young children will often want to quit when things get hard, but as you get to know your child, you can understand whether their pushback is real or notーsometimes they should quit, sure, but other times they need to learn how to power through.

If we’re being honest, this is not just a problem reserved for young kids. Plenty of adults struggle with knowing when to give up, especially in business. But powering through is a crucial lesson for startups. Post-Series A there should be a time of experimenting, here too you’ll focus on exposure over depth, and this will inevitably mean putting up with a lot of failure. Your ability to experiment with different models is what will differentiate you against larger, slower companies.

On one hand, you want to make sure that you give experiments their due course, and invest enough time and resources to let success take root. On the other hand, you want to fail and move on to the next thing quickly. As CEO, you’re parentingーtrying to find the delicate balance between when to push and when to let go.

Playing Nice

Before elementary school, your parents cultivate your relationships. Once you’re in school, you begin making friends yourself. Playdates and sleepovers result in our first time being selective about relationships. This, like any process, is a learning experience. This is where our personality really comes throughーnone of us remain close with all of our elementary school friends, but these early friendships shape future relationships and teach us how to negotiate conflict and loyalty in more complex ways.

Post-Series A, startups begin to really hire and need to start building skills and mastery around interviewing and recruiting. You might even have to hire a new executive, which is super scary. Part of defining and perfecting your hiring process is understanding your cultureーfinding your “friends” is about understanding who you are. What is unique about the people that bind us? What behaviors are must haves? What characteristics would you hire or fire someone for living/not living? Going from a founding team of 6-12 to a 30+ person team can really test a culture. I’d encourage teams to document and communicate your values, and then adopt some standardization in the interview process.

After you’ve raised your series A, you’re out of the sandbox and beginning to build a scalable businessーthis is not unlike the move from the free-range feel of childhood into a formalized school system. It requires leaving certain behaviors behind, because with independence comes responsibility. And growth begets a kind of socialization and norm-building that are not on the minds of small startups when they are just fumbling their way through toddlerhood, learning to walk. This phase is a critical phase of growing up and moving on the road to independence. Habits you form here in elementary school help define who you are for the rest of your life.

About the Author

Todd Olson is CEO and Co-Founder of Pendo. Before Pendo, Todd served as VP of Products at Rally Software Development, which he led through its public offering. Todd joined Rally via its acquisition of 6th Sense, a company he founded and served as President and CTO.