Why Startups Fall Apart at 50 Employees

🌈 Abstract

The article discusses the challenges that startups face as they grow from a small team to around 50 employees, a phase the author refers to as the "teenage" stage of a startup. It outlines the common behavioral patterns observed among employees during this transition and provides strategies for managing the chaos that often arises.

🙋 Q&A

[01] The "Teenage" Startup Phase

1. What are the common behavioral patterns observed among employees as a startup grows from 10 to 50 employees?

• The original employees stop learning new people's names and become less tolerant of mistakes.
• Employees start forming small, protective cliques and place more importance on titles and status.
• Power plays and conflicts between the "old guard" and newer employees begin to emerge.

2. Why does the author say this "teenage" phase is a positive sign for the company?

• It indicates the company is growing, likely faster than planned, which is a good problem to have.
• It means the company has already developed an internal culture, lexicon, and operations that are understood, even if not documented.
• It suggests the executives are focused on building the product, penetrating the market, and satisfying customers rather than the company's structure.

3. Why does the author say we can't "cure" the chaos of the teenage startup phase?

• The author compares it to the teenage years of a person, where there is no cure, and we just have to "wait it out."
• The author dislikes the common "storming, forming, norming, performing" model, as he doesn't think it actually helps solve the problem.

[02] Strategies for Managing the Chaos

1. What are the strategies the author discusses for managing the chaos of the teenage startup phase?

• Doing nothing and solving issues as they arise (not recommended)
• Implementing rules and standards around things like titles, meetings, and remote work
• Centralizing and being transparent about rules, processes, guidelines, and the company's philosophy
• Creating "owners" and "team leads" instead of traditional managers
• Experimenting with policies and practices from other companies, rather than blindly adopting them
• Outsourcing and contracting work, while gradually absorbing teams as needed

2. What is the author's preferred strategy, and how does it differ from the traditional organizational structure?

• The author suggests a pod-based organizational structure, where the company is made up of semi-autonomous pods that can expand and contract as needed.
• This differs from a traditional top-down hierarchy, as the pods would be run independently, like their own little companies within the larger organization.
• This approach aims to provide a more flexible and adaptable structure to manage the chaos of the teenage startup phase.