Best practices for building a company are passed from person to person like ancient tribal knowledge of which plants in the forest are edible. Over time, the best connected companies learn these best practices via their strong networks, while less connected companies persist in making avoidable mistakes.
Here’s a list of best practices that should be more universally understood. I suspect that many of these tips are easy to miss because they’re very specific and operational, and:
- Much startup advice is written post exit, and tactical details fade into the background of the full startup experience.
- Many relationships with board members and advisors don’t dive to the level of detail where these lessons would naturally surface.
- Some of these tips just become generally understood background noise once you’re aware of them; if everybody knows something, nobody talks about it.
You might already know all of these best practices already, but I certainly didn’t until fairly recently – so I hope that we can help at least a few people dodge preventable mistakes.
Important Projects Must Have Exactly One Owner
Make sure that there is one (and only one!) person in charge of every project that actually matters. For anything important, a single owner should expect to be richly rewarded if they’re successful, and expect some form of negative repercussions if they fail.
The first is that if two people are in charge, then no one is in charge.
There are many problems with having more than one owner for a project, but two of them are particularly bad.
The first is that it makes it easy to avoid the dirty work. Everybody’s a badass when being in charge means telling people what to do and feeling important. But those badassess suddenly go missing when it’s time to have 10 calls in 3 days with angry customers, or take a middle-seat redeye to make that partnership meeting, or make a bet that might turn out badly. Now Bob is in charge of this product – he should handle it. Diffuse responsibility reduces your ability to do the thankless stuff, which is the bedrock of a successful project.
The other reason is that systems with complicated command-and-control are slow to debug. Two project owners pointing fingers at one another doesn’t last forever if a project is going sideways. Reasonable organizations eventually figure out who left the turd in the punch bowl, often by asking everyone involved what’s going wrong and sifting through the responses with common sense. But it can take a very, very long time to get to this point, with finger-pointing and excuses and misremembered details at every step. When there’s only one person in charge, debugging is near-immediate.
Unfortunately, having two people in charge of a project can be tempting:
- Typically it’s ego-driven – Alex nominally owns this, but Bob’s job overlaps and his feelings will be hurt if we don’t name him as a co-owner. Concerns about Bob’s emotional state are obviously a bad reason to jeopardize an important project.
- The other, rarer, reason for assigning two owners is a desire to distribute workload – “if something is really important and hard to do, wouldn’t having more people on it help it succeed?” Difficult knowledge work is not like moving a couch. It’s much more effective to assign one person to actually get the job done, and if they need more hands they’ll find them.
It can be even harder to set up a single owner on cross-functional projects – for example, if you have a large technical cost-savings exercise, you’ll likely need leaders from Finance, Engineering, and Product Management to be involved (at minimum). These situations often devolve into a committee, where momentum goes to die.
For any cross-departmental project the person with the best holistic understanding of your business must be the owner. There are some highly rules-oriented functions that frequently struggle to deeply understand other teams’ goals – legal, security, and accounting are examples – and they must not be in charge. You want a leader with a broader purview, often product management, product marketing, or a GM. Empathy for other teams is critical, and often very different from seniority, skillset, or executive presence. This can be uncomfortable – done well, you might have a product marketer giving engineers deadlines or providing feedback on quality of work. These are good things that strong companies and leaders can make work.
A final trap – the person who’s in charge needs to actually know that they’re in charge!
Hire For Talent Over Experience
Smart companies care much more about talent than experience when hiring. Experience is a great bonus, but they never rely on experience alone to justify hiring someone – they would rather leave the position open. Talented people without experience can gain experience quickly; experienced people without talent will never gain talent.
Many people theoretically agree with this advice, but can’t handle the real implications of hiring for talent over experience. Can you stomach:
- Trusting your interview loop to reject a candidate with a near-perfect resume?
- Risking your reputation on a hire because they’ve shown concrete signs of higher upside?
- Telling your 45-year-old VP Engineering that you’ve hired a 35-year-old CTO for them to report to?
It’s often the less experienced brilliant hire who’ll actually alter the trajectory of your business – people who are experienced and truly talented are certainly out there, but they’re much less likely to be available to you (unless you already know them – see below…). As a leader your career will essentially be determined by how many of these people you can bring onboard.
Promote From Within, Often
Great companies promote a lot of people from within. When new compelling roles open up you’d generally want to see them filled by internal candidates around 2/3 of the time, and should worry if they’re being filled by internal candidates less than 1/3 of the time.
With perfect knowledge of internal candidates you can select for both natural aptitude and soft skills that are hard to verify by interview – grit, positive attitude, collaboration.
Also, about 5% of external hires will have what I can only describe as debilitating personality faults that will take time to surface. Perhaps another 5-15% of hires will be false positives from your interview process who just aren’t as good as you’d hoped. If you promote known quantities, you largely dodge these issues.
Finally, it can be much lower risk to take a flier on someone that you promote from within. A lot of people don’t seem to realize this, but you can literally sit people down and tell them “hey, you don’t really have the exact qualifications for this role, but we know you’re smart and hungry so we’re going to give you a shot. If it doesn’t go well we might need to hire someone over you or you might need to shift back towards your current role – but we’ll make sure you aren’t going backwards from where you are now.”
Not only do talented people step up at higher rates than you’d expect, people whose expectations have been set in this manner can often gracefully step aside if the new role isn’t quite working out or (more often) isn’t exactly what they wanted.
Being able to reliably promote talent from within is a great indicator of hiring strength throughout your organization. Some companies index very heavily on hiring senior talent, and let junior levels flounder; if you’re investing properly in recruiting at every level (as you should), promoting from within becomes much easier.
Hard Work Works
Smart companies know that you need to work hard to get anything of significance done.
“Work smarter, not harder” is a catchy and emotionally satisfying phrase. Unfortunately, if you work smarter, but not harder, your ass will be unceremoniously kicked by a team that works smarter and harder.
The math here is stupidly simple:
- Winning requires getting a lot of things done.
- There are two ways to get (say) 20% more things done: Work 20% more efficiently, or work 20% more hours.
- Operating 20% more efficiently sounds great in theory but is exceedingly hard in practice. People don’t just get smarter overnight, and if they had obvious ideas to be more efficient they would already use them.
- Working 20% more hours is really straightforward, and requires no special tricks or skills. Anyone can do it. Sure there are some diminishing returns, but I’ve reliably found that top teams simply put in more hours.
- Even if you figure out how to work 20% more efficiently, you’d still be better off if you also then worked 20% more hours.
I would strongly consider the incentives of anyone using the mantra “work smarter, not harder” as a weapon. In my experience they’re almost always excusing their own laziness (bad) or cynically trying to sabotage others (worse).
Don’t Squeeze Candidates
Unwise companies negotiate too hard when making offers. They view compensation negotiation as a competitive sport where the object is to pay as little as possible. When given the chance, they lowball candidates and crown themselves the “winners.”
For some bizarre reason people often forget that the adversarial counterparty across the table from them will be their teammate in short order. One of the worst conversations that you can have as a manager is an angry confrontation with a team member who just found out that they accepted an offer below your targeted market rate (or worse, below peers on the team). This can turn into a deep betrayal, and trust issues often trump all other concerns – you can lose employees even if they are otherwise delighted with their job.
While preserving cash is great and we’ll never fault you for trying to be frugal, the best way to maximize productivity and hours is to treat people fairly: They’ll be happier on the job, and more importantly, more likely to stay for years. That’s often worth an extra few percentage points of compensation.
To do this right:
- Have a good sense for the market – track offers made, rejected, and accepted, and look for sources of data that you can trust.
- Just as importantly, shift your team’s pay as you observe the market moving – you are implicitly renegotiating compensation every time someone is eligible for a raise, and this is a multi-round game.
- Be generous with your initial offer, and minimize negotiation. Don’t start significantly lower than you can go and then only move upwards when people negotiate.
Conclusion
If this is all review for you, great – you’ve either been part of a great tribe or spent enough time in the jungle to know how to survive. If any of this is new, I’d encourage you to at least consider everything on this list.
Additionally, if you work somewhere that doesn’t know most of these best practices and where the team is experienced enough that they should know about them, then consider whether your teammates may have some issues learning and adapting.
And of course, if you disagree about any of these best practices, let us know!