4 ms·

After two unsuccessful but still alive start-ups, I've come to very similar conclusions. Absolutely every single time I've tried to say to it anyone other than

by mihaic 2y ago

After two unsuccessful but still alive start-ups, I've come to very similar conclusions. Absolutely every single time I've tried to say to it anyone other than a founder I was met with disbelief that eventually turned into accusations of not knowing how to be a leader. While I do admit that I didn't fire people as quickly as I should have, most of our structural problems came from employees simply doing what was best for them and bad for the company, and most of them not even realizing or caring to think about the long-term consequences of their actions. My main lesson was that almost nothing can be delegated except to other founders or some exceptionally rare adults. Success in scaling seems to be actually more in making sure the things you do are simple enough that employees can't mess them up. From founder reactions I've had when telling this, I think a lot more people have come to internalize similar beliefs, but none will publicly say them since they don't want to risk PR backlash.

elawler24 2y ago
This is especially when there’s less VC money available to support mediocre outcomes. It’s also on the founder to disclose the realities of the startup to employees. If we don’t raise money, we can’t pay salaries. If we don’t make a product, we won’t find customers. If we don’t find customers, we won’t raise money. It’s a never ending cycle until someone does the hard work to break the loop.
JonChesterfield 2y ago
Where the founders are also acting in their self interest but have enough correlation between self and company that this works out? If so non-trivial equity to non-founders might have the same properties, provided they haven't already been savaged by founder liquidity preferences.
usernamed7 2y ago
> most of our structural problems came from employees simply doing what was best for them and bad for the company I've seen this play out a lot as well with management. It's a classic principle/agent problem and one of the best solutions i've seen is flatter orgs where everyone has a primary work responsibility beyond pure management.
mdorazio 2y ago
How did you incentivize people to do what was best for the company rather than only for themselves? What percentage of it did they own? Why should they ignore their own self-interest in favor of your company's long-term success? There's a weird cognitive dissonance I've run into where career advice from most people on HN boils down to "Companies don't care about you. Optimize your own total comp. Jump ship when opportunities come up. Don't bother with loyalty." And then on the flip side you have founders who expect employees to act like the company is their family, but with zero reason to do so. I think there must be a better way to get employees, and especially executives, to care about a company's long-term success rather than about quarterly goals and near-term comp. I'm not sure what that is, but I think it might need to be related to shares in a profit-sharing plan rather than traditional equity shares.
- neom 2y ago
  Long term thinking + high quality story telling. Just gotta keep it up as you scale. At around 200-300 employees your job in leadership is simply telling the same story over and over again to different constituencies in different ways, for years.
- rvnx 2y ago
  It's not about how much they get. The reality is that you can give 100k extra to a software engineer, he will still prefer his kids and wife. Money isn't buying love. You can hire a prostitute, she will work for you, but she will still not love you. This is the same with companies.
  - alok-g 2y ago
    +1. Someone recently hinted at the opposite angle: Give them a lot of money and their motives would move to safeguarding their jobs, which results in a higher level of corporate politics.
  - anal_reactor 2y ago
    I think this is a great analogy.
- 2y ago
alok-g 2y ago
>> ... from employees simply doing what was best for them and bad for the company, and most of them not even realizing or caring to think about the long-term consequences of their actions ... +1. I see this over and over.
Vegenoid 2y ago
> employees simply doing what was best for them and bad for the company No surprise there. If you can’t align incentives, then you are going to have trouble getting people to do what you want. Blaming the employees for a company failing is like blaming gravity for a building falling.
codingdave 2y ago
> employees simply doing what was best for them No leader should expect anything different from their people. It is your job to align the incentives so that what is best for the employee is to do those things that are best for the company. If you are relying on people to do what is not best for them out of loyalty to a corporation/startup/vision, you do not have an accurate pulse of the modern work force. And yes, when a leader or company looks like it is going sour, sometimes employees act in bad faith for their own self-interests. When that happens, question why -- what is it that makes them think bad faith actions are more beneficial than helping the company. Don't just fire and forget... do some self-critique to find out why someone who was smart enough to be hired in the first place lost faith in your leadership. There are likely important lessons there.
- mihaic 2y ago
  I'm sure you mean well, but this is exactly the the non-founder response I'm talking about. And maybe things were different 20 years ago, I don't know. There's always something better I could have done as the person in charge, obviously. I've done a lot of reflection and self-critique, please believe me, and I realized I've made a lot of mistakes, from which the situations could have been recovered though. Putting my faith in employees, expecting them to do maybe 80-90% of what I was doing as an employee 10 years earlier created an almost unrecoverable situation, that burned the entire runway to unscramble. Yet if I say that my biggest lesson was never to put trust in employees, as it's most likely impossible to create a good incentive system for them, most people won't believe me, as I'm sure you won't either. I've come to think that the burden is no longer on anyone to create incentive systems, it's on society to reintroduce some morality. Only a limited amount of businesses have the luxury of aligned incentives.
  - __turbobrew__ 2y ago
    I can be incentivized by money, but it has to be in the 7 figure range. The reality is that tech workers with a little bit of work can clear 400k/yr at BigCo with much higher job security and much lower variance than any startup. Why would I grind at a startup where the best case scenario I am getting a payout I could get at FAANG without any of the risk? I have been through a successful exit as a SWE and you can be sure that the founders did everything in their power to maximize their own payout and minimize my payout. In a company of 40 the founders got a payout of 100x any other individual at the company, even those who were there early on and stayed until the exit. I got a (taxable) payout of ~300k and the founders got 40mil. The money was life changing for the founders, but for everyone else it was just a nice bonus. Now I just work at BigCo and make 400k/yr, every year.

by mihaic 2y ago

elawler24 2y ago

This is especially when there’s less VC money available to support mediocre outcomes. It’s also on the founder to disclose the realities of the startup to employees. If we don’t raise money, we can’t pay salaries. If we don’t make a product, we won’t find customers. If we don’t find customers, we won’t raise money. It’s a never ending cycle until someone does the hard work to break the loop.

JonChesterfield 2y ago

Where the founders are also acting in their self interest but have enough correlation between self and company that this works out? If so non-trivial equity to non-founders might have the same properties, provided they haven't already been savaged by founder liquidity preferences.

usernamed7 2y ago

> most of our structural problems came from employees simply doing what was best for them and bad for the company I've seen this play out a lot as well with management. It's a classic principle/agent problem and one of the best solutions i've seen is flatter orgs where everyone has a primary work responsibility beyond pure management.

mdorazio 2y ago

How did you incentivize people to do what was best for the company rather than only for themselves? What percentage of it did they own? Why should they ignore their own self-interest in favor of your company's long-term success? There's a weird cognitive dissonance I've run into where career advice from most people on HN boils down to "Companies don't care about you. Optimize your own total comp. Jump ship when opportunities come up. Don't bother with loyalty." And then on the flip side you have founders who expect employees to act like the company is their family, but with zero reason to do so. I think there must be a better way to get employees, and especially executives, to care about a company's long-term success rather than about quarterly goals and near-term comp. I'm not sure what that is, but I think it might need to be related to shares in a profit-sharing plan rather than traditional equity shares.

neom 2y ago
Long term thinking + high quality story telling. Just gotta keep it up as you scale. At around 200-300 employees your job in leadership is simply telling the same story over and over again to different constituencies in different ways, for years.
rvnx 2y ago
It's not about how much they get. The reality is that you can give 100k extra to a software engineer, he will still prefer his kids and wife. Money isn't buying love. You can hire a prostitute, she will work for you, but she will still not love you. This is the same with companies.
- alok-g 2y ago
  +1. Someone recently hinted at the opposite angle: Give them a lot of money and their motives would move to safeguarding their jobs, which results in a higher level of corporate politics.
- anal_reactor 2y ago
  I think this is a great analogy.
2y ago

alok-g 2y ago

>> ... from employees simply doing what was best for them and bad for the company, and most of them not even realizing or caring to think about the long-term consequences of their actions ... +1. I see this over and over.

Vegenoid 2y ago

> employees simply doing what was best for them and bad for the company No surprise there. If you can’t align incentives, then you are going to have trouble getting people to do what you want. Blaming the employees for a company failing is like blaming gravity for a building falling.

codingdave 2y ago

> employees simply doing what was best for them No leader should expect anything different from their people. It is your job to align the incentives so that what is best for the employee is to do those things that are best for the company. If you are relying on people to do what is not best for them out of loyalty to a corporation/startup/vision, you do not have an accurate pulse of the modern work force. And yes, when a leader or company looks like it is going sour, sometimes employees act in bad faith for their own self-interests. When that happens, question why -- what is it that makes them think bad faith actions are more beneficial than helping the company. Don't just fire and forget... do some self-critique to find out why someone who was smart enough to be hired in the first place lost faith in your leadership. There are likely important lessons there.

mihaic 2y ago
I'm sure you mean well, but this is exactly the the non-founder response I'm talking about. And maybe things were different 20 years ago, I don't know. There's always something better I could have done as the person in charge, obviously. I've done a lot of reflection and self-critique, please believe me, and I realized I've made a lot of mistakes, from which the situations could have been recovered though. Putting my faith in employees, expecting them to do maybe 80-90% of what I was doing as an employee 10 years earlier created an almost unrecoverable situation, that burned the entire runway to unscramble. Yet if I say that my biggest lesson was never to put trust in employees, as it's most likely impossible to create a good incentive system for them, most people won't believe me, as I'm sure you won't either. I've come to think that the burden is no longer on anyone to create incentive systems, it's on society to reintroduce some morality. Only a limited amount of businesses have the luxury of aligned incentives.
- __turbobrew__ 2y ago
  I can be incentivized by money, but it has to be in the 7 figure range. The reality is that tech workers with a little bit of work can clear 400k/yr at BigCo with much higher job security and much lower variance than any startup. Why would I grind at a startup where the best case scenario I am getting a payout I could get at FAANG without any of the risk? I have been through a successful exit as a SWE and you can be sure that the founders did everything in their power to maximize their own payout and minimize my payout. In a company of 40 the founders got a payout of 100x any other individual at the company, even those who were there early on and stayed until the exit. I got a (taxable) payout of ~300k and the founders got 40mil. The money was life changing for the founders, but for everyone else it was just a nice bonus. Now I just work at BigCo and make 400k/yr, every year.