Some of the most valuable long-term employees of a high-growth company join early on. These employees often have earned the trust and admiration of the founders and CEO, and they have the cultural context and long-term mission of the company in mind, which enables them to achieve outsized things in a high-growth startup. Examples like Susan Wojciki (Google employee #16 and eventual CEO of YouTube) and Google and Chris Cox at Facebook (who joined as an engineer in 2005 and is now chief product officer) come to mind.
Unfortunately, some early employees also dramatically overstay their optimal tenure at a company as it scales. They may have gotten too rich and lost their hunger, or simply not scaled their skill set and mindset along with the company. Some cling to the past when they had lunch every day with the CEO and had input into every company decision.
Early employees that can grow and scale responsibilities within a company are invaluable. They can channel the mindset of founders/CEO (and therefore get quick buy-in for their teams), have the trust of the executive team and their peers, understand internal processes and jargon, and have a deep understanding of the company operating procedures and culture. Their “old timer” status allows them to challenge convention (or provide context on it) in ways that enable them to reshape or remove rules or old processes.
While many early employees may lack deep functional or industry expertise, the trust of the CEO allows them to hire, manage, and learn from more experienced industry executives. Early employees who are humble enough to realize they can learn from fresh blood can grow with the company and use it as a personal platform for their own learning and impact. Some early employees will stick with a breakout company for decades and their personal story arc mirrors that of the company. These employees tend to be hungry to learn from others, understand that the company, their role, and its culture will inevitably evolve, and are open to change.
“Early employees who are humble enough to realize they can learn from fresh blood can grow with the company and use it as a personal platform for their own learning and impact.”
– Elad Gil
A common sign that an old-timer will work out is their eventual acceptance that their role and influence at the company will shrink in the short- to medium-term as the team scales, but that it will expand with time as they continue to learn and the company continues to scale.
In contrast to the early employees that scale, there are also a set of old-timers that should probably change roles, quit, or be managed out. Often the temptation is to keep giving early employees chances or to move them to a spot that they are not hyper productive but is “less important.” Usually this suggests that the fit between the employee and the company is not a good one. Often the employee will be happier to leave the company but feels obligated to stick it out due to loyalty to founders or the company.
When dealing with an early employee who is failing to grow with the company, you can take the following steps:
1. Identify the problem and whether it is solvable. Potential issues may include:
- Does not evolve with the company. Some early employees fight cultural, organizational, product, or other changes to the company. They may fight against the hiring of a sales team, the professionalization of staff, or the sun setting of an increasingly irrelevant product or strategy.
- Cannot scale into the role they want. Early employees are often the first or only person in their functional area. Your first marketing person may not be the right long term VP marketing, and your first engineer may not make sense as your CTO. Individuals may lack the skill set, experience, or maturity for certain roles. Given their early tenure at the company employees may nonetheless ask for roles that are beyond their capabilities. Founder CEOs will often put up with poor functional or team leads who cannot scale, but who have deep founder relationships and trust.
- Feeling left out. When the company was 12 people the early employee had lunch with the founders every day and had the chance to give her opinion on all major company decisions. As a company scales, most early employees no longer have as strong of a voice or influence. Some of them may start to act out by blocking new projects or inappropriately escalating to founders they still have relationships with.
- Inappropriate exertion of power. Some early employees or founders may have a large title as a historical artifact but little influence. The person who was CTO at 10 people may still be CTO at 1,000 people, despite not having any reports or real responsibilities. This is even stronger with cofounders, who will have strong influence at a startup whether they are still active with the company or not. Some cofounders or people with fancy titles may lobby or push parts of the company to do things they want even if they are not supposed to. Often, the other employees do not realize the cofounder or titled employee is acting out of band with the rest of the executive team.
- Getting too rich. Due to secondary stock sales and tender offers it is possible to partially cash out. Some employees may suddenly be liquid to the tune of tens of millions of dollars and get distracted by travel, buying houses and cars, or other issues.
2. Put emotion aside and understand if there is a problem. As a founder CEO you will feel you owe the early employees for their early work and dedication. People may come to you with issues around a person that you will ignore or defer. This will create a bad environment for everyone including the early employee. It is best to understand the situation and then act quickly and decisively.
3. Address the issues head on. As a first step, you should discuss the issues with the early employee. Sometimes the issues are addressable and the frank conversation with the employee turns things around. If there is a fundamental mismatch between the role they have and their skills, it is best to move them to a place of good fit. This may lead to a demotion and the departure of the employee. It is okay to discuss this frankly and explain why you are making the change, and whether they will be happy or thrive with it. As an early employee they are likely a large equity holder in the business and should act with you to maximize equity value. Often, CEOs try to find early employees a place where they won’t do much harm, versus a place they will excel. If you find yourself thinking this way, 99% of the time the right answer is to part ways with the early employee. You can let them go with grace and they may be relieved to be free to do something new.