Rickerism

I have talked about how company management must change after the 100th employee. I have also talked about the inherent need for start ups to acquire other companies. I will now outline some specifics of how to organize a start up software company in order to handle the requirements of the 100th employee and embrace acquisitions.

As a company quickly passes the 100th employee mark and moves to acquire more companies, the internal structure of the company must become more formal and traditional. New and existing employees must be able to (a) quickly identify who is responsible for what in order to (b) quickly achieve a decision on the issues that affect them and their performance. The structure should enable employees to more effectively cooperate across mission boundaries and enable the company to leverage its skills and assets to achieve economies of scale.

Success is achieved by giving the right people the right mission. Traditionally, a software company has the following executives:

• VP Operations is responsible for accounting, human resources, inventory, information technology, etc. His mission is to make sure (a) that the company has the right people and (b) that those people have the tools and care (pay, benefits, etc.) that they need to focus on their work.
• VP Marketing is responsible for product management, public relations and corporate communications. His mission is to (a) understand the needs and expectations of the customer, (b) define the requirements of existing and new products to meet those expectations, and (c) communicate to the market that we fulfill those expectations
• VP Sales is responsible for sales and channel business development. His mission is to (a) grow revenue by (b) establishing new personal relationships of trust and (c) maintaining those relationships.
• VP Engineering is responsible for product development, quality assurance and OEM business development. His mission is to build or acquire the products defined by marketing to a level of quality that makes sales easier.
• VP Professional Services is responsible for training, consulting and customer support. His mission is to (a) add value to the products built by engineering and (b) capture secondary markets created by the products.
• CTO responsible for creating and communicating at technology vision. The CTO should not be the VP of Engineering and should not be encumbered with managing P&L.
• CFO responsible for monitoring the financial health of the company for the board of directors. The CFO may or may not be the VP of Operations.

More and more start ups are becoming what the industry calls a micro-multinational. Such companies pull together relatively small pools of talent, established in teams of 5 to 30 located in cities around the world, and combined them into one relatively large team. A start up will be an engine for growth if it can create a repeatable and replicable means of adding teams. The value of Google is not in its current products but rather in its recognized ability to create products. Start ups are very much the same. Its value is not so much in its current set of teams but rather its ability to effectively add new teams.

Usually one location is a self contained product team. If so, each team or location would have the following:

• Office Manager fulfilling the roles of operations and reporting to the VP Operations
• Product Manager reporting to the VP Marketing
• Engineering Manager reporting to the VP Engineering
• Sales Manager reporting to the VP of Sales
• Consulting Manager reporting to the VP Professional Services
• Technology Evangelist who reports to the CTO

Depending on the size of the team, some of these managers may not have any direct reports.

This structure should be scalable up to 12 acquisitions and 1,000 employees. After that, the company will have to restructure into divisions. The reason is that after 12 locations, the VPs would have more than 12 direct reports, which violates Miller’s Law, or the Law of Seven, Plus or Minus Two.