How to be a good manager at a startup (9 principles)

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Hi, I'm Kieran. I worked in startups for 5+ years at places like On Deck and Wefunder.

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The management principles that you see online or in books don’t apply to startups. They apply to consulting firms, banks, and corporate America. Before becoming a manager at On Deck, I remember searching for the best resources to prepare me to manage a team for the first time. In hindsight, it’s clear that none of those resources adequately prepared me to be a good manager at a startup. These are my hard-earned learnings and management principles that I wish I had known at the beginning, many of which seem counterintuitive, that will help you stand out as an excellent manager at a startup.

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Before we dive in, let’s look at why many of the management principles in the corporate world don’t work at startups: 

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• Startups are resource constrained in ways that large corporations are not

• Startups promote top performers to lead functions, not the most experienced or person who has been there the longest in the room

• Startups have less process and bureaucracy around decision making

• Startups operate under a relatively flat organizational structure

• Startups rarely ever have full-time managers; instead, they have individual contributors who they also ask to manage teams

• Startups operate under a life-or-death mentality (at least the best ones do)

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My other gripe with management principles is that they are not tactical. Some of the “best resources” on the topic will tell you things like “be a good person.” No duh?

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Here are the ways to stand out as a manager at a startup:

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1. Build small, agile teams

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One tendency of new managers is to advocate for a larger team. New managers may do this for several reasons:

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• They may believe they can accomplish more with a larger team

• They may believe their current team will like them better if they bring in more resources to distribute the workload more evenly

• They may think a larger team will lead leadership to view them as more valuable and mission-critical to the startup

• They may think a larger team will allow them to advocate for a title or pay raise

• They may think a larger team means more responsibility

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While these reasons seem logical, when you understand how good startups and teams operate, you’ll see it’s just the opposite. The more you can do with fewer resources, the more valuable you are to a startup. There is a point of diminishing returns with headcount resources at a startup; small, agile teams outperform large teams. The best startup managers and employees want to work on teams that move fast, where they can learn, providing them an opportunity with asymmetric upside if they achieve the outcome.

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2. Spend more time with your best employees

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It’s human nature to want to help someone who is not performing. However, startups are resource-constrained, and firing someone is sometimes the best way to elevate your team’s performance. Startups win by retaining the A players on their team, not by making their C players into B players. The 40 hours you could use helping someone not cut out for the job may be better served to help your best employees get to the next level.

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Unlike in the corporate world, where letting someone go reflects poorly on your ability as a manager, in the startup world, firing someone who is not performing well is a sign of courage. It is viewed with admiration by top performers.

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Thank you to Nate Snow, who helped me see this :)

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3. Hire world-class generalists

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Founders tend to hire specialists, or “people who have done the job before,” when a startup begins to scale. I also know investors pressure founders to do this. I think hiring a specialist makes sense for risk-reduction roles in finance or legal functions. However, this is bad advice for most roles at a startup.

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If you hire a specialist, then you’ll have a better chance of getting the same results. But you don’t want the same results; you want to become the new standard. If you hire a generalist, you give yourself the opportunity for someone to rethink the entire function from first principles and build it from the ground up, giving you a chance for an asymmetric outcome. In the world of venture-backed startups, you need to do things differently to have a chance at beating your competition and winning the market. Good companies copy. Great companies don’t.

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Another reason why generalists make sense is that most startup roles evolve. I held 6-7 job functions at the two startups I worked at. A generalist is more equipped to adapt, continue to perform, and grow with the company.

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The last reason for my case for generalists is that no two startups are the same. The playbook you wrote at one startup won’t work at the next startup -- even in the same industry. If you work in startups, get used to building new playbooks.

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In an interview, Keith Yandel shared that Tony Xu, Founder & CEO of DoorDash, is a big proponent of hiring generalists, or someone who has never done it before, to head up critical divisions at DoorDash. Tony wanted someone with no previous conceptions of how something should be run or built, so they could create new functions at DoorDash from first principles that they believed would work more efficiently and better fit the needs of their specific organization. This is a competitive advantage for them. Look at all the teams Keith led at DoorDash from 2016-now.

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4. Challenge them more than you praise them

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Another tendency of first-time managers at startups is to praise their best players. Yes, it’s important to call out wins, but too much praise and it starts to have less of an impact on the employee. I think many startup managers tend to do this because they believe the more recognition they give someone on the team, the more that person will like them. It’s human nature to want to be liked! I would argue that they don’t need to like you; they need to respect you. If it gets to the point where an employee receives praise for average work or for something that wasn’t that hard to accomplish, then you’ve lost them, especially if they are any good or have high standards for their work product.

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Feedback is like oxygen. Nobody at a startup wants a manager who tells them to “just keep doing what you’re doing” or has no critical feedback for them to improve. If you ever find yourself in this situation, you’re not challenging them enough. Give them more responsibility and ownership until they are forced to grow or fail (in a controlled way), so at the very least, you know their best work.

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5. Set unreasonable expectations

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From the beginning of time, people have underestimated their abilities. In the 1940s, someone pushed the mile record to 4:01, which stood for 9 years. Then in May of 1954, Roger Bannister broke the 4-minute mark, something experts for years said was not humanely possible. Then another runner joined him within the year, and three more runners broke it in the same race right after. Sometimes it just takes one person to break through for more people to follow. This can be said in life and with startups.

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Startups, by nature, are risky endeavors. You’re making a big bet on something that usually has never been done before, like flying cars or cures for cancer. 99% of startups fail. You only get one shot, so you may as well set unreasonable expectations on the off-chance that you surprise yourself and hit it.

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One pushback from “traditional management principles” is that employees should have attainable goals or risk feeling unmotivated or like failures. I think just the opposite. I’m not motivated by easy goals. Generally speaking, they aren’t big enough if the goals don’t scare you and your team. Reasonable expectations return mediocre results, and these things don’t count for anything in startups.

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6. Pay them before they ask for it

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Your pay and compensation package directly relates to how much the startup values you. Anyone who says otherwise is lying. The top performers at startups rarely care about things like praise in front of the team; instead, they care deeply that you advocate for them and praise them behind closed doors to the leadership team, and that praise is reflected in their compensation.

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By getting them a pay raise before they ask for it, you build trust with your employee and often save the startup money. When presented with a raise before they ask, people usually don’t negotiate it, and more importantly, it helps retain A+ players because you proactively handled compensation before they realized they were getting underpaid, and it festers.

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7. Give away shiny projects

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Many managers at corporations want to lead shiny projects – cross-functional projects where you get a lot of exposure to senior leaders. It’s prevalent for managers to fight for these projects behind closed doors and even at the expense of sabotaging team members they manage. This is partly due to their belief that they will get promoted if they lead the project.

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In startups, as a manager, you never want to take these. Instead, give away shiny projects to your team members and support them relentlessly. Cause at the end of the day, everything is your fault anyways, and you look better if they earn a promotion, not when you earn one. Also, the closer you are to the core business, the better – especially as a leader. No one will have space to care about the shiny new project or continue pushing it forward if the core business implodes. It’s your job to make sure that doesn’t happen.

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8. Don’t just hire for experience

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Again, hiring for experience helps you get closer to the median outcome rather than the 99th percentile. Instead, hire for slope, clarity of thought, and aptitude. Hire people who give a shit.

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9. Let them take your job

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This one seems ridiculous on the surface because everyone wants a job and cares about job security – even if they won’t admit it. However, at a startup, you should look to hire people as good or better than you so that one day you’re confident the person you hired will do a better job than you in your position.

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The best startup employees always do this and never worry about losing their job. Because for them, the goal is to work on the highest leverage problems at the company, regardless of the role, title, type of work, or how many people they’re managing. A startup succeeding in the long run will do 10x more for your career than any of these distractions.

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There it is. My 9 management principles for startups. To do your best work, remember:

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• Build small, agile teams

• Spend more time with your best employees

• Hire world-class generalists

• Challenge them more than you praise them

• Set unreasonable expectations

• Pay them before they ask for it

• Give away shiny projects

• Don’t just hire for experience

• Let them take your job