Unicorns--that is, private startups valued at $1 billion or more--are as rare as their name implies, with only about 500 operating around the world. Yet, there are more unicorns than there used to be, thanks to the fact that more VC and private equity investors are getting behind these fast-growing companies. What in the world kind of magic are these companies doing to achieve such impressive worth?
The truth is, it's not magic at all. It's a common sense set of best practices. I identified these best practices by reading books by the CEOs of some of the most successful hypergrowth companies, such as Hubspot, Netflix, and Salesforce, studied the discipline of objectives and key results (OKRs), and integrated and deployed all of these "successful actions" at KnowBe4. Now, I'll share a summary of what we did so that you can join the Unicorn Club, too.
1. Be friendly, but tell it like it is.
Do yourself a favor. Don't sugarcoat or hide information because it might make you look better. Be completely honest, because your integrity and ability to hold people properly accountable establishes the trust you need for long-term relationships with your employees and customers.
Of course, offering up some truth doesn't have to mean being a jerk. Find kind ways to say what has to be said, and instead of just finger-pointing, stay approachable by focusing on how everyone can improve or solve the problems at hand.
2. Leave politics out of your decision-making.
Spoiler alert: You're going to have people who want one thing while others want something else. There will be conflicts and pressure to take sides. Don't give in to that, because the long-term well-being of the business goes far beyond what might be happening or preferred in the current moment. So, don't fall prey to short-termism.
Not only that, but your team has to see that you can objectively work for the good of the entire company. If they think you're making choices for the benefit of only one team over another, you'll create an "us versus them" culture that can create silos that rip your startup apart.
3. Produce and watch your stats.
Everybody has some kind of measurable "product," whether it's lines of code per day, dollars in sales, or the number of invoices sent out. If your production numbers are going down, then that's a fairly good sign that you've hit some kind of snag--for example, increased distraction, the need for better enterprise software, etc.--and that you need to make changes. If your trends look like hockey sticks and all employees go 90 miles per hour, then you know that your organization is scaling well. You can feel confident about continuing your process. However, during hypergrowth, your production monitoring should be continuous, with both scheduled and on-the-fly reviews happening on a regular basis. Hypergrowth scaling can easily break down. I have seen dozens of high-tech companies either explode or implode during this phase.
4. Put it in writing.
This ties to the first best practice of telling it like it is in a friendly way, since you might not be able to interact with everybody face to face each day. But whether you're dealing with your daily email or your employee handbook, written communication is critical because it eliminates potential conflicts and creates real clarity about goals and intentions. It also helps your employees hold you more accountable so the business stays on track.
Making all policies and procedures available to everybody helps your team feel more empowered and enables them to do independent and collaborative jobs more efficiently. Everybody can refer to the written materials when they have questions or forget something.
When it comes to implementing these best practices, use the following tips:
- Don't reinvent the wheel. Climb on the shoulders of the giants that paved the way. Read their books!
- Ruthlessly prioritize and continue to ask yourself: "Does it scale?" If it doesn't, don't do it. Closely monitoring your productivity, getting your people to identify their OKRs, and checking their stats and trends is a particularly good starting point.
- Automate as much as possible. This includes your organizational chart, which should always be updated and visible for everybody to see. The chart, along with clear job descriptions, helps everybody see the big picture of your organization and where they fit and connect inside of it.
The bond of overcoming barriers.
Will becoming a unicorn with these best practices be free from barriers? Not even close. People aren't used to living in a proverbial glass house and working with radical transparency. You'll need to hire carefully so that you're bringing on happy people who are a good cultural fit and really work their collective butts off to solve hard problems. Then, once you've built a team, you'll still have to commit to continually training them within an inch of their life.
But if you do the hard work upfront, then you'll be able to let your employees go and trust them to build the business with you. That ongoing team spirit is something you can enjoy and be proud of no matter what heights the valuation of your company might reach.