What is the biggest challenge of an early stage startup? originally appeared on Quora - the knowledge sharing network where compelling questions are answered by people with unique insights.
It's impossible to say what the biggest challenge is because every company has different strengths and weaknesses. However, the one thing that almost every startup has to reckon with eventually is organizational debt.
It's true that finding product/market fit is hard, fundraising is hard, growth is hard, and so on. But smart, qualified teams can and do work through those problems. Org debt is a human problem, which makes it inherently messy, unpredictable, and unlikely to have an out-of-the-box solution.
These are some common situations that lead to org debt:
- Founders (rightly) fear conflict in the earliest stages, so they hire people like them, or sourced out of their personal networks. They put off the work of figuring out culture and organization by relying on a homogeneous team where everyone thinks and acts the same way, until they don't.
- Founders can have their form of org debt when they don't apparently agree on each other's roles or capabilities. Founder breakups are the obvious worst case scenario here, but even when they stick together this kind of debt can be toxic as it trickles down to everyone else.
- Knowing time is of the essence, companies cut corners on things like 1:1s, mentorship, hiring process, and performance reviews. You may have a functional team without this stuff, but taking on this debt creates the opportunity for you to be blindsided when a big problem does come along.
- "We don't believe in titles." Commonly used to sidestep the issue of who reports to who, who makes more, and who wins when there is a fight. Deferring this issue means you'll just have to deal with it later when there are 25 people on the org chart instead of 5.
- Finally, founders (and other company leaders) are busy people at early stage companies. They are fundraising, doing press, writing code, recruiting, handling HR + legal + accounting, marketing, customer support ... you get my drift. Sometimes they just fail to make enough time to nurture the human side of what they are building.
I don't mean to dump on founders who have made some of these choices. I've made some of them myself. Like technical debt, it's fine to take on a little org debt, as long as you have a good reason and a plan to deal with it before it ruins your life.
Every young company, like every young person, will have their unique growing pains, triumphs, and traumas. You can't possibly prevent or predict all of them. Just be aware that too much org debt early on comes at a heavy cost down the line -- loss of talent, loss of morale, difficulty recruiting and massive logistical problems when you need to grow the company from a small team of 6 or 7 to a functional organization of dozens or hundreds of people.
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