A VC Firm Tracked 200+ Startups Through The Chaos Of Growing Fast: Here’s What It Found

How do successful startup founders scale their companies during the hectic, fast-growth early days between zero and 1,000 employees?

To answer that question and offer guidance to startup founders on how to grow their businesses through that tumultuous early period, venture firm Index Ventures tracked 210 startups as they grew to their first 1,000 employees.

The insights it gained are captured in a new book, “Scaling Through Chaos,” released Monday. The firm is simultaneously releasing an app called TeamPlan that founders can use to find guidance on everything from how to scale an engineering team to when to hire a CFO.  

Ahead of the book’s release, we spoke with Martin Mignot, a partner at Index who moved from Europe to set up the firm’s New York office, and Dominic Jacquesson, vice president of talent at Index.

“For these hyper-growth companies, it’s very, very hard,” said Jacquesson. “There’s a lot of change.”

Hiring is key

Index found that the No. 1 question founders ask is: “Who should I hire next? At what level? What function? How should I organize a team?”

Once those hires are made, the question becomes: “How do you build the culture? How do you keep raising the bar, and adapt your team to the next phase of growth?” Mignot said.

The firm also found that as the company scales between zero and 1,000 employees, founders will spend about half of their time on people-related matters. 

“In the early days it’s a lot about hiring. And then, as your team grows and you have more execs, it’s a lot more about exec alignment,” said Mignot. 

The book also prepares founders for changes to the early team and the need to bring in experienced members over time. The idea is to build a mindset of “competence over loyalty.” 

“A lot of the growing up that happens as a leader is to run toward difficult conversations instead of running away from them,” said Mignot.

Founding team changes

Index also found that for a startup with 10 founding team members, by the time it’s scaled to 1,000 employees, only two or three members of that founding team typically remain.

But the founder-CEO was still in place at 85% of the companies that reached 1,000 people.

While a technical co-founder is critical for success, the percentage was much lower for the CTO-co-founder. In that case, only around 24% remained at the 1,000-employee mark. 

First-time vs. experienced founders

First-time founders make different mistakes than more experienced founders, Index found.

“If you are a first-time founder, you have to aim much higher — beyond your immediate network — to secure some of those more seasoned individuals who can help to mentor and nurture and develop the more junior members of the team,” said Jacquesson. “But conversely, the repeat founders might hit the problem of: they hire only from their little network, their little pool, and then they create a bit of a monoculture, and that becomes a ‘them vs. us’ situation as they scale.” 

Illustration: Dom Guzman