This article is adapted from Dr. Gerd Weishaar's talk at the Product-Led Summit, London 2019.
"There's a study from McKinsey & Company (2014) titled Grow Fast or Die Slow.
The name says it all.
In this study of over 3000 companies, about 800 made it to over $100 million in revenue. Only 96 made it to $1 billion in revenue. Only 17 of those made it to over $4 billion. Fast growth is key to those successes.
I work for UiPath, which is currently one of the fastest growing software companies.
But, there's a lot to consider before jumping into working within a rapidly growing environment. There is a balance to be struck.
I will be sharing some of my experiences from the last 15 years of leading product management in different growth environments, exploring both the advantages and disadvantages of working within these types of businesses.
The first role that I ever took was VP of Product Management for a CRM company. It's fair to say, I was pretty naive at the time.
The leadership team would sit together every Monday morning and talk about opportunities. I remember once, we had two or three large opportunities, between a projected one and two million in revenue. The CEO stressed that we needed to do everything we could in order to support these opportunities. So, we changed roadmaps, we promised features. We did everything we could.
The CEO would look over to the sales guy, 'What do you think are the chances that they'll come through?' The sales guy would say, 'One will, for sure. Maybe two, but definitely one.'
The quarter ended. Guess what? None of them came. We had changed the entire roadmap for this.
Monday comes. We have the leadership meeting again, we're sitting in the room with the same people. Highly educated, smart people. There's two or three large deals in the pipeline. We talk about them. We change the roadmap, we change the features and the CEO asks the sales guy, 'What do you think?' He says 'One. Maybe two, but one for sure.' And again, it didn't come through.
It was Groundhog Day. I was Bill Murray waking up every single morning and running through the same conversations over and over again. I asked myself the question, 'Am I the only one who sees the pattern here?'
Revenue growth and organisational growth
If what I'm describing is hitting close to home in your current role, or if you're looking at joining a new company and don't want this to become your reality, it's useful to research what type of growth your business is experiencing so you can best equip yourself.
Depending on the organisational growth and revenue of a company, we can categorize them into four groups. Take a look at the table below.
1) Bottom left: 'Walking Dead' company
If you're not growing in revenue and also not growing in people, then I would call you a 'Walking Dead.' This is what McKenzie talks about as 'dying slow'. It can take 15 years but still, you're dying. It's really not that much fun.
2) Top left: Solid company
If you're growing in revenue, but you're not really growing in people then I will still call you a successful business. You're at the top left of the table.
These companies are quite interesting for PMs. They are where you can actually practice functional product management because they have more stable processes and defined structures that allow you to practice your PM skills.
Here, you can learn to create a product lifecycle. You can create a workable product roadmap. You can practice your own comprehension of data analytics because that data will be readily available.
The only downside is that, as a result of these defined structures, you might also find some established conflict, either between engineering, product management, sales or marketing.
3) Bottom right: Hyper growth company
This is the next big thing. VCs go in, they pour money into it. Companies get founded and explode, but they might never make it into a real business.
4) Top right: 'Tornado' company
If you haven’t heard of this phrase, it was coined by Geoffrey Moore in Inside the Tornado.
These are companies that are growing massively. Tornadoes happen, you can't just create one.
And, if somebody has to tell you that your company is in a tornado, it's not. Because, you will know when you're in a tornado.
The company I currently work for, UiPath, is a Tornado. It grew in the last three years from about 350 employees to 3500 employees. From a small company, valued at below $100 million to a giant one, now assumed to value at $7.7 billion.
Tornado companies - the lowdown
Rapid organizational and revenue growth doesn't necessarily mean a better workplace for a PM.
Here are a few trademarkes of the tornado company.
There isn't the time to establish them. If you set up a process, it takes a year to establish it. In that year, the company changed so much that the process might not even make sense anymore.
In UiPath, there was a time when half the population of the employees were with the company for less than half a year. Nobody knew anyone at this point.
If you want to get stuff done, you need to know people and you need to know who can make something happen in the organization.
In my previous company, we implemented user data, then the tool would report this data back to us. It was an on-premise solution. It took us a year to implement this. And then it takes half a year until the customer installs this version. And then you need a half a year worth of data before you can make decent decisions with it. It took a total of two years.
That would never happen in a tornado company. You don't have two years. In two years, the company is either gone or you don't recognize it anymore.
Tornadoes overshoot because of their sheer force and speed. When you overshoot in an organization like this, you need to act quickly.
This is what happened this year at UiPath. It overshot by over 500 employees. And, at the point when everyone realized what the burn rate was, and that it was not sustainable, they had to lay off those people.
Organisational structure changes
Think of an oil company. In oil companies, the first people who started, at least in the good old days, were those who could sniff oil. They walk through the desert. Stop. 'There's the oil.'
Then they get the drillers. These guys are crazy. They drill because they like the challenge and they love the rush. Once the oil is shooting out of the well, you bring in the pumpers and the refiners. After you have your products, you can distribute it and market it.
Imagine the sniffers and the drillers are the founders. The pumpers and refiners are the Architects and the Product Managers since they are creating products. The distributors are the Product Marketers and the Salespeople.
The people from the previous phase will not always be the right people for the next phase. The driller and the sniffer will not be happy in the pumper and the refiner environment. And, when companies grow really fast, this is what we see happening.
You might have heard your colleagues talking, 'It's not the same anymore. It used to be such a cool company, we had so much fun.’
These are typical signs that this generation of people are shifting in this organization. Some, of course, make the transition. But others might not be in the right place anymore.
What else to consider?
In the beginning the business and the founder are one. If the founder is in technical companies, they are always the first Product Manager.
As the company grows, they need structures, they need managers. At some stage they will bring Product Managers in.
It depends on the founder as to how far they are able to detach from the company and allow other people to manage the business.
The business can even fall into bankruptcy if this doesn't happen.
I came up with my own list of three types of founders that exist within the industry.
This guy is crazy about starting businesses. He creates a business, he takes it to a level where you can either fund it or sell it to a private equity. And then he just walks away, happily smiling. He starts the next business because that's what he wants to do. That's the serial entrepreneur.
'Can’t Let Go’ founder
The typical symptom is when you are in a software company. You walk in and you see that the CTO is the founder. Or they are the CPO, the CSO. They are still pulling the strings behind the scenes, even if they aren't necessarily fulfilling the role of the CEO. This can cause some real tension between the management teams.
The only way a founder can be the CEO is when you have a charismatic founder. And there's only a handful of them. Daniel Dines is the founder of UiPath. He started UiPath in Bucharest, about 15 years ago. He's one of the most humble people. The guy is a billionaire more or less. But, he's the nicest and most humble person and, importantly, he's very charismatic.
The Good, The Bad, The Ugly
Hopefully you're starting to understand that no company is perfect. There are so many moving parts.
So, in reference to the title of this piece, I like to think each business has something good, something bad and something ugly. I'm going to use three companies I have worked for and run through these categories for each of them.
This was a CRM company that was founded in 1988 called Update. Five years before, Siebel systems was founded. Siebel system was the company that created CRM.
This company was founded five years earlier, had some early successes. The tool was very popular. They got funding and they actually went public.
They blew it. They never succeeded. They never grew bigger than 34 million in revenue.
Siebel systems was, at their peak, $1.7 billion in revenue. But, this company turned into the 'Walking Dead.' When I joined the company, I didn't ask any of these questions. And within three months, I realized I was sitting on a dead horse.
The leadership clash. The founder was a CTO. He was a smart man. He built engineering like a fortress, you couldn't work with it. And, he tried to steer the company from the engineering side. He clashed with the CEO and there was a lot of tension. In my mind, this was the reason the company went down in first place.
This company is called Tricentis, it's in the automated software quality space. The company was founded in 2007. It had some periods of minor growth but not much. Until they got $170 million in funding. This turned the company around. It started to grow and it started to become very, very successful.
It was a late bloomer. It had layoffs. It was almost a ‘Walking Dead.’
It was merged with another portfolio company of the investor and that caused a major culture clash in the organization. A company from Atlanta was merged with a company from Vienna, Austria. That didn't go well. The management let the tension grow. Also, the founder was the Chief Strategy Officer and he wanted to be CEO. He pulled the strings in the background. He was a ‘Can’t Let Go’ founder.
This is my current company, UiPath. It was founded at the right time in the right place with the right technology.
In 2017, Robotic Process Automation used the same technology as Tricentis. It took off like crazy. It raised a billion in funding over three rounds. And it's now evaluated at $1.7 billion in value.
You are inside a tornado. This is a true tornado. You meet people and they're here for three months, you feel like you are a legend because you are here for eight months.
This growth is partially out of control. You have a ton of initiatives going on. You have over hired which was corrected by layoffs. And, you have a lot of informal structures.
Do I jump into the tornado?
Growth isn’t everything. There are so many other factors at play.
If I was a new Product Manager, and I wanted to learn how to do product management from a process perspective, I would join Tricentis. It was successful, it was growing, and you could use all the tools that you want to use.
If you want to have a process focused, data driven role, a moderate growth company is perfect.
If you jump into a tornado, you will not use those tools. You will be crunching and doing whatever you can. There's data, but it's changing so quickly that you can barely make your chart before it's outdated. I would start in another company, and then jump into one of these because it's a great experience to see that.
Ask about the founder, too. Maybe you can even get an interview with him. Ask him what his plans are, gauge what type of person he is. The worst thing that can happen is joining a 'Walking Dead' company, where there's zero transparency because engineering puts a fortress around themselves, and the founder can't let go.
To finish, I quote the (late) legend Kenny Rogers."
'You gotta know when to hold em. Know when to fold em. Know when to walk away, Know when to run.'