5 failure points between $5M and $100M in ARR

Share Story on

I had the privilege of leading PlanGrid to $100 million in ARR before I stepped down as CEO and passed the baton to Autodesk Construction. I’ve had years to dissect the mistakes I made with my first startup.

Regardless of which industry you build in, or where you are at in your startup’s journey, there are many things that will likely fail.

This post breaks down PlanGrid’s key failure points and what I’ve learned from them. If these reflections help even one founder make one less mistake, I would consider this effort worthwhile.

Organization structure and communication failure

As first-time founders, we were too creative with our organizational structure. We had a flat management hierarchy in the early years, and we bragged that we ran our startup like “Star Trek” — you were either in engineering or operations, and everyone reported to a founder.

This was cute until it quickly stopped working. People care about titles and career paths, and if you want to retain great people, you have to care about these things too.

In Year 3, we tripled from 30 to 90 people, then doubled the team to 180 a year later. Those were the most painful years, because we went from a high-execution team to one that felt like it was stuck in molasses. We didn’t know how to hire giants, so we recruited several mediocre managers, who in turn recruited more mediocre people.

Meanwhile, communication gets a lot harder with more people, and I did a poor job communicating the direction of the company. We had a first-mover advantage in a category we created but lost our position during these years of slow execution.

People care about titles and career paths, and if you want to retain great people, you have to care about these things too.

Takeaways: Be creative about how you’re solving problems for your customer and not about organization structures. Hire a great HR leader as a business partner to help recruit and retain the right team and design a good communication flow. Remember that A players can recruit other A players, but B players can only recruit C players.

Internal conflict

Our trickiest inflection point was hitting Dunbar’s number — at 150 people, everything went to chaos.

Hierarchy is a factor. At 10, 20 or 30 people, everyone can report to a founder. At 150, just based on basic management ratios, the frontline team member is now separated by three to four degrees from the founders.

Not feeling like a unified team becomes dangerous when you don’t hit revenue targets or product milestones. When there is a mismatch on velocity and performance, it’s easy for those who feel like they’re performing to blame any slowdown on everyone else. There are natural tensions between sales and marketing teams, support and product, and product and engineering. Everything becomes magnified with more people simply because communication gets harder.

5 failure points between $5M and $100M in ARR by Ram Iyer originally published on TechCrunch



Search By Category

Recent News

You May Also Like

‘My Company is My Family; My Family is not My Company’, proponent Govindkaka of Shree Ramkrishna Exports Pvt. Ltd honoured with 2022 Hurun Most Respected Family Business of the Year Award

‘My Company is My Family; My Family is not My Company’, proponent Govindkaka of Shree Ramkrishna Exports Pvt. Ltd honoured with 2022 Hurun Most Respected Family Business of the Year Award

Renowned Diamond Baron, Visionary, Industrialist, and Humanitarian, Shri Govind Dholakia sounds stimulating when he says “Our Company has been made into a Family; We haven’t

CricAdda and Sanjay Dutt: A winning combination for sports fans and gamers

CricAdda and Sanjay Dutt: A winning combination for sports fans and gamers

New Delhi (India), February 4: CricAdda, the online sports and fantasy gaming brand, announced that Indian film actor & renowned celebrity Sanjay Dutt has joined

Sakhiya Skin Clinic is India’s No. 1 skin clinic chain

Sakhiya Skin Clinic is India’s No. 1 skin clinic chain

The clinic has performed more than 3 lakh+ safe and painless laser hair removal procedures. Surat (Gujarat) [India], February 4: With more than 3 lakh+ safe

Aditya Prakash, Bollywood Actor and Writer shares his secret of a happy & successful life

Aditya Prakash, Bollywood Actor and Writer shares his secret of a happy & successful life

New Delhi (India), February 4: We caught up with Bollywood Actor and Writer, Aditya Prakash where he spoke about his personal life, movies, his love for old

Darshan Aulakh started his film journey as an actor, today apart from acting, he has also made his own identity in film direction and singing

Darshan Aulakh started his film journey as an actor, today apart from acting, he has also made his own identity in film direction and singing

New Delhi (India), February 4: Darshan Aulakh is a well-known name in Bollywood apart from Punjabi films. Aulakh who made his debut as an actor has also

On This ‘WORLD CANCER DAY’: 8 Best Oncologists Share Their Advice on Increasing Risks of Cancer

On This ‘WORLD CANCER DAY’: 8 Best Oncologists Share Their Advice on Increasing Risks of Cancer

New Delhi (India), February 4: Every year on February 4th, World Cancer Day is observed to raise awareness about the disease and its prevention. Cancer is the