Specialize the business at 100 to 249 people

1. The stage

The theme is to specialize. At the stage before, too much was coming in, disorganized, so you sorted it and learned how much arrives. Now that it all goes into those buckets, you specialize.

Item	At this stage
Headcount	100 to 250, as the range is given; the stage's own label says 100 to 249
Your role	President: you now have a full executive team
Leadership structure	Four layers. You do not add a top layer; you add layers at the bottom: a fully built executive team, a fully built director team, a full suite of managers, and managers below them, or leads: almost junior and senior management, directors, executives. Everyone names these differently; these are the most common terms
How many companies get here	900,000 in the United States: fewer than a million, out of the 30 million businesses counted at the start, which were already only 9% of people

As president you lead an entire community, a team of teams: several very robust teams that come together. In one practice here, businesses have gone from 100 to 250 three times, and what follows is that experience. Getting here is called very, very rare.

2. Each function at this stage

Function	What breaks	What graduates it
Product	The product has too many features and overwhelms customers	Survey, prune, and improve through deletion; pruned items can become cross-sells
Marketing	Broader creative brings in lower-quality leads and dilutes the brand, and one more figure goes up yet again (section 12)	Grow the brand with standardized messaging, free value and big positive brand associations
Sales	Closing efficiency on the premium product drops	Route the best leads to the best closers, for the front end and for ascensions, and track metrics automatically
Customer service	Several customer journeys conflict with one another or are poorly timed	Proactive recommendations to cross-sell, and a blended customer journey
Information systems (called IT)	Departments outgrow general software and need specific solutions; too many internal inquiries and no inquiry process, so you need departmental policies	Specialized stacks for each department, an internal inquiry process, and service level agreements
Recruiting	Recruiters hold inconsistent standards and the culture suffers: the wrong candidates get too far in the process	Standardize selection, and a founder fit check
Human resources	So many new and existing employees that performance suffers; compliance issues arise, and complaints start to skyrocket	Group onboarding (software you can implement), documented performance management systems, insurance, and reinforced cultural values
Finance	You still pay retail for everything and are overcharged; your cash is unprotected and likely earning very low returns, or none	Renegotiate rates on everything, move cash into yield accounts, specialized finance roles (especially around tax mitigation), and internal financial audits

3. Product: prune, and improve by deleting

You keep adding to solve problems until the product has too much attached to it. Overwhelm is said to be the number one reason for cancellation in a recurring business, and in any business really, where canceling might mean simply not coming back: too many choices, too much effort.

So instead of asking what to add, ask how to make each feature good enough to be worth the investment on its own. Instead of saying there are 14 things, listen: customers a lot of times say it is worth it just for one. That thing is the core value, and the rest, believe it or not, detracts from it: customers justify not using the rest by how much more valuable the one thing is. In a very real way, the service would be more valuable if it left out what they do not use.

Make it work without them. One way to think of it is making the product magical: can it work with the customer doing nothing at all? Alarm systems, home energy, Wi-Fi and a phone just work. Get people to do basically nothing and still get value, and you have won. From the internet you want it to work, and to be fast. Ask what "just get it to work" looks like for your service; usually, if you ask your customers, it is one or two things.

A lot of the times a business gets here by looking for new things customers would want, rather than for how to make what it has better.

The findings cited, each as it is cited:

Where it comes from	What it found
A large consulting firm's study	Companies pruning six times as much are three times more profitable than those that do not; the best chief executives, in the top 10 percentile, prune six times more, rather than adding six times more
A well-known executive, quoted	Keep deleting until you have to add 10% back: until you add something back, you did not delete enough
A dictation program	Its second version, two years later, had zero new features, only better comprehension of each word spoken

As companies grow, people with time on their hands start doing things; growth nobody controls is likened to a cancer to cut out. Growth stops being only addition: ask what job your product does and how to do it better. That is harder than adding something new, which is why most people avoid it; getting better, going deep on details, is the discipline of the product team and of the founder.

Repeat. To go deep, in this view, you repeat: every function at this size has a lot of repetition, and nobody likes redoing the old thing. Make every experience customers have more distilled and packed with value, rather than simply more: raise the density of value in the time they spend. The idea is said to come from media but to apply to anything.

Sort features on a grid of value against willingness to pay:

	Low willingness to pay	High willingness to pay
High value	Table stakes: what everybody in your industry does, so it is high value, but because everyone else does it, people will not spend much on it; it is not differentiated	Differentiated: high value, and no one else can do it the way you can; think of it as pricing power
Low value	Trash: not valuable, and nobody wants to pay for it	Not established on this page.

Carve out, and sell to the few. You might have added something you think is really good that not many customers use. Be honest: it is no longer core. Carve it out as an add-on or upsell for specific types of customers; for some people it might be high value, and they will pay more. If you are set on it and a few people are loud, the few pay more, and the core stays simple.

Look to your customers, not your competitors. The best-performing companies in the portfolio described, it is said, do not look at the table stakes their competitors do; they look at what customers want more of. Most of the time that is the current thing improved, not a rival to a competitor's launch.

A worked survey. A subscription-analytics company's survey is cited; it was for creators, run across passive fans and super fans: two audiences, which is how you would look at your own base.

Tier	What fell there
Table stakes	Newsletters: par for the course
Valued	Access, exclusive content and subscriber-only events: almost all of it exclusivity
Valued by some, not everyone	Badges, credits, deals and discounts; make them the core and you lose people, since for some people discounts do not matter at all
Not a reason to subscribe, or at least not a core value driver	Subscriber merchandise

The point is less what that map says than thinking through your own product the same way.

Asking customers which features to keep and which to drop is SOP 131 — Run the keep-one and remove-one survey. Pruning products, hires and processes, and moving what that frees to what returns most, is SOP 274.

Flag: when people miss a cut feature. SOP 157 (section 3) deletes quietly and, if people respond, asks whether they are customers you want to grow before adding it back. Here, the few who insist pay more for it. Charging them keeps their money and the core simple, with an add-on to run; weighing them first can mean losing some of them for a healthier whole. This page does not settle which reading is right.

Flag: how many core things. SOP 131 (section 1) says to decide on the core 2 or 3 things you deliver. Here, customers usually name one or two. This page does not settle which reading is right.

4. Marketing: one message, repeated in new ways

More people are coming in, more hands in the pot, and people do not understand your messaging. The four pieces, in this view: the big free value; a simplified mission; standardized messaging aligned with it; and big brand associations your customers love.

Standardized messaging. Simplified, in this view: you only get one to three words that people associate with you; in one practice here, surveys show which words people typically associate. The audience will not know your mission statement or tagline, only that you are the "X" one, and X is what you hammer over and over.

Look and feel only reinforce. People get obsessed with colors and fonts; that is called hogwash. They exist only to reinforce the association that this is the same company, not because a font holds power or a particular blue means something.

Repeat, in new packaging. This is hard because the team and the founder typically do not want to repeat themselves; as with product, at a certain size the returns come from a lot of boring work. Build the brand by repeating the same associations: new packaging of the current message, not new concepts. Brand inside the business is culture: in one practice here, the same value is repeated to the team rather than new words made up. A famous sportswear brand has kept one slogan for a very long time; its creative team does not freshen it up because it ran last year. Once a message hits, say it over and over in new and creative ways: vary the ways, never the message.

Free value, split by who you sell to:

	Business to business	Business to consumer
What it is	Typically actual value, usually some sort of monetary value (in one practice here, extensive trainings, courses and content), so that someone feels they made more from it than they paid	Oftentimes entertainment, in the formal sense: anything whose purpose is to be consumed, such as sports, dancers and singers
How	Invest real money, not just content: tools, calculators, even low levels of service for prospective customers, to reinforce your position. Some of the large consulting firms give away white papers holding information you would pay tens of thousands of dollars for, to position themselves as thought leaders and authorities	Big direct-to-consumer brands find the entertainers in their space whose values resonate most with the brand's core values and audience, so they keep pairing themselves with what matters most to their customers. Some of the best ads of all time for such brands are funny and entertaining, with people customers recognize and like
Why	They try it before they buy it, and feel really good about buying	Almost by proxy: in business to business you cannot get a famous entrepreneur to do your ad, so you create the value directly

For business to business, ask what would be insane to give away, and how much work you will do that competitors will not, to over-deliver. Accept that 99% of people will never become a customer, and that is okay. The best moment, in the view here, is a customer saying you have paid for yourself 100 times over before they have given you anything; doing business that way is recommended. Long term, both still come down to the product; this is about more people finding out about you.

Big associations ask which endorsements and sponsors make the most sense for the business now.

The 99% here is said of business-to-business giving. SOP 24, section 3, gives 99.9 percent for the people your public reputation rests with who will never do business with you.

Brand as reach, influence and direction is SOP 92; pairing the brand with what the ideal customer likes is SOP 94; how much to give before you ask is SOP 24 — Set the give-to-ask ratio.

5. Sales: the best leads to the best closers

With a bigger team, your three superstars get overshadowed by the 30 non-superstars in the role. At the stage before you categorized; now you decide what to do about the categories: you specialize. The best salespeople get the best hours and leads.

• Track automatically, at a finer grain. Metrics tracking should exist by now, and it has to be automated. Take it to the rep: attribution by platform, by rep and by product, so you know where leads get the best return.
• Set assignment rules that push each kind of lead to the right people.
• Give the best leads to the best closers, exclusively. A statistic called crazy: contacting leads within 60 seconds can multiply revenue by four. With a huge number of leads that is very hard; give the best closers only the best leads and they have the time to call them fast.
• Score leads. That should already be happening; this routing can only happen once leads carry scores.
• Split front end and back end. You will probably have front-end salespeople, and back-end products now need selling too. If the back-end sale is worth more than the front-end sale, the best closer goes there, and everything floods to those one or two people. It becomes almost a pyramid: large numbers at the bottom, a few at the top who do very well. Apply it to every sale the business makes.

What is left for the juniors. Survivorship bias, the reason people play the lottery. Some of the most competitive sales roles work this way (multi-level marketing, insurance, private wealth management): people work for years for a shot at a million dollars a year, or 500 grand. As the best closers earn a lot, more strong people come in at the bottom, sharpen their teeth on the bad leads (the 500 credit scores, the tire kickers), and get better leads as they improve. It is still the most efficient way to allocate resources.

The case behind this is on SOP 84 — Score and route inbound leads, section 2; speed of first contact is SOP 90.

Flag: the timeshare case. SOP 84 says what the middle column says; this page says what the right column says. Both tellings put the reps at about 3,000 (here "however many it was"). This page does not settle which reading is right.

Point	SOP 84 section 2	Here
Credit scores he wasted time on	500	400, which he sometimes got (500 is the figure used above, for the leads juniors learn on)
Result	Office production fivefold; sales $200M to $1B a year over five years	That one division's productivity 5x, then the company 5x; sales from 200 or 250 million to 1.2 billion over three years, from $200 million a year at the time

6. Customer service and information systems

• Customer service. When customer journeys clash across products, the fix is SOP 169 — Blend the customer journeys across products.
• Information systems. Moving technology from one central team into each department is taught on SOP 170 — Decentralize technology into the departments.

7. Recruiting

Structured interviews, interview panels, the founder's final interview and candidate scoring are on SOP 174 — Standardize selection and the founder's final interview.

8. Human resources: see performance, repeat the values

Until about this stage, in the view here, you can get by with pseudo-HR, an operator playing HR. Past 100 you have real HR, a full department.

One place to see performance. A performance management tool, often alongside an HRIS, holds one-on-ones, feedback, surveys and goal progress in one place, for a holistic view. At 50 people you may have helped a department's performance yourself; now there is too much going on, so monitor proactively and step in when, say, half the team is missing quota. Growing to over 100 people, small problems become very big ones: a tiny performance issue ("he's just that way") is suddenly 10 or 15 people.

One setup here, built the first time a business got past 100 employees:

What the chief executive could see	How often
Every one-on-one, each person with their manager: the notes, the documentation, even a recording of it	Not given
The feedback every team gave about its manager	Every week
Surveys on how the chief executive was doing, and how the company was progressing toward its goals	Every week
A goal-progress tracker: how far everybody got toward their quarterly goals, red, yellow or green in each department	Every week

That showed how healthy each team was. With so many leaders you cannot give each one individual attention; you move to preventing problems, a maintenance mode, which is why you probably have an executive team now. Visibility also shows where performance dips and things get lax: where the values need reinforcing. Going from 50 or 75 people to 100 or 150 feels really different.

Repeat the values. As with the brand outside, repeat yourself inside. The recommendation given: formalized leadership training, performance development systems beside performance management, one to many. The suggestion given: twice a month, a leadership or full-team training on what the values are and what they are not, rewarding the people who show them. In one practice here, a weekly team touch-base gives shout-outs tied to the core values (three, there). In a previous company, anyone who showed a value, or went above and beyond on one, was sent a T-shirt with that value on it that week. Who you hire, promote and fire communicates almost more than anything you say: claim values, then tolerate someone who does not live them, and that says more. People, in general, watch what you do far more than what you say.

Insurance. Get EPLI, a liability insurance tied to employees, and look up the details: usually, at this point, you want insurance against sexual harassment claims and the like, because you are a company now and people will sue you. Insurance law and policy terms are not covered on this page. Insuring against what could end the business is SOP 156.

9. Finance

This stage's money work sits on its own pages: cutting what you pay and making idle cash earn is SOP 171 — Cleanse expenses, re-shop vendors and move cash into yield accounts; internal audits, the monthly read of the books and tax are SOP 172 — Audit internally and review the financial statements each month.

10. The principle under the stage

By now you should have categorized what comes in. The moment you do, you need to specialize the team: a stack of people for this type of customer, of salespeople for this type of prospect, of developers or delivery people for this level of product. Everything at this scale goes very deep and specialized, and those people can be harder to recruit and find.

11. The bottom line

The constraint is that no one is good enough to know everything, and your focus is too broad. To graduate, create dedicated people and teams for specific tasks: specialization of roles. The stage runs from 100 all the way up to 250 people.

12. What this page does not decide for you

• The name of the low-value, high-willingness square. Not established on this page.
• Which figure goes up in the marketing constraint. Not established on this page.

13. What this page does not cover

Training and development, and group onboarding software, are not covered on this page.