In this episode of Secrets for Scaling, we chatted with Peter Reinhardt, Co-Founder and CEO of Segment. Segment is a SaaS company helping thousands of companies collect and leverage their customer data. Here’s a quick company overview:

  • Founder experience: 6 years
  • Team size: 130 team members
  • Traction: 4,000 customers
  • Stage: Series B
  • Company founded: 2012 (5 years old)

Having dropped out of college his junior year to start Segment, then scaling the company to 130 team members in five years, Peter has learned several tough lessons in his founder's journey. He candidly shares his lessons in management, goal-setting, and values in the episode below!

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Episode highlights

Take a ‘mission to metrics’ approach to team structure. In the early days, with 20-30 employees, Segment had a wild west approach to goals where everyone did what they had to do to take the company to the next level. As they reached 50-60 employees, Peter realized they needed more structure around goals. The team needed context behind what they were working on. They’ve gotten better at setting goals around what they want to accomplish, then orienting their team around those goals.

Peter gave the example of SpaceX who takes a mission to metrics approach for structuring and organizing their team. Everyone understands the breakdown of the final mission (for SpaceX it’s go to Mars) down to the things they’re contributing to (e.g. if they’re successful landing then the designing of gimbals on a rocket engine was successful).

Write your goals and processes down. Peter says that as managers with concrete deliverables, it’s easy for things like goal-setting or decision processes to become ingrained culturally and not written down. But to be effective, managers need to be held accountable. And to be held accountable, goals and processes need to be recorded.

**Take a collaborative approach to your annual goal-setting process**. Peter drafts the annual plan, completing about 60% of it. Then the executive team gives feedback contributing about 20% until they get it to 80% complete. They then share it with the rest of the team who shares their feedback and collaborates with their exec team member to work on their goals and activities quarter by quarter until the plan is 100% complete.

Most difficult scaling period for founders is $1 million - $10 million ARR. It’s at this point you have a real business with real expectations from customers. It’s at $10 million that you finally have the velocity to hire managers. For Segment, this was at about 80 people.

Explicitly communicate and share your vision with your team. Segment makes their vision easily accessible to all employees. They also talk about it regularly, about 1-2 times per quarter. (Peter admits they should talk about it more.) This serves as a reminder of what everyone is working towards, aligning them around the same goal.

Choose values that are representative of what you truly value. Peter says, “don’t choose things you think should be values. Choose values that you’ll hire or fire someone over.”

Apply your values to your performance reviews and compensation levels. When Segment is assessing employees based on their responsibilities, they ask questions directly tied to their values. One of their values is to finish things to they ask questions such as, “are they able to finish things?” and “what scope are they able to finish at?”

Management takes a learning curve but gets easier with practice. Segment launched after its founders dropped out of college junior year. It took them two years to find product-market fit, then Peter became a pure manager about a year and a half later - at about 30 people. Not only was he young, he didn’t have any experience as a manager, making the learning curve a tough challenge. He says that once you’re a manager, however, becoming a manager of managers isn’t much different.

Line up coaches based on specific areas in need of improvement. To overcome the above challenge, Peter secured a series of coaches to help him improve in different areas as a CEO. Each coach was relevant to the scaling stage they were at, starting with sales, then finance, then management, then HR, and finally public speaking and storytelling most recently.

There are three things CEOs can never delegate. The first is setting clear goals with accountability built in. The second is having the right executive team in place who can execute against those goals. And the final is to always look for ways to inject the values into the company and set the cultural tone yourself.

Be honest with yourself about product-market fit. A big part of a founder’s job is to be constantly pitching the company – to investors, potential hires, etc. After doing this for so long, it’s easy to adopt a distorted reality. To lie to yourself about the company’s real problems and how bad they are. You have to take an analytical approach and be honest with where you’re at.

Play to win the long game. Segment failed the first 1.5 years but by patiently playing the long game, they’ve watched several “rocketship” competitors come and go. Be patient and focus on long-term success. Don’t let competition or pride distract you. Peter says, “Take the breaks you need. Think for yourself. Don’t get caught up in the whirlwind of activity. Keep perspective.”