Why Startups Fall Apart at 50 Employees

Coaching your business from its teen phase to adulthood

Photo: Luis Alvarez/Getty Images

Ask anyone who’s worked at more than one startup and they’ll probably tell you the same thing: Young companies start to go off the rails once they hit 50 employees. I call this the “teenager” startup phase, and I’ve been there several times, both as an employee and an executive.

What does this look like?

Employee one through 10: At a certain point, the original employees stop learning new people’s names. They won’t come right out and say it but they start to resent having to show yet another noob how to do the same simple things. Their tolerance for mistakes, even for the same mistakes they once made themselves, goes into the toilet.

Employee 10 through 25: The second tier of employees then starts to form small, protective cliques. They may occasionally drop references to the “good old days.” They place a growing importance on things like titles and status. Discussions might start to percolate about adopting the title prefix “Senior.”

Employee 26 through 39: This is the group where power plays start to happen. If the “teens” are going to form tribes, the late-twenties and thirties are going to start raising hell against the old guard.

Employees 40 through 49: WTF is going on?

While this scenario may not be true for every employee in every group, it always happens to at least a few people after a startup hits 50 employees. Like I said, I’ve been in each group and I’ve exhibited each of these behaviors, so I’m not judging here.

Well, maybe I’m judging a little. But we need to talk about what to do when your company feels like it’s going off the rails. We need to get our teenage startups out of the house and into the world like functioning adults.

Hitting chaos at 50 employees could mean several positive things. For one, it definitely means a company is growing, likely faster than planned. And as long as the growth doesn’t get too far out of hand, that’s a good problem to have.

If growth is indeed happening and it’s organic, your company has probably already developed an internal culture, lexicon, and set of operations that may not be…