Should I join (or leave) an ex-hypergrowth company?

Recent market conditions have made this stage of company undesirable

We’re barely into 2023, but – wow – it’s turning into an intense year for navigating career expectations. Amid a lot of economic and market uncertainty, I’ve had more conversations with people about career decisions over the past six months than over the previous 18. I launched The Skip nearly three years ago to coach tech industry executives and product managers through role and company transitions, but their concerns are bubbling up everywhere, among all levels and functions of organizations, and I’m finding myself sharing my insight more universally.

The very essence of The Skip is to look ahead – not at just the next opportunity but the next, next opportunity. All of us want to move forward in some way, whether that means climbing the ladder, growing skills, finding more satisfying work environs, or simply making a better wage. Over the past 10 years, hypergrowth companies have been a key driver of this momentum. But today’s climate is a little muddy, and these growth and hypergrowth companies – that big segment between startups and Big Tech – have been on my mind. Over the past half dozen years, this was “the” stage of company to join. But is this still the case? I’ve chosen to devote my latest podcast (listen), which I’m also summarizing here, to exploring this dilemma.

From ‘Blitzscaling’ to Sustaining

Hypergrowth companies can be described as those that are “blitzscaling” – shooting up and out like a weed and expanding their product lines at an insanely rapid pace. Over the past decade, these companies were largely fueled by the market’s 0% interest rate phenomenon, which led to a bull of a stock market, a huge influx of capital, valuations in the billions, and hiring, hiring, and more hiring. Even at the earliest signs of product-market fit, these tech companies were expanding. Leadership was asked to simultaneously scale and expand the business, and managers could shine as they oversaw complex, fast-developing organizations. Oh, and the compensation packages – with huge equity value gains – were excellent.

At the start of 2023, however, we saw the economy shift, marked by higher interest rates, a creeping apprehension, and, unfortunately, a slowdown. Today, sustainability has supplanted that push for growth. The focus is on protecting a business’s core, rather than scaling rapidly and innovating. Funding is down, and layoffs are up. These conditions have clearly had an impact on every company, so what does that mean for you, if you’re looking at the next, and the next, opportunity?

Market impact to management teams, culture and compensation

To wrap my brain around the shift that has taken place, I think of many of these hypergrowth companies as ex-growth companies. An ex-growth company is also an ex-unicorn company – the rare and highly valued kind that was growing like gangbusters but simply isn’t any longer. And we can’t ignore that these companies have experienced a major drop in valuation (even if many are reluctant to admit it). I’m not passing judgment. It’s simply recognizing the distinction between building and sustaining – which are two very different modes that require very different skill sets. Executive teams have gone from looking outward, aggressively hiring the very best people and driving innovation, to looking inward, checking the day-to-day numbers, laying off the not-very-best people, and strengthening product-market fit (PMF).

This pivot results in a shift in culture and the makeup of the management team. The “growth” executives joined on to build teams, install organizations, and expand product lines, yet the company now needs leaders motivated to achieve PMF. They desire “crafters”, who are far closer to the product, streamline execution, and avoid growth and expansion distraction. Instantly, this has put all ex-growth management teams in turmoil. Some have the skills but won’t be given the chance to display them. And as companies panic and seek instant solutions, many executives are losing their jobs entirely.

As I talk with chief product officers (CPOs), many are tagged as “growth-only” executives and are simply getting fired and replaced. Other nervous CEOs are reducing their reports and streamlining their organizations, layered under founders or seasoned executives. There are cases in which companies are combining the engineering and product management roles into one, under the title of chief product and technology officer (CPTO).

Simultaneously, company culture is plummeting, as boards exert increased pressure and founders and executives are in uncharted waters and panicking. They are ill-suited to their new directives and push teams too hard, micromanage product development, and create an aggressive workplace culture.

Finally, ex-growth company compensation is upside down. Who more than anyone at a growth-focused organization will feel the impact of a flagging company valuation? The answer: All of the employees who expected their equity to comprise a healthy portion of their compensation. During the hypergrowth heyday, when a private company IPO’d, that stock an employee had been issued would lead to a big payday. Today, if you’re at a private company, you can’t see the valuation, but it’s safe to assume that you aren’t immune to the market’s softer conditions. The IPO or a big acquisition is not coming like in the past. As such, valuations are deeply overpriced internally, yet companies aren’t doing any repricing or offering aggressive retention packages. But we know – employees aren’t going to make anything close to what they thought they were promised. It’s not going to work itself out.

Making Your Exit

All of this leads me to say that I’m nervous about those situations in which a company that hasn’t ever really hit product-market fit is still pursuing a fit, all amid an iffy market and with an artificially high valuation. I’m wary of any company that has one hit product – at a valuation that suggests it has had several. It’s like an ocean liner trying to navigate Class 4 rapids. You want to be in a small boat that you can quickly maneuver to achieve PMF with down-to-earth expectations. But instead you've got too many investors, inflated valuations, unreasonable expectations, and way too many employees. Ask yourself: Do you really want to be at a company mired in these circumstances? And especially if you aren’t going to be compensated?

If you are a leader and considering an ex-growth company, my advice is to avoid it, or leave it if you’re there.

The learning possibilities aren’t worth it. The culture is only going to get worse, and most companies will struggle to right the ship. Sure, you might have more responsibility than you can get elsewhere in the market or feel a sense of loyalty to the management team because you’ve grown with the company. In those cases, then you may need, or it may be prudent, to stay. Just don’t have blinders on. Have discussions every three or six months about the situation. Overall, however, I consider the reasons to stay to be quite rare. The career coach in me – from a purely rational perspective – says this is a bad career decision. 

I feel that it’s really important to address this topic in order to protect folks. Yes, pay is important – but the pay, or less pay than expected, on top of an extremely tough work environment is going to breed frustration and resentment. Consider the case where the company ultimately navigated choppy waters and succeeded, partially due to the team’s hard work.  When that happens and the non-founders don’t feel compensated, they get so frustrated, they can even get to a point where they leave the industry altogether. 

So are there any new growth companies? Yes, they do exist – just not as many, and they’re likely not in blitzscaling mode. Joining them is highly competitive, and the talent will become concentrated at these “winners,” marked by a good brand, good networking, and good compensation. The last market correction led to some truly big winners. So if you can get a role (or are already) at one of these companies, that’s an ideal opportunity. But again, this is rare today.

In the end, being at a company in the growth phase can be really exciting and rewarding, particularly if you’re in product management. But growth, especially hypergrowth, is rare right now, so whether venturing into a new role or sticking it out where you are, consider other phases of company. In fact, my next article will focus the pros and cons of roles in Big Tech companies.