One of the hardest but least spoken about transitions in a startup’s life is crossing people management chasm.

At the outset of the startup, there might be three people, then eight, then fifteen. As they grow, startups often create ad hoc managers I call team leads.

Team leads manage 3 to 5 people. They work alongside their team, whether engineering, sales or marketing and contribute actively to achieving the goals of that team team. They code, sell or market for 50% of their time. With the remainder, team leads coordinate team members, set goals and measure progress. In company sizes around 30 to 50 or so, team lead structures work well.

As the company scales, the number of team leads in the business grows, so someone must be appointed to manage the team leads.

This is the people management chasm.

The manager of team leads isn’t a team lead himself because he doesn’t actively contribute to any one of his team’s output - there’s not enough time to do both well. He’s a different kind of manager, a team builder.

The team builder is responsible for cultivating the people within that team, recruiting and hiring additional members of the team, and guiding the team to perform at a high level. The team builder spends 90%+ of his time in one-on-one meetings, recruiting meetings and progress evaluation meetings. CEOs are team builders almost from the very first day of a startup’s life.

Crossing the people management chasm, hiring the first people manager, is challenging. After all, the interview process used to evaluate individual contributors is no longer valid. Nor will annual review processes work - the metrics to evaluate a manager’s performance differ from an individual contributor. Suddenly all the criteria have changed. What got you here won’t get you there.

At this point, the startup has to develop another competency: how to hire and manage people managers. Like other skills, successful startups research this competency by speaking with experts, solicit advice from well-known and successful managers and founders who have done this before. They speak with recruiters before launching search processes about the kinds of managers who will fit best into their startup’s culture and they iterate on their interview and evaluation processes.

Crossing this chasm is the key to growing the business. It’s not easy but it’s essential.