Scale breaks everything - adapt your leadership style or fail

The core dynamic that makes organizations hard to navigate as they get larger, even if you assume everyone is actively good at what they do, actively collaborative and actively hardworking, is this emergent force or coordination of finding the subset of projects to work on when everyone's super busy that everyone agrees and commits to and actually works on together. And finding this coordination cost grows with the square of the number of people who are working on that thing.

When the company is very small, you can drive it, you can steer it like a sports car. As a founder, you are allowed to steer. Everyone acknowledges you are allowed to steer. They're never, 'Why is he steering it that way?' So you, a founder, can help navigate an organization around an obstacle the organization cannot see or comprehend itself. The problem is as you steer, as you grow into the size, your organization goes from a sports car and you grow into the size of a big rig, if you drive a big rig like a sports car, you're going to be a danger to yourself and others on the road and you're going to grind the engine.

The difference between a senior manager and a director is how you lead and the work you're doing. You can get as far as senior manager by being really strong in your function, but as a director it becomes much more about influence, coordination with others, and letting go of being in all the details yourself.

I personally will not be involved in really any of the decisions that matter and happen. There are thousands of decisions that an organization of any skill is making every single day. The most important thing is to really focus on hiring the right people, and that means hiring people that you can trust with a tremendous amount of autonomy.

They really need to keep hiring 2X and 3X leaders who have seen the next stage of growth, because it's going to be here before you know it.

Daniel Ek is Spotify's CEO and co-founder; the speaker (Gustav Söderström) is Spotify's Chief Product and Technology Officer.

What we've found, which I don't think is very contrarian at all, I think this is the case in most companies, is around the VP level. So if you have Daniel, then you have the C level, myself and others, then you have the VP level, that is a good mix of instead of having one person in the company think, so only Daniel then and the rest just do, you have on the VP level in the company this many tens to maybe hundreds of people that have a lot of autonomy to think.

Growing more than 100% every year is a bad idea. The happiest growth rate is 50%, 100% is manageable. Anything more than doubling and you are signing yourself up for a world of pain.

The problem with that is if you put autonomy very far towards the leaves of the organization, and also if you combine that with having a very junior organization, which we did back then, there's a fair chance that you're just going to produce heat. You're going to have a hundred squads with a hundred strategies running in a hundred directions.