The Operating System That Breaks at 40 People
There’s a number that nobody warns you about. It’s not your first hire. It’s not your first million in revenue. It’s somewhere around 40 people — and it’s where most founder-led companies quietly start breaking.
I know because I lived it.
The invisible wall
When Mailigen was 15 people, I knew everything. Every customer conversation, every product decision, every interpersonal dynamic. My operating system was simple: be in every room, make every important call, and rely on the fact that everyone could see everyone else.
It worked. Until it didn’t.
Somewhere around 30 to 40 people, I started noticing things I couldn’t explain. Decisions were being made that I hadn’t been part of. Teams were building things that didn’t quite align with where I thought we were going. People who sat 10 meters apart had completely different understandings of our priorities.
The company wasn’t broken. But the operating system was.
What actually breaks
Communication stops being ambient
At 15 people, communication is like air — it’s everywhere, and nobody thinks about it. At 40, it becomes water — you have to actively pump it where it needs to go, or whole areas dry out.
The founder who thinks “everyone knows what we’re doing” at 40 people is wrong. I was wrong about this for months before I realized it.
Decisions need structure
At 10 people, “let’s just decide” works because the decision-maker is always in the room. At 40, you need to answer: Who decides? Who needs to be consulted? Who needs to be informed? And you need to answer this before the decision comes up, not after.
I went from making 90% of decisions to needing to make maybe 20%. The hard part wasn’t letting go — it was building a system where the other 80% still happened with quality.
Culture becomes deliberate
Small company culture is organic. It’s the sum of the founders’ behaviors and whoever they hired first. At 40 people, most of your team joined after the culture was formed. They didn’t absorb it through proximity — they need to learn it through systems, rituals, and explicit norms.
When I noticed new hires behaving differently from the original team, my first instinct was “they don’t fit.” The real problem was that I hadn’t given them anything to fit into.
Individual management doesn’t scale
If you’re a founder who still has 8 direct reports at 40 people, something is wrong. You can’t do meaningful 1:1s with 8 people, handle strategy, manage stakeholders, and still have time to think.
The shift from “I manage people” to “I build the system that develops leaders who manage people” is the hardest transition a founder makes. Most never make it.
What to build instead
A decision framework
Not bureaucracy. A simple framework that answers: What decisions can be made without me? What decisions need my input? What decisions need my approval?
Write it down. Share it. The clarity this creates is immediate.
Communication rhythms
Weekly all-hands (brief, not performative). Team-level standups. Cross-functional syncs. Not because meetings are fun — because information doesn’t flow by itself at this scale.
The best operating leaders I’ve worked with treat communication like infrastructure. You don’t notice it when it works. You notice immediately when it doesn’t.
Explicit values that drive behavior
“We value transparency” means nothing. “We share bad news within 24 hours, in the relevant channel, with proposed next steps” — that’s actionable.
Convert your implicit norms into explicit, behavioral expectations. Otherwise you’re hoping 40 people independently guess the same things.
A leadership layer
You need people between you and the team who can carry the culture, make decisions, and develop their people. Not just functional experts promoted into management — actual leaders who understand that their job changed.
This is where most founders under-invest. They hire great individual contributors and expect them to figure out leadership on their own. They won’t.
The pattern I keep seeing
I’ve now been through this transition as a founder (Mailigen), as a product leader inside PE (Pipedrive + Vista), and as an executive at a robotics startup. The details change, but the pattern is identical:
What got you to 15 people was founder energy. What gets you to 50 is founder systems.
The founders who make this shift build companies that scale. The ones who don’t either burn out, get pushed aside by their board, or watch their culture erode until the company they built stops feeling like theirs.
Start before you need to
If you’re at 20 people reading this, start now. The best time to build your operating system is before it breaks. The second best time is today.
Don’t wait for the crisis that forces it. By then, you’ve already lost people you didn’t need to lose.
This is what I think about every day while building UnsaidSignals — a tool that helps leaders catch the early signals of misalignment before they become real problems.