How to Scale (Without Scaling Too Fast!)
There is not a single entrepreneur that hasn’t become immune to the diatribe of warnings on how slim a chance they have to succeed. If the statistics weren’t enough, every single person they’ll encounter will, with galvanizing semantics, tell them sagas of businesses failed and dreams crushed. Every entrepreneur knows how hard it is to succeed, and I would argue that any decent entrepreneur already knows that scaling too fast is the number one reason why startups fail. You don’t start a marathon with a sprint and you don’t start a company without intending for long-term, sustainable growth.
Scaling is one of the most exciting and most pivotal times for a startup. There’s no cookie-cutter approach and they’ll always be exceptions to the rule, but a lot can be learned from startups that have scaled too quickly and have either failed or had to rapidly reiterate their approach. For me, I saw this happen time and time again while working at an incubator that helped European companies scale into the U.S. market. After working with all types of industries and business models, some lessons learned became apparent that can maybe quiet those voices haunting the young entrepreneur.
Your market viability isn’t invulnerable.
You got investment for a reason, I get it. After spending months and years and about a billion iterations
of your pitch deck, acknowledging that your market viability isn’t set in stone is difficult. Proceed with caution here. I’ve seen founders invest 100% of their resources without accounting for the fact that markets aren’t stagnant, they shift. Be open to pivoting if it becomes necessary, and don’t rely on one niche market exclusively.
Another thing to keep in mind is that there will be early adopters of your app that drop off, which is natural. Your user retention strategies probably haven’t been perfected quite yet. This isn’t to say that your traction isn’t real or indicative of market viability, but you should be careful with how much you invest in one route. Take this into account when you’re developing your product roadmap and you’ll thank yourself later.
Things unravel with ambiguity.
Founders are, in essence, creatives. This right-brained quality that allows them to dream up innovative products and solutions is also at times coupled with a lack of structure. When you’re at the brink of the growth-phase and about to exponentially scale (let’s say, after your first round of funding?) having a thorough definition of your brand, mission, exit strategy, short and long-term goals, and a robust, and more importantly, tiered growth plan imperative. All this is necessary on the outset.
What does a tiered growth plan look like? Maybe not having the cold-brew-on-tap, floor-to-ceiling-window, branded-electrical-bike office in Soho. At least not right away. Company culture is absolutely important to attract talent, but I’ve seen many Founders jump at ideas of what their startup company should look like rather than implementing lean operations. Budget well, prioritize spending and be wary of jumping in head-first.
Hierarchy doesn’t mean hegemony.
One of the biggest selling points of startup culture is the lack of hierarchy. Most people working at early stage companies express a distaste for the office politics and overly-structured culture of traditional corporations. Now you don’t need to invest time in a maze-like org chart, but as your scale and begin building out your team, it’s important to do so with intention. There should be clear lines drawn to define an employee’s purpose within the company and what responsibilities will fall under their title or department. Generalists are great (and necessary) for the first few hires you make, but once you’re at growth-stages you might need to fight your structure-adverse intuitions and have a well-documented organization of your company, with designations of reporting structures, before the next phase of hiring.
Beyond avoiding structure, I’ve seen a lot of startups hire too quickly, especially when the growth stage develops overnight rather than incrementally. I’m thinking of one case specifically where a company I was working with had to fire 50% of new hires after two months. Like I mentioned previously, having a clear definition of an employee’s purpose and responsibilities will help you tell if the hire is completely necessary. A tiered approach, in the same way, that you would spend any of your newly-acquired resources, is absolutely necessary. This is critical since bad hires can drain your resources, alter your company culture and hinder your growth.
Many of these points you may already know, but it’s important to be reminded of these as you move forward. Intentions are easy to lose track of with the wildly-demanding schedule that most Founders have. Keeping these few things in mind and learning from those who came before you is key to optimizing your growth and making the most of that small window you have to scale your business effectively.