Considerations When Scaling Your Startup
Posted on 7th June 2017
After working with companies like Skype and Google, we’ve learned a thing or two about scaling startups successfully. At the heart of successful scaling is effective decision making. It’s also the acknowledgement that cognitive load doesn’t scale in the same way technology does. To scale successfully, you have to find a way to deal with added complexity that incorporates human limits.
Getting The Basics In Place Before Scaling
Before scaling your startup, it’s important to ensure you’ve considered all aspects of your business model. Startups are searching for a profitable business model. By the time you consider scaling, you should be executing on a validated business model. The basics to have in place before scaling include:
- Product-Market Fit – You’ve made a product that an identified customer base will pay money for.
- Customers – You have a large base of core customers who use and pay for your product.
- Marketing Channels – You have identified which marketing channels produce the biggest ROI.
- Cash – Scaling comes at a significant cash cost – you need a big enough cash runway to do it well.
Understanding Why Scaling A Startup Is Hard
Scaling isn’t just growth. Scaling is acceleration of growth. It’s dealing with added complexity at breakneck speed. It’s having to rebuild everything because existing processes break when things get bigger and more complicated. And it’s doing it all before the cash runs out.
Hire The Right People
As Y-Combinator Founder and Startup Guru legend Paul Graham says, “Do Things That Don’t Scale.” Your startup won’t take off just because you have a great product. You have to do all the non scaleable things constantly to get the wheels turning.
Recruiting is a key function to keep doing. It’s important to hire people that fit the culture you’re developing. Scaling environments have unique people requirements with certain skills and characteristics, such as resilience, adaptability and a growth mindset.
Don’t skimp on recruiting. At scale up stage, time and cash resources are scarce. Bad hires eat into that. Having a dedicated function to help you build high performance teams is vital. This is where we can help you.
Respect Cognitive Load
Technology scales nicely. The marginal cost to add another user is usually quite low. The complexity load doesn’t go up too much with each additional user either.
The human capacity to take on more load doesn’t scale so well. The more things people have to remember, the more their will and concentration stores are depleted. With that in mind, without dealing with the human complexity problem when scaling, productivity can grind to a halt. The risk is that more time is spent coordinating and arranging than it is doing meaningful work.
So when scaling, you have to respect cognitive load. The best way to do this is to remove complexity by keeping teams small and agile. When you’re working in a team of five, you have five personalities to get on with and five people to coordinate. That’s manageable. When you’re working in a team of fifty, things can quickly trend to chaos.
Keep it simple. Keep teams agile. Respect cognitive load.
Process and Culture
There isn’t a one size fits all approach to culture, with each startup wanting their own way of being in the workplace. What’s important is choosing the right mindset for the right time. Someone that may be hugely effective in a large established corporation may not be effective in an uncertain scaling environment. Where you are on your business journey impacts who you should be onboarding.
To keep morale high, it’s important to create a pressing cause. Changing collective human behaviour doesn’t respond to rationality, it responds to cause, to a compelling narrative. By creating projects that staff can be passionate about, and then getting them to find simple solutions, you can develop and sustain an effective culture. Therefore, effective internal marketing and communication is vital at all stages of scaling.
To maintain momentum, keep moving forward. In line with your compelling cause, put the next project on the horizon to engage your staff. And then the next project. And the next one.
Culture is also impacted by processes. If you want an “improve everything” mentality, you need processes that facilitate that. If you want a “check everything” mentality, you need processes that facilitate that. And so on.
Remove The Constraints
Scaling isn’t just about acceleration of growth. It’s tending to your garden. It’s effective pruning. It’s removing all the waste so the flowers can bloom. It’s removing the bad so the good can thrive.
Negative employees can severely impact the rest of the team. Bureaucratic processes can stifle productivity and innovation. Annual performance evaluations can take thousands of hours to do where dynamic feedback solves problems in real time. Outdated systems can stop processes working effectively and cause bottlenecks.
Throughout the scaling journey, there is a constant need to identify constraints and remove or fix them. That’s people constraints, product constraints and process constraints. A startup doing £100m in annual revenue will need fundamentally different ways of working to a startup doing £1m in annual revenue. Removal of constraints is a constant in scaling. You have to sweep the floor everyday.
Before scaling a startup you need the basics in place, like having a product that people want to buy. Scaling startups is hard because there is a huge acceleration in user growth. This in turn requires a constant evolution of people and processes whilst trying to maintain an effective culture.
To maximise the chances of effective scaling, you need to prioritise hiring the right people. You need to respect cognitive load – people make mistakes when they have a lot of things to remember. You need to develop effective processes and an engaging culture and understand that your culture is partially a function of the processes that underpin it. Finally, you need to constantly remove people, process and product constraints so that your startup can flourish.
We work with high growth gaming studios to ensure they hire the best staff for their companies and their environments. We work with you, on site, as part of your team. We’ve helped to build teams for Supercell, Klarna, Farmdrop and more. If you’d like help building your team, get in touch here .