The 5 things you need to know to scale a startup

Scaling a company, particularly after having received substantial funding, is no easy feat. It requires an entirely new set of skills that are not exactly those that allowed a founder to succeed in finding product market fit in the first place. Whilst nimbleness is always a top priority in any stage of a startup’s life, there are some areas of the startup that start breaking without the right processes to provide structure amongst diverse groups within the organization (if you want to read more about moving relationships into a process check out my post on that here). There is some good literature out there on the subject of how to organize and scale teams to perform better as they are pushed to outperform themselves and their market rivals. One of the classic works in this space is the book Scaling Up.

However, nothing is better than sitting down with founders that have just gone through something to get the modern feel for the hurdles of any challenge. In order to prepare anecdotes for a panel I had at the Collision Conference on this subject (scroll to the bottom for the embedded video), I had the chance to sit down with notable scale-up founders Kristo Kaarmann of Transferwise, Geoff Watts of EDITED, Laura Woo of Shippo, and Andy McLaughlin of Huddle to discuss the topic of scaling and their experiences.

After hearing the war stories and challenges they had in scaling their companies from a small founding team to well over hundreds of employees, I noticed a few commonalities. It should come as no surprise that most of these commonalities revolved around dealing with people. How to find them, hire them, train them, and empower them.

The top 5 commonalities that surfaced during our chats to consider when scaling a company are:

The Evolution of founder from operator to manager — The role of a founder evolves and needs to grow to that of a manager, focusing on hiring people and fundraising. If necessary, hiring an exec coach can be useful to help deal with many of the questions a founder will have during this process.

Geoff shared — “You’ve got to trust your managers and develop yourself as a manager too; you need to get buy-in from people and can’t make decisions unanimously… Everything becomes a teaching moment not an execution moment.”

Laura shared — “You role as a founder changes every 6 months, always expect new issues to come up after you start getting used to how things are.

The Transition from one team to managed teams — The inflection point of direct involvement operationally to having others take over, seems to hover around 20 people. This means, that at this point, founders start struggling to keep track of all operational matters and needs to get comfortable with a scaleable structure that trusts managers.

Kristo shared — “The philosophy we implemented was sharing a strategy into as many as independent units as possible and giving them autonomy to execute on it. Parallel autonomous teams. Provide guidance naturally, but transition into an independence model, and hire accordingly. Let them (the teams) make decisions themselves.”

For further reading on this, check out Kristo’s blog post on the matter — 
http://tech.transferwise.com/we-inspire-smart-people-and-we-trust-them/

The Focus on scaleable hiring — Hiring is a huge bottleneck, so at some point, having an internal recruiter really helps to deal with that process more efficiently. Staff don’t always scale, and so expect some attrition or people you’ll have to let go. Have a way of clearly determining the value new hires bring in and make decisions quickly.

Laura from Shippo shared — “Early employees can sometimes stop scaling, and you need to be able to think about transitioning them out, for if not, they can become toxic. Acquiring talent and hiring can be a full time job. Early on, at roughly 25 people, we hired an internal recruiter, and wished we had got one earlier. Onboarding is critical— keeping culture alive after 25 people, particularly where you can’t talk to everyone any more. Lastly, you need to be comfortable at hiring people that are much better than you, and let them loose on tactical stuff, and you focus on setting the vision.”

The Agreement on and adoption of company values and culture — Getting a company culture down clearly and creating an on-boarding process that instills this in new hires is critical. Once accomplished, it allows founders/managers to provide the teams the manage with the independence highlighted in the previous points on this blog.

Bretton Putter, founder of CultureGene.ai, breaks the process down into three parts:

Define — Surface your company’s unique purpose, vision, mission and values.
Embed — Embed your culture into every business policy, process and function.
Learn — Develop self-managing leaders who experiment, learn and grow.

CultureGene is a culture-first consultancy and culture-centric executive search firm. Feel free to get in touch with Brett here — hello@culturegene.ai

The Balancing of company culture with the use of scaling tools and processes— Lastly, start creating policies (eg. expenses policy, hiring policy, etc) that allow for you to scale, but don’t let the policies run away and hold your culture hostage (eg. how United Airlines dealt with a passenger because they needed a seat free in their flight).

Kristo shared an example of how he sets guidelines for his staff, but then gives them room to do what’s right, and in alignment with the company values — “we have less than 300 people in customer service and they don’t have scripts; we let them decide how to deal with calls. There are some dos and don’ts but we need to hire people who can do it on their own.”

Hopefully, by keeping these 5 points in mind, you will be able to scale up without any huge hiccups, but more importantly, empower your team to help you achieve your company’s goals.

Below is the video of the panel session I had at the Collision Conference 2017. On the panel with me was Max from Instacart and Vince from Avast.

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Relationships -> Process -> Product

One of the things that has allowed Seedcamp to scale from a few startups in our early years to over 250+ companies today is an understanding of what elements of our operations need to sit in the RPP stack (what I’m calling it).

The RPP stack, in short, is:

Relationships — This includes how you engage with not only your customers, but also your employees.

Process — This is born out of relationships, meaning you need to understand the scope of relationships, where things can fall through the cracks if not structured, and where things can only scale across new teams members joining, if not adequately structured.

Product — This is born out of the combination of Relationships and Process as it serves either your customers or your employees. Yes, you can have products for internal use as well as for external commercial gain. In theory, many businesses could operate within Relationships and Process alone, but are only truly capable of scaling once they take some of those and convert them into a Product that leverages both Relationships and Process. Naturally, there are some businesses, where the Product is front and center as the start of the company, but let’s face it, it’s just a manifestation of Relationship and Process at the end of the day, it’s just that the process is not really affordable to do without the Product from the onset.

Questions for reflection

Where is your company in understanding which relationships could benefit from process to increase the quality of that relationship across a larger group of team members?

Does your company have processes that would be better suited in converting into a product to allow you to scale faster?

Does your product accurately represent the trust dynamic between your relationships and the processes they need?

Do your relationships suffer because the quality of your interaction suffers between interactions due to the lack of support from a process and/or product?

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Martha Lane-Fox and Joe Gordon-Levitt on the This Much I Know podcast

If you have’t caught up on the ‘This Much I Know’ podcast in a while, now is the time to check it out! Just search for it on your fave podcast app..

A couple of our recent highlights include Baroness Martha Lane Fox

and Actor and founder of Hitrecord.org Joe Gordon-Levitt

Hope you are finding the podcast fun and please feel free to @ tweet me anyone you think I should interview or questions you’d like answered.

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On Pricing and Building Trust Online

This week and last week, we’ve had two amazing interviews focusing on aspects of a startup’s operations that are critical for its success: How to price a product and how to create trust online around your product or service. You can’t have one without the other….

I had a chance to sit down with Patrick from www.priceintelligently.com and we walked through some case studies of companies iterating on how they price their products and services. It was great to hear how he approached understanding the customer before really getting to the pricing part.

But pricing is only part of the equation, without consumer trust, no matter how cheap or expensive the product is, it’s nearly impossible to sell. So on that note, the founders of Onfido and online-watch-retailer Chronext joined me to talk about how they built their customer trust online.

Hope you enjoy them!

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VC Investment in AI Talk at the AIBE Summit

With venture investments in AI expected to hit a 300% rise in 2017, and with AI systems playing Atari way better than I ever did, it is no surprise that now is the time to bring to surface discussions like the ethics around AI systems, the impact that AI will have on our labor force, and which areas of AI will receive the most investment in the near future.

As part of the AIBE Summit which took place in the QEII conference center on the 4th of Feb, 2017, I was asked to talk a little about VC investment in the sector. Below are my slides and accompanying audio file of the talk. I hope you enjoy it and please feel free to leave any feedback.

Slides:

Audio:

More on the AIBE Summit from their website:

The AIBE Summit is a conference on artificial intelligence in business & entrepreneurship. It will be the largest event of its kind ever to be held, with a capacity of up to 800 participants.
Our mission is to increase public understanding and intellectual discussion on the implications of AI for the business world, to raise the technological literacy of students, entrepreneurs, and professionals alike, and to recognise London as one of the world’s major digital capitals for the future of AI.
It is an initiative pioneered by the LSE Entrepreneurs Society, driven to celebrate the newly formed Partnership on AI between Google, Facebook, Amazon, IBM, and Microsoft.

More about Seedcamp on our website:

http://seedcamp.com/

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