Riding the high roller of a “blitz-scale”
Like it or not, the "tech-unicorn" defines how Generation Y does business. Our age boasts high-impact entrepreneurship and billion-dollar exits, with more start-ups rapidly growing in employee numbers, products and profit than ever before.
And the cherry on the cake? Opportunity for hyper-growth is literally everywhere. From Silicon Valley to emerging markets in Africa, young companies worldwide are growing faster - and bigger - than ever. “Blitz-scaling,” to use Reid Hoffman’s term, is a core aspiration of any ambitious start-up.
Once a company establishes its product-market fit, the next logical step is to hit the accelerator - but how best to mitigate risk during a period of massive expansion?
Short of having access to an in-house management guru or a crystal ball, it’s worth pointing out that many C-suites emphasise the don’ts than the dos when recounting their company’s journey to rockstardom. After all, it’s those unforeseen and unobvious roadblocks that can set a business back, compromising well-laid plans and squeezing operations of both time and money.
No path from back-room obscurity to billion-dollar multinational is likely to be bump-free, but to ensure as smooth a transition as possible, here are the biggest traps to avoid.
#1 Don't stick to your religion
If your business is about to expand rapidly in all directions, expect things to backfire. Be ready to pivot and pivot often. As Stephane Kurgan, COO of King (Candy Crush) explained: “Scaling won’t work unless you mature and change the way you do things. You can’t just stick to your religion.”
Devising a plan based on current work procedures may help anticipate and mitigation breakage, but the likelihood that a massive expansion will demand massive internal changes. Instead, invest in ensuring the client’s experience with your company is faultless.
#2 Develop a company culture
Grey carpets, drop ceilings and cubicles are not only a visual turnoff, they’re an obstacle for people who want to feel passionate about their job - and your company. Airbnb's CEO Brian Chesky found the perfect solution.
“We literally turned the company offices into the homes of select Airbnb hosts. The office interiors have actually become a huge competitive advantage in hiring,” Chesky explained. “People like to stay over.”
This wasn't about making the office more pleasant. The move literally submerged employees in the company’s product, making it far easier for them to remain focused on Airbnb’s values in the midst of radical, often destabilising changes brought about by scaling.
#3 Find and empower your community
Many unicorns leveraged their community to make the transition from “family” (less than 10 employees) to “nation” stage (thousands of employees) swifter.
“Why this works is simple,” explains John Lilly of Mozilla Firefox. “A company that grew as fast as Firefox had hundreds of people regularly contributing code, thousands of people testing new releases, people localising Firefox in their own language. Millions of people took ownership of Firefox by spreading Firefox.”
Empowering the most relevant community to your product gives them a sense of belonging - and they will want to help. An engaged community means access to reliable feedback on products, an easier hiring process based on recommendations and advice on tap from industry experts.
#4 Expect clones
If you are already blitz-scaling successfully, there’s always a chance that your product will attract the attention of a clone company that starst eating up your market share. This famously happened when the Samwer brothers set up their own version of Facebook, then sold the clone company Studivz for $132 million. Facebook founder Mark Zuckerberg refused to be intimidated.
“Whoever has the best product wins,” was his mantra at the time the media was speculating about the morality of the Samwer “clone kings.” Ultimately, the company with the most refined product is the one that will go the distance. Should you see your booming business surrounded by clone sharks, simply knuckle down and make your product superior.
#5 Think like a client
According to Robert Sutton, author of Scaling Up Excellence: Getting to More Without Settling for Less: "Companies grow well and scale badly when they focus on running up the numbers but not the quality. They get bigger and start to look like just any organisation. And there goes the value."
Businesses that are disconnected from their client or customer are prime targets for being disrupted. Avoid churn by always putting yourself in their shoes; every big step needs guidance, and where better to get mentoring than from consumers?
Cloud-based comms tool Slack attributes their successful blitzscale to prioritising customer experience over increasing profits. And with good reason: the ugly scenario of a client surge leading to websites crashing and failing to deliver on objectives is the ultimate no-no.
#6 Be mindful of quick-fire hires
Hiring is perhaps one of the trickiest parts of scaling any business. Most CEOs agree that it is surprisingly difficult to find talented individuals who are not only on-the-spot problem solvers but are willing to ride the rollercoaster of instability that is a company undergoing viral growth.
iBus Media CEO Jon Squires gave the above talk at Google Campus London on minimising the hiring risk and future-proofing a business, emphasising the importance of planning job roles carefully, avoiding a rushed hiring process and being wary of LinkedIn “rock stars.”
#7 Embrace Automation
Manual systems are a necessity when operations are getting off the ground – and a valuable source of learning. However, when you reach the point that the stunt the company’s growth, find a way of letting the project run itself and invest your time into nurturing plans for the next phase of expansion.
Israeli foodie startup EatWith had the perfect business pitch to go viral: a free-to-join community of amateur cooks sharing dishes with paying guests. However, the business wasn't going viral, weighed down as it was by a lengthy, manual sign-up process with checks and authentifications. Automating that process proved a pivot in the company's fortunes, and now the company enjoys thriving communities in over 200 cities, is a magnet for investors and is presently referred to as the "Airbnb of food."
#8 Prepare to go over budget
Heavy capital investment is a requirement for scaling successfully, and yet, Simon Bond of the world’s leading university business incubator SETsquared explains that many companies underestimate their need for cash.
"Scale up is a high-risk moment in the lifecycle of start-up development; one clear requirement for success is financial resilience to support the cash flow needs of expansion," he said.
Proof your scaling operation by having a good revenue model that encompasses flowing capital markets. Don’t yo-yo with how much you pay out at any stage, whether this means undercutting the market price or feeling coerced into overpaying. ROI should be your guide at all times, but contingency capital for tough times will help ensure goals are met.
#9 Have a vision
Uncertainty and frustration are part and parcel of hypergrowth. So what keeps a pioneering entrepreneur in the driver's seat? The short answer is having a vision: one that a leader can articulate and share with the people giving up their evenings and weekends to realise it. And few could express this better than a young Steve Jobs:
Failure, uncertainty, things breaking, sudden change: welcome to the blitzscaling process. There is no perfect way of going about the process, but an ideal candidate will always be more willing to shake things up, activate well-laid contigency plans and evolve when necessary.
The flagrant success stories of our time - Facebook, Google, Airbnb, Uber - may seem like fairy tales, but scratch below the surface and you’ll find groups of carefully chosen individuals who do their homework, bounce back from defeat and navigate the tricky waters of hyper-growth with unerring belief in what they do.
Kate Busby is iBus Media’s Content Division Manager. See her other work here.
Lead photo courtesy of Entrepreneur.com