One of the things that have surprised me in the past few years is the size of the ecosystem around startups. We see the same ecosystems evolve in all the major hubs across the globe, but we lack an ecosystem for scaling up.
In my own journey the past decade, I have learned that it’s a lot easier to start up than to scale up. I’m aware that part of the problem is my personal DNA. Some people are good at starting, and some are better at scaling. However, most founders need to hang around for a while to find out how to scale.
For me, starting up means you need a decision to start and/or a product idea. That’s it. Once you’ve decided to start a company, you can find an idea. Or once you’ve found a great idea, you can decide to start a company. And then you need to get out of your cocoon, start talking to people (ideally the ones who’d give you their money as customers) and start acting. By acting, you’ll find out your path (it might be your idea, but it’s likely something else), and you’ll attract people who can help you. Then after some time, you’ll have a turnover. You’ve hired some people, rented an office space, etc.
Now, how do you get bigger? When I was young, I always thought this just happens because you’ve got a great service and customers keep flocking to you. And yes, that happens with companies like Facebook and WhatsApp. But with most of us, it doesn’t, and we need to fight for our customers.
For me, the scaling part was a real struggle. I was very ambitious and wanted to grow big, but each year was a struggle. Our growth was much slower that I had hoped for.
Here are a couple of things that I’ve learned:
1. There’s a Big Difference Between Product & Service
Software products are very hard to start. You need cash to hire programmers, find the right balance between building stuff and listening to customers, and great marketing. A very tiny percentage of products get this right and grow big. The rest just fails or remains small.
Services are very easy to start. All you need is a computer, a phone, some contacts, and yourself. It’s easy to get cash flow and you don’t need much investment upfront. But service firms are very hard to scale, unless you are a first-mover. You’re likely to enter a competitive space (and if it’s not, it soon will be). There’s little opportunity to differentiate, and for every turnover, you need to hire people. To scale means to have more people.
As my experience is mainly with services (I’ve tried product but I’m in the fail category on that), the remainder of this article will focus on the lessons I learned in scaling a service company.
2. You Need Support
When I was younger, I thought I could do it all alone. I saw myself as a born entrepreneur and after getting my MBA I thought I had it all figured out. I tried working with co-founders but it didn’t work, so I decided to do it alone. Then after years of struggle, I realized that I needed help. I then joined Entrepreneurs Organization, an international group of growth-focused entrepreneurs supporting each other.
EO has an accelerator program that helps companies get from US$200,000 to US$1 million in three years. I joined that program and got into a circle of entrepreneurs. Our circle met on a monthly basis and an experienced entrepreneur coached us. Based on a one-page plan, we shared our major priorities, stumbling blocks, and plan actions. By committing to actions, we created accountability within the group (most people don’t want to meet and say, “I didn’t do it”). There’s also a quarterly learning day where a professional trainer teaches us about people, strategy, execution, and cash.
From this program, I also met my favorite mentor, Pieter van Osch. With him, I did bi-monthly Skype calls in which we addressed my personal challenges. This individual mentoring helped me a lot since it’s more direct than in a group. You can also share more intimate struggles.
3. A Growth System Helps
In the first few years of building my company, Bridge Global, a software development company, I had a couple of employees and partners who developed the software for our customers. It grew, and as we grew in size and in other countries where we have offices, we needed a system to organize and scale.
The EO program is based on the scaling up method of Verne Harnish. The power of the method is that it essentially consists of a one-page strategic plan (so you don’t need a 40-page business plan) and a meeting rhythm.
As your group of people grows, the one-page strategic plan helps you create clarity on where you’re going and how you’ll get there. In my company, I spent a lot of time working on all the blocks in the plan. We defined the core values, our purpose, and BHAG (big hairy audacious goal). Then, we made a plan for the next three years. We started doing yearly, quarterly, weekly, and daily meetings (we skipped the monthly meetings because they didn’t add enough value).
Check out more insights, and if you are interested in learning the proven development methodology for teams to be self organised and scale up, here is an overview of the training.