When startup founders first get up and running, they must, of out necessity, be lean and nimble – and that keeps them sharp. As resources become less scarce, it will become more and more challenging for founders and their teams to embody these qualities. In turn, this may lead them to lose sight of what made their startup great to begin with and focus on the ‘wrong kind’ of growth.
For this week’s “Let’s Talk…” feature, we asked nearly twenty entrepreneurs to discuss how startup founders can keep their early edge as their business scales. Some of their tips included… Squeezing every last drop of value from dollars spent. Experimenting quickly. Maintaining teams that pass the pizza test’. Taking investment wisely (“not all money is smart money”). Doubling down on what the customer needs. Maintaining a work environment where employees are empowered to do their best work. Resisting the urge to double or triple headcount overnight. Establishing clear and safe channels for communication throughout the organisation.
Read on for further insights from this week’s line-up of commentators…
“How can startups remain lean and nimble as they scale?”
Deb Noller, Founder and CEO of Switch Automation & Portfolio CEO, Heads Over Heels: “Raise only the amount of cash you need to avoid becoming bloated as an organization and when things are not working FAIL FAST.”
Edwin Onggo, founder and CEO, GiggedIn: “To me, nimbleness is closely related to being agile which is closely linked with a willingness to experiment quickly. Firstly, I believe it’s important to bake this into the company’s values and mindset; however, marrying this up with strong processes is also key. Adopting the mindset will encourage an attitude of moving forward quickly but good processes will anchor operational efficiency and create the stability needed so that when you move fast, only a few small things break – not the things that are critical!”
Danielle Fletcher, Marketing and Strategy Director with Kimberlin Education & Portfolio CEO, Heads Over Heels: “Remaining lean and nimble as you grow is harder than most think. When you first start out, being lean and nimble is your only option. You don’t have the time or the cash flow to be anything else and you often try and be everything you can be to your clients just to make those sales. As you settle into your niche and your MVP products have been through a few iterations, you begin to scale. It is at this point you have to resist the urge to take on too much, purchase too many expensive assets, and hire too many team members. Unadulterated focus on running lean to the end goal, makes it easier to remain agile and make mini pivots to meet market needs.”
Jamie Pride, venture capitalist and author of Unicorn Tears: “It may be controversial, but I think the best way for startups to remain nimble as they grow is to be underfunded. Money typically doesn’t solve the biggest startup problem – that is product/market fit. When startups get overfunded and scale too quickly, they often lose their edge and experience a loss of agility. Getting the funding balance right (not too much, not too little) is the best way to keep agility and hustle inside a growing startup. I think this also directly correlates with team size. If you can keep your team small for longer, even when you can afford to grow it, this will often mean you will be able to execute faster.
Tania Jolley, founder and CEO at DNA Security Solutions & SBE Australia Springboard Alumna: “Remaining lean as a startup is mostly about mindset. It is making sure that you squeeze every last drop of value from the dollars that you spend.
“I have been able to achieve this through a number of initiatives that include surrounding yourself with fabulous contractors that will work on projects as and when you need them – therefore eliminating the need to hire a fulltime person.
“We have also been able to use our credit card to its full advantage by earning as many frequent flyer points as possible, and using these points to pay for 75% of our yearly travel.
“As the business landscape has changed over the past five years, startups can also benefit from running their business from co-working spaces rather than paying for rent on their own premise (and the facilities are often fabulous). Startups can also join an accelerator program which can help give them the tools needed to improve their performance and outcomes.”
Sreelesh Pillai, General Manager at Freshworks Australia: Staying lean and nimble can be a challenge for any company growing top-line. The key is to always remember what made the business successful in the first place — never lose sight of your unique value proposition and culture. Your success will always be from the combination of a valuable offering, a unique culture and strong partnerships between team members, and this holds good throughout all stages of your business growth.
“Leaders should invest in communicating the vision and goals of the organisation, maintaining culture, and educating team members of the importance of their contributions in the whole journey to success. Businesses remain lean and nimble when each team member has a shared vision, plays their part to their fullest and there is happiness across as the bar to success is set higher and higher.”
Sam Riley, Co-founder and CEO of Ansarada: “The startup scene is constantly evolving, with new firms entering to disrupt at an alarming rate. The startups that succeed in this space are the ones that scale extremely quickly, remaining lean and nimble as they grow.
“As a startup that has seen impressive growth over the past decade, Ansarada has always placed an intense value on our people and culture. Company culture isn’t just about buying a pool table and having a mini bar (although we do have both of those). It’s about creating a space where every employee can do their best work.
“Focusing on individuals and their interactions alongside software and service has been an integral part of growing Ansarada from four people to 200 around the world. The key to startup success comes down to a simple decision to genuinely invest in people and culture early, and a commitment to never waiver from that goal.”
Peter Harris, CEO of Digital Stack: “Startups need to grow out their departments incrementally. A common mistake is to double or triple teams overnight after a funding round. Product development, marketing and sales are unlikely to be in sync in a rapidly growing company, so grow in increments and adjust as you need.
“Resist the urge to grow headcount to satisfy others’ simple definitions of company growth. Often investors or potential customers (especially in B2B) still ask ‘how big is the company now?’ looking to equate employee headcount to company size and reliability. This is an overly simplistic approach and shouldn’t be a reason to add team members.
“Additionally, bed in scalable processes before growing headcount. For example, a formal product development and testing process should be locked down before growing out your product and developer team. When the team is small you can get away without the documentation and process but it will unravel quickly as you grow.
“And lastly, hold on to your staff. Growth provides enough turbulence, you don’t need turnover on top of it”
Naby Mariyam, Founder and CEO, CoverHero: “When scaling lean, the key focus areas should be culture, skills and product.
“Promoting a culture of creativity and collaboration is essential to keep enthusiasm within the team – and hiring the right people that will echo the culture is the best starting point. There are number of things that can be done to get the right skills in-house. Talent is expensive and sometimes unaffordable. We have sought great advisors in the process to learn from and in doing so, acquired those skills here. One of the key elements in the early stages is to fill the knowledge and skills gaps with advisors.
“Having a team with a combination of generalist skills has been useful for us, as we can all wear several hats depending on what needs to be done at any given time. We have a number of service providers that we tap in to that are reliable and deliver good quality work as well. Hiring full time employees can be very costly for the business and also time-consuming. We like to work with talent on a contract basis before we hire them full-time. This allows us to get an understanding of the cultural fit too!
“In developing the product, we focus on getting feedback from the customers and iterating the product on that feedback, so that the team’s energy and resources are spent on the crucial areas of product development.”
Matt Leibowitz, co-founder and CEO of Stake: “One of the most important things a startup needs to do is remain grounded about what can be achieved. A lot of startups have massive aspirations when they start out, and these aspirations are often quite lofty.
“When we were first getting Stake up and running in 2016, the best method we found to do this was to double down on exactly what the customers want. With this focus, you know you’re building for the right people and solving their true problems.
“Equally crucial to this is actively shaping the internal culture of the startup. Make each employee of equal importance to the business. Ensuring everyone has a say in major business decisions provides a clear vision for where you’re headed.
“It is easy to rally ahead and focus on the wrong kind of growth. I’d recommend every few months taking a step back to ask yourself if you’re truly serving your mission. For us, that’s giving Aussies easy access to the global stock market.
Ben Pfisterer, Australian Country Manager with Square: “One of the core ways startups can keep their overheads low when they look to scale is through networking. Whether it’s networking with government associations, venture capital groups, startup hubs or other local support organisations, collaboration makes expanding much less daunting.
“Networking is helpful when it comes to being cost-efficient too. Whether it’s funding, office space, local events, contacts, regulatory advice or new talent that you’re after, there are always people on the ground within existing networks that will know it better than you – so reach out and let them help.”
Chris Chang, Program Manager at Techstars Adelaide: “There are a few ways startups can remain lean and nimble, even when they are scaling. It’s important to establish clear and safe channels for communication throughout the organisation. This allows for fluidity and transparency across the organisational chart, which can be helpful for management to quickly identify key issues, respond and iterate accordingly, while also empowering employees to voice concerns and act when needed.
- Don’t get bogged down by day to day tasks. Always make time to return to the big picture and stay true to your values, mission and vision. Remember what it is that your business truly does and why you sought out to solve the problem in the first place.
- Take investment wisely. Not all money is smart money. Don’t dilute your cap table if you don’t have to as it can slow down your decision-making process.
- Empower your employees to take risks and be open to change. Everyone on the team should feel empowered to produce their most creative work and be provided the tools and environment needed to succeed.”
Mark Fletcher, Co-founder and CEO of Cohort Go: “Having a CTO as a co-founder has helped keep our company lean and nimble. The CTO’s primary job is to create or source the best technology solutions to achieve the business’s objectives.
“Any modern startup needs to be digital in order to be competitive and stand a chance of survival. To make this possible, it is vital to have all the required resources in-house so that if and when things go wrong, the CTO can sort out any issues, instead of having to go to an external service provider which can be costly and less time sensitive. For example, if something happens in the middle of the night, your CTO has a vested interest to solve the problem immediately, while your service provider will get back to you in the morning.
“A CTO can also enable the company to push product out to market faster to gather real-world customer feedback and drive continuous product improvements.”
Gemma Lloyd, Co-founder of DCC Jobs: “As a business grows it becomes necessary to create teams that are not only given clear responsibilities but can pass the pizza box test! That is when you’re setting your team size, keep in mind that each team should be able to be fed by two pizzas and is a manageable size that doesn’t lose sight of the objectives.
“It’s important to set clear goals, key metrics and top priorities for the organisation that are communicated to the teams in accordance with their own area of responsibility, that they are then empowered to act on.
“And, to support your teams in making the right decisions, it’s vital to have systems in place that are aligned with the company goals without being too process heavy that your teams are taken away from the core business. This then leads to a culture of transparency and reciprocal feedback where team members can ask questions and make suggestions in an open forum to help the organisation reach its goals.”
Dan Ross, Managing Director of Optimizely: “Once you’ve got your business up and running, it can be enticing to take on as much as possible in order to scale. However, remaining focused is key to driving execution. David Packard once said, ‘more organisations die of indigestion than starvation’.
“Concentrate on your business’s core strengths, value proposition and operational rigour. This will ensure that from the beginning you don’t dilute effectiveness by spreading yourself across opportunities that aren’t suited to what you’re good at or capable of.
“Once you have established the rhythm of your startup, approach new opportunities with humility and be willing to adapt as reality unfolds. This is more easily achieved by combining the foundation mentioned above with a diverse team that mitigates each other’s weaknesses. A tight ship will allow you to remain as lean and nimble as possible as you scale.”
Trevor Townsend, Managing Director of Startupbootcamp: “Startups can stay lean and nimble as they scale by ensuring that they do not pretend to be a bigger company than they are. They need only just enough process and structure but not too much. At Startupbootcamp, we practice what we preach. We keep organisational structures flat and we ask everyone to act like a founder. We use small teams, who are empowered to make decisions to achieve outcomes. Ensuring that the companies purpose and strategy are clear and ensuring that every decision and task is taken in the customer’s best interest, challenge anything that does not add value to your customer.”
Detch Singh, Co-founder and Co-CEO, Hypetap: “There’s always a tough balance to strike as you scale – on the one hand you need to enact strong, effective processes, but you also need to remain innovative and nimble.
“An example of how we find this balance is in our company culture and mindset, which we feel is just as important to scale as our footprint or revenue. New ideas (from anyone and everyone!) are always openly discussed, and with the right proof points, anyone in the organisation can be sanctioned to champion change. We believe nothing is ever gold plated until it’s validated with a proof of concept, and therefore we pilot all new ideas using a minimum viable product before perfecting and scaling them.
“It’s also important to align your company goals by ensuring different teams ‘sing to the same tune’ so to speak. We’ve found success in this by building cross-functional teams, for example putting together product teams made up of people stemming from different areas of the business, which helps us communicate and align more effectively, prevent delays, and eliminate bottlenecks.”
Tim Bos, Co-founder of ShareRing: “Without strong leadership, a long term vision, and an agile culture, it’s easy for fast growth to restrict creativity and innovation.
“Generally, when you start a company, your staff all work together towards a common goal. In a strong startup culture, everybody generally does a bit of everything to make sure the company succeeds. This becomes difficult as a company scales, so you need to adapt your processes and work culture to allow your company to stay nimble.
“One way to remain nimble as your company grows quickly is to keep a balanced focus on operations and sales, whilst also making sure you have budget to grow the R&D and innovation side in sync with the day-to-day operations.
“Essentially, make sure you don’t over-spend on either side. Too much expenditure on sales and operations will hamper your innovation, whilst too much expenditure on R&D, will hamper your sales and operations.”
Robbie Sampson, Founder and CEO of OrbitRemit: “The success of a startup will heavily depend on the business journey and responding appropriately to challenges and hurdles that arise. Here are my four top tips for startups to embrace to scale effectively:
- Maintain business goals: A startup should never lose sight of its focus. Whether it is finding new products to service customers or innovating in their respective field, this provides a clear waypoint for growth. OrbitRemit was established almost ten years ago to help Aussies get more bang for their buck when sending money overseas, and this maintains our core business objective.
- Find the right investors: Startups must ensure their investors share the same passion and vision for the direction the business is going. Ask yourself what you’re looking for from investment. For instance, if it’s to support growth initiatives then growth needs to be top of mind for the investor.
- Aim higher: Startups should always be on the lookout for partnerships and business opportunities that will enable them to expand their services to new regions. While it’s important to set out goals for measuring growth, it’s also crucial for startups to take risks and never be afraid to challenge the status quo. Don’t be afraid to fail, it’s only from mistakes that you’ll learn how to succeed.
- Listen to your customers: Put yourself in the shoes of the people you’re doing business with or providing services to. Delivering on your promise and understanding the emotional aspect of your customers’ needs are critical to success. For us that means understanding that it’s about more than transferring money, but about helping friends and family put food on the table, pay for healthcare or education and beyond.”
About “Let’s Talk…”
“Let’s Talk…” is an exciting weekly initiative that provides entrepreneurs and industry experts with a forum to share rapid-fire views on a range of issues that matter to start-ups and SMEs. Every Wednesday, we pose a themed question to a line-up of knowledgeable industry figures, with a view to picking their brains for valuable insights to share with you, our readers.