Months of Runway? Profit Margin? Growth Rates? Revenue Multiples? Bessemer Efficiency Index? Rule of 40? Cash Burn? These are all metrics investors care about through various stages of a startups lifecycle. The common thread…
Scaling != Growth
Growing or Scaling? I was chatting with a student looking to get into the startup world. This particular student wanted to join a newly launched app and help “scale” the company. I paused and asked, “Do you…
Growing or Scaling?
I was chatting with a student looking to get into the startup world. This particular student wanted to join a newly launched app and help “scale” the company. I paused and asked, “Do you mean help grow the company or scale it?”.
Super early stage startups are rarely “scaling”, rather they are doing anything possible to grow. They are doing things that are not scalable, trying to find product-market fit and cold emailing just about everyone to try their product. When you are trying to grow your company, you hope to find a repeatable process that will scale one day. Growth means every unit of input yields the same predictable output. Scaling allows your output to exponentially grow while keeping your input the same.
Here are 2 great examples I’ve encountered at Visible :
1) I was the sole BD guy when we started and I would ad-hoc email potential customers, it was too early to do anything more sophisticated. I would track these potential customers in Streak. Over time, our core customer developed and I knew sending 100 emails yielded 50 responses to 35 demos and 10 deals won (made up #s). Luckily, we had some growth so we were able to have Brett join the team. He quickly took my archaic (yet proven) process, setup a Tout account, and in the same amount of time he was able to effectively email 10x the amount of potential customers. With the same amount of input (hours) we were able to scale our outbound sales 10x. Which brings me to point #2.
2) Since we were successful in point #1, I increasingly had to help setup trials for potential customers, onboard new customers or handle support. I was primarily using email to handle all of this. It was tedious but it was too early to try and setup a help desk or an onboarding process. Eventually this wasn’t repeatable and things broke down. Nate then joined the team to handle customer success and operations. He tricked out Intercom, setup potential trial-ers on Formstack, on-boarded new founders on Lesson.ly and has our whole process buttoned up and scaled…for now.
Brett & Nate are still testing out new distribution channels, re-engagement campaigns and more by “brute forcing” them. When something works, we will scale that process. Startups are in a perpetual state of grow -> scale, grow – > scale, grow -> scale. Coincidentally, Jeff Bussgang at Flybridge Capital just penned this post on “Scaling the Chasm” which is a great read.
There is a certain sexiness that comes from scaling a startup (that’s why they exist) but to get there you have to put in the work in and find out how to grow the company first.