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2 Most Important Factors in Scaling Your Start-up

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The most important factor to success is team

So you have a minimum viable product and/or have a good start in proving the business model either by generating customers or revenue. You are on the cusp of greatness. What next? How do you successfully scale the business to its zillion dollar potential? The two most important things to consider when scaling your start-up is hiring and firing.


 

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Hiring for Success

Many seed/early stage start-ups find themselves needing help as the company grows. There are just too many things that require attention that the founding team cannot handle. Everyone wants the famed hockey stick growth but to achieve that, you must have the right team in place. There are three things to consider when hiring senior management.

  1. Specificity in job description and capabilities

When hiring a senior manager, you must be as specific as possible in their expected deliverables and capabilities such as revenue targets, number of new accounts, and team building all within a certain timeframe. Hiring is almost the same as marriage and thus you must consider personal fit as well. Interviewing candidates effectively will also be a crucial skill that you must learn.

  1. Ability to scale with growth of company

When hiring for a certain position, it is imperative that you consider someone that will scale with the type of growth you want to achieve in the long run. Not someone that will do for the next year or two, but someone that will take the company to the next level in 5 years. I know, it’s hard to find highly that talented someone in your industry that is willing to join an early stage start-up. This is when your sales skills are most important. You need to sell your company and its vision to convince them to come on board.

  1. Ability to build relevant teams

Hiring a season veteran in the industry will not only help you scale for the long term, but also bring reputation and with that, ease of building teams with relevant industry experience. One person can really influence other candidates’ choices to come on board if that person is a star employee in the industry.

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Firing for Success

Firing employees are just as important as hiring. In the seed or early stages of a start-up, it often has the culture of a college project or interest group. Roles and responsibilities are loosely defined and there is likely little to no structure in the organization. Because of this, early employees that were crucial in the early stages may not be as helpful or worse, destructive as the company tries to scale. Here are the three most important factors to consider when firing.

  1. Identifying right candidates for firing

Some early employees tend to feel entitled as founding members and react defensively towards structural changes or new hires above them that may threaten their roles in the company. They resist change and mostly disagree with the direction of the company. Their strengths and values are no longer in line with what the company needs to scale. Time to let go.

  1. Timing of firing is crucial

If you fire too early, your company may suffer from the day-to-day operations that may be too hard to recover from. If you fire too late, you will have wasted time and effort. You should also consider the equity cost when determining the timing as well. Vesting will happen and that may be very costly down the line.

  1. Executing

When having that difficult conversation with an employee that has been with the company for a long time, you must do it in a manner that will have the least negative impact on the company. This requires careful planning and practicing the dialog that you hope for. Employees are biology first and they will react irrationally and emotionally in such a situation. Treating them with respect and empathizing with them will lessen the blow back of their negative reactions.

2 thoughts on “2 Most Important Factors in Scaling Your Start-up

  1. I agree that having the right people on your team is very important for your company’s growth prospects. One thing I have struggled with as we think about whom to hire and when is the balance between preparing for the future and having the humility to recognize that the future is not guaranteed. In some ways, hiring a COO or CFO who will be prepared to take your company from $100M in sales to $1B feels a little brash when you only have $1M in sales today. Hiring for where you hope/expect your company to be in two years requires a lot of prescience and could leave you paying big dollars for a resume you don’t really need in the short term.

    This is not to say that you’re wrong to advise hiring with an eye toward the future – it’s just a tension that I have not been able to completely resolve in my own mind. And like most things, it is probably situation-dependent.

    1. I agree with Jay here. Ideally, you would want to hire someone who can be effective and valuable both as an early employee and when the company scales, but just like it’s difficult to find founders who are good at both starting and scaling, it’s also difficult to find employees who have such a diverse skill set. Given these constraints, I wonder if it’s actually better to hire for the immediate to near future, making sure you invest in helping the employee grow into the ‘scaling role’ as the company scales, but, at the same time, being quick and firm on pulling the trigger to fire the person if needed. Completely agree that hiring and firing the right people at the right time is what can make or break a startup. Great post!

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