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7 Mistakes Scaling Companies Make
The document outlines key mistakes companies make when scaling, emphasizing that scaling must align with demand and can be hazardous if done too quickly. It details experiences from various companies and offers insights on hiring, management, and the importance of trust in the scaling process. Key takeaways highlight that scaling is distinct from mere growth and involves careful planning and self-reflection.
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7 Mistakes Scaling Companies Make
- 1. @CraigVodnik 7 Mistakes Scaling CompaniesMake Presented by Craig Vodnik
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- 7. @CraigVodnik About cleverbridge ● Foundedin 2005 with 3 partners ● Headquartered in Cologne, Germany ● Bootstrapped with our own money ● No outside investors ● Profitable within 2 years ● 300 employees ● Chicago home at 350 N. Clark St.
- 8. @CraigVodnik What is scaling? Maybe hazardous to your health
- 9. @CraigVodnik What does scalingmean to me? Scaling is growing your business in alignment with demand, resulting in a larger, stable business.* *More than revenue and people growth, with or without a hockey stick curve
- 10. @CraigVodnik What are other’sdefinitions? ✓ A replicable system for delivering goods and services allows businesses to increase their customer base without having to increase their overhead at the same pace. x Scalable growth is all about pairing exponential revenue growth with incrementally increasing costs. http://www.inc.com/jason-albanese/how-to-scale-a-business-4-growth-tips-from-actual-experience.html
- 11. @CraigVodnik Why not scalefast? Scaling too quickly can kill you
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- 13. @CraigVodnik GoodEggs Blog -Sept 2015 The single biggest mistake we made was growing too quickly, to multiple cities, before fully figuring out the challenges of building an entirely new food supply chain. We were motivated by enthusiasm for our mission and eagerness to bring Good Eggs to more people. But the best of intentions were not enough to overcome the complexity.
- 14. @CraigVodnik HomeJoy Forbes Article- July 2015 “Looking back, it’s like, that didn’t make sense — if your core business doesn’t work here, why expand in new markets?” said another former employee. “I think they were sort of fooling themselves with this exciting top-line growth, and they had cash in the bank so it wasn’t really a concern, immediately, getting to profitability.”
- 15. @CraigVodnik Premature Scaling CanKill Startups that scale properly grow 20 times faster than startups that scaled prematurely. TechCrunch article 2011
- 16. @CraigVodnik Brad Feld onPremature Scaling Hiring any substantive number of sales or marketing people before there is customer adoption is premature scaling. All the early hires should be technical or product focused.Co-Founder Techstars
- 17. @CraigVodnik My personal scaling mistakes Learnedover 11 years
- 18. @CraigVodnik Who should Ihire? College Grads ✓ Inexpensive ✓ Trainable ✓ Enthusiastic ○ Unfocused ○ Need mentor ○ Inexperienced Experienced ✓ Knowledge ✓ Leadership ✓ Track Record ○ Has opinion ○ Career path ○ Expensive Scaling requires hiring decisions for max 3 years out
- 19. @CraigVodnik Perfect person wantsto join my company! Ability of Employee ✓ High performers hard to find ✓ Want growth opportunities ✓ Need to continue challenging Need of Company ✓ Align with growth trajectory ✓ Salary 70% of costs ✓ Who’s in charge? Scaling requires the right balance of ability & need
- 20. @CraigVodnik Who should managea team? SME ✓ Gets hands dirty ✓ Task focused ✓ Owns/creates information ✓ Leads by example Manager ✓ Leader ✓ Mentor ✓ Connector ✓ People skills ✓ Professional Scaling requires professional managers
- 21. @CraigVodnik How much shouldI share with team? Control ✓ In charge ✓ Makes decisions ✓ Clear accountability ✓ Top down approach ✓ Employee fear Trust ✓ Owner, not driver ✓ Information flow bottom up ✓ Executive fear Can’t scale well without trust
- 22. @CraigVodnik We’ve never donethis before?! ✓ Decision making and implications ○ Adding an executive ○ Removing an executive ○ Organizational changes ○ Peers vs. Hierarchy ✓ Roles and Responsibilities Scaling requires executive team growth
- 23. @CraigVodnik Scaling Takeaways 1. Scalingnot the same as growth 2. Scaling too quickly can kill you 3. Scaling begins with first hire 4. Scaling balances ability/need 5. Scaling requires professional managers 6. Scaling only lasts with trust 7. Scaling involves management self-reflection
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