Business Magazine

How To Scale A Startup

Posted on the 30 January 2013 by Beingunordinary

I did a post about hiring in general - So You Need To Hire - which touches on when to look to find talent and how to go about getting that talent, but after getting a number of questions about how to hire, when to hire, etc. etc. I decided to do a quick post about hiring at different levels of the company, from concept to scaling. Here are some things to keep in mind when building and managing a team, and the dynamics at different levels of building a company:  

Building the product. While building the product, there should be minimum management and a small team. Less than five is usually recommended, usually just the founder/co-founders and a few developers. This small team is built around product, design and engineering skills. Usually, there are no management skills required, the team is driven by their own account. Until the team has a minimum viable product and has managed to launch into the market to some degree, even in beta, the team should remain small and centered. Hiring too fast too early can sink a great company and great idea quick. Most people think they need executives and CFOs and VPs and so on, but you do not.  Titles should be reduced to a formality and the team should be driven by getting things done; too many people too early slow this down too fast.  

One key attribute at this stage is drive and initiative.  The curse of an entrepreneur is that you see and care about things that others do not even know exist, so there is no surprise that there will be times that people do not show passion.  But at this stage the company should operate like a rowboat, where it is up to everyone to drive the boat forward and everyone knows what makes the boat go -- the team.  This is opposed to have a speed boat that has team members that are merely along for the ride -- not knowing what makes the boat go nor have a part in steering it.

Getting users and building usage. The product is usually in place, even in rough form.  In most cases the product is launched and has positive feedback.  The key to this stage is acquiring users.  This is where you start building your team that will be instrumental in driving the team through this stage and the next.  

A big part of the additions to the team at this stage is engineers. These engineers will be key to scaling the service and will be required to continue to build and perfect the service.  This includes being instrumental in bringing the service to other devices (i.e. mobile) and to adjust the product as necessary, to fully achieve product market fit.  

The product team will need to grow with the engineering team.  Customer support individuals will need to be brought on board, because with users comes the need to keep them happy, support them and engage them.  Marketing also becomes key at this stage, since acquiring users will require marketing.  Business development also comes into play at this stage, as interacting with other companies will be necessary for distribution and service integration.  Other key hiring will include sales and a sales team.  The other departments include business operations, human resources, and finance and legal.  

The team size depends on the company, but the initial team usually grows to now be 10+ people, and may grow to 20 before entering the next stage. Key people will include business development head, marketing people, finance person - who usually handles outsourced legal and accounting. Then there are a couple salespeople.  

Usually only the engineering and software development team requires its own management team, which is usually the CTO, while the other team members report to the CEO. In some ways it is unavoidable. During this stage the key members will be found who will be the leaders for the next stage.  

Scaling the company. At this stage we will know the product inside, have detailed information on the market, customers and competitors. Our goal at this stage will be to deliver the product to the marketplace in full form. The company now turns to organic growth or sales and marketing to build a vast user base that will make the business sustainable for the long term.  

Leaders for every part of the business will be required. Including leaders for engineering, product team, customer support, as well as leaders for finance, marketing, sales, and business development. A strong manager or HR person is usually brought in as the COO to help recruit keep leaders. At this stage there is no magic number for the number of employees to add as the scalability of the company will dictate this.

Thoughts on outsourcing.  Main reasons for outsourcing (1) cost (2) skills.  By outsourcing, a company can get the necessary work done at a lower cost or highly quality than if conducted by someone on the team or by hiring someone.  Other reasons may include time, where the job can be done faster by outsourcing.  

All kinds of business functions can be outsourced, but the most common things that companies outsource are software engineering, data entry, customer service, tech support, legal, and accounting/bookkeeping.  The general idea around outsourcing for startups is that these companies can focus on their competences.

Also check out how to keep the talent - .Employee Engagement

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