In our last blogpost, we discussed the biggest debtbergs in the Growth stage. This blogpost is focused on the Scaling stage. The startup is selling something. It is moving to a growing venture in terms of products, customers, and employees. It may have the opportunity to get more significant funding through angel groups, and perhaps even A-round funding with venture capital investors. Significant investments in product development and support, marketing, and sales may follow. It likely now has a board of directors as well as one or more advisory boards. It is trying to accomplish extraordinary growth, or become a “Gazelle” (check the glossary in the book to find out more).
Scaling requires moving from experiments to having known processes to escalate sales. Once again, the biggest challenges change across our Oceans of debtbergs:
Human– Hopefully, many of the employee debtbergs have been avoided. Now the challenges from investors emerge. If a startup is successful, it will likely need additional funding rounds and capital. In fact, the more successful a startup is and the faster it grows, the more likely it is to need money to fuel that growth—and sooner than most would think. Will existing investors step up for additional funding rounds? Are they connected to new sources of funds, particularly institutional sources, that can help fund future growth? Tying a venture to a set of shallow-pocketed investors with no broader investor network can lead to hitting the Elusive Expectations of Behavior debtberg. Here’s some insights about what an A-Team looks like to investors. You should know what an A-Team of advisors looks like as well.
Marketing- Landing initial customers who are in your backyard and maybe are friends, colleagues, or acquaintances is one thing. Selling halfway across the country or world to unknown hundreds or thousands provides a much bigger challenge. It’s a success when you have the first paying customer that the founders don’t personally know. In order to avoid the Sales Process Not Scalable debtberg, the startup should have been experimenting to create a repeatable sales process. It should also be building a sales team and seeking partners who can provide access to groups of customers.
Technical– Congratulations, paying customers are using an actual product! It’s easy to try to relax at this point. But, the Foggy Waters debtberg is laying in wait.Now the team has to grow and fully develop the product. The backlog needs to include a product evolution plan that includes ideas for next generation products, new features, and even product extensions. Some of those ideas should come from monitoring customer usage. Be systematic about how you capture these ideas and evaluate future growth options.
Strategy– Just like early on in the startup’s life, the Lack of Coordination debtberg comes back again. It’s hard to make forward momentum on product, people, market, and funding all at the same time. It’s tempting to tackle these domains one at a time. But a scaling startup has to make progress on all of them at once, despite continued uncertainty across these Oceans. The work then needs to be spread across the team rather than one person. And those people need to communicate with each other to reduce the chance for disconnects.
If you have reached this stage, congratulations and well done! But it does not mean there is no more uncertainty. In fact, the icebergs might be bigger and the challenges might have greater consequences. Keep navigating!