November 19, 2019
September 8, 2020
How to Scale a Company From 0 to 50
On October 10, together with Atlantic Labs, we had a chance to host a dinner for a group of early-stage founders. The dinner was one of our first initiatives coming from our new executive search service, ACELR8 X. The goal of the event was to help the fresh founders get more insights into scaling a company from scratch to 50 and more people.
First, Sebastian compared building a startup to setting up a machine that you put money and resources into, and expect it to generate you a profit. Sometimes, the machine will burn the money you put in, but if you are going to tweak it right and maintain, it will start working as intended. After that, you have to make sure it will stay this way. To achieve that, you first have to come up with the right business model. Scaling is possible only when you find a product-market fit. If you don't have it, it's better to put more effort and time into polishing your product. Otherwise, you'll work on an idea that may not be profitable.
Don't rush with making your ideas come to life. Create blueprints of your marketing funnel, strategies for building relationships, your customer care plan, and profit forecast. If your product doesn't meet your customers' needs, reiterate the concept by closely collaborating with them. Michael Varley, a founder of ACELR8, agrees with Sebastian:
'You can have all of the great people in the world, but if you do not please your customers, there's no point in hiring any people.'
If you are scaling too quickly, it's easy to lose track of your long-term goal. It's crucial to have a fundamental understanding of the market you are operating in.
Your first hires
Once your machine is working, you can start thinking about bringing talent on board that will have the power to upscale your company. Those people must have an excellent understanding of your product and the business itself — make sure to give them the best overview of your business goal. They will lay foundations and cement the culture for people to come next, so choosing the right team on this stage is critical.
Then give the team a purpose, let them know why they are working in your company and let them live up to their value. As Til Klein — Founder & CEO of Vantik — points out, helping shape a company is a priority for candidates nowadays.:
'Today, a good job with competitive compensation is not enough to attract good people. E.g. high impact business and company culture are very important factors to attract good talents.'
Don't try to add as many people as possible — a lot of people equal a lot of problems and misaligned feelings. Focus on whom you want to hire — constantly having in mind your business goals — and hire slowly.
Michael, when making first hires for ACELR8, was focused on people's attitude more than on their experience:
'If you hire someone experienced, they can be more sceptical and follow their learning instead of trying out new things. Experience is great, but you should be open-minded and open to new ideas.'
When setting up a new company, founders seek a startup talent — people who are able to carry many different labels. As Sebastian said:
'Typically, people stretch over several roles at the beginning, and you get more specialised in each role over time, with the respective person, and experience. In general, a Startup talent should be able to cope with ambiguity and chaos.'
As Jenny Herald, CPO at Gtmhub, mentioned in A-Players podcast: 'startup talent is about hunger, creativity, and mindset'. Looking for startup talent means looking for people who are persistent and autonomous in their work.
How to set up your recruitment?
Recruitment is one of the hardest parts of a scaling process and will take you a lot of time when done incorrectly. As Sebastian said:'You will make mistakes in hiring, and you will have to let people go over time, that is the truth.'
He mentioned that having outside support from companies like ACELR8 will save you a lot of hassle — you won't have to build your own recruitment department on day one and you will have external experts helping you scale your business faster. He also listed a few challenges you will probably face when building your team in Berlin:
- 'You don't bring your friends to business — you make friends in the business.'
- In Berlin, where the startup community is very mature, people come to interviews really well-prepared. To make sure that's the right candidate for the role, you have to go deeper into their profile and make sure that they will be able to deliver.
- With key roles, it's necessary to do reference calls that will give you a better idea on if somebody' working style aligns with your business
- As a founder, you probably love your company and might exaggerate its potential, but make sure always to tell the truth.
- 'And most importantly — if you have a bad gut feeling, don't do it. Even if you cannot rationalise it.'
The last key element when bringing in new talent is to provide them with proper onboarding. Make it an experience that they will remember and will tell their friends about. Prepare their laptop, phone, and desks for their first day so that, when they come in, they have tools to work with right away. Spend the first day with them to give them deeper insight into your company's vision, goals, as well as the expectations you have regarding their position. Having a clear understanding of their tasks will make them more motivated, and they will share around the great experience they have with your company.
How does a company change when scaling?
Having more people on board requires coming up with a structure. Set up teams that are related to your business goals — you can always rely on the expertise of external recruiters who will guide you in terms of looking for the right people in that regard. Give them autonomy and ownership of their part of the company. Let them connect over team events and after-hours activities.
'People work well if they are happy.'
If you're growing to a-few-people size company, be sure to have weekly status meetings where everyone can share what they've been working on and what's on their to-do. It will add more transparency to everyone's work and will make collaboration and helping each other much easier. When you grow bigger, make sure that the stand-ups are well organised and fast. Last but not least, over-communicate your vision. Announce all of your decisions and explain your processes.
At ACELR8, which is currently going through the scaling phase, it's easy to see the first signs of changes:
'There’s a classic problem of communication and either should you over-communicate your vision. Different personality types are another problem — how do you create a culture that accepts all of the kinds of people and let them thrive?'
Sebastian’s biggest learning from scaling a company was to scale carefully: 'Wait for the right product-market fit instead of scaling too quickly and making the task much much harder.'
Michael's advice to other founders is not that far off from Sebastian's: 'Put business first. Do something that your customers really want and hire based on those needs. Every hire in the first 50 should push the business forward. If you don't feel that they have an impact, maybe it wasn't a good hire'.
Til, on the other hand, advises to learn how to let things go: 'You need to accept that people will approach things differently than you would.'
If you're preparing for scaling your company, have in mind these things:
- Before you start scaling, make sure that you found the right product-market fit and that your business model is working.
- Come well prepared. Create playbooks and profit forecasts that will help you in achieving your goals.
- When bringing first people on board, make sure that they have a good understanding of your business and the company's culture.
- Bring open-minded people who are willing to test new things. They don't have to be well-experienced.
- Look for startup talent — carriers of many different labels which can work autonomously and will have an impact on your company's performance.
- Get external help for your hiring efforts from a company such as ACELR8.
- Provide new-joiners with great onboarding.
- Run weekly company stand-ups to sync on everyone's work.
And, most important — good luck:
'Enjoy the ride — it's amazing to build a company. Be proud of it.'