Growing a high-tech startup can be rewarding and exciting, but also frustrating and challenging. Small, rapidly growing businesses have agility and enthusiasm, but they also have restraints: too little capital, not enough people, and an organization that quickly outgrows the infrastructure available to support it.
The challenge is to evolve successfully while retaining the rare but highly valuable attributes that sparked a startup’s early success. To understand how they approach this delicate balancing act, we contacted Bo Burlingham, contributing writer at Forbes and a former editor at Inc.; Chris Rommel, executive vice president at US-based industry and IT consulting firm VDC Research; and the founders of four high-tech companies making the difficult transition from startup to established player:
• Ben Stagg, CEO and co-founder of North Carolina-based Halo Smart Labs, which developed connected smoke detectors that can be networked into an early warning system for tornadoes.
• Jack Kutner, CEO of Massachusetts-based Bigbelly, which manufactures solar-powered and networked refuse containers that notify city workers when they need emptying.
• Syed Ahmed, CEO and founder of UK-based Savortex, which makes smart hand dryers that play video advertisements while monitoring foot traffic and alerting staff when a washroom needs servicing.
• Alan Weinberg, director of Marketing at Massachusetts-based Myomo, which helps people overcome upper extremity paralysis with myoelectric orthotics and services.
SUCCESS BEGINS WITH A PLAN
Every startup begins with enthusiasm and an exciting idea, but many forget the vital third pillar that gives a startup its stable base: a sound business plan.
“We spent years planning,” Ahmed said when asked about the “secret sauce” of Savortex’s early success. “We researched our sector for at least two years to understand the pain points, and then we embarked on looking at the market trends before launching our company.”
Even with a plan, it’s easy to get sidetracked, Weinberg said. “Realistically, plans are only predictable to a point, especially in product development and engineering phases. It’s so easy to get distracted. That’s not to say that new ideas aren’t worth investigating, but it’s about timing. Keep reviewing your strategic plan.”
An added benefit of frequent reviews, he said, is that your plan is already up to date if a new funding opportunity appears.
“ONE NEEDS TO ADAPT ONE’S TOOLS AND PROCESSES TO SUPPORT THE EVOLVING NEEDS OF THE BUSINESS, BUT IT TAKES A DEGREE OF SCALE TO MAKE THAT PRACTICAL.”CHRIS ROMMEL
EXECUTIVE VICE PRESIDENT, VDC RESEARCH
Burlingham said it is important to plan not only what to do, but to envision what success will look like.
“Many entrepreneurs don’t have a concrete plan where they’d like to end up,” Burlingham said. “They do things that have unintended and unplanned consequences down the line, and things start to happen that you don’t understand.”
THE RIGHT SYSTEMS SUPPORT COLLABORATION
Collaboration is easy when everyone shares the same vision and works in one room. As companies grow, however, degrees of separation naturally appear between those who steer the business and those who perform the day-to-day work.
When each employee can no longer have direct access to the founders, a company must make the difficult move from individual knowledge and ad hoc processes to institutionalized ones. But the low-cost tools that were practical in the early stages often don’t scale effectively.
“One needs to adapt one’s tools and processes to support the evolving needs of the business, but it takes a degree of scale to make that practical,” VDC’s Rommel advises.
At Bigbelly, Kutner said, inflection points to adoption were driven by organizational “noise”: sales teams complaining that it was difficult to place orders, for example, or customer service finding it difficult to manage customer satisfaction.
“One can’t just rely on gut feel or a belief that the right things will happen at the right time” when managing growth, Kutner said. “The business needed to move from anecdotal and qualitative to quantitative” decision making.
CHANGING WITH THE ENVIRONMENT
Automating outdated processes isn’t the answer, however.
“It’s pointless moving from cowpaths to paved cowpaths,” Kutner said. “One needs to create roads and pave them.”
Systems that are difficult to adjust to changing business priorities can be as bad as no tools at all, Stagg said. “One must find the right balance between sophistication and entrepreneurialism. Making sure we can run and monitor the business, while at the same time challenging the status quo ” is essential.
“Growth is a funny thing,” Stagg said. “It’s difficult and cumbersome at times, but it’s all about balance.”