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@CraigVodnik
7 Mistakes Scaling Companies Make
Presented by Craig Vodnik
@CraigVodnik
Nuclear Engineering Degree
@CraigVodnik
Recovering Programmer
@CraigVodnik
Launched Chicago Tribune 1996
@CraigVodnik
Founded 2005
@CraigVodnik
HPA Member 2013
@CraigVodnik
About cleverbridge
● Founded in 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.
@CraigVodnik
What is scaling?May be hazardous to your health
@CraigVodnik
What does scaling mean 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
@CraigVodnik
What are other’s definitions?✓ 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
@CraigVodnik
Why not scale fast?Scaling too quickly can kill you
@CraigVodnik
@CraigVodnik
GoodEggs Blog - Sept 2015The 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.
@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.”
@CraigVodnik
Premature Scaling Can Kill
Startups that scale properly grow 20 times faster than startups that scaled prematurely.
TechCrunch article 2011
@CraigVodnik
Brad Feld on Premature 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
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My personal scaling mistakes
Learned over 11 years
@CraigVodnik
Who should I hire?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
@CraigVodnik
Perfect person wants to 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
@CraigVodnik
Who should manage a team?SME✓ Gets hands dirty✓ Task focused✓ Owns/creates
information✓ Leads by example
Manager✓ Leader✓ Mentor✓ Connector✓ People skills✓ Professional
Scaling requires professional managers
@CraigVodnik
How much should I 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
@CraigVodnik
We’ve never done this before?!
✓ Decision making and implications○ Adding an executive○ Removing an executive○ Organizational changes○ Peers vs. Hierarchy
✓ Roles and Responsibilities
Scaling requires executive team growth
@CraigVodnik
Scaling Takeaways
1. Scaling not the same as growth2. Scaling too quickly can kill you3. Scaling begins with first hire4. Scaling balances ability/need5. Scaling requires professional managers6. Scaling only lasts with trust7. Scaling involves management self-reflection
@CraigVodnik
@CraigVodnik
Thank you!Good luck scaling!
