Last week we held our first JuntoDay, a day-long learning event with sessions on sales, people, and scaling. Craig Vodnik, co-founder and COO of cleverbridge and a Junto mentor, led the session on Scaling & Operations.
GROWING DOES NOT MEAN SCALING
Craig demonstrated that in today’s startup ecosystem, scaling and growing are used synonymously, and yet do not mean the same thing. When a startup company is adding people, expanding their customer base, and entering new markets they’ll often call this “scaling”. And it might be.
It certainly is growth, which is not only increased revenues but also simply doing more. Growing is doubling the company’s salesforce and doubling sales. Scaling is when a company can do more with less. It’s about keeping costs the same or only slightly increasing, while creating significantly more value. It’s not just adding customers, but adding those new customers with the same or only a slightly increased team. Scaling is about unlocking new efficiencies in a company’s process of creating value that allow them to grow faster without increasing costs at the same rate as before.
Craig also highlighted that not every successful startup company achieves “scaling”, and yet they run a highly valuable business by simply growing. “This is most of us,” he pointed out. He underscored that, as a culture, we need to stop being so obsessed with the unicorn that is “scaling”, and that we forget great companies are – and can be – built by incrementally growing.
EVERY COMPANY HAS A KEY SCALING METRIC
Craig pointed out that every company has a metric that drives company growth and can possibly unlock its efficiencies of scale. This is more specific than “more customers” or “sales”. During the session, Craig lead us through an exercise to find that important metric for a few of the companies present at JuntoDay.
The Junto Institute was one of the examples used. For Junto, the more members that sign up, the more costs are incurred through the required amount of people, resources, and time. But it isn’t as simple as that. Craig asked, “What specifically happens when an additional member signs up for Junto?” Through the discussion, we recognized that while each additional member doesn’t have an immediate impact, over time, the number of sessions gradually increases with each member.
Our key metric indicating more value is the additional number of sessions. If we can unlock how to operate more sessions while only slightly increasing the size of our team, then we can move towards scaling our business rather than incrementally growing it.
HIRE TRUE MANAGERS
Hiring is one of the most important elements to growing your business fast. We’ve all heard that the right people for the company today may not be the right people for the company at its next stage of growth. Craig shared that many leaders fall prey to promoting some of their first employees beyond the level of their abilities. He explained that there is a big difference between subject matter experts and managers. Startup company leaders come to trust and depend on their first employees. These folks are usually a company’s star subject matter experts. As the company grows, leaders decide to make these trusted first employees managers.
Craig warned that this is usually not the right move. Great subject matter experts do not necessarily make great managers. As a company scales it needs great managers. Great managers are people who get people, and enjoy working within a group, rather than on their own. This isn’t everybody, and that’s okay. In order to grow efficiently, company leaders need to be brutally honest with themselves about who is really qualified to be a manager, and who is not.
Overall, growing or scaling a company can be achieved more effectively when approached with thorough planning and intentionality. Understanding the difference between growth and scale, identifying the company’s key metric to scaling, and hiring the right people for each stage of growth, are only a few of the key takeaways that Craig imparted. With the lessons learned and insights from Craig, those who attended our first JuntoDay have more tools to grow faster and also scale.