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Scaling Tips From Silicon Valley

Silicon Valley is famous for its billion dollar start-ups. So what's its secret?

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Silicon Valley is famous for its billion dollar start-ups. So what's its secret?

Guides

Scaling Tips From Silicon Valley

Silicon Valley is famous for its billion dollar start-ups. So what's its secret?

Share this article

If the past decade has taught us anything, it’s that no institution is bulletproof. By that I mean resilient enough to face down every threat posed by technological and business model disruptions - global competition, surprise political events, cyber security attacks and natural disasters.

We think of “Fortune 500” companies as enduring and invincible. Their magic money trees can be harvested to take out competitors and avert any crisis. But they’re a lot more fragile than you think.

Lehman Brothers, founded in 1850 with $600 billion in assets in 2008, hit an iceberg (aka the housing bubble) and sank in a matter of days. Only 12% of 1955’s Fortune 500 companies were still around in 2015.

Fortune 500 companies earn the most revenue, but as Lehman’s downfall graphically illustrates, resilience and sustainability depends on so much more than being able to sell. They have to stay nimble, lean and vigilant - things that growth can stifle.

This doesn’t mean you should dial down your growth ambitions. Many things that make your start-up great today can help you thrive as you scale.

One place to draw inspiration from is Silicon Valley. While its start-ups aren’t perfect, they’ve pioneered new ways of working that are scalable and provide genuine resilience. Let’s talk about some of them.

1 - Build a minimally viable product (MVP)

One key thing that distinguishes established companies from start-ups is how they build products. Big companies tend to build to specifications. Start-ups build MVPs.

The MVP concept is simple: focus on core features that get customers up and running with a product. Customers give early market feedback that guides future development. Dropbox, Twitter, Airbnb are three examples that have applied MVP successfully as start-ups and stayed with it as they’ve scaled up.

Most large companies build to detailed functional specifications before writing any code, then releasing the product when all functional specs have been met. In their quest to get everything right the first time, they give lean, nimble start-ups the space to release multiple ‘good enough’ versions, gather customer testimonials, and make improvements based on actual market feedback.

idea

Launch with a simple product and go from there

2 - Stay lean

Most start-ups are constrained by limits on money and time. Small teams, the palpable awareness of burning cash and a fierce desire to be first to market, focuses everybody’s attention on what’s important. As companies scale and resources grow, it can be hard to maintain lean principles.

Lean isn’t a euphemism for cheap. It’s about optimising. As you grow, you should absolutely invest in competitive excellence - hiring the best people, innovating in new areas, caring for your customers. You do all those while still maintaining lean principles.

Setting near-term deadlines, for example, helps focus people’s minds on core problems. Establishing minimal red tape, when it comes to processes like performance reviews and expense reporting not only saves time but improves morale.

Keeping every team size to a minimum is an important aspect of staying lean. Fortunately, if you take the MVP approach you don’t need excessively large teams.

Startup

Lean is good when you're just getting started

3 - Share the vision

The venture capitalist Fred Wilson famously asked a company board member: “what does a CEO do?” He replied that a CEO has three jobs:  make sure there’s enough money to run the business, hire and retain the best people, and communicate the overall vision.

When companies scale, the first becomes easier, the second harder, and the third often gets neglected. The CEO still has a vision; it just gets harder to communicate. Evangelising to 20 people in one room is much easier than inspiring 150,000 people on four continents.

How can you scale this? Recruit and train managers who will buy into and communicate the high-level vision but can also convey what it means in practice for their teams. Broadcast company-wide meetings regularly so that everyone gets to see and hear the CEO.

Remember that your best people are motivated by shared goals and dreams, not by annual reviews.

Steve Jobs

Good communicators (internally and externally) are more likely to succeed

4 - Tie people to the same goal

What would your team members say if you asked them to name your company’s most important goal? People in start-ups tend to answer in terms of how they expect to contribute to revenue, customer satisfaction or even social value.

As companies grow, people are more likely to respond with an individual or departmental goal, like completing a project successfully. In previous roles I’ve seen engineers labour for thousands of hours over technical problems that didn’t really need solving.

They had lost touch over time with the real customer problems.

As you scale, it’s vital to maintain the principle of tying everyone to the end goal. In doing so, you’ll stay lean, efficient, and have happier customers.

facebook

Staying united as you grow is a key principle of Silicon Valley firms

5 - Celebrate successes

I have worked for a large company a few years ago on a high-profile project.  One of our most strategic customers wasn’t happy and my team was assigned to fix the problem. Ultimately we not only turned the situation around, but exceeded the customer’s expectations.

Millions in revenue were tied to this customer, salvaged largely due to our work.

Instead of celebrating, our team was sent a mass email congratulation from the Global VP. Then it was on to the next project.

In my current company, we hit a successful milestone with a much lower monetary value and celebrated by throwing a party. Celebrating success makes people feel valued, breaks down barriers and reinforces a shared vision. Unfortunately it’s often a casualty of company growth.  So don’t lose that partying spirit as you grow and don’t substitute it with email!

There’s denying that with growth comes complexity. The good news is that the principles, processes and vision you started with, are scalable.

There are no laws to say that you need to turn into an overstaffed, bureaucratic behemoth. It takes considerable effort and leadership to manage, but my experiences so far at ThoughtSpot suggest it’s possible. Best of luck as you scale and prosper!

Doug Bordonaro, chief data evangelist at ThoughtSpot.

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