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Startups: Avoid These Inner-Series Mistakes When Scaling Your Business

by Everett Harper, CEO and cofounder of Truss

It’s not uncommon for startups that are laser-focused on fundraising to deprioritize certain challenges. But to get to the finish line successfully, there are several key company milestones that leadership must identify and address. Startups tend to put a premium on being “agile,” but that doesn’t always work – and certainly won’t replace the effective collaboration a business needs to grow.

Over the years, the Truss team has worked with several early-stage startups, and noticed a consistency in inter-series problems (regardless of the industry). Specifically, there are five challenges that emerging business typically put on the backburner between funding rounds:

Seed to Series A: Customer Testing.

Hypotheses should be tested extensively and disproven, which is where customer testing plays a central role for seed-stage startups. From a customer standpoint, there are nuances that go into buying a product, and then using the product. By incorporating a research phase, startups can leverage pertinent feedback and then consider: “What are the key hypotheses that need to be correct to for the company to be successful?” Customer testing pinpoints which hypotheses were right, which were wrong, and sets the stage for longevity.

While domain experts have substantial interactions within their respective markets, they, too, can fail to find independent, disconfirming data. It’s critical for seed-stage companies to be privy to this information, particularly before committing money and manpower to scale. This approach potentially saves hundreds of thousands of dollars over time, and help startups entering a competitive market to learn exactly what their customers are asking for and how to deliver it.

Series A to B: Identifying Company Blindspots.

Socrates once professed that he was the wisest of men because he was aware that he knew nothing. That’s as true for new businesses today as it was thousands of years ago. Entrepreneurs have a strong sense of self-reliance, and so the idea of asking for help  isn’t on their radar. However, particularly in the A-B series interim an independent third party can uncover product or market blind spots. Not only will they know what questions to ask and where to look, but their work will free up time for core staff to focus on delivering solid, scalable products, services or features. .

Series A to C: Automation.

Companies entering the production stage are tasked with discovering how to make the product scalable and reliable, while also learning how to repeat building with greater efficiency  over time.

Automated testing is the most efficient solution in this growth phase. Building an infrastructure to automate internal testing allows companies to develop a deployable, scalable, working prototype to the market–and work with customers to meet their needs. It also ensures that company execs have more money to deploy towards iterating features, and growing market share , not fixing mistakes.

For example, we worked with a company and observed that each release required eleven engineers. The sheer inefficiency cost the company an exorbitant amount of money. When they incorporated an automated system, they saved $250,000 – per release – which was then used to improve the customer-facing features..

Series B: Hiring and Developing Managers.

All startups find themselves struggle with hiring to meet growing demand, leaving most startups scrambling to onboard hires. While additional personnel is crucial to scale the product, misaligned  hires will increase burn rate without a concurrent jump in productivity and meaningful growth. Additionally, there’s the hurdle of finding the right candidates in a competitive environment, and getting them to produce as fast as possible.

When startups make new hires, it’s not uncommon to then promote the longest-tenured engineer, tasking them with onboarding staff. Surprisingly (or not), this process can have catastrophic effects. The newly-promoted engineer often has no managerial experience. The psychological shifts required to go from being an individual contributor to a manager shouldn’t be underestimated.

For companies to build onboarding for engineers, for example, to be productive, they need to designate, train and support the managers who are hiring them; essentially, training the trainers on how to be more productive and aligned with company goals. We’ve seen startups have success in hiring independent advisors who can identify the natural leaders within the company, and show them how to apply their characteristics to the art of good management.

Avoiding churn is also key in monitoring burn rate. Consultants can add capacity, and help new managers address the hiring pace (for example, establish structures for managers, how to train and recruit, understanding what progress looks like, etc.). Outside parties  also make it easier for executives to be candid about who the good leaders are, and the employees can be candid with the consultant about where they are struggling in management (something they are less likely to do with their colleagues).

Seed to Series D: Collaboration.

In engineering culture, there exists a mythology around the solitary engineer that builds an amazing, scalable product. But individual engineers have their own methods of working without collaborating or sharing.

In reality, a collection of these silos within a team is not conducive to a successful company, culture, or product. An engineer with a particular expertise is valuable, but to build an effective team, startups should invest in professional development around collaboration and communication.

 

Everett Harper is the CEO and cofounder of Truss, which builds software and infrastructure to help companies scale and modernize digital services. At Women 2.0 Founder Labs in 2011, Everett pitched an idea to make calendars more useful for executive assistants. That app, called Tetherpad, was the original DNA of Truss. Everett was head of Customer Acquisition and Community for Linden Lab. 

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Young Upstarts is a business and technology blog that champions new ideas, innovation and entrepreneurship. It focuses on highlighting young people and small businesses, celebrating their vision and role in changing the world with their ideas, products and services.

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