Tech Start-Up Map of Growth: Scaling at the right time

Scaling

Aug 09

Like a pilot, the founder needs to complete pre-flight checks before accelerating down the runway to rapid growth.  Otherwise, when inevitable turbulence hits, faults can appear leading to disaster.  Pressures on tech founders from stakeholders to grow can be immense but 74% of high growth start-ups fail due to premature scaling.  Businesses that scale properly grow 20 times the rate of those that do it prematurely[1].

I learnt this hard lesson at the very beginning of my start-up journey.  At Intravascular Research, we had world leading IPR from London University.  We had a highly talented, experienced and motivated team.  What we didn’t have was a proven design and build process for our ultrasound probe before significant funds were invested in mass production.  I will never forget the day when half the company was made redundant.   It never recovered and only the IPR remains today having been sold on several times.

There have been a number of well documented, higher profile failures.  Webvan, the grocery e-tailer, valued at $1.2 billion in 1999, expanded geographically before proving its business model.  Two years later, it shut down losing over $800 million investment[2].

At my fourth and self-funded start-up, Orbis Technology, we were determined to scale at the right time.  With a proven sports betting platform and a growing list of major customers, the business was purchased by NDS and had the funds to recruit and grow rapidly.  Starting with a highly talented team, hiring ‘behind the curve’, we sourced only the best new talent.  New starters came up to speed rapidly with minimal load on the core team.  Strong customer trust was built at all levels.  In one year, revenues grew from £3.5 to £11.5 million delivering a four year increase of 999%.

More stories of controlled growth have been shared on the Digital Hunters Podcast by other winners of the Deloitte Fast 50 including that of Paul Volkaerts, founder and CEO of Nervecentre:

The Digital Hunters Map of Growth draws on these experiences of controlled and sustained rapid growth.  It shows how this can be delivered once the Foundations, Team and Product are in place.

[1] The Startup Genome Report Extra on Premature Scaling: A deep dive into why most high growth startups fail, 2011.

[2] https://www.wsj.com/articles/rebuilding-historys-biggest-dot-come-bust-1421111794

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