The startup journey goes through many phases, and each has its unique challenges. In the first few years, it’s all about getting funded and finding a strong product/market fit. Once you nail those, your next challenge is to build a scalable sales model and deliver your product to a broad market as fast as possible and before competitors start to catch up.
This is the “hyper-growth” phase — i.e., grow as fast as you can and grab as much market share as possible. Typically, hyper-growth is characterized by triple-digit year-over-year sales growth for several years and an ongoing surge in the number of your employees. If things go well, your company may grow from 30-50 employees to 700-800 employees in just 4-5 years. It’s exciting — but it can also be dizzying and at times scary. Many promising startups stumble or even fail during hyper-growth. And unfortunately, conventional MBA-school management theories do not help much during this unique period.
At my startup AppDynamics, we were fortunate to experience this kind of hyper-growth and were one of the fastest growing enterprise software companies in Silicon Valley. As an engineer turned the first-time entrepreneur leading the company as Founder & CEO through that hyper-growth phase, I learned a lot along the way.
“If everything seems under control, you’re just not going fast enough.” -Mario Andretti, race car driver
Leading a company through the hyper-growth phase is sometimes like driving that race car. The business is accelerating like mad, and you do not feel totally in control. You might be tempted to slow things down a bit out of a fear that you’re going to careen off the track. But if you slow down too much your competitors are likely to speed past you! The bottom line is, you have to get comfortable with the pace and with the fact that not everything is going to go perfectly. That is not only OK — those are actually the right conditions for victory. As an engineer, I had a hard time accepting that at first. But once I did accept it — and even more importantly, once I got everyone in our company to accept that as normal — we operated much more smoothly.
#1 There Will Always Be Things To Fix
Just as every race car needs the occasional pit stop, in business, there are always things that need fixing. My rule of thumb was that at any point in time, about 80% of things would be going right and about 20% would need fixing or improvement. The job is to identify the 20% and course-correct — but once that is done, expect a new 20% to emerge, and so on. If at any time you feel like you have nothing much to fix and improve, it is a sign you are not moving fast enough, and that should worry you the most.
#2 Focus On What Moves The Needle
Prioritize ruthlessly — not just for yourself, but for the entire company. When you are growing like crazy, there will be times when your company won’t have the bandwidth to fix everything that could be fixed. Ask yourself, “Is this going to impact our trajectory as a company, either positively or negatively?” If the answer is yes, prioritize it. If not, don’t spend your precious time on it.