There is a lot of hype and confusing about what is required to successfully scale the small company. Startups and private companies in Silicon Valley and the San Francisco Bay Area are told to scale their organization as quickly as possible. However, while CEOs and founders are told to grow faster, they are often left in the dark on how to proceed. A good CFO is crucial in helping the management team in developing the right growth strategy and how to balance the various competing demands for limited resources and capital.
The article below by Gabriel Luna-Ostaseski on First Round Capital’s blog shares some crucial lessons learned over several startups in the Bay Area. He writes about the seven major sins that startups are guilty of committing in their quest to grow rapidly.
Boiling the Ocean: Chasing any customer that you can by selling to everyone possible.
Hiring an Architect, Not a Builder: “You want someone who is process oriented, and who has already done this multiple times.”
Scaling Prematurely: “You have to get all of your existing sales people profitable and your system very repeatable before you bring on more headcount.”
Burning Through Your Cash: “Finding people who can generate revenue is very difficult, but they are absolutely necessary. Growth and revenue are how companies are measured. I think this often gets forgotten — people think you should add sales at the end once you've built a product. I strongly disagree. The earlier you add sales people, the greater impact they'll make.”
Sales Reps Wearing Too Many Hats: “Start breaking apart roles and increase specialization. Ask yourself things like: Is this person in customer acquisition better at building relationships with new or old customers? Depending on the answer, they go into account management or closing deals.”
Relying on Data Over Emotion: "When we look at our top 10 customers and our bottom 10 customers, they shared the same four attributes, so our ideal profile should fit these 5 criteria. Here's a list of companies that do.”
Flying Blind: “Even very late-stage companies lack complete transparency around parts of their funnel. They don't have context. They can't see trending across reps or time. They have no way to look at every stage of their funnel by sales person over time. They can't pick out bottlenecks or identify people who are kicking ass at a particular piece of the puzzle. As a result, they miss out on huge opportunities. “