From Startup to Scale-up: Nine key Principles for Rapid Growth of a Startup

Starting from 2019, we are witnessing a trend where funding rounds are growing larger. Ten years ago, rounds of over $50 million in Israel accounted for about 20% of total funding. In contrast, in the years 2021-2022, seventy percent of total funding was in rounds of over $50 million.

The past five years have undoubtedly been turbulent with many tragedies. However, hundreds of Israeli tech companies have grown rapidly, both in their business operations and their global reach.

Young companies that have proven "product-market fit", with 20-30 employees are facing a challenge to rapidly double or triple their capacity within a relatively short time. It may sound like "rich people's problems," and perhaps they truly are, but it's definitely a complex challenge.

From startup to 'scale-up' - always prfioritize speed over efficiency

The competition in the technology industry is so intense that you must assume that at any given moment, there are other talented teams trying to solve exactly what you are trying to solve. Reid Hoffman, the founder of LinkedIn, wrote an excellent book called "Blitzscaling" in which he describes a specific set of business practices that enable rapid growth. In an environment of uncertainty, the fundamental principle is always to prfioritize speed over efficiency. This is how a company can shift from a startup to a "scale-up" and outpace the competition.

We raised a lot of money because we did several things well. Why do we need to change anything? Why do we need new practices?"

What worked with twenty people in two rooms will not work in a company of a hundred employees spread globally. To continue leading the company and capitalize on market opportunities, there is a necessity, at this stage, to build an effective organization that enables entrepreneurs to look ahead and ensure their prosperity over time.

Through insightful articles and books, and primarily based on practical experience gained with dozens of growing companies, I have developed a 'scale-up enablement' model that offers nine key elements enabling rapid company growth. The model ensures the preservation of the company's unique identity throughout its growth because it relies on the same qualities that have driven the company's success thus far

The model is based on three dimensions, each containing three key elements. It's important to note that every startup faces a unique business situation, and therefore the relative importance of these keys will vary from one to another.

The first dimension is Leadership. It focuses on the leadership qualities required at different stages of growth, as well as the role of the entrepreneurs: How do we know if the person who led the technology development so far can be our Head of Engineering? Can a successful salesperson in Boston lead the sales team from two to fifteen people, or is it time to recruit an executive with proven management experience? Is it sufficient at this stage to rely on the entrepreneurs' intimate and effective "kitchen," or is it time to transition to more substantial management team work? It also appears that the executives we recently recruited expect this... For further reading - "From Startup to Scale-up – How to Lead When You Grow"

What worked with twenty people in two rooms will not work in a company of a hundred employees spread across the globe

The second dimension is Alignment, which wasn't simple with twenty people but will be much more complex with fifty or a hundred people. You can no longer gather everyone from two rooms into one in the morning when you return from New York and update them on customer visits. It's cool and easygoing, but it doesn't work anymore when you're operating in four offices across different time zones. You must ensure that all your people are aligned with the main business challenge and are working on exactly what matters most at the moment.

The confidence that all your people are working towards the same priorities will likely only happen if you implement a mechanism (simple yet consistent) like OKRs or a similar framework. For further reading - "From Startup to Scale-up: How to Build Your Company as You Grow"

The third dimension relates to culture and people: Is it important to explicitly define the company's values at the beginning of the startup's journey? Culture describes how we operate, and therefore rapid growth requires focused and decisive actions. On the other hand, defining culture is often perceived as a formal "corporate" process...

What should you invest in during the early stages of the startup - establishing processes, like recruitment and employee evaluation, HR technology, or perhaps analytics? For further reading - From Startup to Scale-up: How to Build Your Company as You Grow.

 What do we do with these principles when there are so many open positions that need to be filled?

The model spans a broad spectrum and may even feel overwhelming because it's challenging to address so many topics, especially when there are so many open positions at fill... I will expand on each of these dimensions in a separate article and include practical tools for implementation.

Here's a suggested approach: We can use the model to conduct a mapping, meaning we assess which of these keys are in good shape and ready for growth, and which keys require adjustments to ensure the company's growth. For example, organisational communication might be good, with information flowing from the founders to other employees, and there might be an open channel from employees to founders. On the other hand, strategic dialogue may be limited to founders only, excluding senior managers who have been added later, or it may be found that the company's unique way, which has been its key to success so far (for example, internal entrepreneurship), diminishes as the company grows and the entrepreneurs, who emphasised this value, naturally drift away from day-to-day operations.

As mentioned earlier, each startup faces a unique business situation, and therefore the relative importance of the keys will vary from one to another. A startup that is spread across six locations in its early stages will encounter alignment challenges different from one that has just opened an office in New York. A startup with two founders with a strong technical background may face the challenge of building management earlier than one led by four founders who fill most of the senior management roles.