I run a startup of ~50 people. Using Lean Startup, we hit on a great product when we were eight. Now we’re on track to make $10M in revenue in less than two years! My problem is that the people I hire tell me it’s time to grow up and adopt traditional enterprise ways. But I didn’t found a startup to turn it into a boring corporation. Why can’t I stick with the recipes that have made this startup so successful?
Pivoter Santa Clara, CA
The answer is that your company is neither a startup nor a boring corporation. It’s in its own category: a scale-up. Scale-up companies are a different breed from both startups and established enterprises. The needs of a scale-up, too, are different from those of a startup or an enterprise. You realize that you cannot run a startup like an established enterprise. But your company is not a startup anymore. And you also cannot keep running a scale-up like a startup.
Between product-market fit and product-market dominance
A startup stops being a startup when it has found product-market fit. An established enterprise only becomes established with product-market dominance. So a scale-up is the organization that turns product-market fit into product-market dominance. Once the startup reaches product-market fit, it becomes a scale-up. Once the scale-up reaches product-market dominance, it becomes an established enterprise.
Not just a compromise or a transition
The transition from startup to enterprise has merited little attention. I think the scale-up phase is more than a mere transition.
A scale-up solves specific challenges that neither a startup nor an established enterprise faces. Its sole mission is product-market dominance: capturing the market before the competition does.
Scaling is more than turning a startup into an enterprise. It is about focusing all resources on product-market dominance. Not on finding new product-market fit, as a startup would do. Nor on minimizing risk, as an established enterprise would do.
Companies that fail to recognize this scale-up phase are in for hard internal fights. Startup people and enterprise people will have opposed views on what is right. And neither ensures resources focus on your company’s real external market challenge.
Are you managing the venture like a scale-up?
First, in your own scale-up, how many of your habits remain from the startup phase? How many are inappropriate for successful scaling? Are you…
- still pivoting or doubling down?
- still serving Kool Aid or injecting truth serum?
- still optimizing future projections or current cashflows?
- still taking most decisions or relying on your team to do that?
Second, which enterprise habits have crept into your culture? Even if they are not appropriate yet for the scaling phase? Are you…
- hedging between business lines or focusing on one?
- adopting safe corporate speak or establishing clarity?
- running corporate budgeting cycles or debating simple numbers?
- sliding into mediocrity or weeding out C-players?
As these examples show, scaling up with success requires different behaviors. Habits that are both different from the startup phase and from the enterprise phase. Recognize when startup habits are no longer applicable. And adopt the true scale-up habits that will continue your success.