The bias for scale

Last week, I was invited by Mats Lundquist to speak at the Telenor Connexion kickoff to discuss how to scale tech companies. Our topic? The ever-present challenge: scaling tech companies. I started with a prop – my vintage Nokia 3310. Remember that indestructible beauty? While legendary for its toughness, it's undeniably obsolete. This simple phone embodies a crucial lesson: companies, like products, must adapt and rebrand while still riding the wave of success. Wait too long, and the wave could swallow you whole.

The Three Pillars of Scale: Product, Process, People

My scaling philosophy rests on three core pillars:?

The Product

A good product should be invisible; a good product should be like the geyser/boiler/water heater at home. The only purpose of the heater is that when you get into the shower, you get hot water every time. If every day at breakfast, you are discussing the water heater with your partner, the only reason is that it is broken. Good technology should work quietly in the background, like the water heater.

That's the essence of a great tech product – invisible, reliable, and seamlessly integrated into your life. The more human intervention it requires, the more it struggles to scale. Remember, scalability thrives on automation, not manual adjustments.

Look at the market trends and pivot while you are at the top. Too many companies in history have relied on past laurels and refused to innovate because they thought they still had nothing to worry about. Dont wait for your Kodak moment.

Be your own customer number 1; whatever you are selling, deploy that product first in your organization. So that when the customer asks for a reference, you can show your own deployment as a best practices example.

The Process

People often underestimate the cost of doing one-off things. Scaling is a mindset that applies to all facets of a business. As a B2B salesperson, you might be tempted to create a custom contract for a customer, but what happens when you have 500 different contracts for 500 customers? You won't be able to discontinue any product feature or update terms and conditions very quickly. This will create technical debt in your products. Every time you do a one-off thing for a customer, think about the long-term cost of that one-off action.

Think about your GTM strategy; always try to focus on bigger customers. Ensure that the smaller deals are done based on a zero-touch, fully automated SaaS basis. You can never scale your business if you start chasing thousands of deals individually. One of my old bosses used to say, “Lions never chase squirrels even if they are starving.” Focus your energy wisely.

If you want to make a Million dollars, you can do it by doing one thousand deals of a thousand dollars each, or you can focus your energies on a single Million dollar deal. When your attention is spread too thin, it is akin to Denial of Service (DOS) attacks, where a server is rendered useless by fully consuming it in menial tasks so that it is no longer available for high-value tasks.

Always keep in mind where you are investing your time and money because that is going to be the best indicator of whether your actions are aligned with your strategy.

From a sales perspective, please ensure that your salespeople' compensation is aligned with the business strategy. As the old maxim goes, compensation drives behavior. So please ensure everything is clear between what you are trying to achieve and how the salespeople are compensated.

The People

With a solid product and streamlined processes, the magic ingredient arrives: your team. Frank Slootman , in his book Amp it Up, talks about making sure you hire “Drivers and not passengers.” These are the self-motivated, creative individuals who propel your business forward. Hire passengers? Prepare for stagnation.

Conclusion

Run your business with data, not gut feeling. Ditch the "HiPPO" (Highest Paid Person's Opinion) approach and embrace data-driven decision-making. Analyze across the value chain, learn from insights, and course-correct accordingly. If you torture the data enough, it will confess to anything. Don't fall into that trap.

In Silicon Valley, there is a joke that there will be only three types of companies in the future:

1. Companies that are data-driven
2. Companies that will be data drive
3. Companies that will be bankrupt

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