Hypergrowth: handling the double-edged sword

As we closed 2020, I announced to our team at Vitalis Extraction that I will officially begin my next chapter at the company as CEO. Since our inception, and as the company’s Chairman and Co-founder, I’ve witnessed rapid success and a number of fundamental changes across the extraction industry, mainly driven by factors such as changing legalization and increased interest in the sector globally. 

Far from merely keeping pace, I’ve always taken the position of leading from the frontline when it comes to service, sales, efficiency and innovation. These areas are what I consider to be the key drivers of any successful organization and have often resulted in unexpected and welcomed periods of hypergrowth.

Hypergrowth is a dream scenario for most entrepreneurs, and understandably so. What business owner wouldn’t want to venture into new markets, expand their team and diversify their product offering at a rapid state? As exhilarating as the prospect of hypergrowth can be, in reality, success achieved at this rate comes with a few caveats and considerations. So, what are the defining features of hypergrowth, and how do you safely handle the double-edged sword? 

What Exactly is Hypergrowth? 

Often referred to as the steep part of the S-curve that most young markets and industries experience, hypergrowth also refers to companies with a compound annual growth rate (CAGR) of greater than 40%, having maintained that growth for more than one year. First coined by the Harvard Business Review, the phrase essentially applies to businesses or industries growing at an extraordinary rate. 

At Vitalis, we’ve been fortunate enough to experience this level of growth over the past five years. Our company recently placed No. 3 on the Globe and Mail’s 2020 Report on Business Ranking of Canada’s Top Growing Companies, based on 8,090% exponential growth over three-years. An incredible honour for our team and a testament to the business we’ve built. This growth would not be possible without the partnerships we have with our clients. While this recognition is rewarding for sure, growth at that level also comes with a unique set of challenges. 

Preparing for Success

It seems like an obvious statement but setting up your business with hypergrowth in mind is essential to successfully riding the wave. Having a solid foundation of organizational structures and practices, clear goals, and a planned trajectory (your values, mission and vision) set within a transparent and embedded company culture enables you to communicate your unique value to clients.

When looking at how we were going to scale our business in the beginning, it was essential to be mindful of what the path ahead would look like and what our customers were going to require. As the cannabis market was moving so fast and with the hemp market quickly following suit, we knew defining and sticking to an agreed growth strategy was going to be vital in servicing the demand. 

Due to its very nature, hypergrowth of a market also has a tendency to force your hand. As our customers continued to move into new markets, their expansion propelled our own company’s growth; if we weren’t there to serve them, they’d be forced to buy someone else’s equipment. It’s an interesting and testing experience keeping up with such exponential growth. Still, we continue to thrive by having a solid foundation coupled with incredible partners who hold a wealth of experience and knowledge.

Understanding your Specific Challenges

If you’re scaling a non-physical product, such as an App, it’s certainly difficult, but most issues that arise can be addressed from a single location. Operating within a physical business industry, like manufacturing, comes with additional challenges, as growth usually means physically moving into new markets. Selling the equipment is one thing, but it’s a different business to service a network of global installs over the long-term. 

Entering into any new territory, using the App example, you identify the tax structure, incorporate a local entity, and you’re ready to go live. As a physical business, we have to consider all of these things, in addition to selling the actual machinery. We then have to find somewhere to ship it, store it and have spare parts available locally while also complying with import regulations. It’s a complex scenario, which becomes even more challenging when you consider the people power required to sell, install and maintain our machinery, as well as train our customers to operate it. 

We’re a manufacturer and engineer of extraction equipment, but we represent much more than just the systems. In every market expansion, we need to continue to drive change regarding standards and safety measures in global jurisdictions, so employing and training the right people is vital. Identifying and scenario-planning your business’s specific requirements and challenges ahead of time is often the difference between successfully handling periods of hypergrowth and not. 

People-centric Approach 

Many challenges associated with hypergrowth can also be people related. Expanding into new cities and leasing out warehouses is important. If you’re unable to follow that up with the right people to run your operations, you are unlikely to be successful.

Suppose you don’t have great onboarding systems for new employees and do not provide clear communication around culture, values and operating standards. In that case, the company can shift as it goes through those hypergrowth times. 

Trying to keep the culture consistent and deliver customer-centric service during our ongoing expansion, especially around our consultative sales approach, is something we really focus on. Onboarding that many people, it’s important to ensure new hires understand and are able to communicate the foundations of our business genuinely. Focusing on people during accelerated periods of growth is truly one of the secrets to our ongoing success, also ensuring the systems are in place to support and streamline this process.

Flexibility to Adapt

Experiencing a slow-down in the cannabis market and also the global economy with the emergence and prolonged fallout of the COVID-19 pandemic, we may continue to lose a growing number of competitors in the months to come. While that might be good for our business, however, no one wants to see hard-working people lose their jobs, reputable outfits shut down, or customers left owning equipment built by a company that no longer exists. 

From the beginning, we’ve been cognizant that operating within the emerging cannabis and hemp markets, we would experience explosive growth but also regulation changes, so we needed to ensure adaptability became intrinsic to our company’s makeup. We also had to be mindful not to find ourselves in the precarious position of holding a mountain of debt in a down market, so we made the conscious decision to grow our company with zero debt. This allows us to continually adapt to changing market conditions and confidently explore new revenue streams to feed future growth. 

While we’ll continue to dominate in the cannabis and hemp space, our extraction technology is adaptable to a range of other products, including pharmaceuticals, F&B and essential oils. As we continue to explore new and exciting ways to diversify and grow our offering, we must maintain momentum in our core markets. 

By building solid foundations, adaptability and great people into our company’s DNA, we’re well-placed to capitalize on the exciting future opportunities brought on by hypergrowth, as well as carefully handling the challenges that come with it.

Joel Sherlock 

Founder & Chief Executive Officer 

Vitalis Extraction Technology