Journey of a Startup - An Organizational Perspective

The story of any fast growth startup like Classplus is full of fascination. It is an overwhelming feeling to see something small to grow, become a recognized name and become indispensable to solving critical problems related to daily lives of customers worldwide. However, the growth story is not a smooth or linear story. There are many ups and downs along the way and it keeps facing varied issues.

If we talk about only organizational issues, they continue to become more complex as an organization grows. Here is an attempt to take you on a journey through various phases of a start-up and the key organizational imperatives during those phases. However, keep in mind that this story is only a typical story and individual stories of each start-up is different in unique ways.

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0-1 (Survival Phase)

?This is the phase where perhaps the only focus of the start-up is to grow large enough to survive. It is like a baby caterpillar or a larva. If it doesn’t add weight fast enough, it will die.

So, the sole priority is to find an under-served niche fast enough, develop a minimum viable product and gain customer traction. And hopefully find initial funding to be able to survive.

Startups obviously have a long-term vision even at this stage, to make some dent in the universe in some way. Without that vision, the madness required to survive this phase wouldn’t exist. But in this phase, typically there is very little structure, processes & long-term planning. Every day is a new day. Everybody works on everything, and the core team members are often indistinguishable from each other. The camaraderie is magical. The overwhelming focus is on hustle and customer traction. Exploration, survival and fast growth is what matters most.

1-10 (Rapid Growth)

?This is perhaps the sweetest part of the startup cycle. The startup which has reached this stage will typically already have a minimum viable product and an assured customer base. It will find it easy to recruit passionate people and find more customers. The most important thing in this phase is not to interrupt the good thing that’s going on and ensure there is enough funding or cash-flow to fund the growth.

Along with growth, specialization begins to emerge, and the members of core group starts focusing on different aspects. However, there is enough flexibility among the members. Even though the decision making is still centralized with very few core group members, the enthusiasm among the employees is still very high. It is because they are given responsibilities far above their experience and are happy to be part of a growth story.

The key pitfalls in this stage are not being able to find a decision making mechanism among the founders, running out of cash/funding too soon or the product/service hitting a roadblock. But beyond these, the organizational aspects are often manageable though may require extraordinary efforts of the founders.

10-100 (Scaling Up)

This is the phase where the startups have a full-fledged product and not just an MVP, and a recognizable brand. More often than not, they will also be able to find many willing investors. But strangely it is also the trickiest phase for the startups as far as organizational implications go. It is the phase where many rules of the games of the previous two phases do not apply. Startups have to unlearn their previous ways to work and learn some entirely new ones.

It is the phase where the startups have to try and reach out to all potential customers (often worldwide) in a fast yet cost effective manner. They also need to make the product truly best-in-breed which can cater to many different requirements. So they have a critical requirement of mature talent who have been through this growth phase. A defined organization structure with clear responsibilities, processes and systems that enable fast and consistent decisions become important. Manpower numbers start swelling and it is important to ensure their quality and keep them aligned & passionate about the core org objectives and culture. Empowering the new generation to make decisions and letting them make mistakes is required to grow rapidly at scale. At the same time a non-stifling method to ensure decision qualities and continuous training & coaching of managerial and leadership talent is essential.?Some attrition of early employees who cannot adjust to the new game is inevitable. That is perhaps most painful aspect of this phase. In short, issues with which the startups have not dealt with earlier start cropping up everywhere.

There are two major pitfalls which organizations can fall into at this stage. First one is resistance to change. They might be inclined to believe that whatever has worked so far will work in future as well, and they don’t want to let go of the ‘magic’ of early growth phase. The result of this pitfall is often seen in form of large startups that mimic an overgrown amoeba which ultimately implodes. In such organization the processes are often broken, few people have any end-to-end responsibility or independent decision-making ability, and the overwhelming priority is on immediate top-line growth.

The second pitfall is to start learning from very mature organizations where processes are attuned to not making mistakes rather than to speed. Such processes when applied to startups result in bureaucratic hurdles. It is a very natural pitfall since there are very few organizations which have successfully passed through the 10-100 phase. So, it is difficult to find people who neither have 1-10 mentality nor a mature organization mentality. The result of falling into this pitfall is slowing growth, lack of focus on customers & product and large attrition of early employees.

As you can infer, 10-100 is the trickiest phase from an organizational perspective and it is only human to fall into one of the two pitfalls. However, a recognition of these pitfalls can help the startups try and avoid them. Perhaps having an experienced mentor or an executive coach, who has successfully gone through this phase of startups, is the best bet to successfully keep growing during the 10-100 phase.