Scaling Smart: Essential Strategies for Overcoming Start-Up Growth Challenges with Mona Sabet

In today’s volatile economy, increasing regulations, public scrutiny, talent shortages and constantly shifting technology all make scaling a business more difficult than ever, no matter what industry you are in. U.S. Bureau of Labor Statistics data confirms that, while most businesses make it past the first year (76.8%), the majority (65.3%) close their doors by year ten. (Thanks to LendingTree.com for interpreting that data.)

As those numbers demonstrate, the business of doing business gets more difficult with growth and time.?

That doesn’t make it hopeless. A shift in the way companies think, coupled with the right marketing strategies and a willingness to make big changes can help companies find success and grow beyond that uncomfortable stage of proving out your concept and becoming a long-term brand with a stable financial foundation.

To help business owners trust the process and make the leap, I sat down with Mona Sabet , whose book (co-authored alongside Maria Fernandez Guajardo and Heather Jerrehian), Sail to Scale: Steer Your Startup Clear of Mistakes from Launch to Exit just hit shelves. Mona’s career spans over two decades in Silicon Valley at the vanguard of the technology industry. She also founded HiPower (which I am fortunate enough to be a part of), a group of leaders championing executive women who drive big changes, which has grown to include an influential group of over 100 women founders and board-ready executives.

Here’s what Mona has to say about scaling your business––the right way.?

Q: What are the top 3 characteristics of companies that have scaled effectively and successfully???

A: I have thought a lot about this. Choosing a top three is always hard––in the book we identified 18 different mistakes that can be made––but I narrowed it down to the three that I think are the most important specifically for scaling.

1. Number one is what I call relentless prioritization.

One of the biggest challenges companies seem to face is the inability to truly prioritize effectively. Many executives understand their goals, but struggle to focus on what matters most. They often create priority lists, but instead of eliminating tasks that don’t align with their core objectives, they merely slow them down, while adding other, more “urgent” tasks. So, in reality, they have just added more stress, without solving the problem.?

Everyone talks about focus, but focus is not the right word. You have to do something to end something. Unwanted programs or procedures don’t just go away. True prioritization involves not just deciding what to focus on, but also creating a plan to end projects that no longer serve the company’s goals. Failing to do this leads to wasted resources and can prevent a company from scaling successfully.

A company that knows what they are doing has a plan for ending things; they understand that customers are impacted, and there is a process for winding down. Most importantly, they communicate about it. When they don’t, companies that could be awesome become simply average.?

1. The second is evolving leadership.??

This is one that can kill a company, and it is really hard for a few reasons. Early in a company, when there are only, say, 20 people, everyone is friends, doing it together. Even though there may be a clear CEO and other leadership titles, you are all doing whatever it takes, and that often leads to a really connected group.?

Scaling requires leaders to evolve from being hands-on founders to becoming executives who can guide the company through its growth. This transition is often difficult because it involves letting go of day-to-day tasks and focusing on the long-term vision. Leaders must learn to balance relationships with the old guard, who may still see them as peers, and the new guard, who may find them intimidating. Those who can’t make this transition often find their growth stalled, as they fail to delegate effectively and miss out on strategic opportunities.

As a leader, you have to figure out how to shift your mindset. Every founder has a different dynamic that they lean towards––either they are a constant visionary, always excited, and wanting to be liked or they are perfectionists, who want everything to happen faster and to a very high (maybe impossible) standard. To get past that muscle memory, you must be incredibly self-aware and intentional. Leaders must remember that it is part of their job to either encourage people or prod them along. If one of these doesn’t come naturally, the focus on – and execution of – it needs to be planned into your daily schedule.?

It’s also vital to have a diverse workforce. Founders and the early-stage founding team should complement each other in dynamics and thought process. Sometimes, founders reject people who operate differently. Instead, embrace that balance and recognize that different strengths are good if they are utilized in the right way.?

1. Number three is thinking beyond the four walls of your product.?

This is one of my personal pet peeves. When businesses scale, they transition from selling to early adopters to selling to the early majority group. As this happens, companies need to shift their focus from features to how their product integrates into the customer's existing routines. I don’t see companies thinking that way as they are starting to scale. It’s a different kind of customer you’re selling to.?

The early majority are very ROI-driven. When they say they want to know how it works, they mean: how does it work for me today? To make the jump, you need to build a customer-facing team that understands how the product fits into the customer’s world. Then document that understanding and educate internally until every department, from sales to support, is aligned with this approach. This is often a huge weakness in the scale phase. You are trying to change the way everyone in your company talks to customers and thinks about your customers’ workflows instead of just your product’s features.

An example of this is playing out in the healthcare industry right now. Hospitals are operating under the thinnest of margins, and as the economy flounders, many are looking for ways to make cuts to their vendor spend. Health tech start-ups might find their hospital customers canceling contracts unless they have invested in integrating their products into the greater environment of the hospital, perhaps by driving adoption across every department and scaling to other hospitals within the same system. Even great products, when not well integrated into a customer’s environment, can suffer through a difficult financial cycle.

[Side note: I recently spoke with the editor of Healthcare IT Today, Colin Hung, about this.]

Think about it this way: It costs between five and 25 times more to acquire a new customer than to retain an existing one. You might be able to sell to the first customer without thinking about how the product will fit into long-term processes and daily routines, but if your support team hasn’t thought about the business from a consumer perspective, you will probably struggle to scale when the sales team can’t effectively communicate the value of the product to a broader audience.?

Q: What role does the CMO and the marketing department play in companies that make it through the scaling phase??

A: The marketing team plays a crucial role in developing the sales strategies needed for scaling. They must engage directly with customers to understand their needs and then communicate those insights across the company. A strategic marketing team doesn’t just gather customer stories for the website; they ensure that these stories inform the company’s overall approach.?

Additionally, there should be someone within the marketing team that takes on the role of a solutions marketing. They can help expand product adoption and turn customers into enterprise clients by tailoring messages to different audiences in the way that only marketers can.??

Q: You recently published an article where you talk about what’s different about getting funded in 2024. In it, you talk about “outside-in” thinking. Could you talk about why that’s important today??

A: “Outside-in” thinking shifts the focus from your company’s internal perspective to the needs and challenges of your audience. It’s about understanding and addressing what potential partners, investors, or customers are currently experiencing, and how you can be relevant to them.?

It’s easy to get trapped in your own world, focusing on how you want to present your company rather than how your audience perceives it and what they care about at the moment.

In partner marketing, for example, you need to convince potential partners of the value you bring. It’s not just about imagining what they might want but actually understanding their current focus and needs. Companies often misjudge what their customers, partners or investors are interested in because they base their assumptions on internal perspectives rather than asking or researching what is genuinely important to their audience. Every company has underlying issues that aren’t always visible externally. If you can identify and address these hidden concerns, your pitch will resonate more effectively.

Additionally, if your external communications—like your website or social media—don’t align with your pitch materials, it creates a disconnect. Companies that successfully adopt an outside-in approach often find that their relevance and appeal increase, positioning them better for scaling and growth.???

Q: What common mistakes do you see companies make when they’re trying to identify product-market fit???

A: There are a few common mistakes that can derail companies:

1. Falling in love with your product: Many companies, especially tech groups, become enamored with the solution they’ve created, focusing more on its features than on the actual problem it’s meant to solve. This is a form of inside-out thinking. It’s particularly challenging when the product originates from research, like in a university setting, where the solution is cool but in search of an application. If you don’t fall in love with the problem you’re solving, you may struggle to sustain the necessary commitment to build the company because the first solution you come up with might not be the one your intended customer needs to solve its problem. You might need to change it entirely once you understand the true nature of the problem.
2. Misinterpreting the Minimum Viable Product (MVP): Many companies focus on the "minimum" part of MVP and forget about "viable." I think this is a byproduct of the lean startup methodology popularized in Silicon Valley, where the emphasis is often on “failing faster,” and getting something to market as soon as possible. However, if what you put out isn’t viable, when your customers don’t like it, you won’t have learned anything, because the product wasn’t viable to begin with. MVPs are about testing your hypothesis about your solution to your customers’ problems. If you skimp so much on your MVP that it’s not viable, you aren’t able to test anything.
3. Misjudging market readiness and pricing: Companies often misjudge when they’re ready to scale, moving out of the launch phase prematurely. You have to understand how much a customer is willing to pay to solve the problem, not for your solution, but for any solution that addresses the problem. If customers aren’t paying for the problem currently, or if they don’t need to pay to solve it, your solution might not resonate with the market.

Q: You talk about the importance of budgeting and stretching resources – e.g., not marketing before product-market fit. When do you recommend start-ups think about, plan for and bring in marketing?

A: During the launch phase, the primary focus should be on sales over marketing - getting customers to pay for your product. Marketing should come into play more meaningfully when you have figured out who is paying for your product and why; that’s when you start seeing a return on investment (ROI) from your marketing efforts.

I differentiate between spending on marketing for broad campaigns and using marketing for hypothesis testing. Full-blown marketing campaigns are premature if you haven’t yet identified your target audience or figured out how to monetize them in order to become profitable, but testing what works is something you should be doing from the beginning.

Understanding how to become profitable is different from actually making a profit. You might know how to generate revenue but still be far from profitability. For instance, you could identify a customer segment that buys your product, but if the cost of acquiring these customers is higher than what they are willing to pay, you’re not yet in a position to understand your path to profitability, and therefore you are also likely also not yet in a position to scale marketing efforts.

Marketing should be aligned with validated hypotheses. For example, if you realize that changing your business model—as in from a seat-based to a transaction-based model—or shifting your focus––for example, from hospitals to standalone clinics––will lead to a profitable path, that’s when you should ramp up marketing. At this point, you have evidence that your marketing will lead to revenue and, eventually, profitability. Until you have this clarity, marketing should be focused on testing different approaches and refining your strategy.

If you’re a #founder, #CEO, #CMO or someone working with start-ups, I hope you find this information valuable. Of course, there’s a lot more in Mona’s book, so make sure to check it out.?

Thank you, Mona, for sharing your expertise.