The content in this blog is outdated and we cannot reliably say it is still accurate with the speed in which the cloud industry moves. But don’t worry—below are more recent, up-to-date blogs.
There are many phases to a startup, and many ways in which you can categorize these phases. I love remembering the early days of CloudHealth Technologies—when we were just 5 people in a cramped office trying to win our first customers—and comparing it to where we are now: 130 employees worldwide, thousands of customers, expanding internationally, with bustling headquarters in Boston. Those are two very different stages in our evolution, but how would you objectively separate them?
The keyword is scale.
Essentially, a startup goes from product and market testing, to early product and market fit, to ongoing repeatable sales, to sales and market expansion, to scale. If you’re one of the lucky entrepreneurs that are successful in the startup phase, then get ready for scaling up! The scale stage is the last and the longest. (While I’ll admit that it brings certain challenges... it can also be the most fun.)
From a venture funding perspective, these phases can be categorized by seed stage, A round, B round, C round, D round, mezzanine, and IPO. And just as the scale stage is the longest stage, the funding options for scale—C, D, mezzanine, and IPO—are the most extensive.
In an early stage startup, incredible individual feats will take the company from one win to the next. Heroes are born. Tales are written. And true genius shines as software development hackers, marketers and amazing sales people work to win each new customer.
It’s during this period that an amazing iterative creative process occurs. The startup begins to create a framework for working. They develop a process to build product, to market and generate leads, to close a sale. They create a way to train and support customers. And, finally, they create a way to capture customer feedback in order to continuously improve product, marketing, sales, training, and support.
The scale phase is all about taking everything you created that’s working in the startup phase and taking it to the next level for exponential growth. Key components for moving from startup to scale are:
- Documenting and recording processes.
- Establishing processes where missing.
- Putting controls in place.
- Automating wherever possible.
- Measuring and tuning for constant optimization.
- Repeating successful steps and processes over and over again.
Ultimately, you want to be able to add new employees to the rapidly growing organization who can be quickly on-boarded and productively participating as soon as possible. It’s critical for new employees to contribute to the creative systems and processes that will exponentially grow your business.
When you get to this point in the company’s growth, there’s a recurring movie that can play over and over again with founders. Up to this point they’ve been the focal point of their creation, and they love it. They’ve grown accustomed to being heroes – swooping in to save a customer, working 24 x 7 to deliver new solutions. However, as the company grows and additional expertise fills the bench, the company no longer needs founders to play this role. The challenge becomes: how do you redirect their efforts? That expertise needs an outlet, otherwise they may start fires just to be involved in putting the fire out.
The true challenge of an entrepreneur is to navigate each stage of the startup lifecycle and ensure smooth transitions between phases. The people who can successfully execute from early stage through scale stage are the ultimate entrepreneurs.
The amazing thing is that the creativity, skillset, drive, and work ethic required at each phase is the same. It requires incredible levels of creativity to successfully scale hiring, onboarding, marketing, sales, support, services, and training. It requires incredible creativity to exponentially grow – i.e. scale – an organization and business model. And, it requires incredible creativity to build a quality, reliable, and scalable product that also achieves market-leading velocity. But ultimately, it requires a team of people that want ownership, want to collaborate and participate, are looking to make an impact, and want to get immersed in fulfilling a vision.
That brings me back to CloudHealth Technologies. Over the past 4 years we’ve created a company culture for individuals who want to actively participate in all aspects of a startup and evolve with each phase. My greatest pleasure has been watching so many people thrive and grow throughout every phase (check out this 2016 highlights video to see an example of what I'm talking about). Helping us navigate the scaleup phase and watching the team successfully achieve scale will be my ultimate reward…that, and a little incentive of a company trip to Turks and Caicos when we crush our 2017 goal.