Venture Backed Startups: The Race of a Lifetime

Last Friday I gave a short talk to the entire team at Mysa where I wanted to answer and unpack a question asked by one of our recent students the week before. The student asked me, “What is the one thing that will prevent Mysa from succeeding well into the future?” My mind immediately went to “what a great question and what motivated this student to ask me this very big question?” It then went to, “how do I answer this question because I can probably name a hundred things that could fault us!”

“What is the one thing that will prevent Mysa from succeeding well into the future?”

After about 20 seconds of humming and hawing, I was finally able to articulate a concept pulled from my three years of startup life (feels so much longer) plus what I’ve learned from speaking with many many other founders who have been both successful and not successful. It’s also probably the most important thing I learned from completing the HBX course “Scaling Ventures”.

So what did I tell this student and later the entire team at Mysa? The one thing that will prevent Mysa from succeeding well into the future… is not correctly managing our growth rate.

To help unpack this concept, I thought of explaining it through an analogy of driving a car in a race. The growth rate of the company is analogous to the speed of the car as the car speeds around the track.

The growth rate of the company is analogous to the speed of the car as the car speeds around the track.

As almost everyone knows, a skillful race car driver has to continuously speed up and slow down to finish the course and to hopefully place near the top. At certain times on the track there are straightaways where the driver can just floor it. However, there are other times where the driver must slow down around turns to prevent flying off the track. At the same time, the driver must drive as fast as possible to win the race. Therefore, a very dumbed down race strategy is, “drive as fast as possible while maintaining control.”

So, how do we think about the growth rate at Mysa. It applies to essentially everything we do but here are just a few:

  • How do we balance new features and products against bug fixes, improving core feature set?
  • How much do we focus on new growth marketing/sales initiatives vs improving what-we-know-works?
  • How much inventory do we buy at any given time?
  • How much money do we raise either through debt or equity?
  • How quickly do we hire and build out the roles/teams we need to continue growing?

The answers to these questions (oh by the way which are changing all the time) and the actions we take, ultimately are what keeps us moving and in control.

After describing the problem and the risks to the business, I began to describe how we have thought about our growth rate and how we know when we need to ease up on the pedal and when we can push a little harder. Some of the questions we ask ourselves include:

  • How are our people feeling and do they feel supported and motivated?
  • How are our customers feeling about us and our products?
  • How are our shareholders feeling about our progress and revenue growth?
  • How does our burn rate compare to our cash inflows?
  • For any given initiative, are we confident in the path forward or are we still researching, iterating, or analyzing the possible paths?

There are strategies on how to answer or think about all of these big questions. However, one thing that I have found is that, while leadership is extremely important, it is on everyone at the company to help us answer these questions. And the key to getting the whole company to help, is open, honest, and frequent communication across the company.

Before I wrap up, a couple of related points.

  1. A constantly changing growth rate can sometimes be hard for employees to understand. Sometimes a slow down in hiring can feel like the business is not doing as well as it was in the past. While in reality, it’s more likely that the business is taking the time to establish new processes or hunkering down on a new product development phase or simply to maintain an appropriate burn rate until the next fundraising event. Growth spurts and times of slower growth are normal.
  2. My experience so far has been down the venture backed path where maximizing the growth rate is important for the return of our investors. This path is not for all companies and certain companies and lifestyles don’t need to think about going around the track as fast as possible. Venture backed startups aren’t for everyone.

I have loved the last three years of leading the team at Mysa. I have learned more than I could have ever imagined when I was just starting out on what it takes to make something truly successful. The pace at which we have grown has worked out very well (although nothing is ever perfect) and I look forward to continuing to managing our growth rate for many years to come.

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CEO Mysa Smart Thermostats

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Joshua Green

Joshua Green

CEO Mysa Smart Thermostats

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