From Hyper-scale to Hyper-downsize: How to Navigate Turbulent Times
5 Lessons from Simone Rüschenberg
With hype cycles repeating, it is worth asking some related questions: What does it mean for a startup to sustainably scale fast? How might VCs guide more thoughtfully? What can we learn from hyper-downsizing?
Simone Rüschenberg can offer many answers here. She is a seasoned finance leader with experience across corporate finance, accounting, tax, controlling and M&A. Simone has worked at fast-growing companies — scaling them quickly to become unicorns — including HelloFresh, Tier, Soundcloud and Gorillas.
Impressed by her track record as an angel investor and mentor to founder and leadership teams at early-stage companies, Nina Mayer from Earlybird Digital West recently invited Simone to share insights with our team.
We listened & abstracted 5 of Simone’s valuable lessons to share here.
1. Stay focused during times of rapid growth
In the hype phase, keep focused on your core business and a sustainable business model. Aim to have a healthy attitude to growth, remember your margins, and frequently challenge your business model assumptions. Avoid pressure to achieve only top line growth and instead focus on efficient customer acquisition and healthy unit economics.
Ensure you don’t add too many side-growth initiatives too fast and instead focus on your team-building efforts. It is better to build out 3 survival-critical teams to make sure you are set up to handle extreme complexity. Non-critical teams can distract core teams from focusing on what’s important. Core departments can also change over time — therefore it’s important to stay agile and adopt necessary adjustments quickly.
2. Pick the countries that you expand to with the full picture in mind
Expect your expansion managers to brief you thoroughly on the opportunities but also possible challenges. For example, “The Netherlands, Italy, and France have very complex employment laws and structures.” So ensure you have a fit to local markets, and especially familiarity with legal frameworks or regional or international labor laws.
3. Choose your international C-suite carefully in periods of rapid growth
Even if the senior leaders look ‘great on paper,’ fast hiring decisions might back-fire. Keep in mind that you want seasoned leadership that can communicate seamlessly with headquarters, and has led their teams through good and bad times. Ensure your C-levels have familiarity with new locations or regions you may be entering.
4. (Clean) data is everything
Empower HR and Finance to implement the right systems and tools to understand and track even the most complex of workforces. A powerful HR and Finance management tool that has been properly maintained will help you make conscious data-driven decisions at time-critical moments. It is also important to keep track of costs and create budget control systems and spending transparency for teams.
5. Layoffs: The best worst case
When you must trim your staff, you may see that your team can still function well. But this should serve as an opportunity to ask in the future: ‘What do you actually need to survive?’ The answer might be streamlining to key hires e.g tech, finance and operations…
If a layoff is unavoidable, try to do it with empathy and in 1 round, rather than in waves. Be sure that your data is clean and that you are aware of local labor law regulations that you can take action in a relatively short time frame. Communicate clearly: to your management and in your messaging: via all-hands and via personal 1:1s.
TL; DR: Takeaways
- Pay attention to unit economics and cash flow.
- Keep the focus on hiring for 2–3 teams at a time, not hiring everywhere.
- Hire wisely and for talent.
- Seek advice from your VCs if taking funding. Don’t succumb to pressure!
- Always keep an eye on your competition.
Thanks to Simone for sharing these hard-earned reflections.
🙌🏽 Simone Rüschenberg is also a founding member of the Finance Leaders League, an exclusive network connecting Finance leaders across startups and scale ups. While sharing best practices, Simone has grown that community to 400 people. To apply to join, visit here.
👀 To read more from Earlybird, check out our Medium publication.
