From Family to Tribal Stage: Laying the Foundations for Sustainable Growth

As Chris Yeh puts it clearly on Session 5 notes, moving from family to tribal stage is about evolving from identifying a market opportunity where you have a unique advantage, then building a product with strong market fit, to focusing on how to get market-share and scale.

In reading and watching the stories of companies like Mozilla, LinkedIn, Code for America and of people like Mariam Naficy and Eric Schmidt, a simple and powerful framework emerges: evolve the product to reinforce product-market fit, nurture the culture and company’s identity by hiring and retaining the right people, get financing right so you have the muscles to grow, and plan, execute and iterate relentlessly.

In having gone through such a transition myself, I’d highlight the importance of nurturing and defending the company’s identity (culture) by properly hiring (sometimes firing) and retaining the right people: it is extremely important to hire people with an ownership and accountability attitude, complementary skills, a strong identity with the company’s mission, and with the financial incentives properly balanced. It is also important to “weave” the company’s culture with smart processes, so things get done with quality, clarity and within expected time boundaries. Lacking an identity or culture is a fast way to break a company.

It also resonated strongly with me the importance of the plan, execute, iterate approach: do it not only on product development, but also with everything else, from operations to marketing, to sales to organizational design and processes. Many product-market fit, organizational structure, business model and other hypotheses still need refinement and flexibility to allow the company to keep the defined course of action or to eventually shift it. So, good execution and flexibility are extremely important.

What still surprises me is this, until now, focus on consumer markets and the generalization of the rule: “get millions of users fast, improve the product as you go, and allow the network effects to do the rest”. If we observe the rules for success in b-t-b markets, including for platform businesses, it is clear that the focus must be in quality and reliability, not necessarily viral growth on a product that “can embarrass” you. B-t-b markets are much less forgiving when it comes to ‘beta’ versions and demand deeper levels of services to attract and retain customers. Also, although network effects are powerful, so are low switching costs and high multi-homing incentives, which can make a leading platform business disappear very fast (take Blackberry for instance).

One key lesson I take is to keep it clear to myself and to my management team: evolve the product-market fit, hire for the right attitude, affinity with the company’s culture and complementary skills, get financing right so you don’t get into the “lack of fuel” problem, and plan, execute and iterate on everything.