How to Grow 3000% a Year Without Making a Mess
By Parul Singh, Principal
When Kate Keough joined Paint Nite as COO, the 10-person event startup successfully combined Monet, Merlot, and a capital efficient business model, but had little in the way of organization. By the time she left earlier this month the company had over 100 employees and was active in 1,600 cities, hosting 6,300 events, and serving 200,000 customers every month while generating $65M a year in revenue — not to mention the creation of six million works of art! This feat is made even more impressive considering the capital efficient company didn’t raise any VC until two years after she arrived.
During Kate’s tenure as Chief Operating Officer, the company grew 3,000%. We asked her to curate a retrospective of her best management advice for startups also looking to make a mark on a very big canvas, without spilling too much paint along the way.
Learn to say no to good ideas
Kate’s secret isn’t throwing everything at the wall, a la Jackson Pollock, but rather embracing the minimalism of Mark Rothko. For those of you who aren’t fans of abstract expressionism, it often means that growing fast means doing less.
For example, one of Paint Nite’s competitive advantages is that they allow their freelance artists to buy paints, brushes, and canvases for their events at wholesale prices. It’s a great package, except Keough says, “the portal was junky, it broke all the time; it was built on Excel sheets, it was a mess.”
Early on, members of her team begged Kate to let them redesign the site. After all, fixing the widely-used portal was a straightforward, if time-consuming process. Keough consistently rejected these requests. “Despite its shortcomings, it saved the licensees hundreds of dollars, and bottom line, it worked,” she says.
Instead of investing time into fixing this inelegant, yet perfectly functional site, the Paint Nite team decided to focus their precious engineering resources on initiatives that would make a bottom line impact. The team redesigned the checkout flow three times, relentlessly tweaked the algorithm to help customers find events, and continuously improved the tools to provide artists with analytics on the event experience. Sure, the artists might have been frustrated with the UX of the internal platform, but keeping the classes full and providing artists with feedback on how to improve the classes, were the most critical values that Paint Nite provided.
And this wasn’t a one-time decision. Sweet sounding, yet superfluous ideas, like web-based classes, were mercilessly rejected so that everyone focused on the company’s key mission of bringing people together and in supporting PaintNite’s extraordinary growth.
Learn to say no to bad habits
When Keough first joined Paint Nite, the office, located above a laundromat, had no assigned desks, no conference rooms, and footballs careened through the workspace with some regularity.
“There were no real titles, no job descriptions, or formality of any kind — one person called himself the “Excel monkey.” Moreover, there wasn’t a great sense of what made for appropriate office talk. Keough immediately sketched out an org chart, filled in HR guidelines and even more importantly, enforced them.
Keough was also careful to preserve and strengthen the healthy parts of the culture that made Paint Nite unique. The staff was dedicated and energetic and would spend 12–15 hours a day working — that kind of passion is a startup’s super power — but made sure to regroup for lunch and fun events that brought the entire team together. She balanced this fiery intensity by formalizing a culture where management shared all the key metrics, both good and bad and regularly tracked employee engagement. She also spearheaded a “core values exercise” which sounds a bit schmaltzy, but actually helped to unite the team.
A Smart Business Model is the Best Growth Hack
The “paint and sip” product category was well established before Paint Nite’s founding. The startup’s innovation was flipping the model from a conventional franchise arrangement to one where the company employed no teachers and owned no classrooms. They basically applied the AirBnB playbook to art classes and created a masterpiece. Paint Nite puts money in the pockets of struggling artists, provides bars with an influx of buyers on slow nights, and gives customers a unique creative experience — which they are happy to share on Facebook, driving even more referrals.
While these considerations are all brilliant, the pre-sales model Paint Nite employs is the pièce de résistance. By pre-selling tickets, the company has a continuous stream of non-dilutive working capital to reinvest in further growth. Many startups believe they can cobble success from a succession of growth hacks, but the best bang for the buck comes from properly designing the business model from the start.
Nothing Beats Facetime — The Experience, Not the App
One of the most impressive feats Paint Nite achieved was recruiting hundreds of freelance art teachers, most of whom had never run a business, and turning them into an engine for growth.
“As we continued to grow, we invested in ‘Paint Nite Palooza,’ which was a conference we initially offered 4x a year. That may seem like a lot, but those early days were during the peak of our growth curve, so that face to face time was especially valuable.”
These get togethers let Paint Nite demonstrate how devoted they were to the success of their artists while additionally building camaraderie between the creative instructors.
“Those friendships between artists allowed for a highly engaged online social community — artists would help one another with tips and tricks that they found to be effective and when they saw the big heartedness of others,that started to snowball,” says Kate. “That’s why I believe our events stand out so much against the competition — our artists run events that are putting to work the collective minds and feedback of hundreds of others.”
Learn to Love the Smell of Garbage Fires
The hard truth about growing 3,000% a year is that things will rarely be pretty. Success can look pretty scary along the way. “When you’re growing that fast, it can get messy” says Keough. “I’d explain to my team that we’re in a room with 100 trashcans on fire, that the room was getting really smokey, but if we could ignore everything and just put out the three most impactful fires, it would be so much easier to breathe.”
Big Data is a Big Luxury
Startups often want data to support their decisions, but in the early days, reliable numbers are rare. “Year over year trends are such a luxury when you’re starting out,” says Keough. “Sometimes there isn’t any data, and you have to understand you’ll be operating in the gray for a little while.”
Keough’s advice? Pick a direction and test it. Measure it, and either nurture it or abandon it. In most cases, you’ll have ten other ideas anyway. “I don’t believe in multitasking.”
Not everyone wants to scale
One challenge for highly motivated entrepreneurs is learning to understand that sometimes, people don’t want to scale beyond a certain point.
“I’m a very ambitious person, I really try to see the best in people and think about how to advance their careers,” says Keough. “But not everyone wants that.” Founders need to realize that some people just want a job, or are in a stage where they can’t make the same sacrifices as founders and senior employees. Good organizations figure out how to utilize this talent pool in creative ways.
Profit Margin is Marketing
When Plant Nite, A paint nite spin-off focused on making terrariums, launched, the prices were kept low, but the team didn’t see a spike in traction in the way they had with Paint Nite. “As we did more digging, it turned out there wasn’t enough margin for an artist to justify the effort involved — more intense inventory management was required considering plants are more expansive, expensive and vulnerable than paint,” says Kate. “As soon as we adjusted the ticket economics to better compensate the time and effort of our artist, we found that the concept dramatically took off.”
Ops Doesn’t Have to Be Boring
It’s easy to think adding a focus on operations will make your freewheeling startup’s energy fizzle, but that’s not been the case for Paint Nite. In fact, systematizing their processes made it possible to introduce new services, like Plant Nite, which has grown 800% since launching last year. The offering was a supply chain challenge, trading in paint and canvas, which don’t die, with plants and glass which are far more fragile. Like Flaubert said, “Be steady and well-ordered in your life so that you can be fierce and original in your work.”