3 Problems 50 Entrepreneurs Faced when Scaling Their Startups
“It’s like a man riding a lion. People think, ‘This guy’s brave.’ And he’s thinking, ‘How the hell did I get on a lion, and how do I keep from getting eaten?”
This famous analogy very aptly describes the life that entrepreneurs tend to live — doing the miraculous, and holding on for dear life. To the man on the street, being a startup founder might seem sexy and appealing (“Take control of your life, run your own business!”).
However, out of 100 entrepreneurs, 99 will probably tell you otherwise, and the last one is obviously deluded.
So, dear budding entrepreneur, I know that you’re raring to go and do your own thing, and I’m extremely excited for you. It would be wise, though, to first have a glimpse into the major problems startup founders face at each stage of their companies’ lives.
We did a random survey of 50 entrepreneurs, and received a very diverse set of problems faced by them at the seed and growth stage respectively. This makes sense on hindsight, as we made sure to survey across a variety of markets and industries.
There were, however, three key problems at each phase that most startup founders seemed to encounter.
At the seed stage
1) Building a talented and motivated team
For all the attention that startup founders get, the quality of work done — especially in the early stages — is largely determined by the team behind them. Not only do these first employees have to be talented enough to churn out top-notch work, more often than not they also need to juggle more than one task at a time.
Because of this, LawCanvas founder Daniel Leong says that the team needs to be almost as motivated as the founding team themselves — but even smarter.
Jefrey Ong, founder of Malaysia-based roaming service provider Flexiroam, concurs strongly. He believes that employees need to be given a reason to “work in a company that no one had [sic] heard of and forgo the big fat salary that large companies can afford to pay.”
Naturally, this applies all the more when finding co-founders. Towards that end, Toby Ruckert of Unified Inbox found it critical to perfect his pitch so that he could communicate his idea “in a way that makes sense and enables you to get the necessary buy-in from the key stakeholders you’ll require.”
2) Getting initial validation and traction
The perpetual challenge for all startup founders is, “how do I get customers to use my product or service?” Unless you’re fresh out of a prestigious program like YCombinator or 500 Startups, no one will believe in a new product that has no proven track record, explains Goh Chee Hau, founder of on-demand delivery service The Lorry.
This task is all the more harder for marketplace startups like The Lorry, who suffer from the “chicken and egg” problem. Vendors or suppliers want to see customers before joining the platform, while customers require proof that the vendors on the other end are reliable.
In short, a tough nut to crack.
Getting that first ten customers, according to Wedding.com.my founder Kelvin Leow, is therefore extremely crucial to the morale of the team. It is quite literally “make it or break it” at the seed stage.
Edwin Tay, who heads education startup EasyUni, emphasizes that this responsibility falls to the founder — he or she must do the “initial hustling” to validate their hypothesis.
3) Executing fast
There is a startling number of startups out in the world today. Fast Company estimates that, in the US alone, more than 500,000 new businesses sprout up every month. Almost every industry is crowded with upstarts looking to carve out a niche for themselves, which means speed is of the essence.
This is particularly pertinent at the seed stage, when your startup is struggling to catch its first breath on little to no resources. “How do you do more in short period of time without the big bank account and team around you?” questions Ching Wei Lee, co-founder of iMoney.
Here’s where the much talked about “agile mindset” comes in — fail fast, learn quickly, and keep improving till you beat out the competition. In this way, entrepreneurs can build a minimum viable product and reach the market quickly, receiving valuable input and (hopefully) validation, says Tham Keng Yew, the brains behind business-matching platform Socialwalk.
By executing fast, founders will have a clearer idea of how to develop an idea into a full-fledged company, adds Krystal Choo, founder of travel app Wander.
Startups might not necessarily have the means to hire the required talent to get all these done in the early days, which is where companies like AgilityIO and Ops Ninja come in — to supply the right talent at a crucial stage.
At the growth stage
1) Hiring and retaining talent
Now that product-market fit has been established, startups need to focus on empowering specialized roles to drive certain metrics. For these positions, only the best-in-class talents will do, but every other founder surveyed in this study said that it is far easier said than done.
Choo and Ruckert — from Wander and Unified Inbox respectively — both agree that it is a massive challenge to keep employees motivated through the ups and downs. And the nature of startups is such that there are many peaks and troughs, especially in the growth stage.
Choo says that morale is particularly difficult to maintain, since most employees are now being paid with salaries instead of full-on equity — they have to be motivated differently.
For this to happen, LawCanvas’ Leong thinks that establishing a team culture — and preserving it — is critical. More importantly, everyone has to be constantly kept “on the same page on what we’re doing, why we’re doing it, and what needs to be done next and by when.”
2) Bringing on a good management team
In the same vein, most entrepreneurs found that as the startup scaled, they no longer had the capacity to look after everything. In Ching’s words, the workload now requires an “initial set of top calibre guys who are willing to go ‘all in’ with you.”
In other words, there is a need for an all-star management team to take the reins at the growth stage — people you can trust to “make very big decisions with very little data and in a very short time,” according to Megafash founder Ngeow Jiawen.
Doing this isn’t as simple as just throwing money at talented individuals. EasyUni’s Tay recounts this particular period as “horrible” because there wasn’t a strong foundation to begin with. Their team comprised of 15 fresh graduates at that time. Taking too many shortcuts at the seed stage, he says, caused many problems when scaling up and moving to the next level.
3) Putting stable and efficient processes in place
It’s not enough to have a group of brilliant individuals. In order for a company’s products or services to remain excellent, good processes must be established — notably when company size is swelling in numbers.
Or, as Goh from The Lorry puts it, it is “essential to have a standardized service commitment to the customers in order to be scalable.”
A good management team and processes go hand-in-hand. Once procedures have been defined, Wedding.com.my’s Leow says that the founder has to let his lieutenants handle them, “trusting they will follow or do better, so that you can move on to bigger things.”
And there we have it. I’ll leave you with a quote from the founder of Pandora:
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