The Challenges of Scale-stage Companies

Rate of innovation

By definition, these companies have hit product-market fit; that means they’re no longer consumed with finding a sustainable, repeatable business model, but rather, executing on it. And that can be their undoing; they’re attacked by incumbents on one side, and upstarts on the other.

Technical adoption

These organizations need to scale without hurting margins. That often means using tech on the back office to sustain growth and reduce error rates or increase consistency. But they’re frequently the shoemakers’ children, reluctant to adopt tech themselves.

Pricing your services

Emerging technology can be hard to price. For example, Machine Learning-driven solutions are often nondeterministic. When you can’t easily quantify the benefit a customer will enjoy, it’s hard to know what to charge.

Management changes

Every time a company hits an order of magnitude change in number of customers, recurring revenues, or number of employees, something has to change.

New risks

As Paul Graham points out, most startups are probably tech companies. And when you deploy emerging tech you’re running ahead of legislation. That means you may have built a house of cards atop, for example, a GDPR-violating business model. Or that your new biotech startup is about to run afoul of the FDA. How should companies account for, and mitigate, risk in these situations?

Measuring intangibles

The value of a startup is often about what might be — not just brand equity and IP, but understanding how much its users’ attention is worth, or the value of data it has collected. Whether pursuing an IPO or an acquisition, quantifying this information is critical.

Applying analytics and learning

In the earlier stages of a company, analytics are about exploration and experimentation (what Rumsfeld called unknown unknowns.) Bigger firms look at known unknowns — did we make this quarter’s sales? — but need to employ analytics and data science to identify threats and opportunities outside their usual scope of awareness.

Launching the Scaletech discussion

This October, along with the team at Georgian Partners and other colleagues, I’ve invited a number of people from academia and industry to come to Toronto and speak about these topics. It’s a one-day series of talks and Q&A discussions for executives from scale-stage companies around the world.

What did I miss?

Are there other major challenges unique to scale-stage companies? How are the best organizations dealing with them?

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Alistair Croll

Alistair Croll

Writer, speaker, accelerant. Intersection of tech & society. Strata, Startupfest, Bitnorth, FWD50. Lean Analytics, Tilt the Windmill, HBS, Just Evil Enough.