How Not to Scale Your Startup
It started with two people in a garage. The quintessential beginning we hear about many startups. And for good reason — you do not start out with 100 people. Companies begin with a founder or two. Some never leave the garage. The ones that grow solve a real problem and learn how to do it at scale. They do not learn how to scale and then figure out a problem to solve.
Knowing when to scale your company is critical. It is your choice — what do you focus on?
Aha! also began with two people. Although, me and my co-founder Dr. Chris Waters never worked in a garage. (We started in my home office in Menlo Park, CA.) We wanted to prove that we could create real customer value in a new way that was actually quite old. We wanted to avoid the scale-first madness that dominates the mentality in Silicon Valley today. So we focused on creating a product people would love and offering personal and amazingly responsive support.
We made a simple hiring policy — bring in new team members only when it benefits customers.
We did not make our first official hire for about a year. When we did, we knew it was essential to serving our customers. But let’s consider if we had taken the opposite approach. What if we had hired 50 employees in the first year, rented a flashy office space, and pushed a just-good-enough product to market?
We would have missed out on opportunities to learn. We would have frustrated customers who would undoubtedly feel the pinch of our unnaturally fast growing pains. We would not have developed The Responsive Method (TRM), our framework for success that grounds each employee in our principles and creates more customer value. And I am not sure we would still be in business.
Companies that grow at a healthy rate are the ones that prioritize value and personal relationships. These companies:
Do not hurt customers You scale only when it is vital to grow your customer love and if the immediate consequences for not scaling will be severe. Give yourself a benchmark — “when we hit X number of customers or reach X in revenue.” Chris and I agreed that we would not hire anyone until we had 100 paying Enterprise customers. We made that first hire because not doing so would have hurt customers and our ability to create more value for more people.
Invest in training So what happens once you reach your benchmark? How to scale comes down to communicating your organizational values and investing in training. This ensures that new hires understand how to use those tools as a guide. As soon as we decided to expand the team, we knew we needed to codify what was working and what was unique about Aha!
There is nothing wrong with aspiring to grow your company — but it cannot come at the expense of your product and customers. Put them first and adding to the team will follow.
Today, Chris and I still work out of our home offices. We have greatly expanded our team — all of whom work out of their own home offices in 19 U.S. states and a few international locations too. And I am proud to say that Aha! is one of the fastest-growing software companies in the United States, serving more than 100,000 users.
I tell the story of our growth, TRM, and how we have stayed true to who we are in my bestselling new book, Lovability. For example, we still follow the same hiring policy and training programs that we first created — although we have considerably more job openings than we did in the early days.
How fast will we scale? Only as fast as our customers need us to. And will our approach continue to work at 100, 500, and 1,000 employees? Answering that is the beauty of the adventure ahead.
What is your advice for scaling a company?