Investors secret

With your groundbreaking idea in hand, it’s time to explore the success stories of industry leaders such as PayPal, Airbnb, Facebook, and Netflix, who overcame challenges by reframing rejection and identifying opportunities. Scaling a startup can be a thrilling journey for entrepreneurs, and learning how to navigate unexpected obstacles can result in exponential growth and fulfillment.


Kathryn Minshew, the founder of The Muse, raised $28 million for her online career platform, but not without hearing the word “no” 148 times. However, Minshew views “no” as an opportunity for insight, not a roadblock. She recommends entrepreneurs do the same, as each “no” is a chance to receive feedback and adjust your approach.


For instance, if the investor denies your chain of kickboxing gyms across Florida, saying too many old people live there, take it as an opportunity to refine your pitch or consider a different location. However, beware of the “lazy no,” thrown out by investors who refuse to put in time or effort, and the “no” from friends and family whose rejections are relationship-based, not idea-based.


According to Minshew, the most valuable type of “no” is the “honest no” from someone whose opinion and wisdom you respect. Meanwhile, the best type of “no” is the “squirmy no,” which polarizes the room between those who think the idea is ridiculous and those who believe it could work. This reaction indicates that you’re onto something so unique that no one knows how to react. While getting buy-in for an unconventional idea can be tough, it also means you’re likely the first to try it out.


In short, every “no” is an opportunity to gain valuable insights, and each “yes” brings you one step closer to achieving your goals. By viewing each “no” as a stepping stone rather than a setback, entrepreneurs can learn and grow from their experiences, ultimately leading to success.


Why Fostering the Right Company Culture is Crucial for Scaling Your Startup

While funding is essential to scaling up a startup, it’s not the only factor that needs consideration. Early on, when you have a small but devoted following, use this time to learn from their feedback, whether it’s positive or negative. By doing so, you can establish your core values and identify your guardrails. This will also help you to decide who you should be networking with, including industry leaders and government agencies. Once you scale up, it’s much harder to go back and dig this deep. So, it’s essential to foster the right company culture early on.


Developing the right culture is essential to the success of a startup. Look at Netflix, for example. Their employees have no set hours or vacation policy, and the company is built around a team mentality, although it is competitive and driven. This mindset hasn’t happened by accident. Netflix has a deliberate process for creating culture, and this has resulted in a more than 100 slides Culture Deck, which is available for anyone to view online.


It’s important to be clear about your values, how you treat employees and customers, and how you envision your culture from the outset. Write it down and develop a manifesto if necessary. When you have this clarity, it’s easier to attract the right people to your team. However, it’s important to ensure that your team members bring diversity of ideas and perspective.


Moreover, when selecting investors, consider them as carefully as you would your co-founders, because they will have a significant impact on your company’s culture. Finally, when done right, culture can help to synergize the startup environment, boost morale, and create a feedback loop in which employees work even harder. This, in turn, helps the business to do better and attract more customers. Remember that a company’s culture is one of its most important assets, and nurturing the right one can help your startup to scale and succeed.


Balancing Speed and Caution

Choosing the right time to launch a product or scale up a business can be a challenging decision for entrepreneurs. Launching too early can mean releasing an unfinished, unimpressive product that may result in losing potential customers. On the other hand, waiting too long can stall momentum, making potential customers look elsewhere and giving competitors a chance to get ahead. The key message is that scaling up too quickly can be risky, but moving too slowly can starve a company.


An effective leader needs to monitor changes to determine when to be patient and when to strike. Those who can strike quickly can achieve “escape velocity,” leaving competitors behind. While rapid growth techniques such as PayPal founder Peter Thiel’s referral program can work, they can come at a steep price and with a messy aftermath. It’s important to prioritize which issues to tackle and ensure that core problems with the product or company culture are addressed first.


The story of designer Tory Burch, who chose to launch her retail store in New York City during Fashion Week despite not having the custom-designed door she had planned, illustrates the importance of making a decision and moving forward. Burch’s successful launch demonstrated the potential of her brand, and stalling would have choked momentum. However, not all problems are equal, and it’s essential to address significant issues that could kill the business.


Entrepreneurs need to strike a balance between scaling up too quickly and moving too slowly. Timing is crucial, and an effective leader needs to be aware of when to be patient and when to act. Once momentum is gained, it’s important to keep the business moving forward and prioritize which issues to tackle first. In the end, it’s about making a decision and taking action, even if it’s not perfect.

Responding to Customer Behaviors when Scaling Up

When scaling up a startup, it’s important to pay attention to your customers’ actions rather than their words. The example of Facebook’s expansion to other schools demonstrated that users were more inclined to stay on the network despite expressing dismay at the loss of exclusivity. In another example, fashion designer Jason Wu’s popularity after Michelle Obama wore his clothes didn’t translate to success on Rent the Runway. Jennifer Hyman, the company’s co-founder, realized that Wu’s designs didn’t match customers’ daily needs, leading to a collaboration between the two that created a profitable and more wearable line called “Jason Wu Grey.”


Hyman also noticed that customers would rent an outfit for a Saturday night cocktail party and hold onto it until Monday morning, wearing it again to work with a blazer, which was costly in terms of repair and cleaning costs. To address this, Hyman switched to a subscription service that allowed customers to rent multiple outfits and rotate them, which further boosted the company’s growth.


Entrepreneurs can conduct their own focus groups to observe customer behavior and gain profitable insights. For example, Mariam Naficy, founder of bespoke stationery company Minted, learned that men today are more involved in the wedding-planning process and began incorporating less overtly feminine designs into her offerings.


By watching how customers behave and reacting to their actions, companies can achieve exciting results. However, what happens when a seemingly insurmountable hurdle arises? 


When you face challenges while scaling up, changing to an even better idea can be the solution. Ev Williams faced a similar situation when Apple entered the market with a competing podcast-publishing platform, putting his product Odeo at risk of failure. He decided to pivot and organized a hackathon where he and his team developed a new product, a group-texting platform that turned into Twitter.


In general, flexibility and adaptability are useful skills that can help in both business and life. The pandemic forced companies of all sizes to learn this skill, including Airbnb, which pivoted its offering to focus on long-term stays for people who needed to relocate and work remotely. Additionally, Airbnb added unique components to its stays, such as virtual salsa lessons and tours of local attractions.


Pivoting to a better idea when faced with difficulty can lead to success. However, it’s also essential to have strong leadership to maximize that success.


The Importance of Good Leadership in Scaling a Company

Successful scaling of a company requires good leadership that can communicate a clear vision and motivate employees. Transitioning to a larger company after a sudden scaling up can be challenging, but to keep employees inspired, it’s important to sustain a steady drumbeat of purpose and motivation. Good leadership requires compassion, wisdom, and clarity of vision, which means being willing to listen, learn, and take advice, even from those in positions below you. It also means being able to accept constructive criticism and encouraging opposing viewpoints.


Marissa Mayer, who was Google employee number 20, employed a bold leadership move by hiring smart, young employees and giving them huge portfolios to challenge them to learn something new. This resulted in a tsunami of new ideas that emerged from the synergy of a bunch of smart people being exposed to multiple ways of doing things.


Leadership that yields tremendous good for the world is the best way to scale big. In this regard, Ben Chestnut, the founder of Mailchimp, notes that startups are like pirate ships, but when they scale up, the culture makes a necessary adjustment. 


Angela Ahrendts, former CEO of Burberry, made a three-minute iPhone video that was natural and real to communicate her vision to all her new employees at Apple, knowing that young Apple employees were unlikely to read long emails. It was such a hit that she made one every week for four years, regardless of where in the world she happened to be. This leadership move sustained a steady drumbeat of purpose and motivation among Apple employees.


In conclusion, good leadership that can communicate a clear vision, motivate employees, and encourage new ideas is essential for scaling a company. Great leadership that naturally flows into doing good is the best way to scale big.


How Scaling Up Can Lead to Positive Change

The decision to scale up a business can have a significant impact on society. As a company grows, it gains the ability to shape entire communities and regions, and the good it does can have a boomerang effect. 


One example is Howard Schultz, the owner of Starbucks, who made a deliberate decision to build a company that took care of its employees, even before making a real profit. Starbucks became the first company in America to provide comprehensive health insurance to every employee, including part-time workers. The company’s success allowed Schultz to provide this benefit to more people and positively impact the lives of many of his employees.


Another example is Franklin Leonard, who used his position at Leonardo DiCaprio’s production company to address the lack of diversity in Hollywood. Frustrated that only a few scripts were being made into movies, he put out an anonymous call for good scripts that were not being produced and published the list. The official “Black List” he created helped numerous independent filmmakers see their projects to completion.


Scaling up also allows entrepreneurs to fill a need in society. For example, when Starbucks tried to expand in China, it found it challenging to retain workers because of the low status attached to being a barista in the culture. Schultz organized parents’ weekends, flying in parents from remote towns and villages to see the operation and its benefits. The goodwill generated by this initiative helped tremendously in curbing worker turnover.


The decision to scale up a business can have an exponential effect on society. Robert D. Smith, CEO of Vista Equity Partners, decided to pay forward his good fortune after delivering a commencement speech at Morehouse, a historically Black college. He announced that he would pay the student debt of every graduate, effectively scaling up the lives of hundreds of students.


Scaling up a business can lead to positive change and have a significant impact on society. By making a conscious effort to do good, entrepreneurs can use their businesses to make a difference and inspire others to do the same.


Expanding a company can be both exhilarating and difficult. By fostering a positive work environment and strong leadership, a startup can transform into a household name. One piece of advice for improving a product or service is to envision an “eleven-star experience” – a version of the offering that goes beyond the best possible iteration. From there, work backward until you find the perfect balance between impossible and better than anything previously imagined. For instance, a hotelier could picture greeting guests with a string quartet or vintage cars, then scale back to something feasible and innovative.


Inspired by a book  “Masters of Scale”; Reid Hoffman, June Cohen & Deron Triff


8 minutes read

Innovators' Secrets to Scaling Your Business for Success

Discover valuable insights from renowned innovators on how to take your business to the next level.