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Ten good habits to scale your startup

Building a unicorn isn’t just about being at the right place at the right time. It requires a game plan and doing the right things—and it’s all within the founder’s control

Being frugal and spending wisely will never let you down.
Being frugal and spending wisely will never let you down. (Jp Valery/Unsplash)

We all have what it takes to do exactly what we want to do in life, no matter what anyone else says. If someone tells you, ‘You can’t do this because you are [fill in the blank],’ I say embrace the challenge. Wear it like a new pair of Converse or Jordans. Meet it head-on.

—Kwame Alexander, author of The Playbook

Are there some good habits that are universally helpful [to achieve rapid scale in a startup]? We think there are.

There will always be some inherent conflict between some of these habits and principles. If there is no conflict, then scaling would be a cakewalk. The trick is to make the right kind of trade-offs without losing your anchors: growth versus unit economics; speed versus being thoughtful; strong accountability versus providing support; frugality versus investing in the right capabilities; goal-orientation versus people-orientation. Juggling these habits as the game progresses without dropping the ball on any of them or losing sight of any of them is of essence. These principles need to be adapted and tweaked based on the situation on the ground and the nature of the playing field. Some unicorns will probably get built by just being at the right place at the right time. Hoping to be at the right place at the right time cannot be a strategy or a game plan. A game plan can only be about doing the right things that are in your control.

1. Frugality is an evergreen habit: Being frugal and spending wisely will never let you down. It is strange how even level-headed founders and leaders can go off the rails and start vanity spending after a large round of funding. Cutting back sharply when things go south is both painful and a loss of face internally. Unit economics should always be the litmus test of a business. You may choose to consciously overlook unit economics in favour of growth, especially if the battle lines are drawn around growth. But it must be a conscious decision. Be extremely frugal before the product-market fit has been established. Hire people who can multitask. Have people doing overlapping roles if needed. Do not splurge on anything. Do not hire heavyweights unless absolutely necessary. Hire people who can punch above their weight class and those with fire in the belly. Operate out of simple and functional facilities. However, after the product-market fit is established, differentiate good costs from the bad ones as you scale. Make the right investments in people and other resources. Get tools that enhance productivity. Operate out of facilities that can get teams face time. Lease or build facilities ahead of the curve so that teams do not get randomly dispersed across multiple and suboptimal facilities. The intangible cost of this is just unbelievable. The cost of lost business can far exceed the cost of suboptimal capacity utilization. The intangible costs of having undersized leaders lead functions at this stage of growth can be high. This may not be visible very easily.

2. Stay grounded: All of us learn lessons in life and we should value them. What got you here may not get you there, but if you forget what got you here, you are unlikely to get anywhere. While you need to be flexible, you should remain grounded and not be carried away by what’s in vogue. This is one of the true tests of character. When the new fad blows away, you will feel good about yourself and the fact that you didn’t sway too much.

3. Don’t lose the ability to be hands-on: The big picture is important but don’t lose touch of the ground reality. It is common to see even the most accomplished professors teaching a basic course to first-year students at a university. This helps them stay grounded and in touch with fundamentals. This also applies to leaders in companies. Continue to stay in touch with the nuts and bolts of the business by reviewing how the key metrics are tracking.

'From Pony To Unicorn' by Sanjeev Agarwal and T.N. Hari, published by Penguin Random House India, 272 pages,  <span class='webrupee'>₹</span>599.
'From Pony To Unicorn' by Sanjeev Agarwal and T.N. Hari, published by Penguin Random House India, 272 pages, 599.

4. Always start with the ‘why’: It helps you define the problem better and will be your North Star when you lose direction. And you are bound to lose direction periodically! Seemingly complex issues can be settled by revisiting the ‘why’. First-principles thinking is a powerful tool. One of the building blocks of first principles thinking is starting with the ‘why’. Why are we doing this? Why do customers shop with us? Simon Sinek, a prolific speaker and author, has even written a book titled Start with Why.

5. Delegate but keep track of the most important things: It’s also important to pay personal attention to these. Most of the people who claim they don’t have the time are often lost in the weeds. They are busy with things that someone in their team should be doing. They have not cared to build a team, coach their team members or empower their team. As a result, the important things are neglected. Or they delegate so much that it is not very different from abdication.

6. Define your talent strategy thoughtfully: Google might have benefitted immensely by hiring hundreds of folks from top-notch universities at top-dollar salaries, but that may not be the best strategy for you. It could also be the best strategy. Your business context and your personal beliefs are important.

7. Cut the crap and jargon: Technology, artificial intelligence, machine learning, deep learning and analytics are important but they are often overplayed. Don’t ever stop asking basic questions, don’t ever lose sight of first-principles thinking. Don’t get carried away by jargon and geekspeak. Get the experts to speak a language that anyone with some clear thinking can understand. Be optimistic but have a healthy scepticism of hype. Ask a lot of questions. Question the status quo. Ask, ‘So what?’ And ask what would happen if we remove some of our self-imposed constraints.

8. Some things are just good to do: As far as possible, define the outcomes you expect and evaluate whether your initiatives are delivering the outcomes you expected. But don’t hesitate doing some fundamentally sound things even if outcomes cannot easily be measured in the short term. Treating people well, taking care of their welfare and security, creating safe work spaces and helping them do their jobs better will all qualify as fundamentally right things to do.

9. Internal customer centricity: Customer centricity with internal customers is as important as it is with external customers. Some of your employees serve paying customers. The rest of them must serve these employees.

10. Avoid activity traps: Don’t sponsor events because it is a good thing to do. Don’t nominate people for expensive training programmes because it is considered the right thing to do. Don’t do anything because it is considered good. These things act as conversation starters or talking points in social contexts, but may not yield bang for your buck. Activity traps can sap energy and focus. So avoid activities that show you are doing something even if not doing anything may be the best thing.

Excerpted from From Pony To Unicorn: Scaling A Start-up Sustainably by Sanjeev Agarwal and T.N. Hari with permission from Penguin Random House India.

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