[I wrote the original version of this for Neya's blog, which is no longer available]
This post is for those of you who are just starting out with your first companies, when you are in the 1-50 employee stage. You're faced with a million questions, many of them regarding growth, and how to manage it. You will desperately want to grow as quickly as possible. Sometimes that's the right thing to do. Sometimes, a more measured approach leads to a healthier overall business.
When you're larger, and/or when you've raised a substantial amount of funding and need to grow at a different scale - i.e., 100-200 employees/year or more, then you'll have a whole different set of challenges. Maintaining quality, culture, and a fair process can be extremely difficult when hiring at a rapid pace. But that's not what this post is about...
I started Neya in October 2009. We hired our first employee in May of 2010. At the time I sold the company, we were up to 30 folks, and we've grown substantially since then. Overall, it was a great experience watching Neya turn from a startup to a stable growing business (I still have to remind myself to stop referring to Neya as a startup). I was fortunate in many respects. I was lucky to attract extremely talented employees; I was fortunate that we were very good at developing customer relationships; and I was fortunate that the skills and capabilities Neya provides fill an emerging niche in unmanned systems. As far as our technology goes, we've hit a sweet spot where we aren't too early or too late.
Having said that, I was always careful about managing our growth. Many folks will tell you to grow as rapidly as you can. If you are selling an app - that's great advice. But if your business is built around developing custom advanced engineering solutions to critically hard real world problems, then you have to consider a wide range of factors in determining when and how to scale. This is especially true if you are bootstrapping vs raising capital.
Here's some of what I've learned about growth in the past few years.
1. Attracting and retaining talented employees is critical. If you are going to grow, make sure you can attract and retain the caliber of employees you need to successfully handle that growth. This is incredibly hard in this labor market. Hiring the wrong folks just to increase head count in order to staff certain projects is a recipe for disaster. It's a mistake nearly all entrepreneurs have made at one time or another. If you're a young enough company, it may be impossible to recover from that. We are fortunate now to have a strong pipeline of folks we can reach out to, to grow Neya. Our best recruiting network is our employees. In our first 20 hire, I hired only two people full time who did not come personally recommended to us in one way or another. Nothing reduces the risk of scaling personnel than growing through internal recommendations. Set up your incentives to reward people who help you hire and grow.
2. Managing growth helps keep existing customers happy. I'd rather have fewer satisfied customers who keep coming back, than a large set of grumpy ones who feel as if we are not spending their (and in Neya's case, "their" often == taxpayer) money well. Make sure your senior folks are able to transition from being strong individual performers to project and customer managers, and can manage their own teams of folks. You may have two equally strong technical performers, and one may be ready and willing to grow her role, and the other may not. It's up to you to figure out how your employees want to grow. In a small company, this is not always an obvious or easy transition. You may try to do everything yourself. Don't. If you've hired the right folks, you can grow your business without sacrificing your quality or values. We were fortunate that our senior folks all had experience managing mid-sized teams. That took a huge burden off.
3. Figure out how you feel about shrinking. Everyone loves to grow. No one wants to shrink. But it happens and sometimes is unavoidable. It's the nature of business. If you take a risk, sometimes it will have a poor outcome, and the result of that is your business shrinks. I wanted to minimize the chance of that ever happening. I knew exactly how many employees I had, and the total number of spouses and children that depended on decisions I made. The fact that any of my employees could have easily found work at other companies should mitigate that fear. But it doesn't. So when I hired someone at Neya, it was only when our available work justified bringing on someone for an extended period of time. That's enough runway to keep growing. Did it cap our growth? Possibly. But hiring 15 people tomorrow, with the "hope" that we'll be able to continue to support that, wasn't the way I wanted to grow.
4. Realize that your overhead and capital needs will change. As you grow, you will be shocked how quickly your overhead and capital needs increase. Make sure you have the cash flow to handle that (for you bootstrappers, that is). Also, make sure to invest in capital only when you know you will be able to keep its utilization high. Nothing is worse than driving your ROI into the ground because you scaled up for something that could either be outsourced or wasn't needed at that time.
I hope some of the advice here helps you, as you go down the path of growing your startup. If you're "lucky" enough to be managing a hyper-growth startup, here's some great advice on Medium to check out.
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