It is very difficult to build a startup, however it is even more difficult to transition it into a high-growth, sustainable startup. Startup success can be learned, however founders need to acquire the right advisors and mentors for each lifecycle stage. Innovation management breakdown is one of the key reason for growth stall. Startups need to avoid these growth stalls with the right organizational structure, management systems and expansion strategies.

1. TRANSITIONING
STARTUPS TO
SUSTAINABLE, HIGH-
GROWTH COMPANIES
Speed/Strength Week – Draper University – May 2nd,
2013

2. Introduction: Martin Tantow
 Entrepreneur: Avalas, Blissity, 3scale (partially
sold, raised $6M from Javelin Ventures and others),
CloudTimes (ongoing), Amiro Group (ongoing –
Scaler, Amiro Capital)
 Venture Capital: Infocomm Investments
 Executive: Booz & Co, Oliver Wyman, T-Mobile,
Viant
 Advisor/Mentor: TechStars, Astia,
Startupbootcamp, Radish Systems, Ziptask
 Growth-stage Mobile Industry Accelerator -
helping startups gain traction, deliver on KPIs and
close successful, subsequent rounds of financing
 50+ advisor network with industry leaders from
mobile carriers, handset manufacturers, mobile
software entrepreneurs, platform providers, service
providers, Internet giants and others

3. There is no lack of startups
137000
120000
Startups Getting Founded
(every day)
Startups Getting Dissolved
(every day)
88% of Startups fail
Source: Worldwide Business Start-ups, Moya K. Mason

4. Why so many startups?
 Markets are more mature
 More Internet users, more
app buyers
 Gaining critical mass
Market
 Reaching customers is
easier
 Platforms like Apple App
Store, Facebook, Google
Play, Foursquare
Distribution
 Amazon EC2, S3
 Heroku
 Ruby on Rails
 MySQL instead of Oracle
 Availability of
libraries, APIs, web
services, virtual machines
Technology
 Google Apps for Business
 Salesforce
 Intuit
 Box
 Dropbox
 Skype, Google Hangout
Services
Eric Ries: Lean
Startup:
MVP, cont.
deployment, A/B
testing, action.
metrics, pivot
Methodology

5. Startup Ecosystems have their
share

6. It‟s not about quantity, it‟s about
quality!
However,

7. Building a Startup is difficult – Converting it into a
high-growth, sustainable business is even more
difficult

8. Why do Startups fail?
 Environment:
competitors, regulation, “Google”
External
Internal
 Market fit: right market at the right
time
 Product: product-market
fit, pivot, UI/UX, design
 Business Model: might be the core
differentiator
 Team:
vision, flexibility, leadership, dedicat
ionExecution

9. The right mentors are a critical
success factor for a startup
1. Founders that learn are more successful
Startups that have helpful mentors, track metrics
effectively, and learn from startup thought leaders, raise 7x
more money and have 3.5x better user growth.
2. Startups that pivot once or twice raise 2.5x more
money, have 3.6x better user growth, and are 52% less
likely to scale prematurely
Why do Startups succeed or fail?
(Study with over 650+ startups, incl. 160 funded
startups)
“Startup success can be engineered by following the process, which
means it can be learned, which means it can be taught.” (Eric Ries)

10. Startups require different functional
expertise along the Startup
Lifecycle
Conservation/Renewal
Sustain
Scale
Efficiency
Validation
Discovery
Seed
Series
A
Requires industry
specific advisors &
mentors with
functional expertise
Gap
Source: StartupCompass, Scaler
 Early business
model validation
 Beta tests
 Pivots
 MPV
 Initial validation
 Initial value
proposition
 Business model
refinement
 Customer acquisition
channels
 Cust. acqu. process
 High-growth
 Scalability
 Organizational changes
 Management systems

11. Avoid the “trough of sorrow”
Source: Paul Graham‟s Startup Curve – avoid the “trough of sorrow”

12. Avoid growth stalls (Fortune
500)
Cause Explanation
Premium position
captivity
A company with long-
successful premium
brands ignores new,
low-cost rivals or
major shifts in
customer preferences.
Innovation
management breaks
down
A company
mismanages the
process for creating
new offerings.
Core business is
abandoned
prematurely
Believing its core
markets are saturated,
a company doesn‟t
fully exploit growth
opportunities in its
existing business.
Company lacks a
strong talent bench
The firm has few
executives and staff
with strategy-
Source: Stall
Points, by
Matthew S.
Olson and Derek
van Bever

13. Building sustainable, high-growth
companies
 Organizational structure (roles & responsibilities, departments, key
hires, incentive system)
 Management systems (financial planning & evaluation, HR planning &
evaluation, strategic planning, product development
management, sales/marketing management, partnership management)
 (International) expansion (product vs. geographical expansion strategy)
 Buy vs. Build (organic growth, M&A, software rental, IP protection)
 Strategic alliances and partners (obtaining targeted
resources, JV, channel collaboration)
 Channel management and enterprise sales (viral, bottom-up user
adoption, lead generation, enterprise learning, support)
 And especially how to ensure sustainable growth (business
model, retention strategies, excellence)
Source: Scaler, Building Sustainable High-Growth Startup Companies: Management Systems as an Accelerator, by
Antonio Davila, George Foster, Ning Jia
✔
✔

14. Organizational Structure
Leadership
1
 Clear vision and priorities
 Cohesive leadership team
1
Decision -
making and -
structure
2
 Clear roles and accountabilities
for decisions
 Organizational structure that
supports objectives
2
People
3
 Organizational and individual
talent necessary for success
 Performance measures and
incentives aligned to objectives
3
Work
processe
s and
systems
4
 Superior execution of
programmatic work processes
 Effective and efficient support
processes and systems
4
Culture
5
 „High performance‟ values and
behaviors
 Capacity to change
5
Source: The Bridgespan Group: Designing an Effective Organizational Structure

15. Management Systems (1/3)
Category of System Individual Systems Within Category
Financial Planning  Operating budget
 Cash flow projections
 Sales projections
Financial Evaluation  Capital investment approval procedures
 Operating expenses approval
procedures
 Routine analysis of financial
performance against target
 Product profitability analysis
 Customer profitability analysis
 Customer acquisition costs analysis
Human Resources Planning  Core values
 Mission statement
 Organizational chart
 Codes of conduct
 Written job descriptions
 Orientation program for new employees
 Company wide newsletter
Source: Building Sustainable High-Growth Startup Companies: Management Systems as an Accelerator, by Antonio Davila, George
Foster, Ning Jia

16. Management Systems (2/3)
Category of System Individual Systems Within Category
Human Resources Evaluation  Written performance objectives for
managers
 Written performance evaluation reports
 Linking compensation to performance
 Individual incentive programs
Strategic Planning  Definition of strategic (non-financial)
milestones
 Customer development plan (plan to
develop market)
 Headcount/human capital development
plan
 Product portfolio plan (plan about future
products)
 Investment budget
Product Development Management  Project milestones
 Product concept testing process
 Reports comparing actual progress to
plan
 Project selection process
 Product portfolio roadmap
 Budget for development projectsSource: Building Sustainable High-Growth Startup Companies: Management Systems as an Accelerator, by Antonio Davila, George
Foster, Ning Jia

17. Management Systems (3/3)
Category of System Individual Systems Within Category
Sales/Marketing Management  Sales target for salespeople
 Market research projects
 Sales force compensation system
 Sales force hiring and firing policies
 Reports on open sales
 Customer satisfaction feedback
 Sales process manual
 Sales force training program
 Marketing collaboration policies
 Customer relationship management
system (CRM)
Partnership Management  Partnership development plan
 Policy for partnerships
 Partnership milestones
 Partnership monitoring systems
Source: Building Sustainable High-Growth Startup Companies: Management Systems as an Accelerator, by Antonio Davila, George
Foster, Ning Jia

18. Rate of Management Systems Adoption by Early-
Stage Growth Companies in Years 1 to 5
Source: Building Sustainable High-Growth Startup Companies: Management Systems as an Accelerator, by Antonio Davila, George
Foster, Ning Jia

19. Q & A

20. Martin Tantow
Founder, Scaler
martin@scaler.co
www.scaler.co
Thank you.