“Go big or go home” is an often-said mantra for growth, but this statement ignores the dangers of premature scaling. While an unbridled spirit is often what fuels startups to pursue their innovative goals, that mentality can also lead to their deaths.
Over time, a startup’s vision grows, as does the demand for its product—which means other aspects of the startup need to scale as well. As a business owner, you may have to start increasing the number of employees, your marketing reach, the size of your office, and more.
Growth is inevitable, but how well you manage your growth will determine whether your business thrives or meets its demise. Startups often start out tiny but mighty, but premature scaling can take away their responsiveness.
In fact, the reason that many startups fail is that they scale up too fast, too early. They have good intentions with misplaced priorities. For example, you may be hiring lots of good people, but if you hire more than you need, you will incur too much cost.
Such an error is most likely due to not understanding the nature of a startup. Because a startup is a business fueled by an innovative idea, a startup is a build-a-plane-as-it-flies operation. Basically, startups are banking on unknown opportunities.
In contrast, established companies have a clear understanding of the product they are selling, and thus scale according to the market demands of that product.
Taking a Look at a Scaling Startup: Hampton Creek
Like many food tech start ups, San Francisco-based Hampton Creek seeks to revolutionize the food industry. Among the biggest players that are food tech startups are subscription box services that offer home delivery of fresh ingredients, as well as companies that are producing alternative ways to consume nutrients.
Hampton Creek falls under the latter. The company focuses on reinventing products that are often loaded with food additives, processed ingredients, and common allergens like milk or eggs.
It may sound impossible to remove a key ingredient like eggs in a food like mayonnaise, but Hampton Creek does just that.
The company’s eggless mayonnaise alternative Just Mayo has made headlines and gained positive customer reviews for tasting just like mayonnaise. The creamy texture is derived from a yellow pea protein. Hampton Creek offers dozens of more products that are also gluten-free and without GMOs (genetically modified organisms), including salad dressings, pancake mix, and cookie batter.
The heart of the Hampton Creek startup—producing off-the-shelf food items that are healthy, affordable, and available—has won over many people. That’s why the company is scaling fast. The products are hitting more retail locations and thus gaining a bigger following.
It’s natural for a startup to want to ride the wave of enthusiasm, but Hampton Creek, like many startups, is aware of doing too much too fast. For example, it’s common for a startup to want to develop more products to fulfill its mission and demand. Hampton Creek expects to release an eggless scrambled egg mix sometime in 2016—but interrupting the scale of sustainable growth can do more harm than good.
Again, if you expend a lot of energy, even on something good like marketing your product and hiring good employees, you will experience premature growth you fail to prioritize your decisions well.
Avoiding Premature Scaling
Hampton Creek is acutely aware of the complexity of scaling, especially when it comes to the operations of the business, but it won’t let those challenges scare it from executing its original mission.
One of the most common challenges with scaling a startup is hiring people that match your culture. In a recent interview, Hampton Creek CEO Josh Terick described how he determines the people to hire as the company scales up:
There’s an element of boldness. … I want people to embrace that.
Hiring well, based on a company’s culture and needs, is a practice that companies must implement to scale smoothly.
Another challenge that startups must understand is how business operations affect growth. As the number of employees increases, you may need a bigger office. The wrong layout or facility can negatively affect the way information flows throughout the company; good communication is part of maintaining thriving business culture.
Those who create startups are not strangers to hard work, but tempering your passion with strategy ensures that your company continues to serve and scale its original mission for years to come.
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