Mike Quinn is a 2007-08 Skoll Scholar and Oxford MBA alumnus, he is also the co-founder and former CEO of Zoona, one of Africa’s earliest fintech companies. With over 10 years of experience running a successful social business, Mike shares his hard-learned tips and experiences on how to get a purpose-driven venture started, built and scaled. This is the third, and final article in the series, how to ‘scale’.
I started this three-part series with some tips on how to start a purpose-driven venture:
- Start by falling in love with a big problem
- Pick the right co-founder(s)
- Rapid prototype to discover product-market fit
I then shifted focus to the next stage of a company lifecycle, how to build:
- Build a model
- Build a team
- Build a culture
Now it’s time to learn how to scale. This is the stage that every entrepreneur and investor wants to get to as fast as possible, but it’s also fraught with challenges when you do.
Know When to Scale
Perhaps the hardest part of scaling any venture is picking the right time to put your foot on the accelerator. If you wait too long, you miss the opportunity and your investors, team, and maybe even you will lose energy and focus. But if you try to scale too early, you risk stretching your organization too far and experiencing burn out.
I have done it wrong both ways. As CEO of Zoona, I took too long to double down on our exponentially growing money transfer product in the early years, but then was too aggressive with market expansion in the later years before we had our core team, operations, and technology ready to go.
The trick, I have learned, is to really pay attention and listen to both the market and your team. If the market is pulling your product and growth is coming organically with strong customer retention metrics, that is the first and most important signal. If you then look across all of your business functions and feel you are executing at a 70% performance level or above, then you are good to go. Don’t wait to achieve perfection (you never will), but be wary of flicking on the growth switch if you have any major shortcomings in your foundations. And if you find these shortcomings, fix them fast!
Pick a Strategy and Execute Well
If it’s the right time to go for scale, the next question is how? Having the right scaling strategy is really important, and it’s generally easier and more effective to scale from your core (i.e. don’t try to scale something that is new to what is already working).
But I would argue that picking a single strategy and really nailing the execution is paramount. You will never know for certain if your strategy is right until you try, and the worst thing you can do is waste time and energy pulling in multiple directions. Have a robust strategy debate with your team and board to find focus and alignment, but then make sure everyone follows Jeff Bezos’ advice: “Disagree and commit.”
Once your strategy is set, it’s all about execution. Cadence is critical: Set quarterly Objectives and Key Results (OKRs) and cull any non-essential tasks that aren’t directly linked to achieving them, set up weekly dashboards to track leading indicators and key learnings, and establish performance management systems for your team. Also, make sure your best people are focused on your most important OKRs and help them by removing distractions and obstacles in their way.
Stay Close to Your Customers
In the scaling process, one challenge I faced as a leader at Zoona was drifting further away from our customers. When you are small, you are in front of customers all the time and this is critical to understanding and connecting with them. But later on, you may have two to three layers between you and your customers, and those layers may also want to execute without you being in their way.
The danger is that you spend more time in meetings watching powerpoint presentations than interacting with the customers who pay everyone’s salaries. You lose perspective and retain outdated assumptions. Your own energy may even wane, as your original source of purpose and inspiration may start to seem inaccessible.
I experienced this several times at Zoona. My favourite remedy was to break my routine and take a customer immersion trip. I cleared my calendar for five weeks and spent all my time in the field working for our agents and serving customers. Not only did I discover several product and operational bugs that were easily fixable, I gained a broader understanding of who our customers were and what Zoona meant to them. This, in turn, influenced my thinking on future strategy and enabled me to take new ideas back to my team to lead the company forward. It also set a new behaviour standard, and soon other leaders across our company were spending more time out in the field with customers, which led to many positive outcomes.
Don’t Run Out of Cash!
Lastly, scaling can be very expensive. You have already gone through an incredible struggle to get to this point and may have even raised a big investment round and have cash to spend. But you can burn through all of that cash surprisingly quickly and end up in a very difficult situation if you aren’t careful.
To navigate this challenge, it’s critical that you have the right people on your team and a culture that values your hard-earned money. Keep your fixed costs as low as possible and spend your money on acquiring and retaining customers. Establish processes and controls to create budget scarcity so that cash is not wasted on things that aren’t working, and empower your CFO to declare war against waste.
Also, watch out for copycat competitors with deep pockets and potential disruptions to your business model. It’s when you are scaling that competition suddenly takes notice and copies what you are doing. Don’t panic (you are probably better than you think) but don’t stand still (you won’t be better for long if you do).
And finally, don’t wait until you are out of cash to raise your next round of investment. You should start nine months ahead of when you need the money and always have a plan B in case you can’t get it. The best plan B is to get to cash flow positive so that your venture is sustainable and you have more options on where to take it next.
Good luck scaling your purpose-driven venture!
If you enjoyed this blog series and would like to learn more, I have written a book called Failing to Win on my ten year journey of being a purpose-driven fintech entrepreneur in Africa. I have launched a crowdfunding campaign for you to pre-order your copy to help me cover the upfront costs of getting the book ready for publication. Please help me spread the word!