Scaling a company from 0 to 100 employees is no small feat. Markus Lang, Partner at Speedinvest shares the top 10 golden rules for doing just that at this week’s Workshop Wednesday, held every Wednesday at 10 a.m. PST.

While these top ten tips may seem obvious, many founders overlook the importance of some of them as they scale their businesses. To start, let’s set some context for the startup lifecycle.

The Startup Lifecycle

There are hundreds of thousands of definitions of what building an early-stage company means and how you define product markets. In the chart below, you can see that pre-seed starts at -2 on the scale. In early-stage company building, there are three phases.

  1. Zero to one
  2. One to two
  3. Two to three

From zero to one, you build your first MVP. It fulfills its primary purpose. If you’re building a car, it will drive safely from point A to point B. It might not have good audio or A/C, but it gets the job done.

From one to two, you’re finding product market fit. The car works, and now you have your first group of people willing to pay for it. It might not be scalable yet, but that’s ok.

Phase three, you’re scaling and building a production line to sell 10, 10,000, or 100,000 of whatever it is. Those three phases roughly correspond with the first three funding rounds.

If we’re being honest, scaling a company is hard. On average, only one out of five companies that raise some sort of external money early on manage to raise a Series A or grow to at least 50-60 people. So, let’s look at the ten golden rules to help master the transition from 0 to a 100-person company.

The Team Side

The first set of rules exists within teams.

1: Spend more time on hiring than you likely want to.

Most of these sound obvious, but they’re important. When running a company, you have so many things on your plate, which can be difficult to prioritize. While we all know it’s important to spend time hiring the best people as a CEO, actually doing it when your inbox is full and you’re talking to customers is much harder.

It’s worth your time, though, especially for those first hires. Ensure you’re spending time with candidates and that it stays a priority.

2: Hire slow, fire fast.

Take time to vet your candidates, get to know them, and ensure your co-founders and key hires spend time with them before hiring. If you learn that it’s not working out, take action swiftly. Markus shares that in 69 of the 70 situations in their portfolio company when they parted ways too late, the number one feedback was that they should have done it earlier.

3: Your first ten hires will shape your culture.

100%. Founder values are important, and you lead by example as a CEO and a founder. The values you bring to the company are especially important when you scale the company to 20-30-40-50 people. You can’t be everywhere, so the first people you hire who then hire the next people will play an important role in shaping or destroying your values.

Make it explicit what your company culture is and don’t compromise on it starting from day one.

4: Introduce processes slowly, but stick to them.

You don’t want to overwhelm people with 17 OKRs and four feedback cycles with pre-seed. Pick a few key processes once you’ve scaled to 20-40 people, and don’t overload your team. Pick the most important ones for you, introduce them slowly, and stick to them. As a founder, you want to use the tools and processes you introduce, or other people won’t use them.

The Business Side

This next set of rules is for the business side of scaling your company.

5: Not all revenue is created equally.

We see this in fundraising especially. Investors want a detailed overview of your different sources and revenue types. By tracking all this, you keep yourself and your co-founders honest when assessing a situation. You’ll know where your company stands and whether there is room for improvement.

6: Burn multiple is your friend to balance growth and efficiency.

Together with growth, your burn multiple is probably the number one metric for fundraising and leading the company through KPIs. In a given period, determine how much money you burned and divide that by new MRR you’ve added in a quarter.

There are different opinions on what a great burn multiple is, and it depends on the stage of the company. At Series A, the gold standard for a small percentage of companies that achieve it is around one. That’s rare. For the seed stage, two is also great. Getting your burn multiple down while keeping growth high is super hard to navigate, and every investor will care about it.

7: Try to lead with data from day one.

Data keeps you honest and is the best, if not the only, source for decisions. Anecdotal evidence can kill a company. Take the time to define your North Star metrics and periodically begin looking at them. It’s easy to get distracted, and your numbers get away from you. Suddenly, you realize you grew 100% in a given period, but costs increased 150%. You can learn a lot from data.

The Fundraising Side

The final rules for scaling your business from 0 to 100 employees are related to fundraising.

8: Have your house in order. It’s not 2021 anymore.

This seems obvious, but the expectations of investors have changed. That’s a good thing, requiring you to keep your house clean. In 2021, investors were hungry, and you could raise on the same deck in pre-seed and Series A. That’s not true anymore.

You need to be able to provide information on your accounts within a timely manner to raise money today. Otherwise, a round could fall apart. Keep your core numbers and KPIs updated for the best possible chance to raise money.

9: Approach fundraising like key account management.

You have to fight hard to make people listen. A fair amount of founders approach fundraising as purely transactional. While time is limited as a founder, you still have to build relationships with investors. Some founders reach out to investors once or twice a year so that it’s a swift process when it comes time to raise money.

The bigger the rounds, the more people will want to build relationships, get to know you, and see how your company is doing over time.

10: You raise round #1 on the promise but #2 on the progress.

If you’re a good storyteller, there are no hard metrics you have to show for your pre-seed round. You have a big vision and a strong team, and that’s what investors back. Eighteen months later, you still have to tell a convincing story during a seed round, and they’ll want to see the numbers.

You can tell a limited number of stories about your customer acquisition costs, growth rate, revenue, or burn multiple. They are what they are. So, raise as late as possible and as early as needed, especially in the beginning.

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