There must be courage to face the problem, but also a means to solve the problem.

Introduction: Startups want to grow and expand, there will be many difficulties, these may be team, revenue growth, opening up new markets, system collapse. Christa Quarles, a former leader in startups such as OpenTable and Playdom, combined his own experience to tell how to kick off the stumbling block on the road to expansion of the startup, Alpha Commune (public number: alphastartups), compile it, hope Can cause useful thinking for domestic entrepreneurs.

Management’s management of the company’s business is out of control, product innovation and iterations become sluggish, and the best people want to quit, leaving people complaining that the direction is not clear. These symptoms go through at least one or two of the startups from start-up to success.

Christa Quarles has experienced many companies from weak to strong growth stages. She has combined her own experience to propose three strategies to promote the transformation of startups. It also lists the problems that four entrepreneurs may face: Team The scale is growing too fast, the income growth model is changing, the user’s explosive growth is on the system, and the geographical expansion. Entrepreneurs can learn from her experience and make fewer detours in the company’s growth process.

Three principles that should be followed when a company expands

According to his career, Quarles is well aware of the weaknesses that are prone to company expansion, and she sums up the three principles that should be followed when expanding.

1. Identify metrics and continually improve

Some companies are not sensitive to the occurrence of the problem, until the problem is very large, and then the result is a crash. Some companies are too sensitive to problems, and take big moves on small problems, so that the company pays too much. The way Quarles recommends is to not worry, find a key indicator and use it to determine if the problem is resolved.

For example, in Playdom, Quarles used LTV (Total Lifetime Value) as a Polaris indicator to determine whether a customer has a contracted value, thereby improving customer quality and ultimately improving the company’s financial performance.

2. Face the problem and build a system with the problem

Quarles believes that any problem with the company can have a reaction, and you can turn it into an opportunity because you can reorient and mobilize resources based on the problem. If a company wants to grow up, it must be broken, like a snake.

The problem with startups is not a trap but a foothold. Entrepreneurs have to face problems and identify the source of its emergence.Head and fix it, and in the process of fixing the problem you can build a better system than before.

In the early days of Playdom, all employee information was entered in a spreadsheet without the use of a human resources information system, and there was no strategy for employee management. When the number of employees in the expansion period reached 175-200, management’s management of personnel began to get out of control, and the growth rate of personnel costs also increased. This kind of problem is hard to predict for the inexperienced entrepreneurs in the early days of the venture. Later, the management led by Quarles rebuilt the personnel management strategy and used the new system to make up for this problem, and the company’s development was on the right track.

3. Don’t overwhelm the team and let the first-line team solve specific problems

As the CEO of the startup company, because the team size is small, many times I am used to being a firefighter, and everything must be done personally. However, after the company’s scale is expanded, using this method will only have the opposite effect. Each of the company’s specific team leaders should have the ability to identify and resolve problems with their respective teams. Senior managers, including the founders, can discuss the problem-solving ideas with the team leader, but they can’t give them a solution.

At Nextdoor, Quarles received a data anomaly report from the BI (Business Intelligence) team, which meant a problem with the product or business. After locating the problematic product, she handed in a task to the team’s leader, and he designed a data dashboard so that the team can find the problem on its own and solve the problem in time without expanding the problem to the whole. The level of the company.

Kicking the four stumbling blocks on the expansion road

No two companies will experience expansion in exactly the same way, so this article will not give a specific solution. However, the rapid growth of the team size, the shift of the revenue growth model, the pressure of the user’s explosive growth on the system, and the geographical expansion are the problems that most startups will encounter when expanding. Quarles gives some strategies and examples, and entrepreneurs can Ideas, integrate the methods that are suitable for your company to solve problems.

First, the team size is growing too fast

When Quarles was in Playdom, the company was acquired by Disney. In the first half of the year, the company recruited 500 new employees. This rapid expansion has put a lot of pressure on the company’s human resources and financial systems. Based on this experience, Quarles believes that startups should monitor three metrics as the team expands to ensure that the company’s human organization system does not collapse.

1. What is the proportion of first-time grassroots managers?

With the rapid expansion of the team, some grassroots employees must be promoted to management positions, and their business or technical capabilities are veryStrong, but also fits the company’s culture, but lacks management experience. For technology companies, it is really inclined to promote a Stanford CS doctor, but the proportion of such leaders is too high, it will also cause confusion in the company’s grassroots management.

If a team expands in multiples in a short period of time, then you need to monitor the proportion of the first time as a grassroots manager (less than one year of management experience), and the warning line is 30%. If you exceed this ratio, you need to brake. And ask the following questions within the management team:

  • Is the grassroots leader’s understanding and implementation of core decisions clear and smooth?

  • Does the grassroots leader have a one-on-one discussion with his team members?

  • What is the quality of the feedback report from the new grassroots leaders?

  • Are they satisfied with their current work situation?

If the answers are not satisfactory after asking these questions, then you need to make timely adjustments, such as strengthening the training of the team, and providing management-oriented partners with technically experienced managers.

2. Can new grassroots leaders report their work quickly and correctly?

An early warning sign is whether new grassroots managers can report and respond to their new work quickly and correctly. The emergence of such a situation means that the complexity of their challenges is higher than his acceptance, so that he can not determine and complete his team goals in a short period of time.

Quarles believes that once this sign is discovered, it should first reconnect with the grassroots manager to help him determine his team goals. If after a few exchanges still can’t meet expectations, then he may not be suitable for management posts, and it would be better for him to go to his suitable position.

3. Does the construction of culture and institutions keep up?

After the expansion period and even expansion, many startups still maintain the organizational culture and structure of the initial stage, and have not kept up with the system. A flat architecture and a culture of freedom can indeed promote innovation in many cases, especially in the early days of a small company.

But after the company’s team has expanded, it will use a flattened structure. Without a perfect system, it may have counter-effects on the innovation or release of talents. Finally,Many companies have to make up classes. For example, after the Quedles’ Playdom was acquired by Disney, she had to adjust the company’s structure and culture, dock with Disney, and act as a communicator in the process. Finally, Playdom is more innovative, while the personnel system and workflow are more complete.

Second, the income growth model changes

Revenue is the lifeblood of a company. The expansion of the company is not only the size of the team, the growth of the number of users, but more importantly, the increase in revenue. What kind of revenue growth is of higher quality, Quarles proposes two points that the founders need to focus on:

1. Does the company’s revenue growth source change from the past?

The Quarles went to OpenTable, the company has passed the initial stage. The company’s main business is online ordering service. Before that, its business growth mainly came from increasing the number of contracted stores as much as possible to enrich users’ choices. But this stage has passed and its growth catalyst has changed.

Kick the four stumbling blocks on the road to expansion of the startup

For the earlier startups, it is very common to adjust the business during the development process. It is also very likely that the things that go into the expansion period are different from those that were done at the time of starting a business. The most important thing is that the founder has to think deeply about what kind of results will be generated by the current income growth strategy, and should also adjust it according to the actual situation.

Specific to OpenTable, after the initial period, Quarles chose casual dining and overseas markets as a new source of revenue growth. Their business has expanded from the United States to the United Kingdom and Australia. In terms of take-away, they also adjusted the types of restaurants based on feedback from different regions and developed new restaurant chains.

2. Is there a network effect?

In the early days of entrepreneurship, OpenTable had always needed to nurture the market, build a restaurant network, and connect many restaurants. This is a hard work, and the cost of newly added signing restaurants and new acquisitions is quite high. After the restaurant network and the number of users increased to a critical point, the cost of newly signing restaurants and acquiring users began to decrease, which further promoted the construction of the restaurant network, and the company’s business also embarked on the fast lane, and the promotion cost reduction was Network effect.

Entrepreneurs should always monitor the company’s financial situation and observe changes in costs. networkThe network effect is the fast lane for the expansion of the startup company. It is also one of the keys to whether it can grow and grow. Entrepreneurs must think about whether their business model can form a network effect in the early stage of the venture. In the process of starting a business, they should also promote And contribute to the network effect. Of course, every company’s business and model are different. How to do it is necessary for entrepreneurs to think for themselves.

Three, geographic expansion

Each startup company will have its own geographical benchmark market, in which the model and proof of play can be matured, and the funds for continued expansion can be obtained. OpenTable is a business based on geographic definition, and entering more geographic markets represents more restaurants, users and revenue.

But different geographical market conditions are different. The startups can’t just copy, but they are different. Finding a suitable game for the target market is never an easy task. To this end, Quarles believes that entrepreneurs should pay attention to the following issues:

1. What is the development cost of the target market?

There are some markets where the cost of development is quite high, and this cost includes economic costs and product costs. If you can’t retain the advantages of your product at a lower cost, and the cost in this market is higher than the expected return, then it may not be a suitable market.

2. Is the cultural difference in the target market difficult to adapt?

Cultural differences may include language and user habits. If the target market user is not using the same language as the original product, or even has multiple languages ​​(such as India), then localized translations and adjustments are required. Even without language barriers, user habits need to be adapted. For example, OpenTable’s product categories in the US are breakfast, lunch, and dinner, while in Australia, breakfast, lunch, afternoon tea, and dinner.

3. What is the difference in the means of payment in the target market?

In different markets, users’ payment preferences will be different. Some prefer to use cash, some use credit cards, and even online payment methods have their own standards. As a startup that wants to enter overseas, it is necessary to consider this preference and optimize it according to the specific situation. A better way is to cooperate with relevant local companies.

Fourth, user growth and system capacity

When active users reach a certain milestone, don’t rush to celebrate, because there is also a risk that the number of users exceeds your system’s carrying capacity. Quarles has experienced several milestones in user growth and has encountered several systemic risks. She believes that it is dangerous to not prepare before the user surges, but “over-investment” will also bring waste, which is a tricky balance.The best strategy is to take small steps to build a scalable system. Quarles believes that entrepreneurs should ask themselves the following questions in order to take action:

1. How to fix the system while the user is growing fast?

Kick the four stumbling blocks on the road to expansion of the startup

Just as automakers test cars with extreme conditions, under normal circumstances, it is more difficult for startups to make plans for rapid user growth. Quarles is exemplified by Playdom’s case. They monitor the game’s DAU and use sandbox testing and beta testing to test user growth scenarios. But when a game reaches 10 million DAU in a short time, the whole game is still near collapse. This situation seems inevitable, and what entrepreneurs should do is learn something in this actual, system-closed crash situation, including how to coordinate resources and how to fix it so that it can do well the next time the user explodes. ready.

2. Are you monitoring and analyzing large releases?

In addition to the processing and repair of the system when user explosions occur, one thing that can be done is to monitor and analyze the user’s activities, especially when doing large-scale releases. Playdom has a mechanism for monitoring systems and teams to monitor large releases, assigning an indicator to every engineer on the team. With this mechanism, the probability of a problem is greatly reduced, and Quarles brings this mechanism to OpenTable, which also achieves good results.

This article is compiled from firstround review.