Start-ups: Vai-Thee-Fuss?. What prevents a business from scaling sustainably?

School kids are familiar with the word ‘scale’ and most use it interchangeably with ‘ruler’. Technically they are wrong because scale and ruler are not the same. Simply put, a scale is a unit measured through a series of marks on a measuring tool or device, such as a ruler.

I hated rulers in school. I struggled with units and measures and conversions but learnt quickly the hard way that the best ruler was the one in plastic, because when the teacher used it to whack you for any reason, wood or metal ones caused more pain. Many years later, I learnt that the pain of not scaling a start-up sustainably is way worse than getting whacked by a solid ruler.

Scale has a different meaning for start-ups. Building a product, launching a service, getting some passionate folks together, signing up the first customer, and even getting the first cheque are all key milestones, but they merely signify the start of a long, hard climb. Real success is when the venture significantly ramps up business operations and achieves scale. 

Start-ups add manpower and headcount at the operating levels as business and revenues increase, but this only helps them manage daily operations efficiently. Many a time, entrepreneurs confuse headcount jumps as organisational growth. They are not the same. The critical challenge start-ups must overcome in their quest for scale and successful organisation building is to attract and retain experienced talent; and this is really, really hard.

In all my start-ups, this was a key issue. Senior talent costs serious money and start-ups cannot afford this expense (not counting the privileged ones that raise Series E or beyond while accumulating huge losses). 

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The best approach for me has been to appeal to the person’s sense of fulfilment — a bit like Steve Jobs asking John Sculley of Pepsi if he wanted to sell sugared water for the rest of his life or try to change the world. 

Just a few months back, I helped a promising start-up recruit a CFO who was in his 26th year at a top MNC and someone I had been in touch with over the years. I told him that he could continue doing boring stuff at his current gig and earn huge amounts (his overall compensation was a mind boggling number) or take an 80 per cent salary cut, help a start-up grow into a solid company, and look back on this with a sense of satisfaction and maybe even recover more than what he lost through some attractive stock options. 

Many folks will not have the courage to accept this challenge, but those who do are no less entrepreneurial than the founders. The real challenge is to locate such folks.

(The writer is a serial entrepreneur and best-selling author of the book ‘Failing to Succeed’; posts on X @vaitheek)

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