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Scaling Smart
A Strategy Framework for Modeling, Managing
and Monetizing the Scaling of
Bootstrapped High-Performance Vent...
Who am I?
Involved in technology since 1979
BEng Engineering Physics and MS in Digital Imaging
Part of a fast growth start...
Scaling is
important…
A high-performance startup
has no value unless it gets
out of development mode
and engages with the ...
Failure To Launch?
Ideal VC-backed Scaleup
(Hockeystick)
Failed Scaleup
(Valley of Death)
Time
Success Metric
(Valuation,
...
The problem
with
hockeystick
scaling
« Unicorn Dreams »
• Distracted by Traction
Premature Scaling
• Insufficient evidence...
Strategy is a pattern of choices
6
Exit Strategy
• Build to Sell
• Build to Grow
Value Chain
Strategy
• Collaboration
vs C...
• STARTUP is “an organization
formed to search for a
repeatable and scalable
business model”
• SCALEUP is “a transitional
...
Scaling Smart is
maximizing
execution
while
managing
uncertainty
8
©2017 Davender Gupta. All rights reserved. 171114 V7-LS...
Strategic Objectives
• How your choices align with vision, mission, values
Suitable
• How your choices fit success and ris...
Causal vs Effectual Logic
• Causal = Assumes the
future is knowable and
known
• Effectual = Assumes the
future is unknowab...
Principles of Effectuation
11
What can you do with what you have, what you know and
who you are
Focus on how to minimize p...
Impact of Effectual Approach to Scaling
•Delay seeking investors to fund initial go-to-
market because the need to generat...
Momentum Scaling
Ideal VC-backed Startup
(Hockeystick)
Momentum Scaling (Waves)
Failed VC-backed Startup
(Valley of Death)...
14
Momentum Scaling
•Establish market influence
•Establish market credibility
•Establish ability to execute
©2017 Davender...
The Startup Lifecycle Model
15
©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
The five components of a wave
• Preparation
• Ensuring the startup is ready to scale, identifying the initial “beachhead” ...
Key Questions
17
©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
Scaling the ability to EXECUTE
•Generating Growth
•Managing Growth
•Directing Growth
Execution Leads Traction
•Take on onl...
19
©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
20
Phase > Preparation Beachhead Surge Consolidation Maturity
Strategic Dimension
Market
How do I build credibility?
Who a...
•To build a sustainable, long term business with the
ability to become a gazelle
•Founder Team stays in control
•Keep opti...
•Effectuation is the mindset foundation of Lean
•Importance of testing to find PJF
Product + "Jobs-To-Be-Done" Fit
•Managi...
“Move Fast and Break Things” or
Move Smart and Build Things
• Ability to execute must lead Customer Traction
i.e. Only tak...
• B2B
• XaaS, Platforms, Workflow improvements, Big Data/AI, Industry 4.0
• Manageable technical risk
• Sustaining innovat...
Be patient for
growth and
impatient for
cash flow.
- Clayton Christensen
author of “The Innovator’s Dilemma”
25
©2017 Dave...
Contact me!
Davender Gupta
Venture Strategist and Co-Founder
The Scaleup Project
davender.com
facebook.com/coachdavender
l...
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Smart Scaling - Presentation to Lean Startup Circle Montreal Nov 14 2017

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Davender Gupta is developping a strategic approach to help startups enter their first market and scale using Lean Startup principles. His approach reduces risk and accelerates progress while being agile and resilient.
This is a project he is working on as part of his Executive MBA course at McGill-HEC Montréal.

YouTube of the presentation: https://youtu.be/oMfXwXkrZhI

For more information: Davender Gupta davender@davender.com
This is a version of a work in progress
(c)2017 Davender Gupta. All rights reserved.

Published in: Leadership & Management

Smart Scaling - Presentation to Lean Startup Circle Montreal Nov 14 2017

  1. 1. Scaling Smart A Strategy Framework for Modeling, Managing and Monetizing the Scaling of Bootstrapped High-Performance Ventures Davender Gupta The Scaleup Project davender@davender.com 514-448-1894 ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com 1
  2. 2. Who am I? Involved in technology since 1979 BEng Engineering Physics and MS in Digital Imaging Part of a fast growth startup 1997-2000 Professional business coach since 2000 in Calgary, Toronto, Quebec, Montreal Launched FastTrac Québec pre-accelerator program Coached and mentored 100s of startups at idea and early-stage Currently completing Executive MBA McGill-HEC Montréal 2 ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  3. 3. Scaling is important… A high-performance startup has no value unless it gets out of development mode and engages with the market But is hockeystick growth the only strategy? 3 ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  4. 4. Failure To Launch? Ideal VC-backed Scaleup (Hockeystick) Failed Scaleup (Valley of Death) Time Success Metric (Valuation, Revenues or Traffic) 4 ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  5. 5. The problem with hockeystick scaling « Unicorn Dreams » • Distracted by Traction Premature Scaling • Insufficient evidence of PSF and PMF Unworkable Business Model • No path to profitability Ability to execute lags demand • Quality and customer service fails 5 ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  6. 6. Strategy is a pattern of choices 6 Exit Strategy • Build to Sell • Build to Grow Value Chain Strategy • Collaboration vs Competition • Created Shared Value (Sustainability) Innovation Strategy • Product vs Value • Sustaining vs Disruptive ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  7. 7. • STARTUP is “an organization formed to search for a repeatable and scalable business model” • SCALEUP is “a transitional organization with the objective to develop the ability to execute and the credibility to attract customers who recognize the value of the offer and who are ready to buy”. • Exploring a viable business model STARTUP • Developing credibility and the ability to execute SCALEUP • Executing and evolving the business model BUSINESS 7 ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  8. 8. Scaling Smart is maximizing execution while managing uncertainty 8 ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  9. 9. Strategic Objectives • How your choices align with vision, mission, values Suitable • How your choices fit success and risk criteria Acceptable • How your choices can be executed with available resources Feasible • How you co-create choices through interaction with stakeholders Effectual 9 ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  10. 10. Causal vs Effectual Logic • Causal = Assumes the future is knowable and known • Effectual = Assumes the future is unknowable and unknown 10 goal means Search for the means to achieve a stated goal Start with the means at hand to design the outcome ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  11. 11. Principles of Effectuation 11 What can you do with what you have, what you know and who you are Focus on how to minimize possible losses Collaborate with partners who provide pre-commitment Surprises are opportunities to explore new possibilities The future cannot be predicted but can control some determining factors ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com Source: www.effectuation.org
  12. 12. Impact of Effectual Approach to Scaling •Delay seeking investors to fund initial go-to- market because the need to generate ROI locks into a causal mindset •First find customers who are willing to collaborate in pre-production prototype development through investment •Establish rapid build-measure-learn loops 12 ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  13. 13. Momentum Scaling Ideal VC-backed Startup (Hockeystick) Momentum Scaling (Waves) Failed VC-backed Startup (Valley of Death) Time Success Metric (Valuation, Revenues or Traffic) H1 H2 H3 13 ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  14. 14. 14 Momentum Scaling •Establish market influence •Establish market credibility •Establish ability to execute ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com H1 H2 H3
  15. 15. The Startup Lifecycle Model 15 ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  16. 16. The five components of a wave • Preparation • Ensuring the startup is ready to scale, identifying the initial “beachhead” market; • Beachhead • Entering the initial market, making first sales beyond “friends”, booking one or several reference clients which give the startup legitimacy with early mainstream customers; • Surge • Using the reference clients as leverage to increase market share quickly; • Consolidation • Focusing on execution efficiencies to make the venture revenue positive, establish the venture as a price or feature influencer in the market; and • Maturity • Stabilizing the organization and the market share and preparing for the next scaleup wave. 16 ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  17. 17. Key Questions 17 ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  18. 18. Scaling the ability to EXECUTE •Generating Growth •Managing Growth •Directing Growth Execution Leads Traction •Take on only the customers you can serve 18 Strategic Dimensions ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  19. 19. 19 ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  20. 20. 20 Phase > Preparation Beachhead Surge Consolidation Maturity Strategic Dimension Market How do I build credibility? Who are early adopters to test feature MVPs? Who are reference clients who can generate use cases and build credibility? Who are pragmatists which can be referred to us by reference clients to help gain revenues and credibility? Is our credibility strong enough that we are attracting new customers on our own? Which adjacent serviceable markets should we target next? Product How do I create 10x value? What are focused, disposable MVPs to test PJF? What is a pre-production prototype to test in real-life use case to demonstrate 10x value? What is the “mass customized” feature set to optimize PMF? What is the feature set to optimize production efficiency What features should I retain, discard or add to efficiently serve adjacent markets? Business Model How do I create a sustainable and scalable business model? Validate potential Customer Segments and Value Proposition Validate Value Proposition and Channels (PJF) and building Partnerships Validating Customer Relationships (Crediblity) Optimizing Revenue Streams vs Cost Structure Expanding Value Proposition to new Customer Segments Cashflow How do I build revenue streams and reserves to fund growth Self-funding (FFF). Avoid using equity Raise product and marketing capital through partnerships with Reference Clients Watch that CAC < LTV (always) Minimize burn rate Quality (profitable) clients are more important than quantity Improve marginal marketing cost and operating margins Consider whether to self-fund next scaleup wave or go for equity or debt Systems How do I measure and manage growth Ad-hoc, disposable “Do Things That Don’t Scale” to understand workflow Systems emerge from workflow as efficiency needs dictate Formalize those systems which add value Capacity expansion to prepare for next scaling wave Team How do I evolve the ability of the team to execute Ad-hoc Passion-driven Focus on developing collaboration as team starts transition from Development to Deployment Be aware of emergent shared values and group story Establish Mission-Vision- Permission based on emergent values and story Formalize Mission-Vision- Permission Leadership How do I develop the ability to quickly make decisions Founder needs to step back from product development to build business Founder is “Salesperson” #1 Start to build leadership team (3H) Fill out leadership team (6H) Delegate decision making but share responsibility Formalized leadership team, board If necessary, consider transitioning to new business management if founder is not at the appropriate spot Entrepreneurship How do I continuously learn and innovate Establish Innovation Accounting systems (build-measure-learn) Structure test cases as Positioning How do I integrate into existing value creation ecosystem Establish Value Creation and Value Capture hypothesis Identify and Validate Value Chain Partners Bring credibility for Value Creation through execution Take leadership role in Value Chain Reconsider position in Value Chain and ecosystem, evaluate switchback ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  21. 21. •To build a sustainable, long term business with the ability to become a gazelle •Founder Team stays in control •Keep options open •Choose the best customers •Better adapted to the Canadian (outside SV) context 21 Benefits of Momentum Scaling ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  22. 22. •Effectuation is the mindset foundation of Lean •Importance of testing to find PJF Product + "Jobs-To-Be-Done" Fit •Managing Uncertainty through Build-Measure-Learn and Innovation Accounting 22 Tie-ins to Lean ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  23. 23. “Move Fast and Break Things” or Move Smart and Build Things • Ability to execute must lead Customer Traction i.e. Only take on clients within your current capability • Grow Revenues before valuation • Managing uncertainty is more important than taking risk especially in initial go-to-market when you're under-resourced 23 It’s your choice ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  24. 24. • B2B • XaaS, Platforms, Workflow improvements, Big Data/AI, Industry 4.0 • Manageable technical risk • Sustaining innovation • Mature founder • Some domain experience, 35+ • Doesn’t fit the VC pattern • Outside the VC footprint • Not into “unicorn dreams” 24 Who we’d like to meet ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  25. 25. Be patient for growth and impatient for cash flow. - Clayton Christensen author of “The Innovator’s Dilemma” 25 ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
  26. 26. Contact me! Davender Gupta Venture Strategist and Co-Founder The Scaleup Project davender.com facebook.com/coachdavender linkedin.com/in/coachdavender davender@davender.com ©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com

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