This document discusses strategies for scaling startups in a sustainable way. It argues that "hockey stick" growth fueled by venture capital is not the only path and can lead companies to scale too quickly before establishing market credibility. Instead, it proposes an "effectual" and "momentum scaling" approach of growing in waves, establishing market influence and ability to execute at each stage. The framework focuses on maximizing execution while managing uncertainty through rapid testing, adapting to opportunities and prioritizing revenue and profits over high valuation.

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. 171116-v8 davender@davender.com
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2. 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?
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©2017 Davender Gupta. All rights reserved. 171116-v8 davender@davender.com

3. Failure To Launch?
Ideal VC-backed Scaleup
(Hockeystick)
Failed Scaleup
(Valley of Death)
Time
Success Metric
(Valuation,
Revenues or
Traffic)
3©2017 Davender Gupta. All rights reserved. 171116-v8 davender@davender.com

4. The problem
with the
hockeystick
scaling
strategy
« 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
4©2017 Davender Gupta. All rights reserved. 171116-v8 davender@davender.com

5. Tech scales quickly.
People don’t.
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©2017 Davender Gupta. All rights reserved. 171116-v8 davender@davender.com

6. STARTUP
SCALEUP
BUSINESS
6©2017 Davender Gupta. All rights reserved. 171116-v8 davender@davender.com
Exploring a viable business model
Developing credibility in the market
and the ability to execute
Executing and evolving the
business model

7. Successful scaling
requires
maximizing execution
while
managing uncertainty
7©2017 Davender Gupta. All rights reserved. 171116-v8 davender@davender.com

8. Strategy Is A Pattern of Choices
• 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
8©2017 Davender Gupta. All rights reserved. 171116-v8 davender@davender.com

9. Causal vs Effectual Choices
• Causal = Assumes the
future is knowable and
known
• Effectual = Assumes the
future is unknowable and
unknown
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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. 171116-v8 davender@davender.com

10. Principles of Effectual Strategy
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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 you can control some
determining factors
©2017 Davender Gupta. All rights reserved. 171114 V7-LSC davender@davender.com
Source: www.effectuation.org

11. Impact of Effectual Approach to Scaling
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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
• pre-production prototype development through co-investment
Establish rapid build-measure-learn loops to find PJF
• find most valuable “PJF” Product-”Jobs-To-Be-Done” Fit
©2017 Davender Gupta. All rights reserved. 171116-v8 davender@davender.com

12. 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
12©2017 Davender Gupta. All rights reserved. 171116-v8 davender@davender.com

13. 13
Momentum Scaling
•Establish market influence
•Establish market credibility
•Establish ability to executeH1
H2
H3
©2017 Davender Gupta. All rights reserved. 171116-v8 davender@davender.com

14. The Startup Lifecycle Wave
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15. Execution is
the ability to
generate
manage and
direct growth
15©2017 Davender Gupta. All rights reserved. 171116-v8 davender@davender.com

16. Strategy Framework
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17. • 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 Canadian (outside SV) context
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Benefits of Momentum Scaling
©2017 Davender Gupta. All rights reserved. 171116-v8 davender@davender.com

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Move Smart and Build Things
Tech scales quickly. People don’t.
Revenues before valuation.
Managing uncertainty is more important
than taking on risk.
©2017 Davender Gupta. All rights reserved. 171116-v8 davender@davender.com

19. Be patient for
growth and
impatient for
profits.
- Clayton Christensen
author of “The Innovator’s Dilemma”
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©2017 Davender Gupta. All rights reserved. 171116-v8 davender@davender.com

20. 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. 171116-v8 davender@davender.com
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