Svc2 uk scale report

Startups that scale
Why it matters and how to do it:
Lessons from Silicon Valley Comes to the UK 2012
Entrepreneur First

About Silicon Valley Comes to
the UK
Silicon Valley Comes to the UK would like to thank Entrepreneur First for its assistance in
producing this report.
Silicon Valley comes to the UK (SVC2UK) is an annual philanthropic programme founded by
entrepreneurs Sherry Coutu and Reid Hoffman, in order to expand the UK’s entrepreneurial
and economic capacity.The programme welcomes entrepreneurs who are creating the
most disruptive US companies to the UK.These entrepreneurs meet their UK and European
counterparts to look at collaborating on business ventures, lead inspiring classes at leading
Universities and High Schools and meet with policymakers.
Entrepreneur First exists to making building a high-growth startup the career of choice
for the UK’s most talented students.We offer a year-long programme of support and
services to recent graduates, including team building, ideation, mentorship, training, and
access to funding. Funded by entrepreneurial corporations and supported by leading
UK entrepreneurs, EF is a not-for-profit and offers the programme free of charge to top
graduates.

Contents
Executive summary 1
Introduction – why scale? 2
Choose a big enough problem 3
Embed yourself in the right networks 4
Recruit people who have done it before 5
Hire for tomorrow, not today 7
Embrace diversity 9
Nurture company culture and values as you grow 11
Build systems that scale 14
Test continuously to stay close to the customer 16
Take the right kind of money at the right time 18
Conclusion 20
Speaker profiles 21

1
Executive summary
The UK has seen a rapid increase in the number of startups in recent years – but still greatly lags
the United States in the number of startups that reach scale.This matters not only for entrepreneurs,
but for the economy as a whole: over half of jobs created are created by the small number of
companies that succeed in achieving rapid, sustained growth.
Silicon Valley Comes to the UK brings serial entrepreneurs from the US to talk to high-potential,
British-based startups and students.Their collective experience, shared over several days of events,
represents an extraordinary collection of advice for companies looking to scale.
We have distilled their counsel into nine key recommendations for aspiring scale-up founders:
 Choose a big enough problem to give yourself room to grow
 Embed yourself in the right networks to benefit from advice and connections of people who will
understand the challenges you will face
 Recruit people who have done it before because many of the problems encountered while
scaling are common across organisations
 Hire for tomorrow, not today because in a high-growth organisation your needs will change
extremely rapidly
 Embrace diversity to broaden the number of problem-solving approaches within your team
 Nurture company culture and values as you grow to avoid losing a sense of mission and identity
 Build systems that scale – from technical infrastructure and data systems to organisational
processes
 Test continuously to stay close to the customer – new techniques are needed when you can no
longer meet all of your customers individually
 Take the right kind of money at the right time and avoid making fundraising an end in itself
These nine steps are not a magic bullet; scaling up is difficult however well you execute. However,
by drawing on the advice of experienced entrepreneurs, founders can avoid common pitfalls and
maximise their chances.

2
Introduction – why scale?
Scaling up matters a great deal for the startup founder; it is the source of the bulk of the financial
rewards of entrepreneurship. However, it is arguably even more important for the economy as a
whole. In the UK, the six percent of businesses that are growing most quickly are responsible for over
half the country’s job creation.1
These are the companies that are scaling up – and we need more like them.As Sherry Coutu
argued at SVC2UK 2012, the UK is no longer in the position where it needs more startups; it needs
more startups that scale. Indeed, the UK now has a similar start-up rate to the US, but has only half
the scale-up rate.2
This is the gap we need to close.
High-tech entrepreneurs are well placed to meet this challenge. Research from McKinsey
suggests that high-tech companies create 2.6 jobs, on average, for each job that is lost to
disruptive innovation.3
Moreover, the same research projects that internet companies will grow
from 7.2 percent to 10 percent of UK GDP by 2015.4
The key question, then, is how to scale?
This was the central theme of this year’s Silicon Valley Comes to the UK conference.An extraordinary
group of serial entrepreneurs and investors from Silicon Valley and beyond gathered in locations
across the UK to pass on their lessons learned for startups seeking to scale.
This report documents and synthesises the advice this group gave over the course of the
conference.The scale imperative is the next challenge for the UK’s entrepreneurs. It is hoped this
report provides a practical guide for aspiring scale-ups – as well as an inspiration for those just
starting out.
1
Nesta, 2009,“The vital 6 percent”
2
Entrepreneur First, 2011,“High-impact entrepreneurship and the economy”
3
McKinsey Global Institute, 2011,“Internet Matters: High-impact entrepreneurship and the economy”
4
McKinsey Global Institute, 2011,“Internet Matters: High-impact entrepreneurship and the economy”

3
Choose a big enough problem
The foremost barrier to scale is lack of demand.
Before the technical and operational aspects
of scaling up ever come into play, an idea
must have sufficient potential to become a big
company.The SVC2UK entrepreneurs returned to
this idea frequently throughout the conference.
As Mary Lou Jephson, co-founder of One Laptop
Per Child, put it,“The first question is always, is this
idea big enough to be worth doing?”.
The next question, perhaps, is how to generate
these big ideas.Two themes emerged from the
workshops and panel discussions: think global
and “own the problem”.
Think global
As Sam Chaudury, co-founder of ClassDojo,
pointed out, having a big market matters. In
his words:
“We’re living at a time when the internet allows
distribution to literally billions of people who
previously could never have accessed your
product. If you want to scale, make sure you’re
offering something a lot of people want.”
One major conclusion from several guests was
that increasingly products with the capacity
to reach billions are going to be products that
solve the problems of the developing world.As
Sir Paul Judge noted in his introduction to the
SVC2UK Cambridge CEO workshops,Asia will
be responsible for 75 percent of global GDP by
2050; companies looking to scale will need to
understand these new markets.
Both Mary Lou Jephson and Ramesh Raskar,
professor in the MIT Media Lab, reinforced this
point.They argued that the biggest problems –
and hence the biggest opportunities – are going
to come from bringing radical technological
innovation to solve problems of people in Africa
and Asia. Raskar provided the example of short-
sightedness: there are 2.4 billion people in the
world who need glasses but don’t have them.A
technological solution to that problem will have
extraordinary opportunities to scale.
Problem ownership
Mary Lou Jephson noted that this represents
a challenge as well as an opportunity for UK
(and, indeed, US) entrepreneurs. One important
conclusion from multiple SVC2UK panels was
the critical role played by “problem ownership”–
that is, having a deep understanding of and
passion for the problem you are trying to solve –
in scaling.As Jephson pointed out, this means
that entrepreneurs from the developing world
itself have a natural advantage in solving
problems they experience:“we’re going to see
radical innovation coming from the bottom of
the pyramid”.
Problem ownership requires a clear mission.
Megan Smith of Google suggested that,“the
question to ask is ‘What are you solving for?’.
That’s where the really big ideas come from”.
She noted that it was Google’s mission – to
organise the world’s information – as much as
its original idea that had given it the headroom
to scale.

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Embed yourself in the
right networks
No one can scale a company by themselves.
One consequence is that you need the right
team and the right people in your organisation;
however, just as importantly, you also need the
right networks outside your organisation.
The right networks enable building a scalable
business throughout the lifecycle of a company.
This starts at the very beginning, as the
character and ambition of the entrepreneur is
formed.As Megan Smith put it,“I was lucky to be
around people who started things.That’s how
you come to start things yourself”.
Moreover, networks become increasingly
important as companies scale.They become
the source of customers, suppliers, partners,
employees and investors. Speaking at the
launch of the Cambridge Cluster Map – a
new dataset of the fastest-growing technology
companies in Cambridge – serial entrepreneur
David Cleevely spoke of the crucial role played
by networks. In his words:
“The ecosystem is vital. Successful startup
clusters rely on people developing cumulative
advantage in particular areas or technologies
and benefiting from and building on each
other’s success.”
The guests from Silicon Valley, the world’s
leading startup cluster, served as a physical
symbol of the power of networks. Closer to
home, however, it is clear that Cambridge is
already a cluster that is enabling startups to
scale.The data provided by the Cambridge
Cluster Map is striking.Above all, Cambridge
has produced eleven billion-dollar technology
companies in the last fifteen years, as well as a
further fifteen with over $100m of revenue that
are growing rapidly.
As data from the map revealed, there are
1,525 high-tech companies in Cambridge,
which employ over 50,000 people.The top
50 companies hired almost 6,000 people in
the last year alone, representing a 23 percent
increase in employment at a time that the UK
as a whole struggles with almost eight percent
unemployment.
The message of SVC2UK 2012 was clear:
locating in a successful cluster is no magic
bullet for scale, but it certainly provides a
company with additional resources and
options that support the scaling up of a
high-potential company.

5
Recruit people who have
done it before
Speaking to an audience of entrepreneurial
high-school students at the UK Parliament,
Angela Lin of YouTube summed up the
challenge of scaling up. In her words,“The
fundamental purpose of scaling is to answer
the question,‘How do you increase your impact
beyond the people you can immediately
interact with?’”.
Technology is, of course, part of the answer
but, for most of the SVC2UK guests, the most
important ingredient is your team.
In particular, a theme that was repeated
throughout the conference was the vital
importance of hiring people who have scaled
a business previously. In Megan Smith’s words,
“You simply must do this.There is no substitute”.
This is not a simple prescription for startups
to follow. Often, hiring people with experience
of scale means changing the dynamic of
a team and bringing on employees who
may be significantly older and – on paper, at
least – better qualified than the founders.As
Panni Morshedi of Wonga argued, founders
must bite the bullet and do it anyway:“You have
to come to terms with the fact that you need to
hire grown-ups who have done it before”.
The crucial insight is that, while every startup
feels unique to its founders, the challenges it
will experience in scaling up are likely to be
common across companies that have grown
rapidly. Pattern recognition and the ability to
apply proven techniques are therefore vital.
As Morshedi put it,“A lot of problems that
seem unique or impossible to you will be
straightforward to someone who has scaled a
business before”.
Of course, hiring people with significant
track records is likely to be a disruptive and
sometimes uncomfortable experience for both
the hirer and the hired.As a company scales, it
is likely that it will outgrow some of the founding
team and early employees. Kim Polese, serial
entrepreneur at Marimba, SpikeSource and
ClearStreet, recommends facing this challenge
head on:
“You have to recognise and embrace the fact
that the team will change. Scaling usually
requires some people who have scaled before.
This means the founding team is unlikely to be
the right team to scale.You need to confront
that truth early.”
A common theme in the speakers’ reflections
was that many of the challenges that this
presents come not from the situation itself,
but from an unwillingness to have difficult
conversations before the working environment
becomes poisoned or bitter.Acting decisively
but compassionately is the antidote.

6
Just as adapting to the scale-up context can
be difficult for the founding team, it may be
equally uncomfortable for the experienced hire
who is brought in to help the company grow.
A scale-up matures quickly, but it is likely to
remain “scrappy”,“demanding” and “chaotic”
(all words used by SVC2UK panellists) for a long
time – and experienced executives who have
spent significant in more established contexts
may take time to adjust.The key is to hire people
who are flexible and who embrace these
challenges.As Sheila Lirio Marcelo, founder and
CEO of Care.com, put it,“You want people who
have scaled a company, but are still able to do
their own photocopying!”
Finally, the key to successful integration of
experienced hires is genuine respect – rather
than mere grudging acceptance.The SVC2UK
speakers were unanimous in the emphasis
they placed on working with brilliant people to
enable scaling up. Mary Lou Jephson perhaps
put it best and most bluntly:
“Scale is all about team. Make a list of the best
ten people you have ever worked with in any
context. Hire them.You must hire people who
are better than you.”

7
Hire for tomorrow, not today
Hire ahead of your needs
A startup that wants to scale has the worry not
just about the who of recruiting, but also the how.
It’s not enough to hire people who have scaled a
business before; you also need to make hiring a
core competency of your company.
This is crucial because, by definition, a company
that is scaling up is going to be very different
in a year’s time from the way it is today.The
consequence is that in order to be ready to
address the challenges you will face next year,
you have to hire people for tomorrow, today.
Sheila Lirio Marcelo, speaking to students in
Cambridge, summed up the challenge:
“You need to hire people who can scale. In
practice, this means that you have to hire
ahead of your needs.You can’t scale yourself,
so you need to hire people you trust who can
adopt your vision and strategy and execute it.”
The fact that your hires today are likely to –
indeed, should – become the leaders of your
company, with large numbers of employees
working for them, means that you need to hire
people not just with past experience but with
future potential.As Marcello put it,“Always view
your hires as a long-term relationship, not filling
a temporary gap”.
This need to ‘live in the future’ is a constant
challenge. It means making decisions that
would be unusual, perhaps even foolish, in
a company that was growing more slowly.
Megan Smith spoke about the way Google
had addressed this, noting that at one point
the business was growing so quickly that she
went on maternity leave and the number
of employees doubled in the time she was
away.The main concern even then was that
Google might not be growing quickly enough;
she remembers in the early days Larry Page
worrying that the opportunity Google faced
was so large that, to meet its full scope
in a year’s time, would require even more
aggressive hiring right then.
The skillsets for which you hire will
change rapidly
Of course, hiring for the future means more than
hiring quickly. It also means that the skills and
experience that you look for in employees has
to change.As Mary Lou Jephson pointed out, it
means that you may be looking for people with
skills that are quite different from those present in
your current organisation. In her words,“Different
people are the best people at different stages of
the business.That’s not an insult to them; it’s the
nature of scaling”.
Megan Smith provided some perspective on
how changing needs and skillsets had shaped
the hiring process at Google. She said,“At the
beginning, you need smart generalists. Eventually
you will need to hire specialists, but you should
always be hiring for more than just a specific
skillset”. In practice, this means taking into
account how a new recruit will go on to shape

8
the broader company as it scales, as well as
how effectively he or she can perform a specific
task. Smith noted that Google makes its selection
decisions “roughly based 30 percent on ability
in the specifics of a role, 30 percent on general
smarts, 30 percent on leadership and 10 percent
on ‘Googliness’ – that is, cultural fit”.
Always be recruiting
The fact that hiring is both difficult and crucial
means that it must be one of the founding CEO’s
most important roles.As Panni Morshedi noted,
early and senior hires are too critical to delegate
to people who do not have a proven track
record of excellence in recruiting. In Morshedi’s
words,“Remember that some people are brilliant
at their day jobs, but are no good at hiring”.
Mistakes made in recruitment can damage a
company for years. Equally, however, missed
opportunities can hamper a startup’s ability to
scale. Sheila Lirio Marcello noted that chance
encounters at conferences, meetings and even
on planes can be the source of some of the
most transformational hires. For this reason, she
summarised the hiring philosophy needed in a
scale-up as,“Always be recruiting”.

9
Embrace diversity
It is not, however, enough to hire brilliant people
with experience.You also have to mould those
people into a team with complementary skills
and approaches.The need to make sure a team
gels and operates smoothly can create the
temptation to recruit people with homogeneous
backgrounds – but this is a temptation that the
SVC2UK speakers urged founders to resist.
Hire multi-disciplinary people
Mary Lou Jephson summarised the issue pithily:
“Diversity matters because otherwise everyone
wants to solve problems in the same way.
Everything looks like a nail.To break this, you
need to hire multi-disciplinary people.”
A number of speakers noted that hiring people
with multi-disciplinary backgrounds can help a
scale-up manage the complexity that comes
as an organisation moves from being one in
which everyone knows everyone else to one
where multiple teams with specific functional
focuses are at risk of becoming siloed.
Sheila Lirio Marcelo gave one example,
arguing that people whose experiences span
multiple functions can help manage some
of the tensions that arise between different
teams as a company scales. In her words,“For
example, it can be a good idea to hire people
with product management backgrounds into
your marketing team, as they’re more likely
to understand the mindsets of the Tech and
Product teams and less likely to allow an insular
mindset to dominate”.
Hire people from under-represented
backgrounds
Megan Smith extended this argument and
pointed out that,“you need team diversity,
because you need a whole range of ways
of solving problems”. Moreover, a good
way to ensure a diversity of problem-solving
approaches within a team is to recruit excellent
people from backgrounds that tend to be
underrepresented in your industry.
Smith gave the example of female computer
scientists, noting that if only ten percent of
people who graduate from computer science
degrees are women, those women are not
only likely to bring a new perspective to an all-
male team, but also to be excellent in multiple
dimensions. In her words,“Think about studying
in an environment where 90 percent of people
are so visibly different from you: people who are
good enough and tough enough to pull that off
are exactly the people you want on your team”.

10
Build multi-disciplinary teams
Embracing diversity goes beyond hiring – it is
something you also need to place at the heart
of how you build and organise teams. In Adam
Nash’s words,“You want multi-disciplinary teams,
not just multi-disciplinary people”. He gave the
example of LinkedIn’s decision to combine front-
end engineers and user experience designers
in the same team.This was a move that went
against conventional wisdom. Nash noted that,
“At the time, it was controversial, but we found
it meant that the engineers became more
focused on the end goal – making sure users
loved the experience”.
This is just one example that illustrates a theme
that the speakers returned to multiple times:
teams with diverse backgrounds but a clear
shared goal are best equipped to help a
company scale.

11
Nurture company culture
and values as you grow
Building great teams that can scale goes
beyond hiring the right people. It also requires
the founders to nurture a great culture and great
values.The bad news is that this becomes much
harder as a company scales.The good news
is that was one of the most-discussed topics at
SVC2UK 2012 and the speakers outlined clear
strategies for building a culture for scale.
Values are difficult to maintain as you scale
Multiple elements of company culture were
discussed during the SVC2UK panels and
workshops, but three values were mentioned
by more than one speaker as being
particularly difficult to maintain as a startup
scales:“delighting the customer”,“owning the
problem”, and persistence.
Jason Stoffer, partner at Maveron, noted
that “delighting the customer” is something
that almost all startups have as a founding
value, but is also something that becomes
more difficult as you scale and the business
becomes more complex. Moreover, Stoffer
argued that it is companies that stay closest
to their customers as they grow that are most
likely to scale effectively.
Christopher Lukezic of AirBNB agreed.“Values
often change as a company grows, but it’s
hard to see how you can scale without an
outward-looking perspective that puts your
customers’ needs first”.
For Panni Morshedi of Wonga, one of the
hardest cultural problems for a company that
is scaling is maintaining a sense of “problem
ownership” – that is a culture in which all
members of the team feel passion for and
have a deep understanding of the problems
they are trying to solve. In Morshedi’s words,“At
first, it’s easy: everything is everyone’s problem!
But it gets harder as you grow and hire. Finding
people who will have the mentality that it is
their problem is important.You can’t accept
excuses or the culture in undermined”.
Persistence was the value most critical to
scale identified by Kim Polese. She argued that
persistence is “perhaps the most underrated
quality for a startup”. Countering the myth
of the ‘overnight success’, Polese noted that
“most successful companies are actually a
series of failures before something works. Only
a culture of persistence can get you through
those failures”.
How to nurture values
The importance of these values is perhaps
intuitively obviously. However, ensuring they
remain at the heart of a company that
is scaling up is far harder.The speakers
suggested four strategies for nurturing the right
culture: first, demonstrate what values matter
to the company by what you choose to focus
on; second, make culture-fit an explicit part of
your recruitment process; third, actively dispel

12
myths; and fourth, ensure that the CEO and
senior leaders role model the culture you want
to develop.
Focus transmits culture
Christopher Lukezic summed up the
importance of company focus by considering
his experience of rapid scaling-up at Airbnb:
“Going from 20 to 80 employees is perhaps
the most stressful phase for the employees
themselves, because you are creating a
structure for the first time.Things that used to be
automatic, such as embracing the company’s
values, now require real work.Values will be
extrapolated from what you ask people to
focus on”.
The challenge is that transmitting focus
throughout a growing company requires
different mechanisms from those that work
effectively in a startup. In the words of Jose
Ferreira, founder of Knewton,“When there
are two of you, there’s a good chance you
intuitively agree or at least can discuss
what is important and worthy of focus.As
you scale, that’s no longer possible”. In a
larger and growing organisation, you have
to communicate what is worthy of focus by
making and communicating clear strategic
decisions.As Kim Polese said,“focus is
demonstrated by saying no to potentially great
opportunities.That’s how you build a culture”.
Maintaining and communicating company
focus is easier if all employees clearly
understand not just their job, but the
company’s guiding cause or mission. Sheila
Lirio Marcelo pointed out that “organising
people around a cause means that you’ll have
to do less management” because people will
have a better understanding of the company’s
priorities and how to resolve competing
demands on their time and resources.
Hire for culture fit
As discussed above, hiring is particularly
important in a fast-growing company,
because the people you recruit will not only
be doing a specific job in the present, but will
become the leaders of your company’s future.
Consequently, the people you hire are one
of the most important mechanisms through
which you build a corporate culture.
This can be a major challenge, particularly
given the importance of hiring people with
experience. Panni Morshedi summed up the
risk scale-ups face by noting that “new hires –
particularly the people from backgrounds in
bigger companies – often won’t understand
the dramatic, live-or-die nature of a startup. It
will be obvious to you, but not to them”. Part of
the solution, according to Sheila Lirio Marcelo is
to “find people who share your values, because
the people you hire later will learn those values
from them”.
Another important element is to pay attention
to the overall composition of the team, as well
as the values of individual members. Megan
Smith pointed out that Larry Page always
insisted that at least 51 percent of Google
employees be engineers, even as Sales was
growing in importance. He wanted the culture
to be engineering-driven and knew that comes
not just from having engineers as leaders, but
also by having a critical mass of engineers

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throughout the organisation.
Actively dispel myths
As has been discussed, one of the challenges
of scaling is that the company goes from one
where everyone knows everyone else – and
may even be close friends – to one where this
is impossible.This has many consequences,
but one of the most important is that it allows
rumours and myths to spread. Sheila Lirio
Marcelo noted the potentially destructive effect
this can have and described the solution she
has implemented at care.com:“every April we
move people around – that is, we physically
change where they sit.This mixes up old timers
and new people and breaks down myths that
might form”.
Megan Smith reinforced the value of ensuring
that team members of different tenures spend
time together and discuss how the company
works. In her words,“people can easily
misinterpret why things happen a certain way.
You see people believing there are a whole set
of rules that just don’t exist!”
Role model the values you want to see
The SVC2UK speakers agreed that the
development of company culture in a scale-
up is not a task that can be delegated or
outsourced; it is a critical role of the CEO and
founding team.As Panni Morshedi put it,“leaders
build culture”. Moreover, this does not change
as the company grows.As Morshedi said,“Even
in a company of 350 people, the team needs
to see the CEO walking around the office,
demonstrating the company’s core values”.
Jose Ferreira concurred, noting that a CEO
needs to remember that his or her actions will
be observed, interpreted and acted upon as
much as – or more so than – his or her words.
Consequently, according to Ferreira,“the CEO
must role model the values and activities that
are important.Anything a CEO shows they care
about, the company will care about”.
In summary, the founders must choose company
values carefully and nurture them as the
business scales by placing them at the heart of
how the organisation hires and operates.

14
Build systems that scale
Another major challenge that startups face as
they grow is that systems and processes – both
technical and organisational – are hard to scale.
Systems that are sufficient in a small organisation
can cease to function when the company is
dealing with numbers of employees and users
or quantities of data that are several orders of
magnitude greater.
Three types of systems in particular were
identified as being critical to scale: the
company’s technical infrastructure; its data
collection, storage and analytics systems; and its
organisational rules and norms.Although these
systems are very different from each other, they
share the common factor that they need to be
designed for scale; merely hoping that they will
grow with you is not enough.
Technical Infrastructure
Kim Polese argued that it is all too easy to see
technical infrastructure as a commodity, when
it is in fact a key differentiator, particularly in a
fast growing market with multiple competitors.
She noted the importance of planning for
scale as you build your infrastructure, drawing
on the striking example of the race to become
the dominant social network in the mid-2000s:
“Remember that one of the critical differences
between Facebook and Friendster was
infrastructure; Facebook could handle
extraordinary growth and Friendster could not” .
Friendster, one of the early online social networks,
had many millions of users before Facebook
was launched, but rapidly faded in the face of
competition from Facebook and MySpace.
Data and analytics
For Sheila Lirio Marcelo, a company’s system
for collecting and analysing data is essential
to its ability to scale.As a company grows,
the founding team’s ability to know what is
happening through personal observation
diminishes. In place of observation , you require
“excellent data systems and dashboards”.
In Marcelo’s words,“if these are not good, you
cannot scale, because you simply can’t know
what is going on.As you grow, it is critical that
you can recognise the bottlenecks in your
business from the data”. Moreover, you need
an understanding of how the data you see
on your dashboards maps to the reality of
activity in your company.As Marcelo says, a
precondition of scaling up is knowing “what
levers you can pull to make change in your
key metrics”.
Rules and norms
Megan Smith reminded the audience at
SVC2UK that it is not only technical systems
that can be challenging to scale: you also
need to build what she called “company APIs”
– which she defined as organisational rules
and norms that allow teams to work quickly
and effectively.

15
One example Smith cited from Google’s
experience was having weekly deal approval
meetings for the company’s corporate and
business development teams. Having a regular,
transparent meeting – rather than multiple ad
hoc meetings – allows members of the relevant
teams to increase the volume or scale of their
activity rapidly without hitting bottlenecks
such as the ability to schedule time with the
appropriate leaders and stakeholders.
Smith also pointed to the power of basic
rules that make people more effective and,
crucially, allow the number of interactions
between individuals and teams to increase
very quickly without introducing bureaucracy
or inefficiency.According to Smith, Larry Page’s
favourite example is Google’s norms around
meetings. Smith noted that at Google “the rule
is that if there’s no agenda or no owner, you
should leave the meeting.That’s a simple rule
that makes the time people spend together as
efficient and effective as possible”.Although
such rules can seem trivial compared to the
technical challenges of scaling infrastructure,
successfully embedding them within an
organisation is difficult – but pays dividends.
Sheila Lirio Marcelo agreed on the importance
of building organisational systems for scale –
and added that it is crucial that these systems
are flexible and evolve over time. In particular,
in a very fast-growing company no single set
of processes will be sufficient for an extended
period. Moreover, once an organisation grows
beyond a certain number of employees, it
is impossible for the founding team to have
sufficient visibility to determine the best set of
processes for the company as a whole.
The key, therefore, is to ensure that teams
understand why processes have evolved
the way they have and that they feel able to
challenge and modify these where necessary.
Marcelo summarised the challenge in saying,
“One of the things that happens as you scale
is that the people you hire are less likely to feel
ownership of the processes and systems with
which they work.You need to empower them
to think about and question system efficiency.
The alternative is that employees become
passive recipients of systems that make them
ineffective – and that will slow your growth”.

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Test continuously to stay close to
the customer
For early stage startups, spending time with your
customers and understanding what they need
is almost the only thing that matters. However,
as you scale, that becomes harder: you have
too many customers to spend as much time
with them individually and growth brings with it
multiple new concerns, from hiring to fundraising.
Nevertheless, the SVC2UK speakers pointed out
that scale-ups that manage to stay close to their
customers are far more likely to succeed – but
that different techniques are needed from the
face-to-face conversations that might dominate
in the earliest stages. Foremost among these
techniques is continuous testing.
Testing allows you to scale customer focus…
Jose Ferreira of Knewton praised techniques
such as A/B testing, which allow web-based
companies to test multiple versions of their
sites and user experiences automatically and
to use the data to gather customer feedback
at scale. In his words, growing a company
“requires continuous improvement – your
business needs to move as quickly as the
customer base – which is why techniques like
A/B testing are important”. Ferreira and other
speakers noted the wide variety of decisions
that can be aided by extensive A/B testing,
from relatively minor points of design through
to pricing and branding strategy.
More important that any particular decision,
however, is developing a culture of testing in
order to understand your customers better.
Panni Morshedi argued that this is something
that is easier to do when a company is still
small – particularly before it raises large
amounts of investment – because A/B testing
and similar techniques are so geared to
avoiding waste and resolving uncertainty.
Morshedi cautioned strongly against losing
this mindset as a company grows:“It can be
tempting to cut back on testing as you grow
and raise money. Remaining scrappy, though,
is a key part of scaling: you have the keep
the ethos you had when you were small. Just
because you have money doesn’t mean you
have enough money not to test!”
… and helps resolve disputes
Sheila Lirio Marcelo drew attention to an
additional benefit for A/B testing – that by
injecting facts and data into otherwise subjective
debates, it can help reduce the role of ego and
politics in decision-making. Marcelo argued that
this is particularly beneficial when a company
has increasingly disparate or compartmentalised
Product, Marketing and Engineering teams,
between which tensions can emerge as an
organisations scales. In Marcelo’s words,“A/B
testing brings an element of objectivity, which
can help resolve different approaches”.

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Testing is not a magic bullet
Several speakers, however – including strong
advocates of A/B testing – cautioned against
viewing A/B testing as a panacea. Jose
Ferreira noted that vision and intuition remain
responsibilities of the founder, no matter how
committed you are to testing.You cannot A/B
test a startup into existence or a company to
scale.A testing culture exists to help a business
fine-tune its execution. It cannot in itself make
the major strategic decisions that will shape
the company. In Ferreira’s words,“scaling is art
plus science, not science alone”.
Above all, entrepreneurs should not become
a slave to testing. Ferreira likened a company
that relies on customer testing alone to a
person who eats only junk food: short-term
satisfaction is achieved at the cost of long-term
unsustainability. For Ferreira, a simple solution
is to ensure that major decisions both test well
and match your long-term vision.
Jason Stoffer, another proponent of A/B testing,
also warned against losing sight of the bigger
picture as you adopt a culture of continuous
testing. He said,“Before you test another
iteration of a button colour or image width,
stop and ask yourself, what are the three things
that are going to cause widespread adoption
of your product? Is what you’re doing right now
going to lead to one of these? If not, why are
you doing it?”.
The message of the SVC2UK speakers was
clear: A/B testing is an essential element of
the entrepreneur’s toolkit – but it cannot be an
excuse for abdicating responsibility for vision
and strategy.

18
Take the right kind of money
at the right time
Raising capital from external investors is a topic
that pre-occupies many entrepreneurs who aspire
to scale their businesses and success in doing so
is widely celebrated within the startup community
and in the technology media.However,while
investment is often a critical ingredient for growth,
a number of SVC2UK speakers warned founders
to avoid seeing funding as the solution to all the
challenges of scaling up – and indeed cautioned
that raising money from the wrong people or
at the wrong time can be damaging for a fast-
growing business.
External investment can be the catalyst
for scale
Taking on external investment can enable
scale at a much faster rate than the organic
cash generation of the business would permit.
This does not always mean raising money
from formal venture capital funds – indeed,
as Sherry Coutu pointed out, most high-
growth businesses do not – but it is likely that
technology startups with aspirations to grow
rapidly will need to take on investment from
angel investors or similar sources.
Adam Nash discussed the wariness that some
entrepreneurs feel about raising money and
the dilution of ownership and control that
results. He warned that founders “need to be
aware that there is a real trade-off between
control and financial outcomes”.According to
Nash, entrepreneurs must recognise that they
“will usually need financing to grow and need
a liquidity event [such as being acquired or
a public offering] to realise their success, but
both these mean giving up some control”. For
Nash, founding teams need to recognise the
trade-off, but embrace growth; in his words,“if
you’re serious about scale, some loss of control
is almost always part of the bargain”.
But beware raising too much (or too little!)
money…
However, multiple speakers expressed concern
that entrepreneurs may become fixated on
fundraising as a goal in itself, rather than as
an activity that supports the real growth of
the business. In particular, several people
concluded that startups should avoid raising
more money than they need.
Jose Ferreira said that it worried him to see
startups celebrate raising a lot of investment.
In his words,“one way of looking at it is that
it just means you weren’t able to grow the
business organically!” Megan Smith reinforced
this viewpoint. She said,“Beware of taking too
much money too soon. Scarcity builds clarity”.
The challenge is that the optimal amount of
investment is difficult to define. Smith warned
that remaining lean “doesn’t mean starve
the company: you need enough resources to
succeed, which means anticipating needs
as well as responding to them”.Adam Nash’s
proposed solution to navigating this trade-
off is to ensure the startup’s leadership is
focused on the purpose of fundraising, rather
than the amount. In his words,“It’s important

19
that you as the CEO make clear that any
financing – up to and including an IPO – is
not an end-point or the goal itself, but part
of the process of building a great business”.
Drawing on his experiences at LinkedIn, he
argued that the management team should
always communicate internally and externally
why the company was raising money and,
moreover, should use each funding round as
an opportunity to “raise the game” in terms of
company culture and aspirations.
… And beware of investors who will send the
wrong message
A second challenge the fundraising process
presents is finding the right investors. Speakers
warned against the temptation – particularly
acute when finding investment is difficult – of
taking money from anyone who is willing to
offer it.
First, taking money from people who have little
to offer the business other than cash is to miss
out on the great value that an engaged and
well-connected venture capital firm or angel
can offer. Jose Ferreira argues that domain
expertise, network and experience of scaling
means that “the power of a genuinely good
VC is extraordinary”.
Second, certain types of early investors can
cripple a business by the signal that their future
behaviour sends to the broader investment
community. Charles Cotton points to the
problem posed by very early stage “strategic
investors” – that is, large corporations that
invest in startups in order to have an option on
the technology or other assets of the startup,
rather than as a pure financial investment.The
danger, in Cotton’s view, is that if a strategic
investor takes a stake in a startup at a very
early stage, but it becomes clear subsequently
that it has no intention of acquiring the startup
or making further investment, other investors
will take that as a signal that the startup is
failing or that its technology is less promising
than was once thought.
Jose Ferreira made the same point about
institutional investors, such as venture capital
funds, providing funding very early in a
startup’s lifecycle. Such investors’ business
model relies on making follow-on investments
in the later funding rounds of successful
startups. Given that an institutional investor
who invests early will know more about a
startup than any future potential investor,
Ferreira notes that if they decide not to follow
on in future rounds, the signal that is sent to
other investors about your likely prospects is
very damaging.
Investment, therefore, is both crucial for scale
yet fraught with potential hazards. Founders
who aspire to scale must select their investors
as carefully as they would a co-founder: as
with a co-founder, the right choice can propel
a company to extraordinary growth; the wrong
one can sink it.

Conclusion
Taking a startup to scale is extraordinarily difficult. Nevertheless, the conclusion of Silicon Valley
Comes to the UK 2012 should be encouraging for UK technology startup founders.
On the one hand, the comparison with scale-up rates in the United States shows that British
companies can, should and – indeed – must do better at growing quickly and consistently.
On the other, the advice and counsel offered by the SVC2UK speakers demonstrates that, while the
task remains extremely challenging, there are proven techniques and methods that greatly improve
the probability of success.
Moreover, as the SVC2UK CEO workshops showed, serial entrepreneurs with experience of scaling
companies not only exist, but are able and willing to share their time and expertise with first-time
founders.The worldwide networks that are built and reinforced by conferences such as SVC2UK and
the increasingly global market for venture capital are a critical resource that British startups must
draw on as they seek to grow.
Silicon Valley provides an extraordinary example of what is possible.The task is now for UK-based
entrepreneurs to meet the challenge head on and turn their startups into scale-ups.
20

21
Speaker profiles
Adam Nash is an entrepreneurial executive with a passion for product and deep experience with
mobile and social platforms. He joined Greylock Partners in 2011 as an Executive in Residence,
where he advises the leadership teams of the firm’s existing consumer technology companies
as well as evaluating new investment opportunities. Prior to joining Greylock,Adam was Vice
President of Product Management at LinkedIn. Most recently,Adam led LinkedIn’s Platform
Mobile products, including the launch of LinkedIn’s open developer platform and their highly
successful native applications and mobile web experiences.
Angela Lin leads all things on education at YouTube, including content strategy, partnerships
and original programming. Her work reaches across the learning spectrum from nursery to higher
education and lifelong learning, featuring educational content that ranges from the purely
academic to the wildly inspirational.
Christopher Lukezic joined Airbnb as an early employee in summer of 2009 and now acts as
the Director of Communications for Airbnb in EMEA where he oversees brand marketing, media
relations, and partnerships. Prior to joining Airbnb Christopher spent 5 years as a professional
runner and spokesperson for Reebok and Nissan.
Jason Stoffer joined Maveron in 2007 and is now a partner focused on investing in education,
e-commerce and web-enabled consumer businesses. He is involved with the firm’s investments in
zulily,Altius Education, General Assembly, Julep, Everlane, Live.ly, Gigi Hill and Livemocha. Prior to
joining Maveron, Jason served as senior director of strategic operations for Career Education Corp.,
where he co-founded and led admissions and marketing for IADT Online, a for-profit design school.
Jose Ferreira is the founder and CEO of Knewton, the world’s leading adaptive learning
company. Knewton combines big data with psychometrics to continuously and progressively
personalize any publisher or school’s online learning courses. In October 2011, Knewton
announced a partnership with Pearson to power their complete line of MyLab and Mastering
products, currently used by nearly 10 million students.

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Kim Polese is a leading Silicon Valley entrepreneur and technology executive. She is currently
Chairman of ClearStreet Inc., a social finance startup focused on helping people eliminate
debt and achieve long-term financial health. She also serves as an advisor, board member
and investor to several early stage technology companies. Previously, Kim served as CEO of
software company SpikeSource Inc., a pioneer in the automation of open source application
management which was acquired by software company Black Duck in November 2010. Prior
to SpikeSource, Ms. Polese co-founded Marimba Inc., a leader in the first generation of systems-
management software for the Internet age, which automated the management of software and
computing resources. Ms. Polese served as President, CEO and Chairman of Marimba, leading
the company to profitability and a successful public offering. Marimba was acquired by BMC
Corporation in 2004.
Dr. Mary Lou Jepsen is the CEO and Founder of the Pixel Qi Corporation, a high tech startup doing
things in display technology that many believed were impossible – and delivering them into high
volume mass production. She is also a member of Innovation Board of MEDCO, one of the largest
pharmacies in the world, serving 65 million people. Previously she co-founded One Laptop per
Child and served as its CTO and the chief architect of the $100 laptop. She has also been on the
faculty of the MIT Media Lab, was the CTO of Intel’s Display Division and was the CTO and a co-
founder of MicroDisplay Corp.
Megan Smith is an entrepreneur, tech evangelist, engineer, social change agent and connector.
At Google[x], Megan works on a range of projects including co-creating/hosting SolveForX. For
nine years prior she oversaw Google’s New Business Development global team managing early-
stage partnerships, pilot explorations, and technology licensing. She led the acquisitions of Keyhole
(Google Earth),Where2Tech (Google Maps) and Picasa, and led the Google.org team transition
to add Google Crisis Response, GoogleforNonprofits, Earth Outreach/Engine and increased
employee engagement.
Panni Morshedi is currently leading all product development at Wonga. She has been with the
company since the beginning and has been instrumental in launching Wonga and scaling it to 5
million loans and growing. In addition, Panni was responsible for setting up and implementing the
international expansion strategy. Prior to joining Wonga, she was in charge of product development
for iModel Music, a global mobile marketing company. Panni was also part of the founding team
behind ExchangePath, a CMGI company based in New York.
Ramesh Raskar is an Associate Professor at MIT Media Lab. Ramesh Raskar joined the Media Lab
from Mitsubishi Electric Research Laboratories in 2008 as head of the Lab’s Camera Culture research
group. His research interests span the fields of computational photography, inverse problems in
imaging and human-computer interaction.

23
Sam Chaudhary is the co-founder and CEO of ClassDojo. Sam holds a Double First-class degree
in economics from Cambridge, and taught high school after graduating. He subsequently
worked in the education arm of consultancy firm McKinsey Co in London, before moving
to Palo Alto as part of the inaugural class of the ImagineK12 incubator – the “Y-combinator
for education technology”. Sam and his co-founder Liam founded ClassDojo in 2011 to help
teachers, parents and students improve classroom behaviour and build positive learning habits
and character strengths.
Sheila Lirio Marcelo founded Care.com in 2006 and today, the Company is the largest online care
destination in the world. Care.com allows families to connect with millions of caregivers to manage
the lifecycle of care challenges families face. Sheila’s introduction to technology started when she
was a management consultant at Monitor Company and a teaching fellow at Harvard Business
School. Her growing appreciation for the power of technology led her to positions at Internet
companies, including VP, Product Management and Marketing at Upromise.com, and VP and
General Manager of TheLadders.com.
Sherry Coutu pursues a portfolio of interests which include early stage technology investing,
advising and serving on the boards of companies, universities, and charities.A serial entrepreneur
now turned investor, her current activities include positions with Cambridge University, Cambridge
University Press, Cambridge Assessment,Artfinder, Linkedin, NESTA, Cancer Research UK and others.

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