8 things every high growth startup needs to succeed

The rapid uptick of the hockey stick on a high growth startup can look spectacular from the outside as you watch the company grow before your eyes. It all looks so easy, but it’s the classic story of the 5 year overnight success — when you’re just seeing the last few months.

Building startups are hard. They’re full of high intensity stressful periods scattered between drawn out frustrating periods of not growing fast enough, not enough revenue or problems with your team. They’re not for the faint of heart. Building a startup that is poised for high growth is even harder and the emotional rollercoaster goes higher and lower as the pressure increases.

Customer apathy kills more startups than any other reason and getting over that to grow the company takes a lot of trying new things and learning. There will always be a couple of years of drudgery before the rocket ship takes off. Here are some things that you need to make sure you have in place as a solid foundation before you try and scale:

1. Have the right team in place
   It all starts with the right people. Picking cofounders with complementary skills and being able to trust them is paramount. Beyond that you need to have key support structures in place both internally, with domain experts who know more than you in their field, as well as externally with a network of advisors and mentors who you can rely on for solid guidance.
   “If you give a good idea to a mediocre team, they will screw it up. If you give a mediocre idea to a brilliant team, they will either fix it or throw it away and come up with something better.” ― Ed Catmull
2. Create a culture of learning
   You’re going to have assumptions about your product and your market that are going to be wrong. There are things you can’t have known at the beginning and your market is going to shift and evolve over time that you’ll need to react to. Building a company culture that embraces learning by studying the data around you and experimenting with new and better ways of doing things will help you weather these changes and how you come out stronger and more resilient at the end. As well as help you adjust to how you’ll need to change internally as you grow. Having open communication and tight feedback loops is a great way to increase and share team learnings. As Darwin said: “It’s not the strongest or fastest species that survives, but the one most adaptable to change.”
3. Focus on your customer’s needs
   One of the easiest ways evolve with your market is to be very focussed on the needs of your customers and continuously finding better ways to fulfil those needs. If you focus internally on your product you’re likely to miss outside changes, but if you’re focussed on how your product or service is solving your customers problem then you’ll be the first to be aware of outside changes, threats or opportunities. You also don’t want to try and solve every customer need. Rather do 1 thing 10x better than 10 things only slightly better. Focus is key and that means saying “no” and doing less.
4. Control your core value proposition
   It’s very tempting to find partners to help you get your idea off the ground and it can be a very favourable way to get started. But over time as you grow and prepare for scale, you need to ensure that you have complete control over the business core that delivers the value proposition to your customers and that their satisfaction does not rely heavily on other parties. You can outsource many things, but if you’re a SaaS company you should have your own developers working on the code or if you’re an online retailer make sure that you manage your own customer service — even if you use partners for warehousing and deliveries. Whatever the essence of the value you provide to your customers is, you’re going to need very tight control over it and this is very hard to do if it’s not in-house.
5. Don’t raise too much (or too little)
   If you’re planning on growing faster than your revenues would typically allow and you’re aiming for rapid growth, then you’re likely going to need to raise some capital to help you achieve that. Raising too little is the obvious mistake as you’re going to run out of money before you get there. But, raising too much can hurt as well as it can lead to you diluting your shareholding so much that you’re disincentivized or you lose control of your board and direction. Having too big a war chest can also mean that you’re pressured into doing wasteful things that you wouldn’t have otherwise and can distract you from the critical focus you need to get the growth you need. Being over funded can also force you into decisions that you don’t want to take, as investors push you down more risky paths to aim for their required returns but that increase your odds of failure. It’s a careful balance to achieve and you need to weigh your options carefully.
6. Know your exit strategy
   Building something with huge potential to scale can be really exciting, but it helps to start with the end in mind. What you working towards will be the litmus test that you apply to 1000’s of smaller decisions along the way. If you’re driving for sustainability then you’re going to hold back on over investing in growth, if you’re aiming for an acquisition then pushing for user numbers or partners might be the most important, or if you’re going for an IPO it’s growth with at least the option of huge profitability and dividend yield that’s going to be the most important. You also need to make sure that you and your investors are aiming for the same outcome. If you’re not clear on what outcome you’re hoping for then you’re less likely to achieve it. “If you aim at nothing, you will hit it every time.” — Zig Ziglar
7. Know your metrics
   Linked to the above point, you need to understand the numbers in your business and what levers you can pull to change them. Track as much data as you can from as early as possible – it will help you dive into the nuts and bolts to see what’s really going on. But no two metrics are equal and looking at too many make it hard to prioritise. It helps to have a high level dashboard of 3–5 of your most important actionable metrics or KPI’s (avoid non-actionable vanity metrics). What are the top 3 metrics for your business that if they go up, you know you’re succeeding. These are the things your team will prioritise over all else and will be be the standard that they compare their actions to. Make them visible to everyone in the company so they know what’s most important. “You cannot manage what you cannot measure.” —
8. LTV > CAC
   Of all the metrics that you can track, ensuring that your customer Lifetime Value (LTV) is greater than your Customer Acquisition Costs (CAC) is possibly the most important. If it costs you more to get a customer than you ever make from the customer then you’re just going to be scaling a loss-making machine. Tweaking the systems and processes in your business to get LTV > CAC should be your biggest priority before you try to scale. You can experiment with automation, different pricing models, different customer segments, alternative marketing channels, different ways of billing, different set of product features and a number of other elements to get this right. But don’t try and scale or raise money to scale before you do.

“The reasonable man adjusts himself to the world. The unreasonable adjusts the world to himself. Therefore, all progress depends on the unreasonable man.”
— George Bernard Shaw

A solid foundation will give you the best opportunity to create a fast growing success story and making sure you get these 8 things in place will take you a long way to getting that. So dream big, but make sure you have the basics in place so that those dreams can become a reality. Good luck.

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