Startups Scale Like Revolutions Do!

by Charle Alfy


Those who have been following this recent Egyptian Revolution closely would know that the idea of demanding Mubarak to step down right away wasn’t foreseen when the calls for the protests started! They primarily started by calling for economic reform, political freedom and social justice. It was only by the end of the first day of the protests, 25 Jan, when demonstrators saw tens of thousands taking to the streets that they realized they have enough traction to demand those fundamental changes. And as the numbers grew larger, reaching the claimed millions in the next few days, people got to believe in their ability to achieve those demands and held fast to them.

Maybe it’s only because I’ve been pre-occupied with those events over the past period, but I do in fact see many parallels between the concepts we’ve been discussing about when to scale a startup and how to do it and those for scaling a grassroots revolution!

When to scale:

Achieving Product-Market-Fit: A basic prerequisite that emerged for scaling a business is achieving the much sought after Product-Market-Fit. Even though it’s important for the vision to be more “hunch-driven” as Fred Wilson has highlighted in class, the value of a “data-driven” confirmation for that vision was not discarded. Putting the idea out there in the market and pivoting quickly until the data proves that a product-market-fit is reached is important before scaling the business. Well, same thing applies for revolutions. As highlighted in the introductory paragraph, it was after the protests could verify they have a market-fit when thousands then millions took to the streets, that the demands took their eventual more drastic form and turned into a revolution.

Economies of scale: From Chegg’s case we saw that it is only valuable to scale a business if it lends itself to some economies of scale, whether on the revenue or the cost side. With revolutions, even though it’s not as clear from the first glance, scaling the demands or the number of participants is only relevant if it leads to more than a linear gain. In that case, scaling to the more fundamental demand of toppling the regime altogether had an exponential benefit compared to reforms in what was seen as a dysfunctional regime. Scaling the size to millions of people was also crucial to ensuring that the demands are met.

How to scale:

Getting mentorship & experienced executives: Ben Horowitz refers in his blog to the basic BoD advice of getting a mentor and finding “been there, done that” executives. He takes this many steps further with detailed advice, but it remains in its simplicity a quite valuable advice. The founders of companies are often visionaries with amazing capabilities in seeing the opportunity and building the first building blocks of the product. As the business grows, the help of a mentor and experienced execs brings the knowledge of scaling up to the much in need founders struggling with the challenges that suddenly evolve. The revolution in Egypt was started by young, middle-class citizens representing different segments of society. The faceless nature of the revolting youth is what sparked it, but the consequent support of many known thinkers, writers and intellectuals gave it a much needed boost in clarity of thought, direction and credibility.

Risks of partnerships with large corporations: HubSpot's Dharmesh Shah blogged on the risks of early partnerships with large corporations for business development. Such partnerships could potentially bring a lot of distraction for the founders struggling with time & energy to focus on their true north. They also create an unwanted lock-in to the aims of that corporation that quickly puff the initial PR glow. The right of first refusal in many deals also reduces the incentives for other players to join the game. Those same risks apply to grassroots revolutions if they align with an established political party. The lock-in to the ideologies & supporters of a certain party prevents a revolution from gaining the needed mass support from the rest of the public despite of the initial benefit of some credibility. That was a pitfall that was fortunately carefully avoided in Egypt’s case.

Striking a balance between Product & Engineering: A lot of talk went into the balancing act needed between product development and engineering, the essence of which is so nicely captured in one of Fred Wilson’s blogs. Compared to the Yin and Yang, the roles of the “VP Product” who defines the product requirements and the “VP Engineering” who works on bringing that product to life are largely complementary and should exist together with significant alignment. In a revolution, this is very similar to the roles of the visionaries promoting the ideals and the demands of the revolution, and the “executives” who are able to translate these into plans of action that can be implemented and brought to life when the opportunity presents itself. Even though some “Engineers” started surfacing in Egypt’s revolution, I think the nation is still hiring for a “VP Engineering”!

Comments

Popular posts from this blog

Quiz Time 129

TCS IT Wiz 2013 Bhubaneswar Prelims

The 5 hour start-up: BrownBagBrain