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Startups don’t starve. They drown. A Lean Startup Perspective on Scaling Teams for IPO



I am reporting at Lean Startup Week in San Francisco. In this session on scaling, JP Mangalindan (Yahoo Finance) posed Jeff Jordon (Andreessen Horowitz and Eric Ries (Lean Startup Co, LTSE) questions to cull from their extensive experience key takeaways for scaling fast and effectively.

Is it true that there should always be more than just one founder?

There is no hard and fast rule, however, the general norm has been that 2-5 founders range has and can be been successful and any more, less so.

However, the need for one founder to be in charge is clear and so many have supported the unequal equity split, to make the final call clear. So 51% trumps 49% when push comes to shove.

As for the founding team, complementary strengths are always crucial. However here, a fine balance between enough diversity of thought and not too much diversity so much so it causes too much conflict.

A pattern in multi-founders companies is that one founder usually separates early from the company. So founder vesting where each founder gets his or her full package of stocks at once to avoid getting taxed for capital gains; but, the company has the right to purchase a percentage of the founder’s equity in case he or she walks away.

What in your experience are the traits of successful entrepreneurs?

Jeff jumped in first with “The ones with unyielding courageous persistence and power through. They are story-tellers or great salespeople. They have a vision and a clear North Star.”

Eric added quickly, “Remember the attributes that bring you to being a strong entrepreneur also makes it the same person unable to be successful. A great trait is that the entrepreneur is known to ignore certain facts. Which is fantastic as a perseverance exercise but not great in the long term management of a team.
They are also charismatic and that too can be a double edged sword. So the
same person has to do be a balance of both extremes. A rare skill.

The successful entrepreneurs who know how to look for employees who are also founders has the greatest success. Always set a high bar for talent at the start.

Remember the true story is that the early employees work harder and for less rewards than the founders. In fact that is how the mafia of the startups continues as each early team members of unicorns go on to build their own empires.

Meritocracy means good ideas come from anywhere and good ideas come from anywhere an in organization.

Find the empolyees who are more missionary than mercenary. They believe in what company is doing not just in it for the money. Remind all new members joining a startup is statistically proven not the way to get rich.

What are the classic hiring mistakes you have seen?

Too much hiring for domain expertise vs startup skill and the new employees come from a big company and they are not domain smart – they are more strategic. They have people who work for them and are verses in organizational politics

Also watch for great people entering the startup the at wrong stage. Too many hire a
CFO before they need one.

Hire my friends can be a very common and costly mistake.

What else kills rapid growth?
Startups don’t starve. They drown. When the startup is tackling everything and
they can’t pick what they are good at. Then they are lost.
To do Lean Startup is to focus. All research points to the fact that people not good at multi tasking. Technology may move fast and we humans are not good at learning so fast. Know which problem you are trying to address
Not only are many startups not focused, they are not focused on right thing

Look at the desert stories of Pinterest and Airbnb.
Jeff was reminded of how he knew he was scaling when he literally had a line outside his door till 6pm and he would have to answer all those questions which ranged from anything to everything. When you can’t make the decisions then you become a coach to the team rather than the decision maker. When you grow bigger then you are the GM and coach people who manage the teams. Basically your role is to build, motivate and leverage.

Eric posed a question that should be on every rapid entrepreneurs’ mind.
“How do you manage the psychology that you are an entrepreneur and now you have entrepreneurs working for you?”

These standards of being an entrepreneur many have to do and learn. So many startup leaders graduate successfully from the Y Combinator and forget that
have you created a Y Combinator for your employees? Your mindset moves from entrepreneur to now the investor and you have to recreate internationally in each team member what you took for granted.

Jeff looked back in self reflection and admitted that he grew ebay without much culture and in their 5th year looked back and went “Eeeek! I should have put in culture.” Citing Alfred Lin from Y Combinator the power of culture can fix all problems, so spend a lot of time on culture. Eric chimed in that the shared consciousness is a mindset as well as key metrics CEO should pay attention as scale. This consistent set of metrics act like a North Star.


Lessons Learnt from The Lean Startup



The Lean Startup book authored by Eric Ries has been sitting on my shelf for quite sometime now, so since I am currently contributing to the making of a startup I figured I’ll take a look into it.

The book is divided into 3 parts, after reading the first two I had my mind blown with the pragmatic and scientific approach to building startups that is described in the book.

In this post, I would like to share some important insights that I gained regarding building highly innovative businesses.

Validating Value Proposition And Growth Strategy Is The Priority

Usually, a highly innovative startup company is working in its most early stage at building a product or a service that will create a new market.

Consumers or businesses have not been yet exposed to something similar to what is going to be built by the startup. Therefore the absolute priority for startups in early stage is to validated their value proposition i.e. to get real data about eventual customers interest regarding their product/service.

The other priority is to validate that the growth strategy that is going to be executed is, in fact, effective.

The growth strategy of a startup is its plan to acquire more and more customers in the long term and in a sustainable fashion.

Three kinds of growth strategies are described in the book:

  • paid growth in which you rely on the fact that the customers are going to be charged for the product or service, the cash earned from early users is reinvested in acquiring new users via advertising for example
  • viral growth in which you rely on the fact that customers are going to bring customers as a side effect of using the product/service
  • sticky growth in which you rely on the fact that the customers are going to use the service in some regular fashion, paying for the service each time (via subscription for example).

These growth strategies are sustainable in the sense that they do not require continuous large capital investments or publicity stunts.

It is important to know as soon as possible which strategy or combination of strategies is the most effective at driving growth.

Applying The Scientific Method

The scientific method is a set of techniques that helps us figure out correct stuff. After making some observations regarding a phenomenon, you formulate a hypothesis about that phenomenon.

The hypothesis is an assumption that needs to be proven correct or incorrect. You then design experimentations that are going to challenge the assumption.

The results of the experimentations makes the correctness or incorrectness of the hypothesisclear allowing us to make judgments about its validity.

In the lean startup methodology, your job as an entrepreneur is to formulate two hypothesis:

  • hypothesis of value (assumptions about your value proposition)
  • hypothesis of growth (assumptions about the effectiveness of the growth strategy)

These hypothesis are then validated/invalidated through experimentation. Following the precepts of lean manufacturing, the lean startup methodology prescribes to make experimentations while minimizing/eliminating waste.

In other words, you have to burn minimum cash, effort and time when running experiments.

An experimentation in the lean startup sense is usually an actual product/service and helps startups in early stage learn invaluable things about their eventual future market.

Sometimes startups learn that nobody wants their product/service, imagine spending 8 months worth of engineering, design and promotion work (not to mention cash) in a product/service only to discover that it does not provide value to anyone.

Minimum Viable Products And Feedback

As we pointed out earlier, an experimentation can be an actual product or service and is called the minimum viable product(MVP).

The MVP is built to contain just enough features to validate the value and growth hypotheses, effectively requiring minimum time, effort and cash.

By getting the MVP launched and in front of real users, entrepreneurs can get concrete feedback from them either directly by asking them (in focus groups for example) or via usage analytics.

Analytics scales better then directly talking to customers but the latter is nonetheless used to cross validate results from the former.

It is crucial to focus on metrics that creates fine grained visibility about the performance of the business when building(or using) a usage analytics system. These metrics are called actionable metrics because they can link causes and effects clearly allowing entrepreneurs to understand the consequences of ideally each action executed. Cohort analysis is an example of a analytics strategy that focuses on actionable metrics.

The bad kind of metrics are called vanity metrics, these tend to hide how the business is performing, gross numbers like total users count are an example of vanity metrics.

The author cites several examples of different startups that managed to validate or debunk their early assumption by building stripped down and non scalable MVPs and even sometimes by not building software at all.

You would be surprised to hear for example how the Dropbox folks in their early stage managed to created a ~4 minute video demonstrating their product while it was still in development. The video allowed them to get more people signed up in their beta waiting list and raise capital more easily.

Closing Thoughts

In the first two parts of the book, the author talks also about how employees inside big companies working on highly innovative products and services can benefit greatly from the lean startup approach, although very interesting this is not very useful for me right now.

The third part, talks about the challenges that arises when the startup gets big and starts to stabilize and how to address them. Basically it revolves around not loosing the innovative spirit of the early days, again, this is not very useful for me so maybe for good future reading.


About the Author

This article was produced by Tech Dominator. see more.

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Women on Top in Tech – Dr. Sanna Gaspard, Founder and CEO of Rubitection



(Women on Top in Tech is a series about Women Founders, CEOs, and Leaders in technology. It aims to amplify and bring to the fore diversity in leadership in technology.)

Dr. Sanna Gaspard is the Founder and CEO of Rubitection, a medical device start-up developing a diagnostic tool for early stage pressure detection, assessment, and management. She is an Entrepreneur, inventor, and biomedical engineer with a passion for innovation, entrepreneurship, healthcare and medical devices. She has received recognition and awards including being selected as a finalist for the Cartier Women’s Initiative Awards(’13), a semi-finalist for the Big C competition (’14), a finalist for the Mass Challenge Business accelerator in Boston, and taking 1st place at the 3 Rivers Investment Venture Fair’s Technology showcase (‘11). Her vision is to make the Rubitect Assessment System the global standard solution for early bedsore detection and management.

What makes you do what you do? 
I am driven to have impact and improve healthcare as I have a strong drive to problem solve, comes up with new ideas, and see them come to life.

How did you rise in the industry you are in? 
I first focused on getting the educational background and then I pursued the goals I have for myself. I got my PhD in Biomedical Engineering with a specialization in medical device development. Having the educational background is important as a woman and minority to assist people in taking your seriously.  After completing my PhD, I focused on bringing my invention for a medical device for early bedsore detection and prevention called the Rubitect Assessment System to market to help save lives and improve care.

Why did you take on this role/start this startup especially since this is perhaps a stretch or challenge for you (or viewed as one since you are not the usual leadership demographics)?
I started my startup, Rubitection , because I felt it was the best way to bring the technology to market. I knew that if I did not try to commercialize the technology, it would not make it to the doctors and nurses. I also have confidence that I could manage developing the technology since I had taken classes on entrepreneurship and had my PhD in biomedical engineering with a specialization in medical devices.

Do you have a mentor that you look up to in your industries or did you look for one or how did that work? How did you make a match if you did, and how did you end up being mentored by him/her?
No, I don’t have a specific mentor in my field. I am looking for one at the moment. However, I do look up to Steve Jobs and Oprah as examples of how one can start with nothing and work their way up and build a successful, global, and reputable business and brand.

Now as a leader how do you spot, develop, keep, grow and support your talent?  
I first try to find people who have fundamental technical or work experience to be competent to complete the work. I then evaluate the person for intangible skills like independent thinking, reliability, leadership, resilience, organizational skills, strong work ethic, open mindedness/flexibility, and good communication skills.

Do you consciously or unconsciously support diversity and why? 
I consciously make an effort as a minority woman in tech, I intimately understand the need to promote diversity within my business and outside my business. I first hire the best people for the job and also make a point to hire women and minorities qualified for the position.

What is your take on what it takes to be a great leader in your industry and as a general rule of thumb?  
It takes resilience, vision, being a team player, an ability to inspire others and delegate work, knowing your weakness, and knowing when to put your business or yourself first.

Advice for others?
My advice to others is to take calculated risks, pursue every opportunity, surround yourself with supporters, build your team with smart dedicated people, and stay focused on your vision. I am striving to implement this advice myself as I work towards commercializing my technology for early bedsore detection, grow my team, and recruit clinical partners to address an $11 billion US healthcare problem which affects millions around the world.

If anyone is interested in learning more about our work or company, please contact us at [email protected].

To learn more about Dr. Sanna Gaspard, CEO of Rubitection visit:

If you’d like to get in touch with Dr. Sanna Gaspard, please feel free to reach out to her on LinkedIn:

To learn more about Rubitection, please click here.

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