Summary: Scaling a hardware startup is a challenge. But it’s can be made easier with a data-driven strategy. Software that integrates with other solutions is key when it comes to leveraging data and scaling your tech stack.
When you first start a hardware startup, the pressure is to scale.
But it turns out it’s not that simple.
With 97% of hardware startups failing in the long-term, scaling isn’t easy.
So we recruited two scaleup experts to help us figure out where people go wrong.
Our webinar Scaling the Tech Stack was led by our VP of Sales Rob Ferreira, and our Chief Revenue Officer Mike Domazet.
Rob and Mike have helped scale businesses from startup to exit for almost two decades now.
During our webinar, the pair shared their insights on:
- What scaling means
- How to identify unscalable processes
- Best practices when it comes to legacy data
- And what to look for in a tech vendor to future-proof yourself.
You can check out the full webinar here or keep reading for a quick summary.
What is scaling?
There’s often this misconception between scaling and growth. Of course, both are important but they’re also very different.
Growth is when your company gets bigger.
In the startup world, growth is about gaining revenue from wherever you can find it.
It’s about taking rapid action.
It’s during this period that you find out where your product fits and how you can find customers to buy it.
Scaling, on the other hand, is something that follows growth.
It’s when you see that your business is doing well and you take a step back and say:
“How am I going to make this last, and how can I do this more efficiently?”
To scale, you need to be able to harness historical data so that you can create processes that will allow you to succeed in a repeatable and predictable way.
When you get to the point of scaling, you’re looking at things like KPIs, trends, and legacy data to predict your performance.
While growth is all about the hustle, scaling is about pursuing methodical action with predictable results.
The importance of predictability
Your data needs to reveal trends and predictability before you can start scaling your operation.
Scaling is all about predictability.
You need to know how a, b, and c are going to affect your business and be ready for each outcome.
Predictability gives you the power of knowing that if you invest one dollar, you’ll get ten in return.
Achieving predictability lets you:
- Accurately forecast performance
- Develop and execute a tactical plan.
Historical data provides the information needed to create and execute strategies that will repeat the success you’ve had until this point.
By knowing where you win and lose, processes can be refined and your efforts can be centered on acquiring the market segments and industries you know you’ll win.
This will allow your business to grow sustainably and be viable long-term.
Eliminate unscalable processes
Another aspect of successfully scaling is to find out which processes work for your organization and which don’t.
The processes that worked when you were a team of 8, are probably not going to be as effective when you’re a team of 80.
The best way to figure out what’s working and what’s not? Cold, hard data.
When it comes to outcomes, you need data to measure the impact of your processes. Reviewing the following metrics can shed some light on how your current processes stack up:
- Number of new logos brought on board
- Incremental headcount
- Net Promoter Score (NPS)
All of these metrics indicate growth and demonstrate that your processes are working.
The goal when scaling is to have business processes that support repeatability and predictability. Doing so makes meeting targets more like following a formula and less like hoping and praying that essential deal closes.
But what do I do with my legacy data?
Rethinking processes often results in drastic changes to the tech stack.
And this often means that technology gets ripped and replaced.
The consequence of this is that legacy data gets siloed in old technology.
Which makes scaling a lot harder, particularly when it comes to:
- Understanding when’s the right time to scale
- Identifying and eliminating unscalable processes
- Creating strategies that leverage the predictability of your business.
All of the steps are crucial to the scaling process, and their success is dependent on access to legacy data.
Since scaling is all about predictability, legacy data is essential to being able to strategically move forward. Our CRO Mike Domazet explains why:
“If you have legacy data, cherish it. You need to be able to go in and leverage it [because] the best way to be able to predict the future is by knowing exactly what happened historically.”
When your tech stack, doesn’t incorporate legacy data, you end up walking blindly into the scaling process — something we don’t recommend.
A simple way to use historical data is to choose software that integrates well with other solutions.
This way your data doesn’t get siloed every time your tech stack is upgraded.
Scaling the tech stack
And that brings us to the tech stack.
When it comes to scaling the tech stack, there are two things to keep in mind.
#1 Integration is key.
When selecting software, you need to make sure it integrates well with the solutions you currently use, as well as ones you might use in the future.
By doing so, you make it easy for your tech stack to evolve with your scaling business.
#2 Establish partners
When it comes to selecting a software provider you need to distinguish the vendors from the partners.
- Vendors simply want to sell you their product. They focus on the dollar amount attached to your contract and don’t have regard for your needs.
- Partners want to create the best solution for you. They work on building a mutually beneficial relationship with clients and provide the best service in the long term.
Partners offer scaling companies solutions with longevity, as they’ll adapt their software to the needs of their client.
Vendors, on the other hand, offer scaling companies a quick fix they’ll quickly outgrow.
When selecting technology, scaling companies should establish partnerships with software providers who will grow with them.
To successfully scale, hardware startups need to focus on:
- Predictability. Your company needs to be growing at a sustainable rate.
- Leveraging data. You need to be able to measure the effects of your actions and gain insights from this data.
- Integration. Historical data is your friend and needs to be accessible across the tech stack.
- Partnerships. You need solutions from software providers that will accommodate your needs as you scale.
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