Building Scalable Startup

Created by Chris Shayan
Mar 23, 2017
4 min read

In this post I will share overview of what are the required actions in order to scale up a startup, the main assumption that I am having in this post is you are technology based startup and already have validated your Product-Market-Fit as shown in following video:

https://videopress.com/v/6f5VMvrR


Second assumption is your startup is compatible with following principles:

  • It's a scalable idea. Investors like ideas based on market research from outside experts, like Gartner Research, proclaiming a billion dollar opportunity with a double digit growth rate. These are more likely scalable and investable.
  • Scalable businesses usually should have a high margin, low support, low CAC, and minimum staffing.
  • They've a great team.
  • The MVP is ready and tested. There are falsifiable hypotheses defined to track down next actions.
  • A well definition of core business and non-core business is defined. There should be no blur line at least for next 3 years.
  • Marketing team is fully aware of Lean Marketing Funnel and Agile Marketing.
  • Most of core business processes are about to be automated and it is in highest priority to be automated.
  • The Value Proposition is open-ended and continuously get be improved.
  • Scaling Up is a book that read by all executives and execution leaders

Scaling Up has divided the scaling process into four pillars which are listed in below:

  • People.

I have shared my point of views on How to start Employee Engagement, it is also important to have the big picture as well:

I will share more on this concept in different post, as you noticed there are several drivers that impact the engagement.

  • Strategy. Strategic decisions are specific, itemized business objectives that connect a portfolio to the evolving Enterprise business strategy. They provide business context for decision-making within the portfolio and influence investments in Value Streams and serve as inputs to the Economic Framework, Budgets, Portfolio, Solution, and Program Backlog decisions. You can read more on Scaled Agile Framework.
  • Execution.
A system must be managed. It will not manage itself. Left to themselves, components become selfish, competitive, independent profit centers, and thus destroy the system. . . . The secret is cooperation between components toward the aim of the organization.
—W. Edwards Deming
  • Cash. Cash is one of the most important streams of any startup survival. There are couple of important topics such as: Cash Conversion Cycle (CCC), Net Cash Flow, EBIT, COGS, AR/AP and etc.

All of the above are important topics for scalability, how about technology. What are the important decisions that is required to be made. In order to scale we should have all mentioned topics align and have a good technology to execute the scale in action.

Infrastructure 

  1. I strongly recommend to move away from physical servers (if any) and move to all cloud and virtualization, AWS is a great place to be hosted
  2. Choose a technology that is common and easy to hire and scale such as Java, PHP.
  3. When you move to AWS then you can: 
  • Start using Application Load Balancer
  • Separate the scheduled jobs from original servers
  • for relational database use Amazon RDS and for NoSQL use Amazon DynamoDB
  • Use Amazon CDN for assets like files, images and etc
  • Use Amazon ElasticSearch or Amazon CloudSearch for search purposes

Amazon will enable you with several more options as shown in following figure:

Architecture

Regardless of what product you're building you should centralized all the services around the member in order to build a better user experience. Also move away from monolithic architecture and start using MicroService Architecture, and split your high level layers into following model:

  • Client, it can be a web site, mobile app, Wear, Tablet or TV
  • Service, which is the logic and heart of business. In my opinion only use RESful services, so later it is easier to integrate (Amazon API Gateway)
  • Data, the typical ORM or so, if you use Java then Hibernate, if PHP then Doctrine

DevOps

Based on above topics then you should define your DevOps such as:

  • SCM process, code review, pull requests etc
  • CI/CD like using Amazon CodeDeploy
  • Production ecosystems like Dev, Staging and Production environments 
  • Agile Processes like Scrum, Product Owner, scrum master, kanban, standup meeting, the tool, sprint, backlog, user stories and etc

THE QUESTION

No new technology can transform an industry unless a business model can link it to an emerging market need. How can you tell whether a model will succeed in doing that?

The authors of HBR article undertook an in-depth analysis of 40 companies that launched new business models in a variety of industries. Some had transformed their industries; others looked promising but ultimately didn’t succeed. The research shows 6 keys to success as shown in following figure:

Uber can claim five of the six key features of a potentially transformative business model.

1. A more personalized product or service.

Many new models offer products or services that are better tailored than the dominant models to customers’ individual and immediate needs. Companies often leverage technology to achieve this at competitive prices.

2. A closed-loop process.

Many models replace a linear consumption process (in which products are made, used, and then disposed of) with a closed loop, in which used products are recycled. This shift reduces overall resource costs.

3. Asset sharing.

Some innovations succeed because they enable the sharing of costly assets—Airbnb allows home owners to share them with travelers, and Uber shares assets with car owners. Sometimes assets may be shared across a supply chain.

4. Usage-based pricing.

Some models charge customers when they use the product or service, rather than requiring them to buy something outright. The customers benefit because they incur costs only as offerings generate value; the company benefits because the number of customers is likely to grow.

5. A more collaborative ecosystem.

Some innovations are successful because a new technology improves collaboration with supply chain partners and helps allocate business risks more appropriately, making cost reductions possible.

6. An agile and adaptive organization.

Innovators sometimes use technology to move away from traditional hierarchical models of decision making in order to make decisions that better reflect market needs and allow real-time adaptation to changes in those needs. The result is often greater value for the customer at less cost to the company.