True to our mission of ‘Winning Together’ – we learnt from the Masters and all the Participants about some of the most important aspects of building a global-scale business. Here’s a summary and key take-aways from our conversations around each of the building blocks -

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1.       Building Scale within an Organization

The foundation of a scalable organization is laid by its initial set of believers that bring in diverse skill-sets to help the company surpass the $1 million (revenue) milestone. This set of individuals, the Founders, don multiple hats, work round the clock, and may even overachieve compared to pre-determined targets. Founders, however, should be cognizant of the fact that scaling an organization from $1 million to $10 million may require a completely new skill-set vs. scaling from $10 million to $100 million. Each step of the journey needs a structural change.

One of the most important steps is building an Executive Management Team (EMT) that would take control of specific functions based on domain expertise. As the EMT represents the organization’s values, it is crucial to ensure cultural alignment with each member of the EMT while onboarding them. This alignment promotes constructive discussions, and the ability to collectively address challenges and solve problems.

An EMT that exhibits GET leadership – the collaborative spirit of Geese, the agility of Eagles, and the territorial expertise of Turkeys, will create an environment where every team member will contribute, lead, and take ownership when needed. Geese form groups (gaggle), communicate extensively, cooperate in decision-making, and demonstrate leadership succession, whereas, an Eagle possesses qualities such as adaptability, clear vision, and independence, enabling them to zoom in and zoom out when required to gain a broader perspective. Turkeys are territorial experts who love to maintain order, but when attacked, they defend their territory by displaying their aggressive nature. Founders should look for leaders that exhibit these qualities comprehensively.

In essence, this layer potentially decides the fate of the organization – an EMT that builds and blends in the culture seamlessly, narrows down the targets, and achieves them while identifying and filling the gaps on the side-lines, will outgrow its competitors in the space.

A fast-paced business environment comes with its constraints, and building a team to thrive in such a state means attracting people with complementary skills and contrarian views, giving control to domain experts. It is easy to focus on the lagging indicators, which works for the bottom of the pyramid but for top management, companies should track leading indicators. Such leading indicators could include understanding the 30-60-90-day targets and setting function-based processes, among others. It is also important for founders to act on these leading indicators - if the leading indicators don’t add up, it is better to sever ties sooner rather than later.

An interesting approach taken by some of our portfolio companies to hire EMT is by integrating potential experts to join the advisory board for an elongated period (6 months) where they understand the company and its vision in detail while working on adding value to the core operations. This is a great leading indicator to understand if the person would fit the organisation and bring in the skills needed to scale the business.

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2.       Going Global & GTM

Every entrepreneur has plans for business growth and scaling. Exploring new markets and introducing the product to a new geography is a different ballgame all together.  

The first question to ask when entering a new market is whether the product is a global fit. It is critical to determine whether your product is designed to scale globally in new markets or is intended to scale in a single market. Product market fit can differ depending on geography. For example, a product that is popular in India may not have a similar resemblance or need in a market like the United States. A different market may necessitate a shift in strategy. A different market may require a change in product approach and possibly require customizations. While considering customization, one needs to be mindful about the level of changes as new customers are targeted, to ensure viability of these investments. Customer sentiments across geographies may differ significantly, and this initial assessment is an important step when deciding to explore markets. This is what we call Culture-Market Fit.

The size of the market or the opportunity should be taken into account while assessing new markets for expansion. Markets with significant TAM should be carefully studied, regardless of the level of competition. Great TAM shows great demand; hence it makes sense to be present in such geographies despite competition.

It is also crucial to have some local presence when developing a global brand, such as country-specific heads, as this will increase client trust for that particular region. To have a local champion in a market and an insider promoter can be a key to success in a new market. In addition to ensuring long-term survival, a brand value driven by the calibre of your products and a customer-centric strategy will help convert customers. It is advisable to not use pricing as a means to enter a new market – pricing can never be a competitive moat. Product differentiation and superior product quality will enable market penetration.

One of the most sought-after strategies for growth in new markets is acquisition of a small player as it offers a head-start in the new territory with existing market intelligence and puts you considerably ahead along the road map than forging your own path into one.

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3.       Raising Capital for Scale

Capital is an important lever for growth once companies achieve a product market fit and assemble the right team. Global investors are increasingly scouting for early-stage opportunities, even as early as the Pre-Seed stage, to eliminate the fear of omission. However, despite the stage of investment, certain fundamental principles remain constant. Investors are drawn towards sound business models with a sizable Total Addressable Market (TAM) and founders possessing strong execution capabilities.

Today’s dynamic and competitive business landscape requires startups to prioritize high growth to establish a strong market position and stay ahead of their competitors. Investors are willing to fund fundamentally strong business models regardless of global macroeconomic conditions. One needs to revisit the relevance of an investment thesis every time there is a significant shift in the macros and venture ecosystem - ensure timely pivots and garner right-sized capital to support the same to realize the best results!

The current funding winter has largely affected companies with high burn and churn rates and in such companies, even their existing investors are cautious of injecting additional capital. On the flip side, companies quick to adapt and revise business plans have received ample support from their existing investors and are able to attract new investors.

A company addressing significant whitespace indicates untapped market potential, lack of saturation or immediate constraints in scaling, and an opportunity for it to be a market leader. Investors are keen to evaluate such companies as they bring substantial value beyond their financial investment. They assist companies with strategic decision-making like opening new geographies, refining business plans, identifying market trends, networking, and exploring business opportunities, among other areas. Moreover, they work closely with scaling teams to identify fresh avenues of monetization and achieve growth, recognizing the importance of time constraints while ensuring that capital is available for the right companies.

This translates into building scalable businesses with solutions that are impactful and addressing a core need of their customers and not just a temporary need.

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4.       Exit, Wealth Creation & Philanthropy

The right time to exit is when an entrepreneur identifies his limitations for the next phase of organization’s growth & expansion. While it’s important to create value for all stakeholders involved, a nuanced approach needs to be adopted towards chalking a plan for exit – it isn’t an overnight event – it is a process that gradually unfolds in steps and stretches over months together. Some important aspects of transitioning have to be taken into consideration before exit. It’s often a multi-year process with founders continuing to build value in the acquiring organization.

First and foremost, the EMT teams should be prepared for the handover. It’s critical to select the right ultimate destination for the company and its people. It takes more than monetary value to decide a right buyer. Company culture needs to be cultivated early on for organisations to thrive successfully. It is extremely important to consider a buyers’ culture that matches your own. Communicating with employees about the rationale for the decision, how it will benefit the company, and in-turn them, is of utmost importance.

Another key aspect of an entrepreneur’s journey should be philanthropy. Philanthropy is for everyone! One can start as early as today instead of waiting for the right time. Philanthropy is not always monetary – it is way beyond money and capital. The under-served require our presence, our skills and intelligence and above all, our service. The capital will flow from multiple sources but putting that capital to best use with maximum impact is what philanthropy is all about. Founders need not wait till an exit event for contributing to society and ecosystem. Philanthropy can be through mentoring, upskilling, promoting & many other ways.

~ Kunal, Sona, Surabhi

Learn more about: CSVP Fund | CGES Index | Enterprise SaaS

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