Path to Scale

Every entrepreneur dreams of creating something scalable. Leaving behind a legacy which people look back in wonder and say … how did they achieve this.

What do we mean by Scale?

Scale could mean multiple things for different people. The CFO would look at scale and say more profits, the Head BD would say more clients, the Head Sales would say more revenues, the Founder would say more valuation, the HR would say more people!

At 13 Llama Studio, when we started the firm, it was just three people and we literally started in a garage. For us scale means all those terms combined, and in the past two years we have trebled our team, our sales and our clients.

I would not say that we have scaled up so far. In the past two years, we have faced a fair bit of challenges. I am pretty certain that most start-ups go through this issues, and only the ones who are able to solve these are able to become larger entities.

Focus has to shift from People to Process

When a firm is small and is largely dependent on the founding team, it relies on the heroics of that team to do things. Folks in IT would know this a SEI CMM Level I.

As the firm grows, the number of tasks the founding team gets to spend on actual delivery versus running an organization slowly goes down. For example, when we started 13 Llama, I used to spend 80-90% of my time on implementation … these days its not even 40%.

That also means that somehow the founding team has to shift their capabilities into the organization … the people they hire. It’s expected that this rung of employees would not be as driven as the founding team, but that’s the rule of the game.

Now, the founding team has to focus on setting up processes via which a team reporting to them would be able to deliver on similar lines. A team which may or may not have the same passion as the founding team. Now, we are not looking at individual heroics any more … we are worried about the sanctity of the business process.

Eventually as these processes become well defined, there would also be a need to automate some of them so that the people running these processes could do a lot more.

Along People come People problems

I am a people person. I am, believe me. However, the minute you start hiring folks, the issue you face with this new found pool of talent is to train them, ensure that your organizational culture remains intact and the values that you espouse are transferred to them. Even if you manage to do all of that, you still have to worry about retaining them!

As a growing organization, one of the departments that would be working full time would be the Human Resources (HR); for the need to attract and retain the top folks would never stop. However, if you somehow manage to automate your processes (look at Uber for eg), then a lot of tech can replace a lot of people.

The Uber way

I deliberately gave the Uber example. These days everybody is thinking about the Uber of model. By this I mean that folks are now trying to think through the entire process to automate as opposed to first figuring out which is the best process and then implementing the same.

Uber did not immediately have this process automation. They took their time getting there … then they scaled up across multiple geographies. What Uber really did for folks in India, was to shake up the core beliefs that to grow, one needs to hire more and more people.

The IT Sector

Take the Indian IT Sector for example. I am pretty certain that we at 13 Llama Studio do not identify ourselves as an IT Services providers. However, at times we have to do development and a lot of times people whom we speak to often use the mental model of asking how many employees do we have to measure the scale of the firm.

A recent economic survey by Delloite revealed that the per capita productivity (annual) of the average Indian employee is 4000 USD (2.5 Lakh INR). As compared to China (at 17500 USD) its less, but as compared to Canada (105,000 USD) it’s a pittance.

Technology is meant to increase productivity, can’t we focus purely on increasing this than the number of warm bodies working for an organization? Yes, this is a term that is actually used.

That’s what Scale should be … doing more.

PS – If you would like to find more about this, be sure to take a look at some of the opportunities at 13 Llama Studio.

Creating a safe working place for Employees

I read about the recent Julie Horvath issue which is out there on the internet, and thought that I might share some of my experiences on this topic.

In case if you are not familiar with the Julie Horvath issue, Google it, or simply head over to TechCrunch who gave Julie’s side of the story.

tl;dr – Julie was an employee at GitHub who quit after feeling threatened at work

GitHub have tried to clean things up with a sincere and apologetic reply to Julie. They have taken some prompt action and that’s what matters.

So what went wrong?

In the entire episode, Julie must have felt threatened at work. Imagine having to battle out on multiple fronts with multiple people … and apart from that handle work as well. The nausea an employee might feel with so much politicking going on is natural. Who would not quit?

One of the most basic requirements of an employee (keep this term in mind folks) implicitly wants, is to feel secure. Be it financially, physically and mentally. These are the very basic requirements, if these are threatened, then the employee is bound to quit. If I were to use Maslow’s hierarchy as a model, then these would be the hygiene factors.

In letting a non-employee (the founder’s wife) sit within the working premises next to Julie, the physical security was in question. The mental security was being questioned by the love lost colleague and the founder in question. Add to it the way the organization reacted with radio silence and hushed tones, the financial security was also put in question. The next move should have been obvious, perhaps the reaction of the organization might have been to incite this move. The GitHub blog update suggests other wise, but we will never know that shall we?

Personal Catharsis

The reason I chose to write about this matter, is because recently we had a similar situation at work. One of our earlier employees went through this insecurity … thanks to my behaviour. It took some time for me to reflect and talk to a few other founders to understand what drove this employee in question to leave … leave at such a short notice. Do I regret this, yes. Did we lose a good player, perhaps. Can this be avoided in the future, definitely.

It’s a lesson learned for me that employees are not to be treated as co-founders. You can cross certain boundaries with co-founders … those boundaries are a strict no-no with employees … even if these are the people who help you grow your organization.

Sometimes, the founder can go to extraneous lengths to retain employees … not because the organization cannot survive without them, but because of the achievements that individual can do if properly channelled. In doing so, lines are crossed … sometimes it helps in bonding the individual closer to the organization … almost like a trial by fire. Sometimes, it backfires … and even worse spreads like wildfire on social media.

In Julie’s own words, what the founder did was to retain her at the organization … however things escalated to such an extent that the very opposite happened. This is what would happen when you mix professional relationships with personal ones. In trying to build a personal relationship with your team, you sometimes cross the boundary. Most of the times it pays off.

So what should a founder do?

A start-up would always face this issue. In order to do greater things, the team has to work outside its zone of comfort … constantly. How then do you build this sense of security within the team?

One simple approach would be to not fraternize with the team. I have seen many a good start-up founders do that … and to good effect. Reduce the fraternization only during moments of celebration.

One of my clear learning from the past episode is work towards fostering a sense of security for the employees … so that means take all conflict discussions offline. Conflicts which endanger the sense of security should not be openly discussed.

What I am saying is to clearly have two separate levels of information parity. What are the things that you have tried at work and it has paid off?

PS – I don’t have all the answers, however I am learning as I journey on.

Don’t hire dogs

don't hire dogs

Dog’s are a man’s best friend. They are considered as faithful, loyal and will always be there to lift you up. A dog will fetch things for you and do silly tricks such as sit, roll over, etc.

In different companies, there is one such breed of employees. Don’t get me wrong, I am not objectifying people, and this is an analogy, if anything. So this breed of employees … they behave in the exact manner like dogs.

They are generally taken from the street or from the wild, they do not have any formal skill set with them. It’s probably because of this reason that they are extremely loyal to the company. They are willing to go the extra distance and spend more time in the office working unrealistic deadlines and striving to satisfy their masters.

Obviously, who would want to say no to such employees! Right?

Well, wrong!! Change is the requirement of all organizations, especially the small ones and the ones which are growing at a fast pace. The problem now magnifies is because you can’t teach an old dog new tricks (yes, I wanted to work this cliché into this post!!). Any organization that is growing at a fast pace (60% – 100% growth YoY) would require such a huge influx of talent, that the loyal dog would now be forced to question his erstwhile unquestionable value in the company.

This is the risk, and it’s a huge one. Why is it a risk? Because at some point in the founder’s life, this loyal employee has done a favor and worked in ridiculous conditions. Now that the dog is tired and cannot do anything new, it has become a liability for the organization. Not only does it sadden the person, but the organization cannot put this figurative dog to sleep.

So if you are an entrepreneur or about to start your firm, do yourself a favor and do not hire dogs.

Addendum

Arjun Bakshi writes –

This phenomenon is not restricted to start-ups:-) Most “Big” organisations are not very different.
I feel HR / Organisations are lazy and want the easy way out. Have a template of qualifications and experience required to hire, short-list such people thru employee referrals and employment consultants and then hire them.
Why take the risk to hire people outside the template and take efforts on them?
In case you follow sports, the recent example of Jeremy Lin is a very good example of the malaise which also exists in our hiring practices. I am sending just one of the millions of articles on him. I think, Malcolm Gladwell also has a few artcles on a similar theme.