Top 10 Scaling Myths: Part 1

Successfully scaling a technology company is complex. It’s a non-linear process with lots of ups and downs. Talking to founders and CEOs, we at Tightrope Consulting have noticed there are a lot of myths when it comes to the “perfect” path to scale.

Here are 5 of our top 10 myths…

Myths surrounding investment, tech experience, age, culture and customers…

Myth 1: Tech companies need early VC investment to successfully scale

Yes, in a very competitive environment, where you need a first mover advantage to capture sufficient market share, it’s key to be able to invest to scale faster than organically possible, and beat the competition. It allows you to move quickly into new markets and even look at acquisitions early on. VCs typically provide more than funding with access to a network of experts and community of founders.

However, in many cases, companies can scale successfully in a more organic way. For every 10 companies that secure VC funding, there are 90 companies that grow organically, and succeed. One of the main cons is that raising takes a lot of effort and focus away from building a great product and focusing on customers.

One local example of a business that scaled successfully through bootstrapping is WiseTech Global, Richard White bootstrapped the company for almost 20 years before taking some outside funding to do some international acquisitions.

Myth 2: Tech company founders need to have technical experience to build amazing tech product companies

Undoubtedly, having technical skills is valuable as a founder, enabling a deeper understanding of the product development process and enhancing problem solving capabilities in a tech-driven business.

Although technical experience is a plus, it’s not a necessity. Non-technical founders have thrived by adopting no-code solutions to craft Minimum Viable Products (MVPs). This strategic approach allows them to swiftly enter the market without being hindered by coding barriers. While some founders may opt for the traditional route of honing technical skills, others find success in focusing on their strengths—whether in design, business acumen, or leadership.

Canva, co-founded by Melanie Perkins and Cliff Obrecht, is a great example. Both lacked formal technical training. Yet, they harnessed no-code solutions to build Canva into a global design platform. The pivotal move was to quickly recruit top-tier technical talent, ensuring the company’s sustained growth and technological excellence.

Myth 3: Building tech scale ups is a young person’s game

There is a belief that entrepreneurship is a unique young person’s game. We all know the stereotypical 20 year old tech founder building a company from their garage (Mark Zuckerberg, Bill Gates & Steve Jobs were all in their twenties when they launched their companies). The benefit of starting young is the ability to take more risk, be nimbler to pivot, and more drive to self-learn the crucial skills required to run a business. However, to increase your chances of scaling successfully, it seems the critical factor element not to underestimate is experience.

Experience founders come with more work and life experience, more knowledge and skills, and bigger networks and financial resources. A study by researchers at MIT, Northwestern, Wharton and the U.S. Census Bureau found that the mean age of startup founders is 42 years old. The mean age of high-tech startup founders is 43 years old. And the average age of founders of the high-growth unicorns (1 in 1,000 fastest-growing ventures) is 45 years old. The study shows that the likelihood of success of a founder increases with age, all the way up to age 60. So, the older you are, the more likely you are to succeed in scaling your business.

There are numerous founders who fall into this age group, many of whom started companies that you use daily. Eric Yuan created Zoom at 41. Reed Hastings started Netflix when he was 37, and Robert Noyce founded Intel Corporation when he was 41.

Myth 4: Building company culture is a secondary priority to building a business

Since scaleups are often run by a small team working closely together, their “culture” is typically a reflection of the founding team's passions and personalities. In most situations, each individual working in a startup contributes to the overall culture. Hence instead of having a deliberate focus on Culture as part of company success, it’s often either dismissed as a nebulous concept that doesn’t affect the bottom line, or simply regarded as an afterthought – something that would be ‘nice to have’ at some point.

However, when culture is embedded properly, it instinctively informs every internal and external interaction in an organisation, and while you might not notice its presence, its absence is frequently identified in post-mortems for businesses big and small. For early stage growth businesses, it’s also one of the only leverages you have to find talent. It might be good news for scaleups that 65% of millennials are more motivated by culture than salary when deciding on where to work. Whether intentional or not, a company will always have a culture so scale-ups should invest time and effort to create a culture, not let it take shape.

A lot has been written about the importance of focusing early on company culture. One of the best documented case studies is Reid Hastings’ focus on culture when building Netflix. Their (now famous) culture deck has become an example for many other founders.

Myth 5: You need to build what your customer is asking for

The key thing for digital companies is to build solutions that find a clear product-market fit. They solve the issues of customers in unique and better ways to existing solutions. Therefore, knowing your customer, and listening to their feedback is key to evolving your product successfully over time. Today, majority of digital scale-ups put significant effort into customer research and customer feedback mechanisms to develop a strategic product roadmap with new features and improvements.

However, the best product companies do two things well. First, they have a strong product vision, they start with the end in mind and have a view of how their solution will do things better (USP). Secondly, they avoid feature fatigue and focus on feature quality over feature quantity. Customers will always be asking for more features, but it’s been proven that products with a lot of features have reduced usability, are less intuitive and require more time to learn and adopt. Low feature adoption also leads to higher churn. The best companies have their finger on the pulse of the customer but can prioritise well, stick to a vision, and focus on only building features that add significant value or are truly innovative.  

The most famous examples of innovative companies that ignored what their customers were asking for are Ford Motor Company and Apple . Henry Ford’s quote “If I would have asked people what they wanted, they would have said faster horses” is probably the perfect summary of the key message here. Similarly, Apple's iPhone departed from conventional smartphone design of the time - bigger buttons and smaller devices. True innovative solutions are designed with the user at the centre but have strong visions of doing something differently to how it’s done today. An example of a product that took it too far was BMW Group's 7 series, where over 700 features and functions were combined into its iDrive system, a system so complex making the car nearly impossible to drive.

Stay tuned for part 2 of our scaling success myths.