{"id":633833,"date":"2018-05-08T00:00:00","date_gmt":"2018-05-07T22:00:00","guid":{"rendered":"https:\/\/www.ie.edu\/insights\/latest-news\/articles\/from-startup-to-scaleup\/"},"modified":"2019-02-06T12:39:25","modified_gmt":"2019-02-06T11:39:25","slug":"from-startup-to-scaleup","status":"publish","type":"articles","link":"https:\/\/www.ie.edu\/insights\/articles\/from-startup-to-scaleup\/","title":{"rendered":"From Startup to Scaleup"},"featured_media":636322,"template":"","meta":{"_has_post_settings":[]},"schools":[29,31],"areas":[16,17,24],"subjects":[],"class_list":["post-633833","articles","type-articles","status-publish","has-post-thumbnail","hentry","schools-business-school","schools-exponential-learning","areas-competitiveness-growth","areas-entrepreneurship","areas-strategy"],"custom-fields":{"wpcf-article-leadin":["The shift from the startup age to the scaleup age requires a new mindset and training in executive skills. For the past few decades, markets and investors have been focused on the startup environment, overlooking the fact that many such companies disappear over time."],"wpcf-article-body":["Despite its many virtues, the entrepreneurial<\/a> mindset has given rise to a standardized a way of creating companies and launching projects, many of which do not survive more than a few years. The startup ecosystem needs to step up and transform these organizations into scaleups<\/em>\u2014corporations with an expansion-oriented outlook, durable business models, and big commercial aspirations. With startups saturating the market, it\u2019s time to make the transition from entrepreneur to business owner.\r\n\r\nThese two concepts\u2014startup and scaleup\u2014are related yet inherently contradictory, so the shift must take place in the early stages of a company\u2019s life. To lead a scaleup, you must study the \u201cenemy\u201d\u2014the startup model\u2014in order to avoid making the same mistakes. The more you study the startup phenomenon, the better you\u2019ll understand the scaleup movement.\r\n\r\n \r\n\r\nChanging in order to survive<\/strong>\r\n\r\nLarge numbers of companies are constantly being created, all with big ambitions and expectations of growth<\/a>. In the medium to long run, however, their success will largely depend on their ability to transform into scaleups.\r\n\r\nMany new companies don\u2019t last long in the market, even when abundant investment capital is available from various sources. The struggle for survival is the defining feature of these organizations, whose primary objective\u2014after the initial capital-raising stage\u2014is to adapt to a scalable business model. As most executives know, the failure to make this transition leads to the premature death of many startups.\r\n
We can define a scaleup as a company that starts with more than 10 employees and increases it staff or revenue by at least 20% annually for three years.<\/blockquote>\r\nThe hunter and the farmer<\/strong>\r\n\r\nIt\u2019s not a stretch to say that startups are for survivors\u2014or, metaphorically speaking, for hunters. The mission of an entrepreneur<\/a> is akin to the vital need of the hunter: to secure resources. The process-oriented leaders of scaleups, meanwhile, are more like farmers. In the venture capital industry, it is widely understood that the hunter must secure financing<\/a> while the farmer must find a sustainable business model.\r\n\r\nWith this mindset, we can define a scaleup as a company that starts with more than 10 employees and increases it staff or revenue by at least 20% annually for three years. Growth<\/a> is the key factor. But the definition hints at the problem: most companies remain too small\u2014the vast majority are SMEs\u2014while only a small minority are truly high-growth.\r\n\r\nBecoming a farmer requires more than just initial money and investments. You also need certain management skills: selecting human resources, retaining talent<\/a>, and cultivating relationships with financial<\/a> institutions, as well as other parameters that require specific training. It\u2019s no coincidence that most unicorn startups recruit executives with these types of skills.\r\n
The transition from startup to scaleup involves constantly learning from today\u2019s rapidly changing global environment.<\/blockquote>\r\nThe folly of short-sightedness<\/strong>\r\n\r\nStartups embody one of the most common mistakes in entrepreneurial<\/a> thinking: the pursuit of immediate results. Scaleups have a longer-term outlook: it takes at least a decade to create a truly valuable project that generates consistent profits and returns. The creation process is just one small step in a much longer journey. The culture of growth<\/a> at any cost is a mistake. (In the words of Edward Paul Abbey, \u201cGrowth for the sake of growth is the ideology of a cancer cell.\u201d)\r\n\r\nThe transition from startup to scaleup involves constantly learning from today\u2019s rapidly changing global<\/a> environment. The international market is the new playing field, and the entrepreneur\u2019s<\/a> initial heroism must give way to the collective ego of a staff committed to the organization\u2019s success. Work structure is a key weapon for scaling a company. In this change of status, the founder is less important than the team and the confidence to do the job. Assembling this puzzle is a laborious but essential step in the startup\u2019s transition towards a scalable model.\r\n\r\n \r\n\r\n\u00a9 IE Insights.\r\n\r\n "],"wpcf-article-extract-enable":["1"],"wpcf-article-extract":["By Joe Haslam<\/strong>. The shift from the startup age to the scaleup age requires a new mindset and training in executive skills."],"wpcf-article-summary-enable":["1"],"wpcf-article-summary":["Many startups have a limited lifespan in the market. These organizations need to step up and transform themselves into scaleups\u2014corporations with durable business models and an expansion-oriented mindset. Startups should look beyond the struggle for survival and the pursuit of short-term results in order to adopt a scaleup outlook. They must accept that it takes at least a decade to create a truly valuable project capable of generating consistent profits. In today\u2019s fast-changing global world, work structure is a key weapon. In order for a startup to transition to a scalable model, the entrepreneur\u2019s heroism must give way to the collective ego of a staff committed to the organization\u2019s success."]},"_links":{"self":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/articles\/633833","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/articles"}],"about":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/types\/articles"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/media\/636322"}],"wp:attachment":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/media?parent=633833"}],"wp:term":[{"taxonomy":"schools","embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/schools?post=633833"},{"taxonomy":"areas","embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/areas?post=633833"},{"taxonomy":"subjects","embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/subjects?post=633833"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}