There are over 214 global startups that claim to have attained the coveted “unicorn” status—meaning they’ve reached a billion-dollar valuation. Becoming a unicorn may not be the end goal of all entrepreneurs, as some may have a moon-shot in mind and some may be in the game merely to solve a problem. Regardless, having the coveted tag attached indicates the growth of the business.
Scaling is a fundamental part of any start-up’s success. Most fail to find the right team, investment or product-market fit, at the right time. The startups who do may still shut down from bleeding while trying to scale. Why? Entrepreneurs tend to utilize scaling as a secondary thought. Most jump into an opportunity to make the most of it—they maintain a micro-perspective while missing out on the required macro-planning.
Many entrepreneurs ask the importance of global scaling. With a great market in your geography, there are plenty of insights into your geography to maintain the dominance. Why risk global scaling? Because for every Uber, there will always be a Didi Chuxing and an Ola. Uber devised the revolutionary idea and immediately catapulted themselves to national success. Before they could enter China and India, there was already well-established competition waiting for them. This competition was born from a rip-off of the original Uber idea.
Global scaling allows businesses to seize opportunities, maximize the valuations and defend your brand/ idea. Without global scaling, someone will soon enter your market with greater capital and resources, based on the rip-off of your own idea!
The Blitzscaling way
Blitzscaling is a phenomenon made popular by LinkedIn’s co-founder, Reid Hoffman, during an interview with the Harvard Business Review. Primarily for start-ups in tech or SaaS industries where either the marginal cost of serving a larger market is slim or the first mover’s advantage is worth the cost. Blitzscaling focuses on the essential parts needed to grow along with the business.
Tech giants, like Uber, have attempted Blitzscaling strategies where they’ve hired people based on the recommendations of fresh engineering hires without even taking an interview. The biggest Blitzscaling benefit is that it allows businesses to focus on what’s essential and helps them scale exponentially at a very fast rate.
The con is that since not all processes are scaling along with the business, there will be bottlenecks and inefficiencies. Ultimately, Blitzscaling will result in either big wins or big losses.
The Decentralized Management way
With a smaller team and a highly focused product goal, founders can single-handedly manage the entire start-up. That said, it becomes difficult for founders to sustain growth as operations grow. They are said to be the visionaries—the ones who know the ins and outs of the product but are not experienced in scaling. Many VC’s would suggest bringing in country heads or professional CEOs for more effective scaling, but experience in managing scaling doesn’t guarantee global expansion success. The best way to ensure this is by creating a power balance between the founders and professional management.
A remarkable example of this is Xiaomi India’s leadership. Manu Kumar Jain, who also happens to be the Vice-President of Xiaomi, is the CEO of its Indian arm. Within the last 3-5 years, Xiaomi has become the market leader. In doing so, the regional CEO, whose earlier stint was with McKinsey as a consultant, has played a marquee role.
In all his public communications, he has stated that though everything at the core of the Xiaomi brand which stands for quality technology at affordable prices, is the same, he was given a free hand in expanding the business. That is why Xiaomi started with a risky e-commerce only strategy and later also expanded into traditional brick and mortar stores.
Process, Planning and Prediction way
This is the organized method for each planned step. Although it takes more time, it also saves start-ups from entropy because each step has its own set of objectives:
Process – Identifying and Prioritizing Key Markets, Establishing Detractors in Key Markets, Team Building Process, Product Localization Process;
Plan: Maintaining the Global Culture, Succession Planning for generic initial core team to make way for specialists, Financial Planning, Establishing KPIs for each target market;
Predict: Using data to predict outlines of the outcomes, leveraging earlier customer feedback, creating a uniform trajectory of growth to be used as a benchmark, creating an exhaustive list of possible scenarios with their ready solutions.
A great example of this is Zomato, the restaurant discovery and food delivery giant that has successfully scaled globally. After entering the coveted unicorn club, Zomato became operationally profitable. The company maintained its business processes and scaled operations using microplanning.
Such processes helped prepare the business for any foreseeable expenses. For instance, a business may arrange for invoice financing if the period of receiving payments from the clients is long. Invoice financing involves the invoice being generated and used as collateral to borrow capital from an outside source to fulfil an order. Between 50-90% of the invoice amount can be borrowed to fulfil the order with the remaining (less the financing fee) is received when the client pays for the invoice. Such processes help to maintain working capital without endangering the start-up’s assets, especially in businesses with longer bill cycles.
Investor networking way.
This is the modern-day version of the Brownfield way of global scaling. Here, the start-up looks for potential partners in new markets to reduce competition. Many, like cab booking giants Ola and Lyft, have already tried this. Ola is from India and Lyft is American. Both, apart from sharing a common rivalry with global giant Uber, have Baillie Gifford (their common investor) in common. After having partnered with each other, both have made strategic investments into each other’s ventures. Partnerships like Ola – Lyft can help start-ups scaling globally to fight with heavily-funded global giants, steepen management’s learning curve and facilitate a technology transfer.