Partner at Acton Capital Partners
In what ways has the startup ecosystem changed since 1999?
Founding teams these days are much more profes- sional, and in many cases partially consist of serial entrepreneurs. You also don’t need to invest in a big infrastructure nowadays, and there’s definitely more startup capital available in an early phase. En- try barriers overall have decreased, but led to much more competition — and thus a higher failure rate overall, especially in early stages.
What are the particular challenges of late-phase growth?
You need to be faster. You can’t wait until the prod- uct is perfect to release it; it’s a continuous process. It’s harder to convince customers to use a new prod- uct when there are multiple existing alternatives, so organisation has to adapt quickly and be very cus- tomer-centric. It is easier for early-stage startups to do this due to flexible structure. Later-stage com- munication is inevitably longer and more indirect.For example, the CTO and CMO may have little direct communication with one another, meaning that crucial customer feedback about the UX may not reach the tech department in time.
“You can’t have people do a bit of everything.”
How do you define a workforce in each phase of the startup?
A company starts off with a small founding team, then the general workforce will grow to 20-25. When it gets to the 50-100 stage, the course chang- es dramatically. You can’t have people do a bit of everything; you need dedicated roles, even if the flipside is losing some agility. An early-stage startup usually doesn’t have, say, a CFO, but this is essential when your company reaches a critical growth stage. You have to make sure you hire peo- ple whose expertise is concentrated on each area.
What is the #1 people-related factor influencing the dynamics of a company?
The quality of your people starts with the founding team. Good founders acknowledge that they’re not the right person for certain tasks, which requires humility. You also need to establish a trusting cor- porate culture and common values. Whoever is making the hiring decisions must share these and therefore know exactly what an employee needs to bring to the table.
Partner at btov Partners
You have three ofce locations. How do you keep all of them on the same level?
St Gallen was the first office and is the most important in terms of strategy, but when it comes to dynamics and size, it’s Berlin. Our Luxembourg office is quite small, but our funds are based there. As you can see, each office has a different focus. We schedule weekly company-wide phone-in conferences and organise a big event twice a year, as well as holding various regular events with investors. This helps keep the culture even between the three.
What are the challenges of remote management?
Getting problems and questions solved over the phone can lead to misunderstandings. I would say that the interpersonal aspect suffers a bit; whenever we do a call, it’s always business. We can’t just go to lunch and chat less formally.
Are there strong country-specific differences that can make growth difficult to achieve?
Hiring in Berlin is slightly easier as it has a reputation as a fun and diverse city, which offsets the lower salaries. But in St Gallen there is competition from Zurich. This can hinder growth as finding the right people takes a long time, due to low unemployment in Switzerland.
“A good CTO will find good IT people, but at some point the recruiters have to take over.”
What are the challenges particular to late-phase growth?
Hiring! A good CTO will find good IT people, but at some point the recruiters have to take over. One particular challenge in Europe is lack of financing, especially when things get more technical. Also, acquiring venture capital for late-stage growth companies can be tricky, as the rounds are often too small for US investors and too big for European ones.
Can a company ever reach “critical size”?
It’s hard to give a generalised answer to this. It can be damaging if the company has expanded so fast that they’ve lost any sort of healthy dynamic. It’s all about whether organisation can match rate of growth. There must be hierarchies so that it remains under managemental control.
Venture Developer, and
Partner at Atlantic Labs
The team at Atlantic Labs is 50/50 on gender — albeit the CEO/partner roles are all men. Do you believe in quotas, or have a diversity strategy?
Does the make-up of a team set the tone for the dynamics and diversity of a company and thus on how a company’s decisions are made?
Do you look for diversity in the individual qualities of a founding team?
“It’s not our job to influence a company’s culture”
How is company culture set and maintained?
Do you stress the importance of culture to your companies?
You may control the first steps in your company, but it’s the employees that keep things rolling. Keep them balanced and happy, and you’ll maintain a healthy dynamic in your company.