I’ve spent the last decade compelling scaling companies to resolutely stick with their Ideal Customer Profile (ICP). Why? Because one of the main reasons that great businesses fail to reach Series C is the temptation to go too broad too soon.
After raising Series A, you start injecting the cash into your growth strategy, but as the money starts to run out, many companies consider deviating from their ICP and seek out revenue from customers that will never be profitable and will ultimately cause lots of headaches. It’s not worth it. Instead, you should aim to get ‘uncomfortably’ narrow on ICP, stay in the original lanes that got you this far and avoid the temptation to go to China or launch a new product. That time may come, but sprinters that try marathons too early rarely succeed.
I’m not just talking about Customer Success people here, I mean everyone. I’ve met CEOs that have never spoken to a customer and even some marketing personnel, but how can you reasonably understand what your customers want if you’re not talking to them? From the CEO-Founder to product development, all parts of the company should have exposure to real customers. It will help the person writing content to create more compelling marketing. The tech team will be able to create a better product. The CEO will make better strategic decisions.
For me, all scaling companies should therefore create a virtual or face-to-face forum where people who are not in the CS team are meeting and hearing from customers regularly (quarterly is a good start), where customers can ask as many questions as possible. I’d also recommend that new starters have customer time - where they are installed with customers and see how they talk about the company - as part of onboarding. It will make a world of difference.
I’ve spent the last decade compelling scaling companies to resolutely stick with their Ideal Customer Profile (ICP). Why? Because one of the main reasons that great businesses fail to reach Series C is the temptation to go too broad too soon. After raising Series A, you start injecting the cash into your growth strategy, but as the money starts to run out, many companies consider deviating from their ICP and seek out revenue from customers that will never be profitable and will ultimately cause lots of headaches. It’s not worth it. Instead, you should aim to get ‘uncomfortably’ narrow on ICP, stay in the original lanes that got you this far and avoid the temptation to go to China or launch a new product. That time may come, but sprinters that try marathons too early rarely succeed.
I empathise with the emotional journey a founder must take. I’ve been there. At the start, you’re a well-rounded individual who has to balance everything from product and engineering to hiring and customer experience. As the company is resource-constrained, you’re the multi-tasker that fills in all the gaps.
After series A or B, the company doesn’t need that anymore. The company needs the founder to build a well-rounded team. To bring in subject matter experts who have authority, domain knowledge and veto power in areas like tech or finance. As the organisation goes along this maturity curve, the founder needs to do less, but better. They might be told ‘stick with fundraising, people, culture and hiring, and we’ll do the rest’. Successful founders are the ones to quickly understand this new context, accept this new focus and let the well-rounded team do the heavy-lifting. No matter how crucial they were at the start.
Almost every VC asset I’ve worked with has raided their big pot of money and fallen for the ‘grey hair myth’. In the tech SaaS world, founders tend to be younger engineer-types that have never scaled a company before. Their brilliance gets them to Serie A, but the burden of expectation grows sharply when investors have put £10 million in their pocket and expect 300% growth. In this scenario, founders often go and hire a very experienced, senior team member. The senior hire comes in, immediately decides that everything the company has done up until this point is wrong, prescribes a rewrite of the platform and decides to open new markets with expensive AEs and sales reps. One year later, having spent £2-3 million, there has been no growth.
The problem is the founder is trying to overcompensate for their lack of experience by buying it wholesale; a mistake that can take 12-18 months to correct. Instead, it’s much more sensible to de-risk and force founders to question assumptions around hiring. Not everyone who's ‘been there done that’, can go there and do that for you.
I often see an underinvestment in marketing programmes in early-stage assets. The temptation is to invest lots more in sales, but this approach is risky as not only does it take a while to find someone good and ramp up, but you can also lose 6-9 months if it doesn't work out and you have nothing to show for it. Yet, with marketing, they will always leave something, such as a stack of blogs, a deck or another deliverable, which shows the business has moved forward.
Scaling companies should therefore make a senior marketing hire early after Series A. Don’t wait until the pipeline has dried up as otherwise there’s lots of pressure on the hire to pull a rabbit out of the hat. Getting the demand generation programme properly funded before a crisis is key and if you're in hypergrowth that means dedicating 20-30% of your topline attainment to marketing and demand gen investment.
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