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Jason Goldberg Asks Are You (Realistically) Ready To Scale Your Business?

You’ve built a solid business. The money is coming in. Now you’re ready to scale – to go big. But are you really ready? Are you mentally prepared? Being a start-up founder and a company CEO is not the same thing.

GG van Rooyen

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Vital Stats

  • Player: Jason Goldberg
  • Company: 10x-e
  • Founded: 2015
  • Background: 10X-e was created by Vumela and Edge Growth. Its aim is to help talented entrepreneurs succeed by offering a high-growth support system.
  • Visit: 10x-e.com

When Eric Schmidt stepped down as CEO of Google in 2011, he posted the following message on Twitter: “Day-to-day adult supervision no longer needed!”

He was referring to the fact that, after a decade as the company’s chief executive, the throne was being handed back to 37-year-old Google founder Larry Page.

Related: Don’t Let People Dissuade You from Following your Dream – Polo Leteka Radebe 

The comment seemed a bit, well, snarky. It wasn’t. But it had some backstory. By the turn of the millennium, Google was attracting investors, but these investors were understandably reticent about sinking millions of dollars into a company that was located above a bicycle shop and headed by two unruly Montessori alums.

The money men were willing to invest, but not without what Silicon Valley VCs referred to as ‘adult supervision’. Founders Page and Sergey Brin grumbled about it, but eventually agreed. They started shopping around until they found the perfect candidate: Steve Jobs.

Jobs wasn’t available. But Eric Schmidt was. And the Google boys liked Schmidt. He wasn’t just a businessman — he had a solid background in engineering and tech. In fact, he had become Sun Microsystem’s first software manager in 1983.

So Schmidt’s tweet wasn’t snarky at all. In fact, it was the opposite. It was a statement filled with genuine affection for the Google founders — a tongue-in-cheek declaration that a decade of ‘adult supervision’ had officially come to a close.

As the geniality of the message implies, the partnership had worked. Schmidt and the founders had worked well together. This isn’t always the case. It can be disastrous, which is why there has been a move away from replacing the founder of a company once it scales to a certain size.

“While replacing a company founder with a CEO is certainly an option when looking to scale a business, it has traditionally had mixed results,” says 10x-e founder and Edge Growth founding director Jason Goldberg.

“Because of this a VC firm like Sequoia Capital in Silicon Valley no longer expects a founder to be replaced when a business scales. When a company loses its leader, it loses a lot of its essence.”

You Need To Cede Some Control

The poster boy for the tech-founder- turned-Fortune-500-CEO is obviously Mark Zuckerberg. Despite still looking like a boy playing dress-up in his dad’s clothes whenever he dons a suit, Zuckerberg has proved to be exceptionally adept at growing Facebook through its various phases.

How has he managed this? While he certainly has more business savvy than initially given credit for, a lot of the company’s success can be attributed to Sheryl Sandberg. Zuckerberg hired Sandberg (then Google’s president for online sales and operations) as COO in 2008, and she transformed Facebook from ‘cool website’ into ‘profitable business’. But she couldn’t have done this without Zuckerberg giving her the freedom to do so.

It’s an important example founders should follow, says Goldberg. “Growing companies need to complement existing leaders with others who have real management experience. Entrepreneurs need to make a paradigm shift when they scale. You need to accept that, even if you stay on as CEO, you are ceding a level of control. It ultimately comes down to the maturity of the founding team. Do they have the maturity to adapt to the new management context? They must realise that they don’t all bring a lot of management know-how. If they can’t make the shift, they kill the business.”

Sandberg was a great hire for one simple reason: She was a seasoned executive with more experience than Zuckerberg himself.

“A lot of growing companies hire the wrong people. If you’re looking to scale aggressively, now is not the right time to hire young people that need mentoring,” says Goldberg. “You want to hire people who can do things five times better than you can. If you’re not comfortable handing off an important task, you’ve hired the wrong person.”

Related: Busy Cardiologist Dr Riaz Motara Works A 4-Day Work Week – Here’s How

Don’t Get Sucked Into The Vortex Of Day-To-Day

Growing a business is chaotic. Once you start scaling aggressively, a million things will demand your attention every single day. You will feel as if you’re drowning.

“We refer to it as ‘the vortex of day-to-day’. As the business grows, there will be more and more balls in the air, and unless you’re able to hand them off, they’re going to drop to the floor,” says Goldberg.

“You have to ask yourself: How do we, for example, have 100 sales meetings every week without the founder having to be in any of them?”

This requires that founders hire competent people, and allow them to run with things. But it also requires something else: According to Goldberg, it comes down to creating systems and processes that diminish the need for executive involvement.

At the same time, you don’t want to turn into that stereotypical organisation that depends too heavily on paper pushing and bureaucracy.

“As you scale, you hire more and more people who don’t actually care that much about the customer. It’s inevitable. At 100 people, you will have employees who never interact with the customer, and who will probably be implementing processes that irk them. A customer who used to deal with a founder will now get an email from a faceless accounts department. So you need to systematise everything from the focus point of delighting the customer. It’s very important to institutionalise customer delight.”

Strike a Careful Balance Or Risk Chaos

Jason-Goldberg-10x-e

Here is the reality of scaling a business aggressively: Your business will lose most of the advantages it had early on. As it gets bigger, it will get slower, regardless of the systems you put in place.

“You have to consider if your company can put its prices up by 20%. If you grow quickly, your costs will go up, but you won’t yet have scale. So unless you get a lot of funding, you’ll need to up prices.”

You will, at least for a while, be slower and more expensive than much of the competition. So what’s needed is a product that is so great that customers will keep coming back, even if you’re no longer the quick and agile start-up you used to be.

“You have to strike a careful balance. Build solid systems and a good management team too soon, and you’ll burn through cash too quickly. Wait too long, and your growing company will descend into chaos,” says Goldberg. “Scaling requires you to spend ahead of revenue — but not too far ahead.”

Related: 7 Up And Coming SA Businesses To Watch

Scaling the un-scalable

Not every business can scale. Can yours? You need to take an honest look at your company.

To paraphrase Leo Tolstoy: All successful businesses are alike. All failed businesses are unsuccessful in their own way.

Google and Facebook grew in different ways, but they were alike in one very important area: They both had businesses that were scalable.

Before jumping into the minutiae of scaling a business, it’s worth taking a moment and asking yourself how scalable your business model truly is. If your business isn’t inherently scalable, no amount of good hires or clever processes will allow it to scale.

“There are three kinds of businesses: Un-scalable, scalable and hyper-scalable,” says Goldberg. “Something like Dropbox or Facebook is hyper-scalable. Here the marginal cost of selling an additional product is virtually zero because delivery is automated.

“A scalable business is one that offers a blueprint for success that can be replicated. A franchise restaurant is a good example. Every restaurant is a profitable unit that can be operated in the same way as the previous one.

“An un-scalable business is one that doesn’t have a ‘saleable unit’ that can easily be rolled out multiple times. Many service businesses find themselves in this kind of situation. If you offer a high-level service that requires very knowledgeable (and expensive) experts, it’s hard to scale. There are many businesses like this with low barriers to entry that struggle to scale beyond 30 people because most of the skilled leaders they need would rather start and run their own businesses. Something like Uber is scalable because being an Uber driver does not require an expert skillset. However, there are exceptions. Advisory firms have managed to scale because regulation creates predictable demand, there is some regular supply of human talent and there are high barriers to entry for new players.”

Remember This

Taking a company from start-up phase to corporate level is a long journey that requires a host of different skills. Very few entrepreneurs have all the talents needed to scale a business successfully.

GG van Rooyen is the deputy editor for Entrepreneur Magazine South Africa. Follow him on Twitter.

Increase Profitability

Leon Meyer GM At Westin Cape Town Shares 4 Experience-Driven Tips On How To Keep Your Team Productive

Productivity is a fundamental requirement for an organisation – it’s the seed that builds a business and contributes to higher profit margins.

Leon Meyer

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Productivity is a fundamental requirement for an organisation – it’s the seed that builds a business and contributes to higher profit margins. But what’s the best way to ensure employees remain productive, and happy in their day job?

The answer is simple and highly effective and I choose to sum it up with three short phrases – respect, trust and teamwork.

In partnership with my management team, which consists of about eight staffers across various disciplines, we strive to tick these boxes.

Related: 5 Surprising Elements That Boost Your Productivity (One of Them Is Colour)

In total we’re ultimately responsible for managing roughly 500 employees.

Five hundred employees across several departments is a mighty job. But with teamwork, good listening skills and the right attitude from the top to filter down, any business can run like a well-oiled machine.

I’d like share with you the essentials for building and maintaining a productive workforce, and these apply to all industries, not just the hospitality sector:

1. What’s your definition of a productive team and how do you achieve that?

We need to keep in mind that productivity is a result, one that CEOs and managing directors strive for with their teams. But what happens beforehand in order to achieve that result determines whether it will be achieved at all, and is equally important. I suggest the following to ensure a productive team:

Define roles and responsibilitiesDirection is incredibly important; everyone needs to know exactly where they’re going and how they need to get there, so KPIs are essential.

Often when roles and responsibilities are unclear, things go pear-shaped. I am an advocate for setting clear KPIs, it’s a good way to steer us in the right direction, and in turn helps to grow the business and the individual in his/her role.

Be flexible: Rigid environments are the worst kind, allow your employees some flexibility and the opportunity to be themselves in the workplace. We spend so much of our time at work, we need to be ourselves there.

Celebrate the team: When there are achievements, celebrate them, single out individuals who are excelling and living the company values. This builds morale and is indicative of appreciation, which is fundamental when running and building a business.

2. What has and continues to be your philosophy since managing a large team?

Know your strengths and weaknesses, as well as your team’s and leverage off that. Be prepared to learn from others, no one can operate in isolation, regardless of the level on which you operate. Accept criticism and don’t bulldoze someone’s ideas, that’s how you build trust.

3. What in your view are the top characteristics the team look for in a leader?

  • Be consistent – inconsistency screams bad leader
  • Provide guidance – this is key, don’t turn a blind eye, give input and council
  • Listen – always listen intently
  • Be impartial – always be fair
  • Give credit – it builds morale and shows you recognise good work
  • Be patient – Rome wasn’t built in a day, and remember not everyone thinks the same as you do

4. What’s your view on an open door policy and how does it assist with managing a team and ensuring everyone remains productive?

I believe in an open door policy. It’s essential to build and develop trust. I’m the first to admit that it takes a while to build that trust, but once the team (on all levels in all departments) know your door is always open, and that they can trust you implicitly, half the battle has been won.

I host a GM’s roundtable every two months, just to establish how everyone is feeling and where everyone is at. It gives staff the opportunity to bring their challenges to the table, and I deal with them the best I can.

It’s 100 percent confidential and line managers are not allowed to attend. During this meeting we try reach common ground, and I commit to addressing and ultimately solving the problem(s).

Related: 10 Ways To Make Your Employees 10x More Productive

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Why Purpose Drives Profits

If you want to succeed, it’s time to start engaging where it matters.

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Over the past two years, many clients have been extending brand positioning exercises into purpose-driven expressions.

When we look at it, it makes sense given the country’s demographics. With many of our fellow countrymen struggling to make ends meet, brands have stepped in to provide them with a picture of a future worth striving for.

Global customer-centricity study, Insights 2020, led by research firm Kantar Millward Brown, has attempted to understand how brands could drive customer-centric growth as well as the factors that really make a difference. The research surveyed 10 495 individuals in 60 countries, and there are some significant efforts worth investing in if brands want to engage where it matters most, in consumers’ hearts.

The research uncovered that for market-leading companies and brands, traditional value drivers such as quality, packaging, or distribution are necessary, but no longer provide a competitive advantage; most brands are capable of providing these drivers. What is important, are a few critical approaches.

1. Purpose-led brands

The study found that when companies or brands linked to a purpose, 80% of them outperformed the market. Only 32% of non-purpose led brands managed to perform better than the market. 

Related: How To Calculate Gross Profit

2. On the ground

It’s important to engage with consumers in their space and on their terms. Through the use of memorable campaigns, experiential events and activations it is critical to engage with consumers on their turf.

3. Be truthful and authentic

Consumers can smell something inauthentic a mile away, especially when it’s coming from a brand. This forces brands to strive for authenticity in everything they do, especially when it comes to marketing. Building values and principle-based attributes into your brand as a guiding tool is essential.

4. Helping consumers commit

By allowing individuals to attach themselves to a brand with a purpose, it helps consumers personally commit to a cause that they consider important. When a consumer is personally invested, the link between the brand and product or service deepens.

Related: Profit Share for Increased Performance

5. Balancing heritage and modern relevance

There is a continuous tussle in balancing the traditional market, transitional market and the new consumers brands are trying to attract. Keeping the heritage and roots of the brand true to itself, while creating relevance for the new market, is a battle marketers are still fighting.

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Need To Trim The Fat To Boost Profitability? Listen To Your Clients First

Jeff Bezos believed that once you win the client over by doing this, everything else will follow – not least profitability.

Marc Wachsberger

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Finding the balance between offering the extras that set you apart from your competitors and keeping things ‘lean and mean’ to minimise wastage and maximise return on investment is a tricky balancing act.

I’ve noticed that many businesses try to attract or retain customers by offering what they think their customers want, rather than finding out what they really need, and then delivering that. That’s an expensive mistake to make – and it’s not going to achieve the business results you need.

I’ve also observed that now is the age of the new entrepreneur – the game changers who disrupt the status quo long set by big bureaucratic competitors who think that their customers will just accept an inflationary (or slightly larger) increase every year, just because they always have.

While Amazon has been around for a while now, there’s also an important lesson to be learned from its launch goal, which was to bring the price to the client. Jeff Bezos believed that once you win the client over by doing this, everything else will follow – not least profitability.

How have I applied these lessons in my business?

Firstly, we design our hotels backwards – we focus on the needs of our clients, very aware that what hotel guests wanted years ago is not what they want now. That’s why we don’t offer thing like a turn-down service with chocolates on the pillow. Nobody eats the chocolates, and nobody uses the toiletries – so why should we include the costs of these unwanted extras (and the cost of the staff required to implement them) in the final bill to our clients?

Related: 7 Steps To Optimise Your Cycle Of Customer Service

We do, however, offer free WiFi internet connectivity, free parking in our buildings, free laundry services and either bed-and-breakfast options or self-catering rooms.

Simply put, we’ve cut the fat that nobody wants anyway, and added the value that our guests have said they expect.

Our clients have said that they expect the whole hotel to be a workstation, and not just the business centre in a dark, unwanted corner. So, we’ve put a workstation in every room, with always-on access to the internet. Our hotels are designed with beautiful work spaces that cater for nomadic entrepreneurs and double up as comfortable meeting spaces, again – gone are days of boardroom only meetings, our spaces are primed for work and play in one integrated space.

Our clients have pointed out that they’re already paying for their room – so why should they pay for parking?

Many of our clients stay with us for days or weeks at a time, and have said it would be helpful if we did their laundry. So, we do that for them – and we don’t charge them for it.

Related: Good Customer Service Is About Relating At The Same Level

It’s true that many of our old-school competitors offer a broader range of products and services than we do, but we’ve built a successful business on adding the value that our clients need, removing the costs and extras that annoy them, and keeping costs (theirs as well as ours) under control by cutting out unnecessary frills.

It’s an approach that’s worked for The Capital Hotels and Apartments as a disruptor in the hotel and long-stay accommodation industry, and I’m confident that its principles would apply to any other industry that’s ripe for disruption.

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