Scaling up requires some healthy dysfunction

If a startup survives long enough, it has a chance to become a real company.

This is actually quite rare.

One of the amazing stats from Verne Harnish’s book Scaling Up is this:

There are about 28 Million companies in the US.

96% have on average 1-3 employees and < $1M in revenue.

4% have on average 7-12 employees and make it to $1M in revenue

0.4% have on average 40-70 employees and $10M in revenue.

17,000 – or 0.06% – get to $100M in revenue.

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In between these milestones is the Valley of Death, as depicted in the graph.

This is where companies often fail to break through – because what worked with a $100K in revenue won’t work at $1M. What worked at $1M won’t work at $10M. What worked at $10M won’t work at $100M.

Along this scaling journey, lots of things need to change.

The processes need to adjust and scale up.

The people need to adjust and scale up.

This can be incredibly difficult and hard, simply because change is hard.

Scale is hard too.

Scaling can also can be incredibly boring and tedious work.

Just like achieving scale with any complex system, the way to achieve organizational scale is to push it to the limit until it breaks.

Then fix it.

Then break it again.

This has a natural lifecycle, which my friend Jerry Colonna talks about as an arc that has three phases:

1. unhealthy and dysfunctional
2. healthy and dysfunctional
3. healthy and functional

I have depicted it here:

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Most startups live in phase one during the early stages.

For many high growth companies, phase two is where lots of amazing things happen. It’s a crazy, chaotic time but lots of exciting things are happening.

Phase three is where things get really boring and predictable. It’s where true scale starts to happen.

Often, founders and entrepreneurs leave the company as it enters phase three.

Or, even worse, the founder unconsciously pulls the company back into phase two.

Sometimes, entrepreneurs just need chaos in their lives and will even create it if it doesn’t exist!

The bottom line is this: know what to expect when working at a high growth company.

Take a moment to appreciate it for the rarity of the experience. Soak in the people you are working with every day, because you are doing something very, very hard.

One thing is for certain – It won’t be boring – but you can expect a lot of dysfunction along the way.

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