90% of startups fail. It’s an infamous statistic in the startup ecosystem. Within the successful 10%, fewer still reach unicorn status, attaining a valuation of over $1 billion. The journey of an entrepreneur can be long and challenging. So what does it take to reach this level of success?
To understand what it’s really like to scale a company to a unicorn valuation, we hosted an informative chat with the founding executives of three well-known Boston companies:
- Stefania Mallett, Co-founder and CEO of ezCater
- Dries Buytaert, Co-founder and CTO of Acquia
- Ash Ashutosh, Founder and CEO of Actifio
- Moderated by Chris Denson, Director of Innovation at MullenLowe
The panelists discussed everything from their first jobs to moments of near-failure. They highlighted five core abilities that founders need to build—and scale—an enduring company.
Watch the entire conversation here, and read on for key takeaways.
1. Find Early Market Signals
At an early point in the business, when ezCater had about 100 customers, a customer called almost in tears—she had just started a new job and was frantically trying to place an order. She had accidentally typed in the wrong domain name: excater.com instead of ezcater.com. Her stress was palpable, and Stefania realized ezCater had identified a real need within a minimum viable segment. “If you have a small number of customers that are rabidly loyal to you, you have a shot.”
At Acquia, Dries measured sales output to gauge progress and fit. The team had “200% conviction” in what they were doing. But despite that, “We got ‘no’ 90% of the time when talking to potential customers,” he says. Even so, the company grew rapidly. “It can be deceiving to get ‘no’ all the time, but you can get ‘yes’ 10% of the time and still grow really fast.”
2. Build a Great Team, Then Cede Control
The three leaders shared a similar key learning about transitioning from the role of founder to executive.
“The more successful you get, the more you have to share control,” says Stefania. That’s a good thing, she’s quick to point out. “It can be hard, but the more you let go, the more you empower people who are better at their specialty, and the better the company does.”
Dries, too, had to learn how to trust the people around him, delegate, and share control. “You have to find ways to make yourself more productive,” he says, “You have to learn it, or you drown.”
“The scope of what you can impact changes,” Ash summarized. “It goes from ‘Let me do that,’ to ‘How can I help you?’”
3. Make the Right Strategic Decisions
When you’re building something from the ground up, “There are hundreds of things you could do, but probably only two that you should,” says Chris. How do you decide?
At Acquia, Dries and his team focus on a multi-decade vision. When determining the next priorities, the Acquia team will brainstorm dozens of different ideas that fit into this vision, and then filter them down to just a few. They ask:
- What was true 10 years ago?
- What is true today?
- What will be true 10 years from now?
“It’s never the shiny, disruptive answer,” says Dries. “But because they’re boring, they’re always relatively safe bets to make as a company.” He gives an example: privacy and security. That was a problem 10 years ago, is still a problem today, and will likely be a problem 10 years from now. On the flip side, blockchain or VR would not fit these criteria.
Then, to narrow down from a few to one priority, they go directly to customers. They ask:
- What would you buy from us?
- What feels logical and natural to buy from us specifically versus another company?
Build vs. Partner
Stefania added another dimension: Once you’ve determined your next priority, do you build it or partner to add it? For example, ezCater provides food for work, at work. Delivery is an essential part of that. Early on, Stefania wondered, should they create a delivery service? To help with decisions like these, she asks:
- Is it a core competency?
- Is it important but not central?
- How much have other companies that provide a similar service spent?
In the case of delivery, Uber and Lyft had spent billions of dollars developing this service. It would be highly costly for ezCater to build something similar, so they decided to partner. “The noes are as important as the yeses,” Stefania says.
The Toughest Decisions
To Ash, the most interesting decisions are the ones you make when things aren’t going well. The toughest part can be “acknowledging that there’s a shift that’s happened, and making the gut-wrenching decision to change,” he says.
When he first started Actifio back in 2009, it was in a very different environment. As the market changed and big players like AWS and Google Cloud began to dominate, Actifio evolved, but “you could see the writing on the wall,” says Ash. They began to get Google involved, which eventually led to Google’s acquisition of Actifio.
4. Communicate and Maintain Culture
A big part of managing challenges is communicating with employees. How do these leaders motivate and empower teams, even when the going gets tough?
It starts with culture. ezCater has clearly articulated the “ingredients” in their culture “recipe.” “We ask you to leave if you can’t live by them,” says Stefania. Notably, she stresses that these values do not need to change as a company grows. “By refusing to believe that by getting big, you have to dilute your hiring criteria or your beliefs, we have kept the culture very strong.”
“We have a very transparent company… We tell everyone just about everything,” says Stefania. So when Covid essentially made ezCater’s core business illegal (feeding people in groups in the office), they continued to communicate with the same level of transparency but at a higher frequency.
Two to three weeks in, it became clear they would have to do some layoffs. People would ask about their job security, and Stefania would be honest: she didn’t know. “I got a lot of kudos for saying, ‘I don’t know,’ instead of offering false assurances,” she says.
When the day finally came, they spoke to every single person being laid off. Because of Stefania’s transparency throughout, “Everyone walked out saying, ‘I get it.’”
“Tell the truth, and tell as much truth as you possibly can,” Stefania says.
Ash strongly believes in authentic optimism as described by the Stockdale Paradox. “Acknowledge the reality of now and have complete faith that you will prevail in the end,” he says. It can’t be only one or the other—you must have both parts of the framework.
5. Grow Quickly, But Smartly
When asked if there was a right pace for growth, Ash replied, “You can never grow fast enough.” Even if you’re a market leader, there’s always more opportunity to be had. “If you’re in the ditch, get out. If you are winning, dominate the business. If you’re dominating the business, find another market. Don’t tell me you’re done.”
But there is a caveat: You must be able to bring your team along with you so you don’t create a backlog of debt. “There’s never enough growth, but the best growth is the kind that your team can carry,” he adds.
When it comes to international growth, Dries says it’s like any investment decision. Say you have $2 million; you can invest it in building your product or setting up a regional presence somewhere else. “You have to weigh what you think will be more successful in the long run,” says Dries.
Ash thinks about it as an extension of customer acquisition strategy. He asks:
- Where can I add the most value?
- Which customers will be most delighted with our value?
- How can I acquire these customers the fastest?
“Just follow the customers,” he says.
This session was a part of Underscore’s Boston Reconnect event, where we dug into topics like pricing and packaging, fostering DEI in startups, customer retention, early-stage fundraising, and much more. Watch all session recordings here.