What’s your scale up strategy?

What’s your scale up strategy?

Understand the growth strategy of these technology companies and the various factors they evaluate and be prepared for as they scale up their business.

At The Smart CEO, we always aspire to understand how businessesgrow from one stage to another; right from the foundation they set the early stage to the strategies they follow to scale their ventures. As a part of this endeavour, we have started a series of sessions on understanding the finer nuances of scaling up which include entering a new geography, rebranding, hiringand getting the management team ready. As beginning of this series, we bring to you the scale up story of eight technology companies, on how they prepare themselves internally and externally as they scale up.

1. Dev Information Technology Ltd.

Jaimin Shah, MD & CEO

Founders: Jaimin Shah, Pranav Pandya, Vishal Vasu, Prerak Shah

Year: 1997

City: Ahmedabad

Funding: A public limited company, it recently raised Rs. 6.25 crore through SME IPO on NSE Emerge.

About the company: Dev Information Technology Ltd. (DEV IT) is an end-to-end IT services model covering Enterprise Applications, IT Infrastructure Management Services, Cloud Computing, Digital marketing as well as Licensing and IT Consulting.

Meaning of scale up: The companybelieves in a holistic approach towards scaling and hence, both horizontal and vertical scaling is vital to ensure sustained growth and achieve all-round success. Sometimes, both co-exist at the same point in time while at times the company has taken a focused approachtowards one at a time.  It has a strong focus on the services and geographies it caters to and has made sustained efforts towards increasing the number of clients. It has also undertaken launching of new services, such as cybersecurity, managed mobility, and digital marketing, in the existing geographies it caters to.

For scaling into newer geographies, it has partnered with and acquired entities operating in specific geographies.

The company has also set up an in-house research and development lab to help stay abreast with the changing technological trends and future market demands.

Preparations to scale up: Once any company starts growing, different behaviours, processes and practices are needed to avoid complete and utter chaos. This can be a painful transition, but with the right team in place, it can also be a lot of fun.

Dev IT has employed around 800 professionals and is on the hunt for more as it scales around the globe. Here are its top priorities as it initiates a new scale up;

  1. Proactive communication with the team: They should be the first to know the company’s vision and plans. It implements this through regular management team and senior leadership team meetings, ensuring that everyone stays on track.
  2. Developing the team: The company hires recent graduates and has an in-house training center which focuses on regular training of all its employees.
  3. It breaks down projects into smaller tasks, identifies efficient team members and delegates work accordingly.
  4. Once the team members are identified and allocated the tasks, the company empowers them to perform their tasks in the ablest manner.
  5. To keep them engaged and motivated, it has started a new initiative where employees can share their moments spent in the organisation on their social media channels using the hashtag #LifeAtDevIT

Evaluation of external factors/market forces

The company evaluates the following factors:

  • Competition
  • Government policies
  • Social and cultural forces
  • Demographic factors
  • Technological changes

Month one in a new country: If it has scaled up by acquiring a business in the new country, it believes in ironing out cultural and work style differences; besides gaining an overall understanding about work techniques/business practices followed in that country.

This apart, if it enters a new country organically, its priority is to identify potential channel partners and empower them to succeed.

2. Epsilon Bangalore (EBR)

Ashish Sinha

Country Head: Ashish Sinha

Year: 2015

City: Bangalore, India

Funding: Seed funded by Epsilon US.

About the company: Started in 2015, Epsilon® is a global marketing innovator which provides data intelligence and customer insights technology, including loyalty, email and CRM platforms and data-driven creative, activation and execution.

Epsilon’s digital media arm, Conversant®, is a leader in personalized digital advertising and insights, through its proprietary technology and trove of consumer marketing data, delivering digital marketing with unprecedented scale, accuracy and reach through personalized media programs and through CJ Affiliate, one of the world’s largest affiliate marketing networks.

The Bangalore office has now grown to 1,500 employees with an aim to hitting 1,800 by the end of the year.

Meaning of scale up: Epsilon is a global marketing company that helps brands improve their marketing, build better customer relationships and find new customers through strategy, analytics, agency, and creative and technology solutions. Scaling up, for the business, means three things: 

  1. Scaling up talent capital by accessing the Indian labor pool
  2. Scaling the ability to enhance its current marketing technology, integration and implementation capabilities
  3.  Scaling up revenue base in European and Asian markets

Preparations to scale up: Scaling up requires a strong startup mentality. Decisions need to be made quickly, one has to be nimble in execution, and take risks, fail fast, learn and course correct all at the speed of light! Key success enablers when scaling a new project include;

  1. Bringing together a top notch leadership team, never compromising on skill and attitude, andgiving them full accountability
  2. Ensuring there is a 3-6-9-month execution plan; but with enough flexibility to accommodate moving goal posts
  3. Ensuring there is funding for a threshold period (period can depend on nature of project)
  4. Being paranoid about quality
  5. Communiating consistently and constantly with key stakeholders and seeking their inputs on managing customers, investors, suppliers, managers and more.

Evaluation of external factors/market forces: One needs to look at the value chain, understand benchmarks and ask the right questions. Who are the customers and what are their needs? What should the supply chain look like so that one can deliver the scale up? What will all this cost? How are others doing it? And what will success look like in 1,2 and 5 years? 

Month one in a new country: Have the right leaders in place, secure investment funds for one year and put a strong execution plan in place.

3. ItzCash

Bhavik Vasa (Chief Growth Officer), Ravi Singh (Chief Business Officer)

Founders: Ravi Singh (Chief Business Officer), Bhavik Vasa (Chief Growth Officer) and Naveen Surya (former MD)

Year: 2006

City: Mumbai

Funding: More than US$170 million

About the company: India’s leading playerin the digital payments and P2P money transfer space

Meaning of scale up: The company believes that there is an opportunity to build a large institution and end-to-end Enterprise Financial Exchange platform in the country. Hence, setting up the right foundation and focusing on the right business KPIs for a healthy, sustainable, profitable growth is important. Also key is focusing on transactions and topline growth, while ensuring that unit-economics are always positive, and creating a nation-wide expansion while controlling burn and indirect expenses.

Preparations to scale up: Start with clarity and define targets, ensure transparency across the organisation and align each team member to these targets. Ultimately, trust and consistency are the key pillars of our execution philosophy.

Evaluation of external factors/market forces: Change is the only constant, especially in today’s dynamic times and hence only Plan B is not enough; always have a C , D and E to every strategy. Being nimble and taking quick decisions are also key.

Month one in a new country It’s a marathon and not a sprint! Whether it is business or any new markets , the company’s philosophy is built for the long term and apply a ‘Glocal’ model.

4. LYNK 

Shekhar Bhende & Abinav Raja, Co-founders

Founders: Shekhar Bhende & Abinav Raja

Year: 2015

City: Chennai

Funding: Undisclosed, backed by the Ramco Group

About the company: Lynk is a last mile logistics aggregator that runs a democratized technology platform for intra-city trucking

Meaning of scale up:

Rapidly increasing the usage/demand of an existing, tried and tested product. This could happen in a couple of ways:

Taking the same product and penetrating deeper into the same customer segment and/or geography

Taking the same product to new customer segments and/or new geographies. Introducing a new product also increases usage/demand, however, the company considers that as a growth driven by innovation and it would need to be tested out for product-market fit before it is scaled up.

Scaling up is like a company’s endeavour to take a product that adds known value to a small customer base and generates the same value for an exponentially larger customer base. It is the ultimate test of product-market fit and execution capabilities of a startup.

Preparations to scale up: The company looks at three P’s before scaling up:

  1. Product: It understand the target customers and ensures that the product solves their most critical need/problem. For mass market technology platforms like Lynk’s, the product must be standardized and easy to use, yet it must be flexible enough to meet most of the use-cases of the target customers. For technology platforms, the technology architecture and backend infrastructure need to be carefully planned and built to handle the projected increase in load and user activity.
  2. Processes: Since scaling up typically leads to a rapid growth of users, most internal processes of the company need to be stress-tested for a larger user base, especially customer facing processes. For example, customer support and issue resolution processes should be designed for speed and quality, with clear SOPs chalked out. The sales process and funnel, if any, needs to be setup to handle surge in enquiries. Product development processes will also need to be made more nimble in order to respond faster to any product tweaks that may be required during scale-up.
  3.  People: The entire organization must be aligned in terms of the company objectives of the scale-up, so that all teams work towards a common goal. This requires multiple planning meetings, gaining key stakeholder buy-in, and breaking down overall company targets into KPIs for each team, wherever possible. Resourcing and staffing in functions that scale with a growing user base (eg. Customer support or sales) will need to be planned and forecasted as well. Aside from these, the customer acquisition plan is also quite important. Every scale up must be accompanied by a well thought out customer acquisition plan, typically done through advertising or using a sales force.

Evaluation of external factors/market forces: This can be done in three ways;

  1. Seasonality – the company should understand the impact of business/demand cycles before scaling up, understand if there will be tailwinds or headwinds. For example, Diwali is a high consumption season and the demand for transportation is high. Scaling up during Diwali is like having tailwinds and it could significantly add to the growth rate which needs to be accounted for.
  2. Competition – The company needs to understand how competition may react to the scale up strategy. Ideally,it needs to create plans which cannot easily be replicated in a short amount of time by a competitor and/or build in retention strategies which increase the switching cost of newly acquired customers.
  3. Regulatory Issues – Scaling up brings the brand/product/model to the forefront as it will gain more visibility. Regulatory issues which may not have been an issue when the brand was lesser known may become an issue once a certain scale is achieved.

5. OpenTap

Senthil Natarajan, OpenTap

Founders: Senthil Natarajan, Harish Devarajan, Suresh Venkataramani

Year of founding: 2016

Headquarter:  Chennai

Funding Details: Currenlty funded internally

About the company: OpenTap is a FinTech company providing alternate financial – peer-to-peer lending services for the lower to middle income demographics in India.

Meaning of scale up: It means adding customers to its portfolio, which is done through a combination of strategies like acquiring new customers in existing geographies, acquiring new customers in new geograohies and retaining existing customers through repeat purchases.

Preparations to scale up: There are four stages to this;

  1. Technology: Since the company is in the fintech space, usage of technology and automation is a key factor. Scaling up in a startup has to include as much automation as possible. And, the right application of technology ensures ease of use and adoption for its customers and also keeps its cost of acquisition low.
  2. Buy-in: When scaling up, a critical aspect the leadership team should works on is, buy-in. The company believes in participatory growth and involves the team, as much as possible, in critical projects. That said, once a decision is arrived at – there is no scope for second guessing.
  3. Awareness: It ensures that basic awareness is created among the entire team so they understand the magnitude of the project and the implications thereof (both organization wide and specifically for each team).
  4. Training: In-depth training is given to the teams that will work directly on the project.
  5. Hands-on experience: Post training, relevant teams are put through field trials to ensure that they’ve got the concept, process and technicalities right. The team re-groups and changes, if any, are done before the project is made available externally.

Evaluation of external factors/market forces: Theteam evaluates external factors while scaling up, by being in the midst of all the action. A series of on-ground interactions – with both internal team and prospects / customers gives an inkling into the potential success of a scale up project. Carefully planned trials extending to a period of 90 days are then carried out to ensure product and market fit. And of course, there is viability.

The team finally regroups with data from field interactions, trials, a SWOT analysis of the team’s readiness and market in terms of competition; and then takes the plunge.

Month one in a new country: Assuming the team has settled down, regulatory compliances have all been met with – a big-ticket project in month one of moving into a new geography would be the actual launch itself, which would see the media, partners and prospects coming together. This would mainly be to create awareness, share the company’s vision, plans for the geography and to introduce the local teams. The other big-ticket project would be field visits – again, with the sole objective of creating awareness and further understanding local nuances.

6. Pramati Technologies

Jay Pullur

Founders: Jay Pullur and Vijay Pullur

Year: 1998

City: Hyderabad

About the company: Pramati focuses on software technology offerings – services (called Imaginea), and products (such as WaveMaker, Spotcues, ThumbSignIn and Reve Marketing).

Meaning of scale up: Scale up means growth – overall as a group and individually as a company. Basically, it involves finding more customers for its offerings. Its companies are micro-multinationals (with a geographic spread across three major continents; North America, Europe and Asia), from day one. Some of its companies see a good potential in Africa and Australia and may expand there as well.

Preparations to scale up: An individual business has to show potential both internally (to service the new geography) and externally (presence of market proven by current customer base). Then, it may be easy to find the local leadership to address the market, which could happen through acquisition as well. Things to keep in mind while scaling up are;

  1. Don’t lose the purpose you started with
  2. Scaling shouldn’t mean dilution of culture
  3. Numbers on the floor doesn’t mean a thing, if value output isn’t scaling
  4. As scaling might result in more people, there has to be a clear voice to deliver its purpose
  5. With scale, even basic business metrics need to be seen differently.

Evaluation of external factors/market forces: External factors for scaling up to a new geography can mainly be about relevance of the market and its ability and need to service the customers there. Many times, the company finds that presence of a customer base in the geography proves to be an important force in planning. For example, the company established a presence in London upon confirmation that a large insurance customer of one of its companies wanted it to service them in UK. A strategy like this can also help the company bootstrap in a new geography.

Month one in a new country: Planning takes more than one month. But, execution depends on prospects and necessity there.

7. Solutions Infini Technologies (I) Pvt. Ltd

Aniketh Jain, CEO & Co-Founder

Founders: Aniketh Jain & Ashish Agarwal

Year: 2009

City: Bengaluru

Funding: Bootstrapped and organically grown

About the company: Solutions Infini is a cloud communication service provider, catering to messaging, voice and email services. The company caters to a diverse range of services like call conferencing, IVR, click-to-call, high volume messaging and split messaging, to name a few. It has reached global scale by acquiring 190+ global country connections and security. With a turnover of over US $25 million, it has six offices in India and two offices globally (Dubai and Singapore). It has termination capabilities in over 200 countries, is associated with eight telecom operators and serves more than 8,000 clients including Vijaya Bank, Federal Bank, Flipkart, Practo and Capillary Technologies.

Meaning of scale up for the company: Scalability is the growth in terms of agility while using its products. The company’s products have the capacity to scale and provide larger data to the requirements of the client. What makes scalability work for the client is that, it doesn’t consume time and is done on demand. Scaling up is not the only option; if the client doesn’t require the existing bandwidth, then it can also scale its services down according to the client’s needs.

Preparations to scale up: The company’s servers are scalable. Typically, scaling is an automated process. When a ticket is raised by the client for scaling up, the same bandwidth is provided by the backend application team and notified to the customer by the support team.

Evaluation of external factors/market forces: In the market in which it operates, there are no external forces that are involved in scaling. It depends on the internal PRI statuses(for Voice) and once the client requires additional bandwidth, the application team does the needful by providing ample bandwidth to the client.

Month one in a new country: The company would want to widen the customer base and buildstrong communicationswithitsclient there. With astrong presence in 190+ countries and with its network and intuitive self-service based applications, communication would be easy to build and scale as per the business needs.

8. Zeta

Ramki Gaddipati, CTO & Co-founder

Founders: Bhavin Turakhia & Ramki Gaddipati

Year: 2015

City: Bangalore

About the company: Zeta, part of the US $1.4 billion Directi Group, is a fintech startup dealing with digitised enterprise solutions for employee tax benefits, automated cafeterias, R&R, and digital payments. Zeta serves over 1,500 organisations and has close to 3.5 lakh users. Its business model entails a fee structure – charged to corporates in lieu of services and to merchant from any transaction.

Meaning of scale up: Zeta partners with banks and payroll companies to pitch the Optima suite to their clients. This ensures that the number of organisations using the Optima suite sees a steady increase in the coming years.

In addition to this, Zeta is currently offering the same technology that is used to power the Optima suite to banks, and developing employee benefits services to them. The versatility of the Optima suite also helps them to offer additional employee benefits, depending on the requirements of its clients.

The only external risk that could hinder the company’s growth is a sudden and dramatic change in government policies that do not incentivise organisations and employees from offering tax-saving benefits.

Preparations to scale up: Encompasses four components;

  1. Strengthening the technology platform
  2. Empowering the customer service team
  3. Hiring the right talent
  4. Studying the market

Evaluation of external factors/market forces: A scalable platform

Poornima Kavlekar has been associated with The Smart CEO since the time of launch and is the Consulting Editor of the magazine. She has been writing for almost 20 years on a cross section of topics including stocks and personal finance and now, on entrepreneurship and growth enterprises. She is a trained Yoga Teacher, an avid endurance Cyclist and a Veena player.

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