Capacity: The biggest challenge for High Growth Companies

27 May 2014 by Jinesh Parekh No comments

So you’ve just gotten 3M in funding. Is that good news?

Here are the hypothetical terms of getting funding:

  1. You get your first 400K right now. That’s good news of course!
  2. You get  600K if you hit 100 paying customers in next 3 months and build 20 new features. This is bad news.
  3. You get other 1M if you hit your second milestone.

Current Situation:

Your team size is just three, two of you being the founders of the company. If you both sit and code then who will procure the 100 customers? Time to ramp up. And that is why it’s not so good news, but it’s bad news.

As a company moves from being a startup to becoming a high growth company, the first and foremost thing that sets in is hardships in hiring the right talent and keeping up the pace of development. So what do you do?

Should you hire fast?

The short answer is NO! You might end up hiring the wrong culture. You might even end up hiring way too expensive people which won’t be justifiable in the next years pay hike. You will loose time if the people you find are not the right fit.

Should you hire slow then?

Again the answer is NO! You cannot afford to not meet the deadline.

So what should you do?

Take a step back. The problem in hand is that you have to meet the deadline. You ought to hire, so open up the job posts.
The next and the most important thing to do is, look out for a consulting firm to keep the momentum going. Make sure one of you founders act as a CTO and talks to the consulting firm you’ve partnered with every single day ensuring, the work is moving forward. This will give you immediate momentum. If you can afford, hire a business analyst to cut down the right stories so that you will speed up the development avoiding the back and forth with the consulting firm. I wrote about the Dirty Secrets of a Consulting Firm and how to choose one some time back.

If you actually choose the right firm, you will easily meet the 3 month deadline. The second founder will only focus on getting those 100 paying customers.

To add to that, you would even hire a few right people in the mean while. At the end of 3 months, start to move the work to your team and getting it in house. As you ramp up internally, you could choose to continue working with the consulting firm or end the relationship based on your experience and cost analysis with them.

As you could see, outsourcing could be very handy during this time. You keep the momentum going while avoiding the pitfalls of hiring fast. Hope this article gives you a new line of thinking.

Jinesh Parekh

Founder CEO, Idyllic.

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