Scaling Your Startup Sensibly
In a recent episode of Crypto Legends, Scaling Your Startups Sensibly, Martyna Lewnska, our co-founder and CTO, spoke with Roza Szafranek, the founder and CEO of HR Hints. This discussion offered a deep dive into the intricacies of scaling startups, highlighting the challenges and strategies essential for successful growth. Read the highlights below.
The Art of Building and Scaling Teams
Every company, startup, and established business alike wants to grow. But the best businesses know how to react to changing market conditions. Martyna opened the conversation with the Crunchbase report on Web 3 funding, which found an 82% fall in funding from $9.1 billion during the first three months of 2022 to $1.7 billion in 2023. She asked what effect that had on the kind of work that HR Hints was doing for companies.
Notably, Roza contrasted the work HR Hints had done for startups over the past two years with the work they were doing presently. For the past two years, “when we had very high valuations and fast-paced hiring, most of our work was talent acquisition. So building teams, helping people build new structures and departments in other countries.” Conversely, Roza described the past year as “crazy” and that for many, this year had been “the cut moment,” noting the necessity for agility and adaptability in changing market conditions. She detailed how HR Hints has navigated these challenges, emphasizing the importance of maintaining efficiency and effectiveness even when difficult decisions, such as staff reductions, are required.
“The main conclusion is that sometimes, teams are just too big. Scaling down doesn’t always equate to reduced effectiveness,” Roza explained.
The Nuances of Hiring and Team Expansion
A significant portion of the conversation revolved around the complexities of the hiring process. Roza stressed the importance of structured hiring to combat biases, especially in startups where rapid growth often leads to hurried recruitment decisions.
Roza emphasized understanding the exact needs of a role to avoid overhiring. She pointed out the high cost of hiring mistakes, which can significantly impact a startup’s resources and momentum.
“Understanding what a role needs to deliver in the first three months is crucial, not just adding more people to scale the team,” said Roza.
Maintaining Organizational Values
An insightful part of the discussion focused on maintaining values amidst rapid growth. Notably, Roza characterized a pyramid approach as the best way for a company to support its values. Supporting values are practices, managing practices are behaviors, and on top of everything are interactions. So, for example, whereas values are the principles of the company, “they are worth absolutely nothing when we don’t have practices. Practices are the rhythm of organization. ” Roza said.
Similarly, the practices are the “daily, weekly, monthly, and quarterly actions” to bring “values to life,” whereas behaviors are the company’s “do’s and don’ts” that guide practices. That is, how a company decides what a value looks like in practice. The example Roza gives is deciding what the do’s and don’ts are for transparency in the company. It could mean sharing salary information with all employees, the CEO needing to disclose the company’s financial results, or even employees needing to share background information on all decisions they make. The point is that a company has defined exactly what the employee needs to understand what it means to act transparently.
Last but not least are interactions, the situations of relating between employees. The example Roza gives is of shouting. If we allow one co-worker to shout at another when they make a mistake, “if we don’t comment, or if we don’t give feedback to someone who is doing it, and we are leaders, that means that really it is a part of organizational culture.” Roza explained.
Strategic Planning and Avoiding Pitfalls
A common pitfall discussed was improper strategic planning in scaling teams. Roza highlighted the critical role of time management and realistic goal-setting in scaling. She pointed out that each growth phase transforms the company, necessitating reevaluating strategies and goals. “Your company is a new entity with every growth phase. It’s essential to revisit your strategies and manage your time effectively,” Roza advised.
Another common pitfall is equating company growth with employee growth on the roadmap. In other words, it isn’t a simple equation of adding more people to solve more problems isn’t a simple equation. Sometimes, instead of thinking that a company needs, for example, five new people, “maybe [it] just needs three and an additional tool.” That way, one will avoid layoffs when times are tough in the following months or years.
This episode with Roza Szafranek offers invaluable insights for anyone involved in scaling a startup. The discussion emphasizes the importance of structured hiring, maintaining organizational values, adaptive leadership, strategic planning, and balancing agility with deliberate decision-making. These insights provide a roadmap for startups and scale-ups to navigate the challenging but rewarding journey of scaling sensibly and sustainably.