Scaling a Hypergrowth Enterprise – Part 1 (People)

Each January for the past 5 years, I have had the privilege of presenting on “Scaling a Fast Growth Enterprise” to a group of MBA students who attend a 3-day “Start Up Bootcamp” run by John May of New Vantage Group and Tim Meyers of Capital Trust Ventures.  Students come from all over the country including UVA Darden, UMD Smith, U Michigan, Duke Fuqua, and others.

This Post is the first of a series of posts on the topic of scaling a hypergrowth company.  At CyberRep, we were able to grow our top line revenue from $550,000 to $22.5 million in 5 years. We then grew from $22.5 million to over $80 million in the subsequent 4 years. In retrospect, there were FIVE KEY ELEMENTS that contributed to our ability to grow so rapidly while maintaining high degrees of both client satisfaction and retention, as well as employee morale and retention.

These 5 elements are:  PeopleCultureScalable CustomersProcess, and Capital.  In these next few posts, I will explain in more detail my thoughts on each of these key elements to scaling a hypergrowth enterprise.

PEOPLE

Everything starts with people, no matter what kind of business you are in. Success begins and ends with getting the right people on Jim Collins’ proverbial bus.

Hiring – We look for 4 key characteristics in our people:  Integrity, Passion, Energy, and Execution capability.  In short, we want players who have high integrity, love their work (because passion is authentic and infectious), have huge reserves of energy (because all hypergrowth organizations require personal and group energy), and folks who can get the job done (critical for thrilling clients).

2 more important traits – flexibilty and resourcefulness.  We need staff who are flexible because plans change in a highly dynamic environment.  Further, since capital and human resources tend to be scarce in organizations which are stretched thin to support rapid growth, we need people who are resourceful and can do more with less.

Staff for the present but keep the future in mind – Every small and growing organization wants to hire the big guns, the heavy hitters whom you may not need right now, but whom you will surely need down the road.  However, you need to focus on the present tasks at hand, so it’s more important to get the best people for the job NOW, than it is to hire for that “future” position prematurely.  Predicting growth is very difficult, so staffing plans are seldom at an “optimal” level.  You will always be overstaffed or understaffed, depending on where your company is in its growth curve.  The key is to make sure you take care of today’s business while keeping in mind the future potential for personal growth of your new hires.  Not everyone will keep growing as the company grows, but that does not mean these folks can’t make important contributions.

Can your people adapt as the company grows?  Every team consists of diverse groups of generalists as well as specialists.  In early stage companies, there is a greater need for utility players, a.k.a. Generalists.  As companies grow, they start to need Specialists to fill specific roles.  The faster they grow, the greater the need for specialty positions.  Can your generalists make the transition?  Do they have the personality, ego sublimation, people skills, and technical expertise to transition, if necessary?  These are key questions which leaders face when hiring and developing their talent in hypergrowth companies.  In my experience, most generalists can’t make this difficult transition and are often left behind as a company grows.  I think it’s important for top leaders of hypergrowth companies to be cognizant of this transition risk and try to mitigate it by providing training and development opportunities to their A Players.

In the coming days, I will talk about the other 4 elements in scaling a hypergrowth enterprise:  Culture, Scalable Customers, Process and Capital.

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58 thoughts on “Scaling a Hypergrowth Enterprise – Part 1 (People)

  1. Tien, great post. I saw you quoted in the Business Journal about HUBZone program. We have been a certified HUBZone firm since 1999 and have had challenges in maintianing the 35% HUBZone employee target and hiring people who demonstrate the qualities you have described. Can you share any thoughts on how you are meeting this challenge?

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    • Hi David, thanks for reading and commenting. The number one challenge for all companies, HUBZone or not, is to recruit and retain top talent. We’ve made this a high priority for everyone in the company, all the way to our top leaders. We employ a very vigorous screening and recruiting process, and are essentially in perpetual hiring/recruiting mode. This takes time, energy, and costs more, but it’s all worth it in the end. Good luck to you guys!!

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  2. Tien – GREAT Post! I have a bit of reading tonight, as I’m quite behind (ie – expect comments on all your posts from me in the next 24 hours!). Your energy and real life experience are 110% visible in your writing. Thank you for sharing!

    I don’t know if you know this or not, but I’m not a college graduate and don’t pack the fancy degree from a well-know university, but humbly attended MC (now serve on their Board of Governors) & R.H. Smith before deciding to focus on the application of business. I think, for me, that was the right move, having run a small (0 – 50 employee comp. growth in 2 years), but profitable company previously and seeing an immediate opportunity for what I saw as a very scalable company at the time….
    Tying this to your post….
    All the comments on pedigree vs. intelligence; I believe if you find someone who has tangible business experience with a drive for education (self or otherwise – degree or no), and a fire under their a#* you will find a person capable of filling the roll of generalist, leading specialist. I say this because I firmly believe we should have people working for us, in any leadership role, who are, or have the potential to, surpass us in specific areas, if not entirely, which would be the greatest compliment to any leader.

    Thank again for sharing. I’m gonna go on to the next post right now!

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    • Thanks Masoud. I think we tend to get too hung up on “pedigree.” I bet some college drop-out billionaire entrepreneurs like Steve Jobs, Bill Gates, and Larry Ellison care less about “pedigree” than performance. Thanks for reading and commenting. Great thoughts!

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  3. I’d just add to the dialogue that what Tien lists are performance skills as much or more than they are traits – at least in terms of finding people who actually can do the work and do it in the way it is intended within a particular organization. In the best recruitment and selection systems, we can include testing as a component which looks principally at traits and potential. Without a well structured and executed behavior-based interview and selection process, it’s just spit-balling potential.

    One of the keys to repeatable and sustainable success within and across organizations is moving beyond the sense that we’ll know it when we see it – and more to the point with entrepreneurs – that those we entrust with helping us build and grow our companies will know and see the same things. Again, I can’t stress enough that what we’re looking for in terms of fit are the SKILLS/APPLIED NATURE of success behaviors such as commitment, tolerance of ambiguity, flexibility, and leadership without formal authority…

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    • Thanks for the Comment, Jeff. Testing is very important in the recruitment process. We found it to be instrumental in increasing associate satisfaction, while reducing turnover. We got a very high ROI on our testing and recruitment activities. What kinds of behavior-based interviewing and selection process would you recommend for a services business? I also like your success behavior of “tolerance of ambiguity” which is very important not just for entrepreneurs, but also for all business leaders, including IT staff and finance and accounting folks. Our best leaders have the ability to balance right brain and left brain, and tolerance of ambiguity gives them the ability to plan, execute, and iterate more quickly and flexibly. Great point.

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  4. Tien: Enjoyed your first post and look forward to future posts not only for insights about the commercial world (our clients), but also for application to the professional world (legal) in which I travel. We are not in a hyper-growth industry, but the business is changing in possibly dramatic ways. And people are absolutely key to our success. Agree with you and comments that intelligence is important but gets you nowhere unless you are a “doer” and have the other qualities (flexibility, passion, energy, resourcefulness) that make for successful representation of clients.

    Great start.

    Graeme

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    • Thanks much Graeme. Hope all is well with you. While I am not an expert in the legal field, and while I agree the legal industry is not, by itself, a hypergrowth industry, I would think that law firms could potentially grow very rapidly given certain market conditions and strategies employed. For example, by focusing on specific hypergrowth industries and rapidly growing companies within those spaces, I bet any service provider could get into hypergrowth mode. Of course, the devil’s in the execution of your plan, and the people doing the work. You are in a people-intensive business, and you are absolutely right in that Zuckerman’s success is inevitably tied to the quality of your talent. Thanks again for the Comment!

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  5. Thank you very much for the honor you have bestowed on me by requesting a reviw of your Blog.
    I shall take some time to review your blog and get back to you soon.
    May God Bless you and your family.
    301 424 0090 (personal Phone)

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  6. Love this part the most …. “Everything starts with people, no matter what kind of business you are in. Success begins and ends with getting the right people…” As you know, this is what I do for a living! I find the technical people that make companies a success. Thanks for sharing Tien!

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    • This concept has become a cliche, and too many organizations pay lip service to the “people” piece of building a company. But it’s the best companies who really embrace and invest in their talent. It begins with recruiting, which is your area of expertise, but it carries through to onboarding, training, motivation, development and the review of the team members, also. Thanks for the post!

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  7. Hi Tien,

    Thanks for including me on your posts. I very much enjoyed the first one and will continue reading your entries as you post them. Interestingly, we also find that once you assess for appropriate execution capability and energy, the rest comes down to culture and fit. In your case, I believe that is expressed by integrity, passion, flexibility, and resourcefulness.

    I look forward to reading your other posts.

    My best,
    Tom

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  8. Pingback: Scaling a Hypergrowth Enterprise – Part 3 | WINNING IDEAS (Tien Wong's Blog)

  9. Pingback: Scaling a Hypergrowth Enterprise – Part 2 | WINNING IDEAS (Tien Wong's Blog)

  10. Tien – thanks for letting me know about the blog – just subscribed. This is a relevant tie-in to the MBA program and is great advice for my future entreprenurial pursuits. Best – Rich

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  11. A comment related to intelligence – with a twist to address pedigree. In my view you should not be confused with pedigree as a measure of intelligence — e.g. worry much about if/where someone went to college or grad school. A personal choice I made when in the UK was to hire the “less intelligent” guy that went to University of Kent over a Cambridge grad. In interviewing them both and looking at their history, the former got things done and thrilled clients (as Tien blogged is essential and with which I wholly agree) and the latter was very cerebral but seemed to have accomplished very little. I later ran into someone that later hired the Cambridge grad much to his chagrin. My hire worked out great. I actually have no idea if the Cambridge guy was more intelligent than the University of Kent grad or if so, perhaps it was on a standard measure that was useless for my business needs.

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    • Thanks for the color Dan! Good example. The need for “do-ers” in hypergrowth organizations is paramount. Thinkers are also important, but when you are small and trying to grab market share, you’ve got to get things done!

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  12. Tien,
    Your passion for the business and the fact that you truly did focus on those 5 key elements made working at CyberRep the most rewarding experience of my career. It was a wild ride with exponential company and personal growth right to the very end. Thank you for the opportunity to be part of the success and for sharing your knowledge via your new blog. Love it!
    -Nancy

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    • Nancy, you made my day with this comment. Wow! Thanks!! Our success was because of A Players like you, plain and simple, and we are very grateful and appreciative of everything you did. Keep up the great job!

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  13. Tien, I like your posting, and agree it is necessary to have those components in order to grow a firm rapidly. When hiring, or retaining employees, I also favor those that can think outside the box and risk the embarrassment of being shot down for weird innovative ideas. One part I think you should include is the company’s commitment to employees and open recognition of positive efforts. With positive enforcement and their belief we are one entity, they perform much better and donate extra work hours both. Of course I am talking about the salaried employees, but I believe the thrust of the company comes from good leadership direction, then the salaried level executing the plan. Hourly employees tend to be box movers rather than innovators and force multipliers.

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    • Thanks for the comment, Mike. You are absolutely right about fostering a winning culture of growth, which means encouraging experimentation and calculated risk taking in order to innovate and do things better. My next post will address Culture, which is super important in hypergrowth companies. I hope things are going well with you and I am sure you are making some great contributions at Filetek. Thanks again!

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  14. Tien. As ususal, you nailed it. Your insights provide common sense rules of engagement for entrepreneurs “of any age”. I am particularly on board with ‘hiring for today with an eye on the future’. Looking forward to reading more.

    Mike.

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  15. Tien,
    Totally agree with you. Hiring the right mix of personnel is the key to grow and creating the competitive advantage.

    Best,
    Caesar

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    • Thank you Caesar. You are very right about having the right mix of personnel. It’s a real art, being able to assess talent and personality and to assemble the various components of the team together in a manner that maximizes performance.

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  16. Tien, great “blog kickoff”! Love the “Passion” focus … As you know, I recruit for a living, but when asked to help executives who are considering a career change, I suggest they first draw a 3-leaf clover … one of the 3 leafs is something I call “rrrrrPa” (pronounced “arpa”). Very simply, “What are you really, really, really, really, really PASSIONATE about?” This passion will “eeeek” out of your pores in an interview, on the job, and easily become contagious to your team, your peers, and most importantly, your customers.

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    • Thanks for the comment Noel. I love how you try and get to the essence of what drives someone. I’m curious as to the other 2 leafs in your 3-leaf clover. What are they? The one thing great people and great leaders of companies have is PASSION. It’s the fuel that drives one to work 80 hour weeks for years at a time, and to get up every morning dying to do something amazing and special that day. Passionate people are the ones who change the world. I really believe that.

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  17. Tien,

    This is great stuff. I know that you have a wealth of knowlegde and ideas about entrepreneurship in your head. Sharing that is both generous and wise. I look forward to reading this regularly.

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  18. Tien – Great post, and I look forward to reading the continuation.

    One suggestion – intelligence was missing from your list of attributes. It’s related to flexibility and resourcefulness perhaps, but those don’t fully capture it. I’ve found intelligence to be a key factor in hiring, especially at the executive level. As you point out, market conditions change and unexpected developments happen; if you have a team that sees things others don’t, your odds of successfully clearing the hurdles are much higher.

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    • Thanks very much, Chris. I know you are the expert on recruiting. Intelligence is very important, but we valued the other traits more. I’d rather hire a passionate and flexible executor who is “pretty smart” than a genius who has limited passion and ability to get things done. We didn’t ignore intelligence, however. In fact, we did perform a PET (professional employment test) on all of our recruits. PET is like a mini aptitude test and we had minimum score requirements. As you know, many companies who hire only the brightest talent without regard to EQ, are at a great disadvantage these days. I can think of many tech companies who put too much of a premium on intelligence. Keep your comments coming!

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