No doubt, it’s been a strange year and a bad one in almost every way. But amidst all the awfulness and uncertainty, for the most part the digital economy has flourished.
Netflix. Peleton. Zoom. PayPal. Amazon. These companies have become integral to our new socially-distanced lives, causing their stocks to surge and their teams to grow.
They’re the so-called ‘big winners’ of 2020, but a lot of other companies are being swept along on the same digital-first tailwind. Are these other companies growing too? And more importantly — should they be?
With so much unknown, we turned to the experts. To grow or not to grow in 2021? Here’s what they told us.
First ask yourself: ‘Have I found my ideal customer?’
Scope creep is real. And it’s one of the top reasons that a company will choose to scale before it actually makes sense to. Pandemic or not, ask yourself: Are the clients I’m taking or the products I’m creating serving my business’s ultimate goals?
If the answer is no, it’s probably time to deal with that. Then scale.
Jessica Davidoff is Founder and CEO of Sprezzatura, a business and production management company. It’s Jessica’s job to help startups at every stage bring their products to market — and she knows a lot about scope creep, some of it first-hand.
“We definitely were way too broad in who we worked with earlier on, which is a common mistake of a lot of entrepreneurs… I think the more specific you can be at saying ‘we solve this problem, and this is how, and this is our pricing’ the easier the sell is going to be. Not doing that puts you down paths that distract you, and then suddenly you have this website that does all these things…I want to write myself a note for when I start my next company: ‘Just say no.’ Because it makes it so much easier to scale when you’re just doing your one thing really, really well.”
The landscape of venture capital has changed — assess accordingly.
There’s an interesting dichotomy happening right now in venture capital. While certain larger, more established companies are bringing in massive late-series rounds, other companies are struggling to get any private money at all.
Serial CFO and Attivo Partners founder Greg Capitolo talked to us about how he’s advising younger, perhaps less-established companies on what today’s funding landscape means for their growth plans.
Greg told us:
“As we went into the COVID downturn, we spent a lot of time with our entrepreneurs redoing and remodeling their financial plans. Asking: How can we extend that runway longer? What are those investments that we have to delay? What are those changes we need to make to the existing resources?
The second thing we told them was: It’s a changed world. We’ve spoken with a number of VCs and they tell us they’re looking at their existing portfolio and making sure that the companies they believe in will be successful and well-funded. And so there’s not as much new investment going on, we believe, as there has been in the past. I think that’s hard for entrepreneurs today who, if they had been thinking about their business in late 2019, had a very different idea of what would be available to them venture-wise.”
Whether or not you should grow depends on the product or service you offer.
Tech companies aren’t the only ones growing. Retail is picking up too, and digitally-savvy merchandizers have an opportunity to get ahead, and yes, to grow.
Jessica Davidoff works with a lot of these digitally-focussed consumer goods companies. In examining the market post-COVID-19, she told us:
“I think people have definitely been thinking a lot more about the way that they work and about their homes more broadly. So the ideas that we’re seeing are very much in line with what people are doing now that they can’t go out. On the product side and on the industry side, that’s things for the home, cooking and food, items for kids and pets, and anything that makes your home more beautiful.”
Hidden benefit: COVID-19 has expanded the talent pool.
If you’re one of the companies outlined above — you know who your customer is, your industry is in-demand, you’re growing — maybe you should be hiring. And hiring might just be easier for you now than it was pre-2020. Here’s why.
As remote office work becomes the norm, many of the factors that would have limited your access to top talent have dissolved. And that includes geographic and national boundaries.
We spoke to Ilya Brotzky, the founder & CEO of VanHack, which runs one of the largest international recruiting platforms out there, about how his clients’ attitudes toward remote work have changed in the last year.
Ilya told us:
“It’s been a double-edged sword. We’ve had a lot of companies that just say: ‘Hey, you know what, we don’t even want to think about international hiring right now! We just want to hire locals. Because of COVID, it’s too many moving parts.’
But more and more companies are saying the opposite. They’re saying: ‘Okay. We tried the remote thing for a few months. It’s great! Let’s hire people. We can have them start remotely. If they want to relocate, we’ll provide them that as a perk.’ Giving people the flexibility to work from anywhere is in my opinion a huge lever that you can pull when trying to compete for top talent.”
For reference — here’s who is hiring right now.
So who is hiring right now?
To answer that question, we checked in with Hugh Norton-Smith. Hugh is a co-founder and executive recruiter at Intersection Growth Partners, where he spends his days transitioning talent between legacy financial institutions and high-growth fintech startups and vice-versa.
Like many, Hugh believes that the pandemic will accelerate tech adoption broadly, and he’s seeing that trend born out in finance, where legacy financial institutions are expanding their tech teams, and where fintech startups are continuing to grow, in part by hiring seasoned finance experts from those very same institutions.
Not ready to hire? That’s ok. You’ve got other options.
According to Jess Mah, the founder and CEO of accounting startup inDinero, one of the top trends of 2020 is the rapid growth of outsourcing in tech.
“A lot of companies are moving towards more extreme levels of outsourcing. What that means is that before COVID you might think: ‘I might outsource my accounting. I might outsource my legal.’ But now people are moving towards having variable workforces all around. Even with product managers, software engineers, marketing people — the roles that you tend to think of as full-time and in-house — those are being outsourced too.”
You’ll figure it out.
Being an entrepreneur is about meeting the moment, right? Well this is a moment — a big, thorny one. But you’ll figure it out, we know it, and we’re here to help.
The advice above was drawn from recorded conversations with Rocketplace service providers on our new podcast The Startup Stack. If you found this article helpful, you might just give it a listen.