097: Roland Siebelink - Scaling Up (Silicon Valley Style)

Are you thinking about how to grow your business with near and offshore staffing, but you're also wanting to make sure that it's reliable, cost effective and really well done? I think docsa talent is the way to go. Here's why. They don't just fill your jobs. They bring integrity, top talent and a people first approach that's hard to find. I've known the people at Doxa talent for over 20 years now and I say that you can count on them. I have. Talk to docs of talent and you won't be disappointed. Go to docsatant.com Bill G. Again, that's doxataalent.com Bill G. One more time. Doxatalent.com Bill G. Check it out today. Well, whether you are a tech company or you'd like to learn from tech companies, today's show's for you. We're going to look at Scaling up Silicon Valley style. And this show will be relevant not only for people who are tech companies, whether you're in Silicon Valley or around the world, but also from people who admire the methods of scaling up Silicon Valley style. We're going to be talking with another coach specialist in scaling up Silicon Valley style today. Hello and welcome again to the Scaling Up Business podcast. I'm your host, growth coach Bill Gallagher. On the phone with me today is a return guest of the show and a longtime friend, fellow coach who's taken an idea that we've talked about that we've been noodling on and he's got a new book out. So I want to welcome to the show today Roland Siebling. Roland, welcome.

Well, thank you Bill. So, so nice to be back.

Right. So if you are regular listeners of the show, you'll remember we talked about innovation versus scale and Roland and I both work in the Silicon Valley San Francisco Bay area. And so we end up well, whether here or actually getting called to tech companies all over the world because that background we end up working with companies that often move rapidly from startup to scale up.

Right.

So the tech companies have a particular trajectory that's unique and not common. So we're going to dive into that more. Roland's taken this work and he's written a book now Scaling Silicon Valley style that he's going to talk about and contrast that. This is passion and love and focuses entirely on this. So while we both do this, I think Roland does even more tech businesses than I do. We both have past running things like that. I'll let him tell a little bit of his story. So he's got considerable past in the tech world and so welcome to the show again, Roland.

Thank you so much, Bill. Pleasure to be here.

You're in San Francisco today?

I am, absolutely.

Yeah. You guys can hear that Roland has a little bit of an accent. Right. So he's from East. East Bay. Right. Very, very East Bay. If you keep going east 10 hours or so by air, you end up where Roland's exactly.

My background, I was born in the Netherlands and then I moved to Belgium for early college and early career where I was involved in the early Internet wave. Then moved to Switzerland for my MBA and just kind of second post Internet boom wave. And I've been in Silicon Valley since 2010.

That's awesome. So talk to us about kind of the, the evolution of your work in tech that led to scale up in this book. Bring us that sort of give us the long story.

Yeah, I've been actually in three subsequent scale ups myself. One in Belgium, one in Switzerland and one here in Silicon Valley. And I'm probably one of the few people that has actually lived through that journey three times in a row. Every time starting as employees more or less number 10 and then growing in a company that grew to thousand twelve hundred people in just a few years time. It's an amazing experience to see that happen time and time again and to kind of see the evolution of a company in fast forward mode where you just learn so much what makes a company effective, what are the errors that people make that will actually hurt the company just a year or two years down the road. Something you would never notice in a more traditional growth trajectory where these things might take 10 or 15 years and you wouldn't be around to see the results. Yeah. So the companies were always Internet related companies. In Belgium, it was the first broadband Internet for consumers that we launched back in 1996. Already 900% growth rates year after year. An amazing story. Then in Switzerland, it was basically cleaning up companies that were meant to go to IPO until the bubble burst and where they had 300 projects going, all for investors, where you had to kind of bring that down to what is actually generating revenue and profits and still scaling it of course, but focusing on the right things. And the third one was Rocket Fuel where I met you, Bill. Actually we worked on Rocket Fuel together, a very big digital advertising platform that also went from 10 to 1200 people in a number of years. Amazing IPO and then had some trouble after that.

We love to talk about clients when they're successful. It's also great to Talk about things that go differently and learn from them and adapt from them. And usually we anonymize the stories. So let's talk about then this book. So you've balanced innovation and scaling up. Bring us into the world of that, how scaling up fits in the Silicon Valley world. Paint a picture for us with this book.

Absolutely. So the overall scaling up framework, the book that's behind you, the Vern Harnisch and Gazelle's organization, you and I are both members there, you taught me a lot of it as well. And I really appreciate the rigor and the whole framework that is available to companies that are growing no matter what industry. A lot of that is applicable to Silicon Valley style companies as well, tech startups or tech scale ups, if you will. But what I did find is there are some things that are very, very different. For example, the search for product market fit in the beginning does apply to all companies, but it applies a lot more to tech companies that are really looking to disrupt an entire industry rather than just be a participant in it. For example, if you start a simple hotel, you just want to get a few gusts and you can be part of the market. Right. If you start a tech company, it's all about how do I find a market that I completely dominate over time, that I can disrupt, where I can actually take out the traditional players, which is a very different way of working. And of course you then need a leverage technology that makes your offer completely incontrovertible compared to offers that the traditional players have.

Pause there for one second.

Sure.

And here's the thing for folks to just notice. So even if you're not a tech company, there's an opportunity to think about if you do a pivot or you do a launch, you're going to enter a new segment, you see a market opportunity, you may want to treat that as a launch. And look at how could we be the best at something, how could we disrupt something even if you're not a traditional or a classic tech style company?

Absolutely, absolutely. And the more you think in those terms in all industries, of course, the more you could actually aspire to dominate an entire market over time. I would say that in tech in particular, because of that technological advantage, it's assumed that you're going to be having one winner at the end and that winner will dominate the entire market. When I say to you Office Software, you say Microsoft. When I say to you Corporate databases, you say Oracle. When I say to you CRM, you say Salesforce. All of these are examples of Companies that have ultimately won the entire industry and nobody else has a chance of competing against them because of this huge payoff at the end. You also have access to venture capital because you have a chance of owning an entire industry. Venture capitalists are interested in getting a piece of that pie. They know it's a small chance. So their portfolios are designed to lose nine out of 10 times and then hopefully have that one payoff that covers it all. But that's something that's very different from other industries because if you don't have that similar large payoff at the end, who would invest in actually giving you millions and millions upfront just to get a few points more market share?

Yeah, that's a very different thing about investors. Backers of any kind in this sector is that they're willing to have a lot of deals go south, fail as long as. And it's pretty disruptive if you're running one of those. And then they just pull out. They decide there's no hope for you or your team, which is where the pivot idea comes in. But they're all looking for that one that's going to actually. The unicorn, right?

Absolutely.

And that's not as much where we often focus.

It's not. And I think there is a lot of other work around. And Silicon Valley has gotten very good in the last 15 years at Understanding that running a startup is very, very different from running a traditional company. If you look back 20 years or so, a startup would be typically run out of Stanford, a few engine would have an idea and then very quickly they would hire an MBA to kind of complement these engineers with the traditional business education and they would expect that company to start running well. It was Steve Blank and Eric Ries that started realizing that these traditional MBA prescriptions really don't work for a company that is before product market fit, as they call it. They have to be far more agile. They have to keep looking for the right solution. They have to be able to pivot two, three, four times in a row. The stuff you learn in a traditional MBA is actually detrimental to that phase. You do not want to apply MBA knowledge in an early startup phase. And they developed a whole body of work, I would say now centered on the bible for early stage startups. Lean Startup by Eric Ries. That really gives a standard prescription for how do I bring a startup from an initial idea to this holy grail of products? Markets fits. Right? Which means I have a product. It's so appealing to people that they're willing to pay me for it and the market is big enough so that I can build a business out of it. And that's where it ends. That's where I saw this giant gap of and now what? Because there's then this assumption, well, by that time you can get your funding and you get your VCs and everybody can advise you. So everything will go well, right? Well, it doesn't.

It doesn't.

Yeah, it doesn't. I looked at the failure rate nine.

Times out of ten.

Yeah, absolutely. I looked at failure rates, Bill, for companies that have reached product market fit, have reached the series A, even as we call it here in Silicon Valley. And the failure rate in raising subsequent series is for every series, it's on average 54%. So you look at them, series B, series C, Series D, and before you know it, you're actually at a success rate of just 1%. Even out of these companies that did reach that initial product market fit. And that's where I felt they need a manual. Just like we wrote or like Eric Ries and Steve Blank wrote for that early stage, they now need a manual for what happens after product market fits. And that's what I wanted to write.

So what's in it? Tell us about this story.

What's in it is kind of a roadmap. A roadmap that tries to link the different series that you raise with a different competence you're building up at every stage. And we kind of jokingly compared this roadmap to a college education. Why? Because we saw a lot of scale ups that have an internal fight going on, Bill, between the startup people, the founders and then the corporate people that they hire. And it's a constant battle over, oh, we need to remain like a startup. No, no, no, we need to become professional. The only way I found to bring these people together is to say, look, you're neither a startup nor are you an incumbent corporation. You're something in the middle. And it's different. It's a different animal. It's a scale up. That's something I learned from Vernon, from you as well, that you know that middle, the Gazelle's phase as we call it, is completely different from that early phase and from the last phase. It's a third way. Right?

So just something I notice here, and I don't know how much you covered or not in the book, but I noticed that in addition to scaling up the organization, right, we've got to scale up the leader and the leader's style and all the leaders styles have to evolve and maybe Even their roles evolve. So a lot of times in this world we think about the professional managers come in and they kick out the founder, CEO and for sure there's examples you can come up where that's valuable. But many times those founders, they change their role. Maybe they're head of R and D or maybe they provide some other special project type work while somebody else who has a passion for running larger teams or scaling the ops or that kind of thing comes in. But I think in spite of any specific sort of chess moves like that, there is also just the evolution of your style. Like learning to influence and interact with increasing number of people is when you start with a core team of 10. Let's say my son's got a startup right now and he's got six guys, right? Or guys and gals. And they're, you know, at some point if they're successful, they'll have a lot more folks in the team. But if you go from five or six and you can share a pizza and have a meeting to now, I've got several thousand people. The way you handle your message and your culture and all of that kind of thing has to evolve. And if you've put in the right practice in the beginning, it's a lot easier, right?

It is. And I also want to contrast what you just said with it's not just your style has to evolve. Your style almost has to diametrically change because the stuff you learned that made you successful in the startup phase is completely detrimental to you in the scale up phase. Just like, and that's where the analogy with the college education comes from. You may still be young when you're in college, but if you keep behaving like a school kid, you're not going to be very successful. Right. And at the same time, you may be an adult, but if you start behaving in college like a 50 year old guy, like one of us, you're also not going to be very successful. You still have to find that middle way of yes, I'm learning new things, I'm open to new experiences and at the same time I need to start honing down on what I'm really good at. And that analogy I think is very apt to that phase of a scale up.

Well, this is the thing we don't always see is we don't always see people willing to focus in. So the scale up implies a certain amount of focus, right?

Absolutely. And that's one example, Bill, of where I see things people learn in that startup phase becoming completely detrimental to Them in the startup phase, they learn to pivot and pivot and pivot until they become successful. Companies that keep doing that after product market fit start confusing the entire organization. When you have a ship of 100 people, you can't keep changing course every week. Nobody was telling these founders that that prescription book really has to change as you become a scale up. You're right that often, traditionally especially they have moved the founder a little bit aside and brought in a professional CEO. I see in Silicon Valley right now that that prescription is getting less and less traction. People have started to realize how important that charisma that the founder has is for the overall well being of the company. And that many of these second time CEOs that come in SIMP do not gel the workforce as much as the original CEO did. The only way you can handle it that way, of course, is if you can, in your words, scale that CEO, that founder and say now can you actually move to that new phase, that new book of prescriptions, the new behavior, if you will, that is apt for this scale up phase rather than for what made you successful in the startup phase. And that requires a lot of reinvention.

So talk to us then. Actually, why don't you use. I know you've got some great stories that illustrate this and maybe you'd like to share one or two of those with us that bring it to life.

Absolutely. So when we divide up the scale up phase in the American traditional way of thinking of freshmen, sophomores, juniors and seniors, we have attached to each of these phases. One competence people need to master to move to that next level. For freshmen, we say the key thing to master is distribution. You have your product, it's attractive, customers are willing to pay for it. That's what made you scale up in the first place. Now how do you set up efficient distribution so that customers don't have to find you, you find them. A great example from longer ago of course is Hotmail. When they were a freshman scale up and they had this amazing free email product and they simply added that signature line, get your own free hotmail.com address here. Which led to explosive viral distribution. Probably one of the first examples of true virality. Zero cost, which was completely appropriate for a product that would ultimately be advertising supported. You want to be distributing at extremely low cost in that sense. Right. If we move to the sophomore phase, that would mean you have mastered your distribution and now what you have to master, it's what I call deepening. It's not trying to be serving the superficial needs of lots and lots of different segments. But to hone in on one or two segments that you say, that is where we really add the most value. Right. And that deepening. One example was HubSpot, very famous other marketing company. For many years they were focusing on actually just two segments, Ollie the owner and Mary the marketer. Ollie the owner being a small business owner, Mary the marketer, typically being in an agency, helping several clients work with these mailing lists and interactive email campaigns. Even a company at that level, and I think they were at hundreds of employees at that stage, had to decide that they couldn't serve their customers well enough by keeping focused on these two segments at the same time. As you deepen and as you start understanding the needs of your customers better, you start understanding there's a trade off. If I want to go deep enough to truly serve this experience well, I cannot also keep serving that other segment. HubSpot famously dropped only the owner and said, no, our target focus is now only marry the marketer. Now the first result of that was that there was a nice hole in the market for new players like ActiveCampaign and others to jump in because they said, oh, only the owner is not being served anymore, so that's an easy opportunity. And they were successful at that. But more importantly, HubSpot also was far more successful by focusing all their efforts on marry the marketer. And their growth really went into the mainstream market. They've crossed that famous chasm that Jeffrey Moore always talked about just by saying, this is our target group, here's where we have the most success and we're not trying to be distracted by all these other target groups that also look like great shiny objects.

Yeah. So deepening and dominating. I see this in companies of a couple hundred to even a couple thousand employees that we work with. And I see them, you get cocky. Right. Maybe you're even at a couple hundred million dollars in revenue and then you start to think you can tackle four different market segments and it's really delusional because you find yourself not doing. Even if you don't have, if you're not competing with Google or somebody like that, a multi billion dollar company, you still are unlikely to be that effective chasing down too many different segments and priorities at that stage. Right?

Absolutely. We were able to make that a little bit clearer by also linking our roadmap to that same customer adoption curve. Right. So the famous marketing curve, where it starts with the technology enthusiasts, then with the early adopters or visionary business users, then there's that famous chasm that we talked about. And only then do you start entering the mainstream market. Now what happens with a lot of tech scale ups is that they become very successful with these early adopters. And these by their nature are people that are happy to take an 80% product and adapt to their needs because they always want to be first and they want to grab the opportunity. Now these people come to them from all kinds of verticals, all kinds of segments. So the tech scale up naturally things, wow, all this opportunity we have to serve all of that, right? And then guess what, there's only so many visionary customers. And second, they always like the newest stuff. So how long do they stay with you? Maybe a year. And then there's some other shiny object that they'll pursue, right? So you see those people fleeing out the door and you haven't made that jump to the mainstream market because they don't accept that 80% product. You need to have the 100% product for them. You need to have the support, the training, the distribution, the partners, the system integrators. If you have an enterprise technology. And that is something that a lot of people never get to because they keep broadening their appeal rather than deepening it. That's what we mean with Mastering Deepening.

That's brilliantly told. And then what happens after that? We master, we deepen, and then we're done.

Well, this book started to gather so much material that we decided to publish it in two volumes. So actually the first volume just came out this month and the next one's planned for next year. However, it does have a bit of a summary of what comes after. Of course, it's more than a teaser. It gives a little bit more information of the rest of the roadmap. Once you've mastered the deepening, you become a junior scale up. And in the junior phase, you can really start mastering disruption, which was always the goal of a tech scale up. It means kind of start playing the chess game about now, okay, which a beachhead can I conquer one at a time? And where can I get 50% or more market share, like really dominating that part of the chessboard? And then from there, how can I move to the next pieces on the chessboard and really start expanding my advantages across all these niches, all these geographical markets, all these target groups that will be open to, to my new offering, my disruptive offering.

So in the first stage, right, so in the first thing, where we're figuring out some customers, we're just, we're getting some product and somebody using it, that's the early stage startup phase. The next two things that we're dealing with in the scale up world are distribution is the first one. And then deepening like that's the focus area where we start to find some stuff. You can see and imagine an Uber as well. Through the range of this, they get a little concept going, then they start to find some connection with. Then there's a focus on a particular category of user and then comes. And what you'll go into in the next book is the disruptive phase where they're literally. I mean in the beginning it was a few people that used apps like Uber and Lyft. Lyft. And then. But that was long before they were putting taxis out of business, right?

Oh, absolutely.

I can't remember the last time I took a taxi. I can't remember the last time I rented a car. Well, actually I can't remember renting a car. But. But I mean I used to be like every week picking up a Hertz car and taking taxis everywhere. I never take taxis anymore and very, very rarely do I rent a car. I just don't want to be bothered with driving.

I had the same experience, Bill, as I booked my ticket for our conference coming up in New Orleans.

Yes.

Where the airline basically offered deals on rental cars. And I'm like, wow, it's been ages since I actually booked a rental car after booking a flight. You know, it's why you just don't need them anymore.

Well, even the regular places I go to, like I work regularly in Hawaii, as many people know, know. And. But if you add the hotel parking plus the rental car fee or whatever, look, I could rack up a lot of Uber costs before Uber or Lyft or, you know, whatever. But, but that phase, right, where you're truly disrupting something is, is well beyond the initial scale up. And, and then of course you go on to what we don't tend to deal with, which is really the dominant player. And then, then there's defensive kinds of plays that you do, which is a very different game than the scale up world.

It is. But nevertheless we actually linked the mastering defense skill to the senior scale up year. Now maybe a little bit longer than a year, of course, but that's companies that are in like series D, series E territory typically. And we kind of did it as a contrast with what we see most founders do. Namely they start duplicating their approaches far too early in our mind. So a little bit building on what you just said, like, oh, I have this good traction. I can basically conquer the entire world in one go. Right. So you start scale up, they start developing different business lines, turn them into business units, then across geographies, across channels, and before you know it, they have so much complexity that their big competitive advantage to the incumbent, in other words, the speed, the agility is gone before they know it. Right. And so our advice usually is to wait longer than the founder would like with duplicating these dominant markets that they want to play in. First, build up the distribution deepening, then disrupt the market and build a mode around it so that you can actually defend it. And only at that time, you actually start investing tons of resources in your second dominant market. And that's actually what you see a company like Salesforce or Oracle at that stage do. Google as well. Right. They have the highly profitable core business and that is now funding ventures into all these other areas that they want to add to their stack.

So what I know you've got a special offer, kind of a limited time offer for our listeners. Tell us about that and we'll tell people where to go and we'll put of course, the link to the book and all that in the show notes.

Yeah, absolutely. So, I mean, for those of you listeners that are listening to this, as the podcast comes out, like within a week of it airing, there's a giveaway on Amazon that, you know, for those of you that are lucky enough, there's a draw basically of people getting a free book of this. So all you do is you go to scalingsiliconvalleystyle.com all one word, and there's a podcast giveaway section and all you need to do is register there and you can get your book for free if you're lucky. For those of you that are listening to this a little bit later, of course this is a podcast, so we're gonna have lots of later listeners. There's free chapters available on that same website, scalingsiliconvalleystyle.com and you can download it there. And that is a good start. We'll see if we can add a discount code to that free chapter as well if you want to get the full book ultimately.

Well, I'm really excited to help you promote the book. I hope folks get a lot of value from it. I hope it's super successful for you and it zooms up rapidly the bestseller list. So we'll have this out. I know we're coordinating the schedule with our producer and so on. So I'm really grateful that you came on and talked about the show. The link is Scaling Silicon Valley Style. And of course, if you want podcasts like this every week and blog posts and tips and things like that and tools for scaling any business, you'll find us@scalingupbusiness.com thanks again for listening. Thanks for being on the show, Roland.

Absolutely Bill. It was an absolute pleasure. Thank you.

Special thanks again to our original growth guru, Verne Harnish. Our show producer is Nio Bade. Audio Productions by podfly Productions. Audio editing is done by Albert Burge. Show notes are compiled by Ein Codina with proofreading by Tim McGowan. If you got some value out of the show today, please share it with somebody else and let us know what parts you loved. We love hearing from you. Thanks again for listening and keep scaling up. Are you ready to turn your goals into daily wins? You should check out our Scoreboard software. Powered by Elan Align, it's the official software for scaling up. With Scoreboard, you'll get an AI driven coach for priorities and KPIs and it'll help keep your team focused on what matters most. With Align, you can track your goals in real time and you'll even see results on the go. With their mobile app you can rest easy knowing that Align has world class onboarding and support to set your team up for success. This is really more than just software, it's what I actually use to manage growth both in our scaling up client teams. Unlock clarity and results with Scoreboard by Aligned. To try it now, go to aligntoday.com Bill G One more time aligntoday.com Bill G that's aligntoday.com Bill G Check it out and try it now.