By August 11, 2018

#TractionConf speakers say scaling up requires thinking small

traction conf

“We had a lot of failures,” Dave Pickles, founder and CTO of digital advertising company The Trade Desk, announced with a laugh from the stage of Vancouver’s Traction conference.

“Don’t think of disruption as always blanket good. You can create a lot of damage if you’re not thinking deeply about what the implications for society are. We should all play our part in doing that.”
 

An annual event that brings Bay Area luminaries north to discuss their hints for honing a business, Traction this year tackled one of the toughest topics for a soon-to-be blossoming company: how to scale. With a stacked selection of speakers from Bumble, Reddit, Intercom, Grammarly, Github, and Google, the lineup offered viewpoints from organizations of all stripes, from overnight success stories to slow-burning behemoths. Each touching on how they were able to take their companies from simple idea to valuations of more than $500 million, experts in IPOs, acquisitions, and exits shared their stories on the best way to push a startup to the next stage. As Pickles pointed out, it’s often a difficult road.

“When I came into this, I said, ‘We’re going to make things perform better’. I knew that if we went and extracted a margin, we’d eat all that performance, so there was a ceiling on how much margin we could cut. I thought I could work out where that was, so I had models that said, ‘Here’s how well this system has to perform if we want to do it the way we want to do it.’ We had to hit that number, and that was super hard.

“[My colleague] did a good job of pushing me to throw my stuff into the garbage,” he continued. “As the CTO, you can get locked into trying to go to that place. To have someone say, ‘You have to think about things differently’ – that was super helpful.”

Pickles’ discussion, the first talk of the day, set the tone for the conference. While scaling was the theme of the event, it was rarely tackled directly. Instead, each speaker emphasized the roles that well-worn business principles play in company development – be it product, employees, or customers – and invited the audience to reconsider those philosophies in a new light.

To scale up, each suggested, it’s important to think small.

Perfecting new hires

For Pickles and The Trade Desk, the company’s biggest breakthrough came from a laser-focus on culture. Rather than follow the typical tech mantra of speed-at-all-costs, the CTO suggested that–paradoxically–moving slowly on the hiring process allowed them to scale quicker. By making sure they onboarded the right people, the company minimized churn, and cut down the time necessary to train new employees.

“One of the reasons we started the company was because we wanted to create a servant culture,” he said. “We wanted to make a culture of contribution and accountability–basically a place where people who would otherwise be running their own company could come in and feel at home.

“We’re based in Ventura, California,” he continued. “It’s a pretty little surf town, and it’s basically us and Patagonia who are employers. I think that Silicon Valley people tend to have a lot of short tenures. When you’re more off the grid, you end up with longer stays. That’s important to me, because what we do is super esoteric, and it takes a long time to train people. We have bases over the world, though. Once, one of my guys was moving to Boulder, and he was like, ‘What does this mean for my career?’ And we said, ‘It means we have a Boulder office now.’”

Making the best product

Contrary to assumptions, however, scaling up is not as simple as hiring more people. A vital part of growing a business, suggested Karen Peacock, COO of customer messaging platform Intercom, is to perfect a unique product. Using a cautionary tale to illustrate her point, she highlighted the importance of honing in on solving the right issue for users.

In a previous role as product manager at QuickBooks–a company that produces software for small business accounting–Peacock wanted to better the organization’s offerings. She and her team spent time with customers, and asked what they liked most about the product. When inquiring about the one feature that they wished QuickBooks had, users suggested that they needed better ways to deal with budgeting. Duly, the company obliged.

“We built a rapid prototype, and brought customers in,” she said. “We iterated with them, we polished it, and we got it to a point where they looked at the product and said, ‘That’s a good budgeting tool’. We said, ‘Fantastic. Ship it.’

“You know what happened?’ she continued. ‘Nobody bought it. And the reason why nobody bought it is because budgeting is tomorrow’s problem for a small business owner. If you actually sit down with them, they will never work on planning their budget. It’s on their to-do list, to do tomorrow. Their actual problem was that they weren’t able to pay their bills […] They’ll sit there with a stack and go through them, and sort by which ones they have to pay now, and which ones are okay if they’re a little late on.

“We made a classic mistake – we listened to what our customers said,” she concluded. “My first piece of advice for finding a product market fit is to watch what people do, not what they say.”

Finding new users

After locking down the right team and perfecting the best product, a company needs to find new audiences in order to scale, the speakers said. For dating app Bumble, that expansion came rapidly.

Early on in the product’s development, the founders realized that the best way to improve people’s dating experience was not to offer an improved UX or UI, but rather to build experiences with women in mind. Typically, users of dating apps skew strongly male – a factor that limits engagement with the platform. Coming up with the idea that women should make the first move, Bumble instead built its brand around the USP of female empowerment.

“This was a really big opportunity to think about how we can create a place for women to feel confident,” said Sarah Jones Simmer, Bumble’s COO. “Because they’re orchestrating the conversation, they can feel safe. We built a community that’s invested in those values – we’ve built a culture of kindness and accountability – and now people come to expect that when they engage with the Bumble app.”

The service launched in American universities with guerilla marketing tactics. Getting volunteers to tell the sororities that all the fraternities were using the service, and running over and telling all the fraternities that the sororities were signed up, the company grew its user base by spotlighting the calibre of its customers. Now branching out into fresh territory, Bumble is currently scaling its product by applying its model to different use-cases in order to attract a new audience.

“We have this framework that works really well for dating,” she says. “We know that our users trust that, especially our female users. [We thought], how can we bring it to other areas of their lives? That’s why we launched Bumble BFF, which is about finding friends, and Bumble Bizz last fall, which is about building business relations. We’re endlessly thinking about this spectrum of those core relationships and how we can be involved in bringing people together.”

The ethics of scaling

The discussions of unbridled growth, though, weren’t all celebratory. For AI company Box, the fervour of tech businesses to scale up comes with some weighty responsibilities particularly in the machine learning industry. When asked about the potential of artificial intelligence to impact human jobs, chief product officer Jeetu Patel made some poignant points about the dangers of rapid expansion.

“In the Valley specifically, we have a very reductive way of thinking about this market, which says that disruption is always good,” he said. “When you disrupt a market and move it somewhere else, the net effect is always a positive, and innovation is a good thing. That’s great, but the reality with AI is that you might have a very plausible argument that there are more jobs destroyed than there are created.

“As a result, we as a community need to start thinking about social structures very differently, and also about retraining for those jobs that go away,” he continued. “I’ll tell you this – when a coal miner loses his job due to disruption in his industry, the next career isn’t being an AI developer. If someone who is 50 years old loses their job and has to be retrained, you can hit rock bottom for the last 10 to 15 years of your life.”

Drawing applause from the crowd, he presented a measured view of both the pros and cons of what it means to scale up a technology business, and add new users.

“Each one us–yes, we’re all focused on building a software company,” he said. “But don’t think of disruption as always blanket good. You can create a lot of damage if you’re not thinking deeply about what the implications for society are. We should all play our part in doing that.”

Feature photo via Twitter.

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