How Scaling Tech Companies Shapes Every Decision I Make About Lasting Impact

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Unexpected Costs Of Scaling Too Fast The Most Founders Are Taught Too Late
The mythology about scaling is basically about speed. When you are able to reach the point of product-market compatibility, then put fuel on the fire. Grow the team, expand the market, raise the next round prior to the previous round has settled. The story favors an entrepreneur who is always moving forward, always adding heads, always expanding into other verticals before it is clear that the business's core has actually stabilized and before the company has developed the internal capabilities it will need to control that growth without losing its coherence. I understand where the mythology comes from. Certain market conditions and business models, the first one to scale most effectively wins, and the stories about companies that have grown aggressively and subsequently succeeded are reported more frequently and with more vigor than tales of companies that grew fast and failed. For every company that aggressive earlier scaling is the optimal strategic answer, there are many instances where the speed of scaling becomes one of the major causes of troubles that eventually take down the business. These warning stories don't get much of the same attention as the successful ones.
Costs hidden by growing too fast is not evident in the calculation of the burn rate or cash flow projection. It's what you see one year later, after the organisation has grown past the informal coordination mechanisms that held it together when it was smaller, as well as before it has established solid structures to hold larger organizations together. The gap between formal and informal that is between the organization you were and the company that you're expected to become is where most growing businesses fail to bridge. The earliest and the most consistent indicator that a business is reaching that apex is when decisions slow down even as everyone insists that nothing fundamentally has changed. The founder's voice is still available in theoretical terms. The team is still aligned in theory. The culture remains solid in its theory. But in the real world, the organisation has grown to a point where informal channels for communication used to relay most important information are blocked and there is no way to create the formal channels that need to replace them. Information that was once flowing easily now needs to be continuously monitored. The decisions that were executed quickly now require alignment across multiple functions that have never been defined clearly in relation to each other. Reliableness that was individual and immediate now is dispersed and delayed as the organization is beginning to exhibit the symptoms of a system functioning at the limits of its coordination capacity.

None of this can be seen on the scales that investors and founders typically monitor most closely. Revenue could still be rising. Customer acquisition could still be growing in the right direction. It is possible that the team is energetic and hardworking. But underneath those surface indicators the organization is developing structural issues which will only get worse and slowly, until they are no longer able to be ignored - at which point fixing them becomes dramatically more expensive and disruptive than it would have been if the issues had been dealt with earlier, when signs were subtle rather than glaring. These are the invisible costs I am talking about it is not a direct financial cost of scaling, but the longer-term costs of extending your organisation past your own infrastructure, as well as the cost of putting the infrastructure in place reactively rather than proactively.

The founders who handle the transition with ease aren't necessarily the ones who scale at a slower pace, though being more thoughtful about the pace of expansion may be the answer. They realize that creating the governance framework of their company is as crucial as constructing the product and who invest in this with the same level of commitment and commitment to product development. This includes doing the boring routine work of delineating roles and decision rights clearly, creating reporting structures which actually provide the information executives require to make the right decisions, making accountability mechanisms specific enough to be meaningful and also thinking critically about what kinds of norms the company needs to adhere to at its size and not taking the one that have been created organically when the business was smaller. All of this isn't interesting. The work will not generate interest from investors or press coverage. However, it is the process that will determine if the company it is building can grow to the level you are looking for.

The businesses that fail to succeed in this change do rarely fail terribly and evidently. They slowly fade. They lose their best employees first - the ones with enough self-awareness to see how things are going in an organization and the options for leaving before it gets much worse. Then, they lose customers slowly and often invisibly, as the quality of execution steadily declines because accountability has been too ambiguous and deferred to find problems prior to reaching the customer. They then lose momentum then, when that change in momentum is seen in the figures as structural issues become well-established, the social damage is substantial, and the cost of fixing the two is orders of magnitude higher than what it would have been if the investment in governance had been made at the right moment. Thinking of organisational infrastructure as a product - something that you design carefully, construct with care, and continue to refine as the business grows is one of the most important mindset shifts that founders make as they progress from the beginning stage to real-world scale. The founders who master this tend to establish companies capable of reaching their goals. People who don't tend to build companies who are a bit too close. View James Deller for more examples including what operating through uncertainty continues to inform my decisions about real value.



The Reasons Why Most Public-Private Partnerships Fail Before They Even Begin - And How To Resolve Them
Public-private partnerships are a perception problem that is, for the most part that they have earned. The history of these agreements is filled with projects that were released with genuine enthusiasm and significant investment in political capital, that drained significant public and commercial resources for long periods of time and, in the end, delivered results with only a slight like what was pledged when the collaboration was initiated. The academic literature and the postmortem analysis that governments and institutions commission following these failed projects are extensive, and they concentrate on the main, on the structural and contractual aspects of what went wrong including the misaligned rewards, the ineffective risk distribution between both private and public institutions and the governance mechanisms built in theoretical terms however did not work in practice, the procurement frameworks that picked the wrong items. The issue that this analysis tends overlook, repeatedly and ultimately an important cultural and operational aspects - the fact that public and private organisations are actually different types of entities, shaped according to different motivation structures, operating on different timeframes, accountable to fundamentally different stakeholders, and measuring success in ways that's not just different in scale but differ in terms of. If you try to bring these two types of organisation together in a formal arrangement without undertaking the work upfront as well as explicitly, to be aware of and address the differences, you're not forming an agreement. You're creating conditions for a slow-motion collision, which is likely to be noticed at the worst possible time.
I have been involved with advisory services to assist institutions in their modernisation and improvement projects, some of which involved public-private partnership arrangements at various levels of complexity. The most consistent insight I've gathered from that observation is that those partnerships that did well - ones that actually met their stated goals and maintained a smooth partnership between private and public partners throughout - were not distinguished from those that did not by the sophistication of their legal structures, the rigour of their risk frameworks, or the seniority of the teams who started them. The distinction was made by the extent to which those who were from both sides of the group had made the effort to truly comprehend how the other party operated prior to the formal partnership was agreed upon. What it entails in practical terms is understanding how decision-making processes in each institution and the accountability structures that determine what each partner can do and what they can agree to, as well as the speed at which it happens they are able to agree, the standards of success that every party will be evaluating, and any points that could cause tension between those definitions. The understanding of these concepts isn't difficult to attain. All of it is frequently not considered in the visible and immediately accessible task of negotiating contracts as well as establishing governance frameworks.

The usual public-private partnership procedure goes from the initial idea to a signing of the agreement with very little focus on the question of whether both organizations involved are truly able of cooperating successfully over the length of the agreement. Legal teams negotiate the contract. Finance team models the economics and the risk allocation. The communications team prepares and announces the news for the moment of signing. The team responsible for implementation begins planning the tasks. Somewhere in that sequence there is a discussion about compatibility of the operations and culture - regarding whether the people who are expected to be working together daily over the boundaries between two organisations share enough common ground to make that collaboration truly collaborative rather than adversarial - does not tend to take place in a logical manner. It is assumed, usually without being stated, that agreements in formal form create prerequisites for effective collaboration and that any operational or cultural conflicts will be resolved informally as they arise. This assumption is generally not true, and the price of this tends to increase according to the ambition and complexity of the partnership.

What this means in practical analysis is that the best investment a private-public partnership can do - prior to when the legal structures are finalised prior to the governance framework is agreed upon, prior to any announcement is made is what I would describe as operational alignment. This means particular, structured, facilitated activities to pinpoint the places where the two parties operate from different assumptions, and then to establish a clear understanding of the way in which those divergences are managed before they become operational difficulties during the process of implementation. The factors that are most crucial to consider are generally the same across various types of partnerships. Authority and speed of decision-making is almost always one of the most important differences. Public institutions are structured to take their decisions slowly, using multiple layers for review as well as approval, for reasons which are completely legitimate and, in many cases, legally mandated. Private enterprises - particularly tech companies that are based on rapid iteration, and fast taking decisions - usually see that pace as a fundamental hurdle to development, and there is no consensus about reasons for why that pace is what it is and what would truly be needed to modify this, the frustration that is triggered on the private aspect can affect the working relationships long before the collaboration can establish its apex.

Success metrics and what is considered as progress are another ongoing and important source of discord. Public institutions typically are evaluated on compliance with process standards, equity in the outcomes among stakeholder groups, and removal of any visible shortcomings that get media attention or public scrutiny. Private entities are primarily evaluated according to efficiency, measured progress in achieving targets, and returns on investments. The measurement frameworks can be made compatible with each other however it is a intentional design and not just good intentions. Partnerships which do nothing to improve such a design typically be caught at crucial junctions, with two parties who are evaluating the same collaboration in unrelated ways and, consequently, coming to disparate conclusions as to whether or not it is succeeding. The partnerships I have observed that failed the most were ones in which the misalignment was accepted as a problem that would get better over time. It was those in which the misalignment was explicitly identified at the beginning. Also, designing a shared accountability framework which accommodated both parties' legitimate measurement requirements became an element of actual work instead of an option on a wish list of things that someone would eventually reach.}