How do you scale up a startup into a fully-blown, growing business? To quote Daniel Isenberg, it goes something like this: “Stop starting, start finishing.” And this is exactly the essence of the success story of Workable.
In our latest #ScaleUpGreece workshop, we were hosted by Workable, one of the most popular startups to come out of the country, who gave us their insights on how to make the jump from startup to scale up.
There was a full house at their Athens HQ where from among others, we heard from CEO Nikos Moraitakis. Before we get into Workable’s recipe for success, why do we need more scale ups versus startups. It’s a question that should answer itself. But, here’s an introduction of sorts.
How to scale up a startup: introduction
In a sea of startups, there’s only a few which can provide real value. And it’s this point which needs to hit home. Are small to medium-sized businesses still the backbone of the Greek economy? It used to be the case, yes, but now that is no longer enough. Greece needs companies that, above all, can grow and become scale-ups.
Among the first who talked about Scale up entrepreneurship was Daniel Isenberg. In a recent article, almost a year ago, titled: “6 Questions about Scale up economic development”, Isenberg sets things straight concerning entrepreneurship and scale ups. “Scale Up is only a simple metaphor. But, it’s a metaphor that evokes growth. By doing so, it makes growth the centerpiece of the entrepreneurship dialogue. Without growth, there is no real entrepreneurship.”
Innovation, unicorns and defining scale up success
Is innovation a prerequisite for success? What makes a startup successful? Is it all about a brilliant idea? Well, the truth is that not all startups are innovative. What about unicorns? There’s nothing wrong with them in our opinion, the only problem is the obsession with unicorns – i.e. the obsession that some startups and investors have with them.
Unicorns are a different beast. They’re focused on investors and they’re really good at crafting perfect pitches. Then we have the ‘workhorses’, who on the other hand, are hardworking and devoted/focused on customers. At the end of the day, the purpose of all business is to be profitable and create value.
But what is exactly a scale up?
In a nutshell it’s to get quick long-term value. In terms of tech-focused businesses, the rule of 40 is what you are aiming for to analyze the health of a software business. And no we don’t mean you have to be under or over 40 years old. The rule of 40 is this: that the sum of your year-to-year growth is equal or greater than 40%.
A company needs to have a healthy growth rate (and of course, profitability). And according to our CEO and Founder Dimitris, there’s a big difference between let’s say the USA and the Greek market. In the US, a company could be complying with the rule of 40% and have a current MRR> $1M. In the Greek market, we can be a bit more flexible with MRR but we still need to respect the rule of 40.
A definition of Scale
Thanos Pappagelis, the CEO and Co-Founder of Epignosis gave his own definition of scale ups during our 1st #ScaleUpGreece event in January. “A scale up grows fast, has sustainable growth, and has a lot of customers. It also has a good market/fit product and profitability – or at least profitability is just around the corner”.
Right then. For now let’s leave all of these numbers to one side and get to the juicy part – our 3rd #ScaleUpGreece hosts: Workable.
If anyone can shed light on the key ingredients about how to scale up a startup, then it’s definitely them. Arguably Workable is the superstar of scale up entrepreneurship in Greece. But their success has not come without difficulties and challenges which come with the territory.
Apart from what startup founders and investors say about scale ups and scalability, it’s the real world experience which makes the difference. And that’s what we’re trying to “disclose” with our #ScaleUpGreece series of events, so what we can share the love with the whole community.
Getting to know Workable
Nikos Moraitakis, Workable’s CEO, sums it up best. “We help companies find people, customize the platform according to their needs, we help them make career pages if they wish. We also make it easier for our customers to cooperate with their team on hiring issues, which is really important.”
Nikos founded Workable with his business partner Spyros Magiatis, back in 2012, to help employers manage their hiring processes better. Finding, assessing and interviewing employees is made easier with Workable’s online platform which automates so many procedures. For example? A hiring manager of a department store can use his/her mobile phone to screen candidates and prepare an interview on the go. In other words, as Motaitakis says,
“What once required an enterprise software for HR personnel is now actually really easy with Workable. Paperwork and the frustration that was once included in HR processes is no longer a problem for hiring managers, and to everyone that owns a business and needs to hire personnel.”
How to scale-up a startup is about following through
Nikos Moraitakis was in enthusiastic mood during the event, especially when asked to talk about the history of the company. Showing us a photograph of his first small office here in Athens back 2012 where the business was launched with a small team, he was understandably emotional.
And seven years later, now they have a company of 320 employees, with headquarters in London, San Francisco, Boston and Greece. How did this happen? It was all about following through on hyper growth.
A brief bullet-point history goes something like this:
- 2012 Workable launches in Athens
- 2013 Product launches and $1.5M of seed funding is raised
- 2014 Boston office opens after $1m first year sales
- 2015 Receive $27 million funding and reach 100 employees
- 2016 Achieve $10m ARR and acquire 5,000 customers
- 2017 Have customers in over 100 countries
- 2018 Growth financing
And so the scale up success story (Epignosis) continues.
How to scale up a startup is also all about customers
Nikos Moraitakis also talked about some of Workable’s biggest customers here in Greece and globally. Names such as Forbes, Ryanair, SEPHORA and e-food, Intracom, and Eurobank. These are the names among their impressive client base. But Nikos is as proud about the small and medium-sized business their help as he is for the big clients.
“Satisfying customers of smaller sizes and giving them the opportunity to upgrade their hiring procedures and grow is really rewarding.” And judging from the numbers – at least 25m of SMBs trust Workable for their HR needs— well that’s a great success.
And that’s not all. They say variety is the spice of life and this is certainly the case for Workable in terms of their customer types. “Our customers are businesses of all type and category, even we can’t believe sometimes that we have so much variation. From airports to plumbing services and more – it’s quite amazing.”
Some key learnings
1. Competition represents the challenge as your fuel for growth
What about the competition then? Nikos was glad we asked. LinkedIn, Greenhouse, Lever and Google Hire are among Workable’s word-class competitors. And as Nikos explains: “It’s great to compete against the greatest of the world in your industry. This forces you to create a really competitive product. It’s an incentive that helps you become better and better. It’s challenging and that’s great!”
2. Close-knit team
How to scale up a startup depends a lot on your team. Nikos Moraitakis and his partner, Spyros Magiatis, have worked together for so many years before they decided to start Workable. And he emphasized that this was a key factor before starting their company. You need to know your business partners inside out, both personally and professionally. And most important, be in it together in terms of commitment and dedication. As well as the fact that they had worked in a well-organized company, something which proved to be a really valuable experience later on. As Nikos said “I believe that everyone needs to have such an experience. Working in a really ambitious company and have the opportunity to learn and practice all about effective processes.”
3. Invest in young talented people
“We give opportunities to young people. The majority of our managers are under forty,” said Moraitakis, adding that “25% of our employees get promoted within two years from starting to work with us.”
4. Give more incentives
Help your employees invest in your company literally and actually. “The majority of our employees have shares in our company. This goes in long way to motivate employees in terms to how to scale up a startup,” said Nikos.
5. Set R&D as a priority
“We have invested the biggest part of our funds in R&D and that’s why we’re front-runners in our industry.” Key to Workable’s success is how their financial strategy on this aspect helped them become more productive and offer their customers a really competitive product.
6. Small is the new big
According to Moraitakis, we’re at the beginning of a big change, especially in the HR market. From now on global companies will be smaller. Smaller teams will be able to achieve great global success at large scale. “The size of companies – in terms of headquarters and employees— that targeted global markets a few years ago is not at all comparable with today’s companies such as ours.” And as Moraitakis explained, thanks to digitalization, time-consuming procedures that used to require extra employees to be completed or required cooperation with other companies are today being executed effortlessly at the stroke of a pen.
Interesting stuff indeed. If we were not sure before, it’s pretty clear now how to scale up a startup. Right, we know, this is a long one. Congratulations on getting this far by the way. Now, buckle up and let the insights rush over you in our quick-fire Q&A finale where Moraitakis answered our questions.
Q: It seems that the majority of companies struggle making the transition to the next level of growth. Based on your experience which one is more difficult: going from 30 to 100 people or 5 to 30 people?
A: Well, when there’s a struggle in general (growing), you should re-examine your product, the market you’re targeting and your competitors. Then make adjustments accordingly. As for which one is more difficult, I’d say that going from zero to 1 is without a doubt more difficult than going from 10 to 100. The higher you get the harder it gets.
Actually, I’d say that challenges and difficulties are different at each stage. In the beginning the challenge is set up a team and create a product that is of value for customers. Once, you validate that your product is of value for customers you need to find a way to sell what you created. And here the key is to find a cost-effective and systematic way so that sell that product. And that’s quite easier in B2B business models, as in B2C things are more complicated. Once you set up that procedure you then fine-tune your financials and all of your internal processes.
Small companies of around 30 people that struggle growing I guess it’s mostly because they have not yet found their market fit. Big companies of around 100 people on the other hand, that struggle to grow I believe that unfortunately the whole idea was wrong (product idea in total) or maybe it’s a matter of funding.
Q: How easy is it to find specialized employees here in Greece? Is possible for a company that grow to find employees (for managers) strictly within Greece?
A: Greeks are good at making things but in terms of management and sales I’d say that we’re a bit behind. There a few people in Greece that have the knowledge/expertise on how to build a huge sales operation. We’re good at technical marketing but when it comes to sales in a market such as the US, well I guess that you need to find the right people there. And finally, I’d say that if you combine talented Greek people with specialized professors from let’s say the US, you’ll work wonders.
Q: What is your criterion concerning investors/partners?
A: Compatibility with investors/partners is the major one, there are also many other secondary factors you should take into consideration but I think this one is really essential. Your team will work closely with your investors. They’re the ones that will help you get your next funding, they will negotiate for your company, they’re ones you advise you. It’s going to be a long-term relationship so make sure they are a good match for you.
Q: What are your greatest challenges at the moment? What’s the next thing you need to focus on?
A: Well, it’s actually what happens when a new market segment starts growing. You realize that apart from your existing (categorized/classified) customers there are new segments rising. And you need to do something about it to make it grow faster. So, you need to answer questions such as: What’s the sales process you need to follow now? (when opening to a new market/vertical.) And that keeps you on a mode where you constantly need to change the rules of the game.
And one more thing about going international, opening new offices in new countries is actually quite challenging. There are many things to consider before you make your final decision.
And here’s the difference with a small company. I mean when you’re a company of 20 people you just focus on making a great product. All you think about is this. All of your efforts are on this. Any feedback you get is so valuable for your company. Sometimes there’s a trap there, when customers ask/require new features, you might get into the trap of implementing without prioritization. But, that’s not true for a huge company. Prioritization comes above everything else.
Until next time
Perhaps our most interesting and successful #ScaleUpGreece event yet, then. Our CEO Dimitris Tsingos had this to say afterwards. “At the end of the day, it’s not every day that one gets the chance to ask the CEO of the best funded tech company in Greece whatever they like, and have him responding spontaneously n kind and not having to be politically correct.” Stay tuned for more updates on the next event!
