Fears around scaling rapidly and how to do it right

Growth in your business can be exciting and is what most business owners are striving for. However, it can be dangerous and scary to grow too rapidly. Host, Jake Jones and guest, Hylke Sluis discuss the history of Fast Four and how they dealt with scaling rapidly.

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Welcome to Finance in the Clouds. Modern finance is broken, forcing finance and accounting teams to work like its 1985, the year Excel was invented. Here we talk about the struggles finance teams face in fast-growing companies and discuss how they can spend less time surviving and more time in the clouds. I'm your host Jake Jones, multimedia producer and brand influencer here at Zone & Co. And I'm joined this week by Hylke Sluis, SVP of Global Strategy here at Zone and formerly of Fast Four an international NetSuite app development company that Zone acquired earlier this year. Thanks for joining us today, Hylke. Oh, thank you. Glad to be here. Growth in your business can be exciting and is what most business owners are striving for. However, it can be dangerous and scary to grow too rapidly. Today we are going to discuss the fears around rapidly scaling your business and provide some thoughts on how to do it right. So, Hylke, before we go too deep, I kind of wanted to just give you some space to tell us a little bit about yourself, kind of what's what's been your experience with with this and give us a brief explanation of who Fast Four is or was and how you guys kind of came to be a part of us here at Zone. Yeah, absolutely. So, so yeah, we started about ten years ago as a NetSuite implementation provider. And actually Fast Four is a combination of three businesses that merged along the way. I'm one, so I'm one of the five founders and we started implementing NetSuite at the Benelux headquartered companies. And quite soon we found that NetSuite missed some key elements, key functionalities that our customers wanted. So we started to build add-ons to solve those gaps. And that actually grew out to be a significant part of the business. And, and that story and the apps just very nicely combined with Zone. Because Zone has a very similar background, very similar story, also started as an NetSuite implementation building add-ons to that to the platform, but very different ones. So as a combination, it just it just makes sense. Absolutely. Yeah. It's a lot of really complimentary apps and implementations, like you said, that are kind of on both sides. So it's been a great partnership. It's been a great merger so far. But so Hylke, as one of the founders of Fast Four, and by the way, I love that Fast Four had five founders you guys, you guys couldn't just kick somebody, you know, to to make that work, the fantastic Fast Four. What was it like starting a company like Fast Four and what was your experience with that early growth? In summary, it was a lot of fun, fear, but also a lot of satisfaction. And that's that. That's mostly because we never got investment before, before we joined the Zone company. That means we funded the growth out of our own cash flow. Right? So we first generated revenue for shelter customers. And with that money, we, we grew sometimes quite tight on cash. And that's really scary at first, but you get used to it. But the upside of scaling your own business without funding is become, is it becomes so personal when it goes wrong, if it goes wrong fully. Also personally. Yeah? When it goes wrong, it's over. Uh, but on the other side, when it goes right I mean, that's, it's a, it's a fantastic feeling when you see there's something you started, it is becoming successful. That's, that's a great, great feeling. The lows are lower, right? But the highs are much higher because it's, it's so personal because you don't you do this with your own money, not with somebody else's. Right. Oh, yeah, absolutely. And I mean, you're way more invested in seeing that success, too, when you take it so personally. So that's awesome. What were some of the early signs that Fast Four, like, when did you guys kind of start to recognize that you had the potential to scale up your business. Alright, well, it wasn't a question. And we were in a very lucky position that we achieved product market fit, quite quickly and that's because of our story, right? We, we started to build solutions based on requests of customers that we've implemented NetSuite for. I mean, personally, I've implemented NetSuite 40, 50 times and worked with many happy and unhappy users of NetSuite and its ideal experience to design an app. And so we became known in the NetSuite ecosystem without having to do a lot of marketing. And suddenly we had more prospects coming our way than we could handle. At times it was even too, too much that we just couldn't respond to all requests. And when it happened just a couple of times you, it has direct impact on the number of new leads that are organically coming, coming your way. So it was clear we had to scale or we would fail. We didn't have a choice. Wow, yeah, So, so really any other business that maybe listening they, they probably already know they need to scale. So what, what was, what were some of the major challenges that you and your team had to face? Like, like you said once, once you realized it's either scale or fail as you, as you kind of put it, what were some of those challenges that you faced early on? Um, I'll talk about two big ones, people and technology. The people one, that's about talent. I'll explain a story about what happened about halfway of our growth story. We were with about 18 employees and four founders. It was just when we merged with the company, called E-litt. 18 employees four founders, we were quite top-heavy. So our top talent didn't see a way up anymore in the organization. They didn't see their own growth path because their next level was taking a job that one of the founders was doing. So yeah, they left and found a new challenge elsewhere, and we overcame that point when we were about 40 employees. And the transition from 80 to 40 employees was it was, it was tough, a nice one, but a tough one. But when we were at that level, we were in a position to promote talent to middle management, and we promoted both long-standing employees and colleagues that were just six months with us. And once we had a middle management in place, things really hit off and that was very cool to see. We had people taking their new roles to, to new heights quicker than we, myself or the other, one of the other founders, could have ever done themselves and those moments you make you realize that as a founder, the company does not depend on you like it did in the first days. Because, it's the other people that it's the talent that takes it the next step further. I mean that, that brings challenges in processes, of course, because suddenly there's new activities. Things being done by, things that weren't being done by one person are now being done by multiple people. And we split them. So you need to learn a lot about process, cut off points, responsibilities, meeting structures, who meets with whom on what topic, how often? And what we did is we, we didn't draw those out on a Lucidchart and, and present it to the team and say this is how we're going to work. You, we, we wanted to look at the people and individuals involved, their preferences, personal preferences, strengths, skills, what they like to do and together design a new, a new process. And what we, you know, I come from quite large organizations, large multi-nationals. So I did have some of that organizational process mined background. We did document very well what we what we decided. So I think that's, It's very important that's clear to everybody who does, who does what. But yeah, we didn't want to design a process on paper behind a desk. But let, let people be involved in in the process for us, it worked very well. That's, that's awesome to hear. And it's exciting that you all were able to kind of work through how to find new employees and, you know, especially today. That's such a such a difficult part. But I want to kind of dive in a little bit deeper to something you mentioned there, Hylke. Just as you were scaling kind of once you said that middle management you know, you you kind of mentioned like at a certain point you weren't as hands on as a founder anymore because a lot of that work was being done by other people. With that newfound freedom, like, what, how did that affect you as a founder? Like, I know I know you had mentioned you had such a personal, you know, in the in the early age and kind of you had such a personal effect on the growth did this give you like new opportunities to kind of focus on some other things to help build the business or kind of how did that work? Yeah, yeah, yeah. And the hands-on part never got, got away, by the way. So so still, a lot of times I was helping other people or doing or doing the work by myself. But, but, but true it, it opens up time. It opens up room for new opportunity, opportunities and international expansion is one, one thing that came from it. And we were already focused on Europe. But yeah, we suddenly had time to think about setting up real teams in, in Australia, in the US that's good. It's an example of what, what came from it and you know, it's, it's, it's a cool position to be in. Yeah. Scaling just leads to more scaling is what it sounds like that's awesome. So Hylke, kind of along that line of thinking, what have been some of the unexpected outcomes of scaling? One of the unexpected outcomes of, of scaling is suddenly I realized that some of the decisions that we made early on that I thought were really good were not so good in the end. I'll give the example of technology. And I'm not super proud of this, by the way, because, I'll explain why I'm not super proud of it. I thought we had our systems right. We had NetSuite as a backbone and that's good. But what NetSuite couldn't do the way that we wanted it to, we customized it and we customized it fit for purpose. And you know, it did exactly what we wanted it to do in a very efficient way. And it worked out. We could scale to a couple of million in ARR. With just, was it? A one-and-a-half finance staff. It was super efficient. But along the scaling journey, we realized that these custom-build solutions were very wrong. And what I'm not so, why I'm not so proud of it is that we had preached this to our customers all the time. That custom-built is not the way to go and take off-the-shelf solutions. And an example of that is moving to a new pricing model. We wanted to launch a new pricing model for one of the apps. And our pricing model used to be very simple from an administration perspective, but not the smartest one from a sales perspective. So when we wanted to change the pricing model, we first needed to upgrade our new, our old custom billing system. Yeah, to make sure that it could handle this new model. And it took time so we could not launch a new pricing model at the moment that we wanted to. Well, if we had a solution with a broader set of features that could support more use cases than we needed at the time earlier on, we would have the flexibility to quickly implement this new pricing model, for example. So, you know, it's feature-rich functionality brings agility for, for the business. And that's what the messages we've always sold to our customers. But I realized along the way that we didn't do, do it internally. Right, you weren't practicing what you were preaching. Yeah. Yeah. Crazy. Yeah. Also around reporting right, getting data out of the system and building custom functionality is one thing. But when you take an off-the-shelf solution, it usually comes with industry standard reporting and we had to build all of that from, from scratch and with every change I just reporting it wasn't ideal. Yeah. Yeah, that's crazy. Well, you know, going through all those struggles and going through everything that you guys have gone through with this, do you feel like at the end the scale was worth it? For sure. Without a doubt. And looking back and I wanted that to go faster and an investment earlier, but for sure it was worth it. It was worth seeing the colleagues rising up, taking new roles. It was worth seeing many customers wanting to have the things that we came up with as a team. It was definitely worth it. Yeah Good. Good. That's good to hear. You know, I know it's really exciting as a as a business owner to see success and to see growth happen within your company. But obviously, as we've kind of talked about, there is that fear of scaling too fast. I know you guys talked about, you know, being a little tight on cash and that sort of thing. But what else? Why do you think there's such a fear around scaling? Yeah, it's not comfortable, Right? It's, it's rewarding. It gives satisfaction when it succeeds, but it's certainly not a comfortable situation to be in. And it feels like, it feels like the organization creaks and squeaks, I don't know if that's a saying in English but we use it over here. And often I felt that I was asking too much of colleagues, and I probably was. Yeah. Nobody likes, likes discomfort. Yeah? And this time it's also relative, I guess. And probably some of the, some people would have looked at Fast Four and said, "man, these guys have high ambitions, right? These guys are shooting for the stars." But then looking at Zone their ambitions are much higher. And probably there's even other people that are looking at Zone and think, oh, that's nothing we are aiming way higher. Right? Absolutely. There's always a bigger fish in the sea. Right? What are some of the. You know, we talked about you kind of alluded to it's a high-risk, high-reward situation. What are some of the dangers and challenges of scaling too fast? And, you know, this may be stuff that y'all didn't even experience but may have always been on the fringes that you were afraid of, like maybe something happening. So so what are some of those dangers and challenges that come with scaling? It's, it's a tough question. I'm usually the type of guy that thinks about the opportunity and the potential build or rather gain, rather than the dangers and challenges. I tend to be an optimist myself. So I'm right there with you. And I think mis-hiring, mis-hiring is definitely one of the dangers because if you do, it sets you immediately back a couple of months and having to rehire. It's a super interesting topic. I was listening to a podcast with a series of, series of interviews with tech founders and, and one of them said about the CFO position, your CFO is such an important hire, get somebody who's very experienced. Don't be afraid to pay very high salaries for that person because it's a key role and you have to get it right. And another founder in the same series said hire the people that can take you to the next level, not one that's used to work at five times larger companies, but just a bit more. Right? So, so that founders said if you hire a CFO of a too high level, that person might bring unnecessary bureaucracy, too much, too easy spending, and they will bring the attitude of the companies that they've worked for. And personally, I would agree more with the second founder. Hire somebody that can take you to the next level, but not much more senior because chances are this person will much better fit the company culture and that person will grow personally as well. So they might actually be able to take the company five levels up by going with the company. That's, that's a really, really ingenious way of thinking about it because, you know, when you when you're I always kind of tell myself when I'm nervous about doing something, it's just take the next step what's, what's the very next thing I need to do to get this project done to get this thing off the ground. And so that's almost a similar mindset of just like we need to scale, we need to hire more people. Let's hire people to take the next step. We don't want to take ten steps at once, but that's, that's a really interesting way of looking at it. I like that. It's scrum as well right? It's scrum building incremental product. So it's the same thing, same methodology that you apply to the product. You apply to other areas. Absolutely. Absolutely. So with all the scale, the risk associated with scaling, why would a company want to scale up and I guess, in other words, what, what are the benefits of scaling? If we had that just kind of sum it all up. In our case, at Fast Four was a necessity, right? If we didn't we couldn't keep up with demand and that hurt the reputation. But as an maybe not an exact answer to your question, but the cost of lost opportunity makes scaling actually more expense- sorry - so it makes not scaling more expensive than scaling. And if you can get more business with investment, then go get that investment and get those additional customers quickly. And especially in the cloud software industry where the value of growth is so, so high. And yeah, we should have done that earlier at Fast Four because if you, if you have the product-market fit, if customers are coming your way, you shouldn't think that, hey, we're in a very good position. Customers are coming our way. Why, why would we need to set up an outbound strategy? But actually, that's the sign that you need to start investing in outbound and you need to start investing in more sales because your product is working and this is the time to take those next steps. It's what you have. Yeah. When you realize that you have something, you need to chase it and really go after it and try to grow to work with it. When you can, before it gets out of hand. That's, that's a great tip. Kind of, kind of along those lines. What, what are some things that businesses, businesses can do to help manage their growth and to scale well? People. Again, people is of course to the probably the most factor in this. And so what we did I'm going to explain a bit about but, but what we did at Fast Four. Our founders are coming from the Netherlands and Belgium. Those are small countries and it's in our nature to look abroad over the borders for opportunities. International expansion was always at the heart of the business and the talent that we attracted is also very international. At some point we have 30 people with 20 different nationalities and that's nice. It gives a super open culture where people eager to learn from one another because they know it with their, their own background. They, they might not have the best answers for the situation in, you know, in a different part of the world. Right. I mean, yeah, the culture has to fit the ambitions of a company in many ways. And if an international expansion is your ambition. Your team needs to be international as well. That's awesome. Yeah. Yeah. Another thing I can say about the technology is actually it's bit reiterating what I said earlier and investing early in technology and buying a T-shirt that may be a few sizes too big because it, it becomes exponentially more complex and expensive to change technology later on. Then that, that's also true in the best-of-breed environment. It's, it's uh. Yeah. Do it early. Yeah, that's, that's a great, that's a great plan too. It's kind of, as I was researching, it really seemed like set your foundation well to scale. And I like your analogy of, of buying a little, a bigger T-shirt than you need because you're going to, you're going to grow into it for sure. So we know that software businesses in particular have seen some of the most rapid growth in history right now. What makes this process unique or not unique to software companies in particular? Um, what it makes it unique, it's that, that making software international is easier than, a product-based business where you also need to set up a whole logistics system in, in multiple regions. And so, so that, that's definitely somewhat unique to the, to the software business in a very interesting one because that opens up so, so many opportunities. But but yeah, you're right. And in other ways it's, it's a scaling of software companies. Is it similar to other companies getting, getting the right talent, getting the right technology foundation, getting the right processes in place that, that don't fit your company as it is today, but it is tomorrow or the day after. Yeah. Yeah. It seems like a lot of the same, you know how to scale well, it seems to apply everywhere, but definitely with software companies in particular, like you said, with everything being digital and being something, you know, we can all connect to the Internet and it's the same Internet across the world. So it's a lot easier to use that and interact with customers and make things and get things to customers no matter where they are because it's all digital so that's, that's a that is definitely something unique, as you said there. So looking back at Fast Four's growth and we've kind of talked a little bit about this as we've gone through, but is there anything that you wish you had done differently when you were setting up the company, especially knowing how much you guys would scale? Yeah. And very, very nice question. Just giving you a little time to be introspective here, Hylke and feel bad about things you didn't do. And, you know, all that. Yeah. But I don't look back at Fast Four's growth in the last ten years thinking we made big mistakes and. Right. And uh, we, we probably made a lot of small mistakes and we made decisions too late. And when looking back, I would have done it more, more and more earlier and like, like the example of investing in, technology off-the-shelf that can help you grow to many many, many millions of ARR. We should have done and earlier we relied on, on custom built technology for, for too long and, and secondly the investment getting investments earlier. I always liked to be bootstrapped. I was actually, yeah, I thought it was a really nice, nice thing to grow organically but looking back I would probably have gotten investment uh, or tried to get investment more early on at the time where we knew that we had the product-market fit and then just go after it and make sure that everybody and that is a potential customer at least knows about you and has an opportunity to buy your product. That's great. That's awesome. That's awesome. Yeah. I like how you said it definitely. I mean, with, as successful as you guys have been, you definitely didn't make any major mistakes, but there were definitely some some things you tripped over and overcame that you might do to eased out for yourself so. But it sounds like kind of a good summary is just set a good foundation for yourself when you when you start your business with growth in mind and then when you see an opportunity for growth chase after it. So I love that. Thank you. Thank you. Hylke for all of that. Is there any final words of advice that you would give to other business owners who may be looking to scale their business in the future? Well, as you might, might know from the conversation, one of my favorite topics is international. And for founders in many countries, the world is their playing field. And I know, I understand for United States businesses, business owners, your country is already so huge and there's so much potential but still going international makes your market even so much bigger. And it's not easy, but it's super rewarding. And my advice would be that if you do so, put the internationalization at the heart of your strategy. Your HR strategy, So your team is international, your go to market strategy. So your, your pricing, your messaging is tailored to each country. And, and this is a difficult one. And Facebook got this wrong a couple of months ago. They advertised in a Dutch newspaper targeting small business owners to go advertise on Facebook. But that text was translated poorly. There are strange sentences that nobody would use in real world. They used a case study from a German company. That and that example just doesn't really nicely appeal to, to many Dutch people. And probably somebody on the other side of the ocean thought, Oh Germany, Netherlands, next to each other. We can use the same content, but no, you cannot. And third, the same with product strategy. And if, if you if you want to make your product go international and start with it at, at the beginning and what I sometimes see happening at companies and yet as one big global software provider from the U.S., that's everybody knows that I'm not going to name right now but they do this and what they do is they designed a product for the US and then when they want to go abroad they set up a team they call it Team international and the responsibility of Team International is to localize the products for all markets and that model will never result in a great user experience. If you want to go global, you need to think about languages, taxes, culture, preferences, etc. At the core of your product and that needs to be the responsibility of the main product owner, product manager, not the Team International. So yeah, yeah. It would. It sounds a lot like what you were talking about really with, with everything we've talked about, with scaling of just as you set your foundation, set your foundation to grow because it's like you mentioned with technology, it's, it's going to be a lot harder to change that technology once you're already doing stuff, once you've already made stuff. And same with like, like you said, localization, it's going to be a lot easier to just have localized from the get-go or to at least have been setting up your, your, your business with that in mind then then to do it later. So great advice. Yeah, thanks. Hylke, It's been great hearing more about Fast Four's experience with scaling rapidly. And thank you for sharing all of those tips. And just your story and how that all works. And I really think what you've shared here is really going to help others manage their growth and to scale their business well. Oh thank you, the pleasure's all mine. Thank you for being a great host, and I love talking about growth, so. Absolutely. My pleasure. I appreciate it. Appreciate it. Now we want to hear from you listening at home. What are some of the biggest fears around scaling your business? Let us know by emailing hello@zoneandco.com and if you enjoyed today's conversation, be sure to subscribe to Finance in the Clouds wherever you get your podcast. And we will see you next time. Bye!