When should defending your fortress become your biggest scaleup concern?

Sandbox

DOUG: Continuing the preview of our next book, junior scaleups have already mastered disrupting. So what else do senior scaleups need to master?

ROLAND: Senior scaleups need to defend from attack the rapid gains that they have made in the junior stage. Junior scaleups build out the fortresses. Senior scaleups dig the moats.

DOUG: What customer type are senior scaleups selling most to?

ROLAND: Senior scaleups sign up customers further down the mainstream. They target late majority buyers who are conservative and price-sensitive. More often than not, you see price wars at this stage.

DOUG: What milestone must companies have reached to enter this stage?

ROLAND: Senior scaleups have reached multi-segment fit. They have expanded beyond their initial beachhead of mainstream customers. They now have enough pieces on the chessboard to aspire to lead the market at large.

DOUG: How much funding should we imagine senior scaleups have?

ROLAND: Senior scaleups have raised a Series D round from venture capitalists. This enables them to reinforce market leadership. Acquisitions of smaller competitors and suppliers become more prevalent at this stage.

DOUG: What is senior scaleups’ product maturity?

ROLAND: Products have reached the #1 position for customers who hate to get left behind. Their market share may still be lower than the previous incumbent’s. But they have been able to relegate that incumbent’s image to “yesteryear’s solution.”

DOUG: What challenge do they need to master?

ROLAND: Senior scaleups need to master defense. How to ensure competitors cannot copy their business model without much investment.

Senior scaleups complement patents and other “hard” barriers with new barriers to entry. E.g. ecosystems, partnerships, large user bases and big data collections. that are impossible to replicate without high upfront investment.

DOUG: How many employees do you find in senior scaleups?

ROLAND: Senior scaleups are larger companies. They employ several hundreds to a thousand employees, across several offices worldwide. Organizations become too complex to manage through functional departments. Hence, senior scaleups tend to reorganize around in cross-functional business units.

DOUG: How much revenue are senior scaleups making?

ROLAND: Senior scaleups make between $100M and $500M in annual revenue. They are likely preparing to file for an IPO. Or they are able to attract enough late-stage investments to remain private as a unicorn.


Roland Siebelink regularly speaks and writes about leadership in fast-growing tech startups. You can find more of his insights, including free chapters of his book “Scaling Silicon Valley Style.”

Able to herd the cats of a management team to get the to focus on the tasks at hand and add value in the process. Adept at reacting to the situation at hand in order to capitalize on the aha moment rather than follow the pre determined agenda.

Al Bennon, Global Controller, NZXT, Los Angeles

About Midstage Institute

We focus our practice on midstage startup companies that need to remain agile, and where what used to work for the smaller startup just isn’t as effective anymore.

 

We ensure founders and leadership teams win, with our over 40 years experience in venture-backed tech startups. We are Silicon Valley veterans with the scars and wins to prove it. We don’t use an inflexible off-the shelf methodology, we adapt best practices to you, your market, your company, and your leadership team.

 

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