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Is Scaling Up Harder Than Starting Up?

14 Feb 2019

InterTradeIreland recently invited Professor Haslam from IE Business School in Madrid to give a series of masterclasses and workshops in Belfast, Dublin, Galway and Cork as part of our All-Island Innovation Programme. IE is ranked by the Financial Times as a top 10 global business school.

In 1998, Prof Haslam was on the founding Team of Marrakech, a Dublin based e-procurement company that raised over $75m in Venture Capital and scaled to over 250 people. He is now the co-founder and Chairman of Hot Hotels, the first company from Spain to be accelerated by the Techstars program in the USA.

During his visit we spoke to Joe about the work he does.

Tell us a bit about yourself?

I was born in Limerick but I've lived now in Madrid for fifteen years. My research area is in Scaleups, which are companies of more than 10 people that grow more than 20% for three consecutive years. At IE Business School, I'm the Director of the Owners Scaleup Program which is a two week executive education program specifically designed for Small and Medium Enterprises that want to scale. Scaling is different to growing. Growing is about getting bigger in a linear way, approximately by the same amount each time. Scaling is about growing in an exponential way, doubling in size every year.

Do you really think scaling up is harder than starting up? Why?

Let’s look at the data, only 0.4% of all companies reach $10million in sales and but only 0.04% sell more than $100million. So most Startups fail and of those that do get past the initial stage, most fail to scale. It´s climbing Mount Everest, winning the lottery, playing up front for Manchester United kinda numbers. Peter Drucker´s chilling words from his book “Innovation & Entrepreneurship” are as true today as when he first wrote it. “Entrepreneurship is risky mainly because so few of the so-called entrepreneurs know what they are doing.”

What makes an entrepreneur?

Research is inconclusive about this. Entrepreneurs are typically good at persuasion but by itself that´s not a guarantee of anything. Many entrepreneurs are just lucky, something they find out when the next business they set up fails to be another success. What most people have wrong is that it´s a young person´s game. The average age of a successful entrepreneur is 45. A profile I´m seeing a lot now are people who are have worked for a multinational for many years and acquired some deep sectoral knowledge. Not wanting to deal with the toxic internal politics, they leave and build a niche company slowly and profitably over many years. This is particularly true for women. As so few women over the age of 50 set up companies, the ones that do are especially driven to succeed.

What tips would you give to anyone who wants to scale their business?

Take your time. Even for experienced entrepreneurs, it takes about 18 months to have even a notion of what you are doing. Then it typically takes about four or so years to know if the business will work and about ten before the value is realised.

Value Diversity. Work with people who are different to you. Although it initially means that everything will take longer, over time this evens out with the benefits of having a different perspective.

Have Deep Sector Knowledge. Someone in the business needs to know an area really, really, well. The kind of knowledge that comes from working many, many years at the coalface of an industry.

Education is lifelong. Either formally take courses in a Business School (yes, I know) or take time regularly to view the fantastic resources on YouTube,

What are the next big tech trends? Where do you see growth and innovation coming from?

Exponential Technologies such as Artificial Intelligence, Robotics, Synthetic Biology and 3D Printing are enabling small teams to do what was once only possible by governments and large corporations. New solutions to old problems will be found in fields such as Energy, Agriculture, Communications, Education and Healthcare. Of course, this will lead to many ethical questions we will have to consider and moral judgements we will have to make but on whole I´m a techno optimist.

Is there anything else you would like to add?

I´m a recent convert to the concept of coaching. I´m now coaching several entrepreneurs through the scaling process and I´ve been really surprised at how good the results are. Not everyone is coachable. For many, it will be too touchy feely but I would recommend to any decision makers out there that they give coaching a try. We forget how lonely it is at the top. Just having someone you respect to talk to can make a big difference. No serious tennis player would be without a coach so if your decisions impact others, should you not also have help?

InterTradeIreland's next free masterclass 'The Innovation Imperative' is taking place with Professor John Bessant in Belfast on March 11th.

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