Starting off day two of Venture Atlanta 2024, we had an incredible bonfire chat with the founders of Scalebound who gave advice to CEOs and founders on scaling startups.
What Is Scalebound?
Scalebound is a consulting company from founders Rob Forman and Eric Spett, built to help scaling startups grow their businesses faster through teaching, coaching, and community.
Who Were the Speakers at the Scalebound Session at VA 2024?
- Eric Spett, Founder & CEO of Scalebound
- Founder and former CEO of Terminus (VA ‘16) whose most recent raise was $90M at a valuation of $400M.
- Rob Forman, Co-Founder of Scalebound
- Co-Founder and President of SalesLoft (VA ‘12) which was acquired by Vista at a 2.3B valuation.
At this chat, Eric and Rob, two titans of the startup ecosystem in Atlanta, discussed the process of scaling startups, and how their new joint venture Scalebound can help CEOs scale their businesses with clarity and confidence.
Keep reading to see the questions each of Venture Atlanta’s headline sponsors asked Eric and Rob during the bonfire chat and the advice they gave to scaling startups.
Scaling Challenges for Founders: What Didn’t Go Right When Starting Your Businesses?
This question was asked by Joe Berklund of Morris, Manning & Martin.
Not Embedding Purpose and Values
Rob emphasized the crucial mistake of not placing purpose and values at the heart of scaling startups from the outset.
“Probably my biggest mistake that I thankfully survived predates Salesloft," Rob explained. He didn't initially see the importance of embedding a clear purpose and values within the company's culture, thinking such measures were only necessary once the business reached a certain size or milestone.
This oversight led to considerable internal misalignment. The experience was profound enough to cause severe chest pains and a period of reflection on what was truly important, which ultimately guided him to prioritize organizational health and align his team around a shared vision of excellence.
Not Focusing on Customer Value and Retention
Eric Spett focused on a different aspect of early-stage startup advice, discussing his initial oversight regarding customer value in his company.
Eric admitted that while his company was proficient at driving demand and closing deals, they overlooked the significance of customer retention until it was almost too late.
"For us, a huge mistake learned the hard way was not focusing on customer value soon enough," Eric shared.
“We were always focused on revenue when we should have been focused on the retention number.”
- Eric Spett, Founder & CEO of Scalebound
Despite impressive annual recurring revenue figures, underlying issues with churn and retention painted a troubling picture. The company was always focused on hitting revenue targets, which masked the critical retention problems that were eroding the business's foundation.
Eric stressed that retention should have been their rallying cry from the beginning, underscoring the lesson that understanding and delivering customer value is paramount for scaling startups.
Founder Lessons: What Leadership Lessons Have You Learned?
This question was asked by Drew Graves from ExtensisHR.
Honesty vs. Positivity
Eric highlighted the critical role of positivity in leadership, especially when creating something from nothing and managing diverse teams. However, he learned that "positivity runs out," particularly when facing challenges and roadblocks with scaling startups. Eric pointed out that solely leading with optimism can lead to missed opportunities for addressing underlying issues within the company.
"When you become more honest and less positive, you'll be amazed how many good ideas come out.”
- Eric Spett, Founder & CEO of Scalebound
This approach not only resolves issues more effectively but also taps into the invaluable insights that employees—often the ones closest to the problems—can provide.
Adding Too Much Value
Rob shared a personal moment of realization that occurred in the spring of 2017 when he debated stepping aside from his leadership role due to the intense pull between his personal and professional life.
With $15 million in funding and his company beginning to scale, Rob initially thought the problem was balancing his personal and professional commitments. However, a conversation with a coach revealed a deeper issue: "You're not growing as a leader. You're the bottleneck," his coach told him. This was a symptom of Rob's difficulty in holding people accountable and his habit of adding too much value, which often undermined his team's autonomy.
Rob learned that while leaders might aim to empower their teams, they must refrain from over-influencing their decisions.
“I learned to stop adding too much value. I had to learn how to just say ‘Go for it.’ That started to increase ownership and empower the next line of leaders.”
- Rob Forman, Co-Founder of Scalebound
Startup Growth Tips: What’s the Biggest Risk You Took That Paid Off?
This question was asked by Jonathan Sawyer from Cherry Bekaert.
Pivoting Product
Rob shared the story of a major pivot in his company when they initially built a product called Prospector, designed to simplify the extraction of public data from LinkedIn for salespeople and marketers.
Despite its initial success, Rob realized the business model—essentially building on someone else's platform—was unsustainable. "We realized we were building on someone else's land, and that wasn't going to last forever," Rob explained.
The decision to pivot from Prospector to what would eventually become SalesLoft was fraught with risks. LinkedIn started to clamp down on their data usage, which forced Rob's hand. He negotiated with LinkedIn for an additional 12 months before agreeing to shut down Prospector, transitioning almost the entire team to focus on developing SalesLoft.
This bold move to sunset a successful product to focus on a more sustainable one proved pivotal, setting the foundation for SalesLoft’s future success.
Letting Go of Your Original Team
Eric discussed his risky decision to shut down the managed service component of Terminus to focus entirely on software. This shift was necessary as the company grew and the original team members, or "OGs," who were integral at the early stages, no longer fit the evolving needs of the business.
"Every time you have to let an OG go, it's scary. What’s the cultural impact? Will their team leave? How is it going to impact us? It’s a big risk, but something you have to do over and over again."
- Eric Spett, Founder & CEO of Scalebound
However, Eric emphasized the importance of aligning the team with the company's growth and strategic direction, acknowledging that while difficult, these decisions were essential for Terminus to progress. The move to focus solely on software, despite the risks involved, allowed Terminus to thrive and adapt along with other scaling startups.
Startup Founder Advice: What Is Your Advice for Someone Going After the First Million Dollars Versus $10 Million?
This question was asked by Brooke MacLean, CEO and Founder of Marketwake.
First Million: Focus
Eric stressed the importance of focus and prioritization in the journey of scaling startups looking to reach their first million.
“The number one piece of advice: focus"
- Eric Spett, Founder & CEO of Scalebound
In the early stages, entrepreneurs are primarily engaged in building and selling the product. He suggested a disciplined approach to managing distractions by laying out goals and priorities on paper, starting with quarterly planning, and then breaking it down to weekly and daily tasks. Eric and Rob use this productivity planner from Intelligent Change to help them focus.
"If it's not about building or selling the product, you have to say no," he advised. Eric underscored the necessity of repeating this cycle of prioritization, focusing on execution, and iterating quickly to see real progress in the business. He also recommended tackling the hardest tasks first thing in the day to make everything else seem easier.
$10 Million: Leadership
Rob highlighted the shift necessary when scaling from one million to ten million, particularly in developing a strong leadership team. He pointed out that success in scaling startups is about more than just focus and resiliency; it involves strategic team building. Here are his four steps:
- Build a highly cohesive team
- Create organizational clarity on why we exist
- Overcommunicate clarity
- Reinforce with human systems
He shared practical steps for achieving team cohesion and organizational clarity, such as sharing life stories among team members to overcome biases and establish deep connections. This practice, known as "Lifeline," involves each executive sharing ten personal highlights and lowlights that have shaped who they are, fostering a high-trust environment.
Rob also emphasized the importance of role clarity within the team, ensuring that responsibilities are clearly defined and understood, with only one person accountable for each decision.
"Your capacity as a leader is set by the capabilities of your leadership team. If you don’t build the foundation of trust early, you’re in for a rude awakening as the business scales.”
- Rob Forman, Co-Founder of Scalebound
The #1 Venture Capital Conference for Scaling Startups
For founders embarking on this ambitious path, remember that your initial million sets the groundwork, but it’s the approach to scaling beyond that will truly define your startup's trajectory.
If you want to accelerate your startup’s trajectory, attend Venture Atlanta, the largest venture capital conference in the Southeast!
From the Startup Showcase Live to insightful panels with industry experts, Venture Atlanta has everything scaling startups need to learn, network, and grow their businesses. Click here to learn more about attending Venture Atlanta so you can start scaling your startup!
Frequently Asked Questions
How can founders prioritize effectively while scaling their startups?
To prioritize effectively while scaling their startups, founders should focus sharply on activities that directly contribute to building and selling their products. Set priorities on a quarterly, weekly, and daily basis and say "no" to tasks and opportunities that don't align with these core priorities.
What challenges did Rob and Eric discuss about scaling their companies?
Rob and Eric discussed several challenges in scaling their companies, including:
- Prioritization and Focus: Both highlighted the difficulty of maintaining focus on the core activities that drive business growth, such as product development and sales, amidst numerous distractions.
- Team Dynamics and Leadership: Rob emphasized the challenges related to evolving the leadership team, particularly the need to ensure role clarity and build a cohesive, high-trust team environment.
- Cultural Impact of Personnel Changes: Eric mentioned the tough decisions required when original team members (OGs) no longer fit the company’s growth trajectory, and the potential fallout from these personnel changes.
- Product and Market Fit: Eric faced challenges related to early product iterations that did not adequately focus on customer retention and value, which initially led to high churn rates.
Strategic Pivots: Rob discussed the significant risk and subsequent challenges involved in sunsetting a successful product to focus on developing a more sustainable one, which required negotiating additional operational time and realigning the company's vision.
