The Perspective of the Scale-up CEO

A recent conversation with an Investor, Advisor, and Board member provided the encouragement. She highlighted that I needed to share the value of fractional executives while keeping the perspective of a scale-up CEO in mind. So, here we go.

The OECD defines a scale-up as a company that has achieved 20% annual growth in headcount or revenue over the past three years. And according to a Deloitte analysis, only one in 200 startups actually become scale-ups.

Mike Reid, a Senior Partner at Frog Capital, shares what effective scale-up CEOs do. They “continually review AND improve on their own thinking and behavior and that of their senior team. They review their team's strengths and weaknesses on a frequent basis to identify where development, role change, and new hires are required.”

There is plenty of advice like this available, talking about what makes a great scale-up CEO. And beyond their qualities, skills, and character traits, here are a few demographics: they tend to be younger (most sources place the average between the late thirties and early forties), they have a technology background, and they were not in business during the last recession in 2007/2008.

John Williams, a seasoned executive and SaaS Revenue Advisor, has been through several recessions: “In the pre-2023 economic situation, contraction periods (recessions) present growth opportunities for some market participants. Being ready to make opportunistic decisions - which increase growth capability leading to higher valuation potential as the economy swings back to expansion - is the result of both strategic & tactical actions; executive readiness is the key to success here.”

One of the earlier indicators of a recession is the slowdown in funding. As the Wall Street Journal reported, in Q3 of 2022, global venture funding fell 34% quarter-over-quarter to hit its lowest level in 2 years.

The list of steps to take to weather a recessionary storm and overcome a shortage in available funding has one overriding headline: Preserve cash! That means being pragmatic and strategic about investments, reviewing every line item in your spending, no longer over-hire or hiring ahead, and, yes, layoffs.

According to Crunchbase, during the first week of November, at least 6,473 tech workers in the U.S. were laid off, a more than 600% increase from the 910 who lost their jobs the week before. These current layoffs from large tech titans and startups alike, in turn, might just hit the pause button on the talent war that was top-of-mind in the past couple of years. 

From a recent Angel List Newsletter: “Tech workers are increasingly anxious about job security amid the latest round of Big Tech layoffs. For those looking, though, there are silver linings to be found:

• The Wall Street Journal concluded that laid off tech workers can quickly find new jobs, pointing to an overall U.S. jobs market that remains surprisingly strong. 
• Recently funded founders of fledgling tech companies can barely contain their glee at the quality of the talent pool they’re fishing in today.
• Laid off tech workers are finding a ripe environment for launching their own ventures. Funding fell off a cliff for later stage deals but remains steady for companies raising a first major round. Seed funding, meanwhile, to set record highs.”

One of the talents a scale-up CEO is looking for today is the executive experience of having dealt with a recession before. Unable and unwilling to spend on a full-time executive hire, though, there is one alternative: Contracting the exact skillset needed through a Fractional Executive.

Especially on the commercial side of a business, the experience of having successfully weathered a recession before is now necessary to:

• Make the product portfolio recession-proof.
• Identify and implement additional channels to market.
• Lead a sales-driven turn-around.
• Enter new markets to spark new growth.

…and so many other steps that help companies navigate choppy economic waters.

Talk to us to find out how our interim and fractional sales leaders like John Williams bring the necessary experience into a scale-up business.

__________________

Mike Reid – Start-up to scale-up: How a CEO’s role changes