Strategy Session: When to replace the founder, how to be a learn-it-all, when to take the "venture bet," w/questions from Endeavor Outliers and co-host Bob Safian, editor-at-large

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Hey folks, Jeff Berman here. I am thrilled to share some of the new names who will be joining us at this year's Masters of Scale summit. This may be our biggest stage yet. Reed Hastings, Meredith Whitaker, Van Jones, Amjad Masad, and more. Will be there with us October 20th through 22nd in San Francisco. If you're building something great, or you want to build something great, We want you there with us too.

Join us at masters of scale dot com slash apply twenty six. That's mastersofscom slash apply. twenty six. You gotta have incredible talent at every position. You

There are fires burning when you're going out. Can you believe it? Such an idiot. go back to this is totally gonna be amazing. There are so many easy ways. I have no idea what to do. Sorry, we made a mistake. But you have to time it right. We haven't made it just how you do it. This is masters of scale.

I'm Ruth Hoffman. Co founder of LinkedIn. Partner at Greylock. And your host. Welcome to our third strategy session.

where we partner with a community of entrepreneurs to hear the questions that are keeping them up at night. Our entrepreneurs on today's show. are all part of endeavor. An organization that helps create startup ecosystems around the world. This has actually been something of an endeavor month on Masters of Scale.

This is our second strategy session with Endeavor Entrepreneurs. And next week our episode is with the Bitcoin Pioneer. When says Casaris. who is an endeavor. Poster child.

For this episode. The Endeavor team connected us with their fastest growing, highest performing entrepreneurs worldwide. They call this group the outliers. because they're just growing so much more quickly than other very successful companies. The question themselves are really revealing.

About what's happening in business and what's happening in the world. So I invited a guest co host to join me and bring some context to what we're hearing. My co host for today is Bob Safian. Many of you will know Bob from the eleven years he spent as editor in chief at Fast Company. You might not know that for the last six months he's been our editor at large here at Masters of Scale.

Bob. We're lucky to have you. Welcome. Thank you, Reed. And hello everyone.

You are in for a treat. As Reed mentioned, today's episode is a strategy session. And that means it's a bit different from a standard masters of scale episode. Instead of Reed asking questions, He'll be answering them, sharing his direct insight on a variety of challenges and opportunities. It is rich stuff and in usual Reed style, it's both refreshing and practical. It's worth noting that the seven questions Reed responds to in this episode aren't from startups per se. They're what we call scale ups.

already established substantial businesses. A couple have even hit unicorn status valued at over a billion dollars. The questions that follow are extremely global, which I love. So much US business media tends to focus on American success stories and because of that, we miss out on other models and the breadth of inspiration and activity underway around the world. Reed's answers illuminate how we can learn from a diversity of experiences and how sound advice can apply to all of us. Whatever the size of our organization or the location.

With our first question, we'll take a deep dive into scaling strategy. When and how should you scale beyond your core product and marketplace? This is a topic we'll return to a few times in this episode. As you'll see, Reed has a way of providing clarity. Despite the uncertainty. This question comes from Mariano Nunez. Mariana runs a cybersecurity company out of Buenos Aires that's growing really fast. He hired a young team. It was everyone's first startup. And it's like they have the tiger by the tail. And so now they're asking

What do we do next? Here's Mariana. Hello, Read. My name is Mariano Nunes, and I'm the CEO and co founder of the NAPSE. Onapsis is a cybersecurity company that's focused on protecting business critical applications.

You basically provide a software solution that helps these large organizations protect the systems. from both outsider attacks like malicious hackers as well as insider threats. The founding team These are all first time entrepreneurs. Basically a month after releasing the first version of the product, we got our first customer that ended up being the US Army. And within nine months, we had about ten fortune, two thousand organizations using the product.

So we had no experience on how to deal with this both from an operational perspective, from a product, from a go to market, and we we really had to learn how to scale very quickly to address and serve those very demanding customers. So fast forward to today, I will consider our company as a category leader in this space in securing business critical applications. So my question to you is really how do we think about continuing to scale down the road? We are now in the middle of planning with executive team. А вихав very interesting bets that we we wanna do. Uh some have to do with truck expansion, with geo expansion. There's some Well potentially adjacencies from a market perspective.

I wanted to get your thoughts on how do you think about balancing bet in maybe new initiatives with Really protecting your core business and continuing to grow that at a at a fast clip, right? How do you balance that? How do you know When it's too much, when it's uh when you can do more. How do you run those discussions with your executive team?

to make sure that you're maximizing your chances and and without really spreading too thin. Mariano, congratulations on the success with Anopsis. These kinds of security applications are particularly important. And one of the things that obviously as you're demonstrating can be done Any area of the world with intelligence and talent.

The question you're asking, which is roughly speaking, how do you balance The growth of the core business. Together with additional initiatives, uh geographic regions, product lines, et cetera. Is a classic one.

That all startups face when they're in scaling or in blitz scaling, either one. And the tenancy tends to come down to analysis of a few variables. So like one variable is Are you under competitive threat in the core area and need to establish that?

If that tends to be high, then most strategic reasoning is from your core area. It depends on competition and market share. The question is how much is the organization straining just to keep up with the demands of the core area? Like if, for example, really critical things are kind of falling off the plate. Then you know, higher percentage. of allocation within the core area.

But on the flip side Sometimes you go, Well the core area Will have a slowing growth rate, has a lower Total addressable market, Pam. And so therefore it's more important to get

you know, kind of expansion, whether it's geographic, product line, investment. Now Roughly speaking I'd say a default plan.

for Silicon Valley growth companies tends to be seventy percent core. twenty percent. easy expansion and 10% venture bets. That's kind of roughly how resource allocation, planning, budgeting, of the overall thing is a default. And it's seventy percent in the core because

Unless you're in a situation where your core is has a limited upside. slow growth, you tend to be, you know, kinda continuing to harvest the core strength of your business, establishing it up. The twenty percent expansion tends to be easy. Adjuncts.

Like for example, if you're LinkedIn, you say, Well, we're doing recruiters, but we're also going to do sales. Or Like maybe we'd think about, and we haven't done this obviously, video profiles or something that's it adds to the product, but it's very understandable within the current customer experience, within the current organizational product development ethos. People take the that's still what your product is. Now to continue the metaphor in venture. a venture for LinkedIn is not, of course opening up a an ice cream store, right? That's like something totally different.

Venture is When we launched LinkedIn influencers saying, Well, actually, in fact, people won't just want to know how to connect with opportunity and use their networks in order to find people. But they will also want an information source and they'll want to be following influencers and lead thinkers and business leaders and other folks In content.

Focused around the business world. And so those when they started were venture bets. And you get the natural progression where a venture bet may become an expansion bet, maybe come a core bet. And one of the pieces of discipline when you're doing this kind of seventy, twenty, ten structure, is that you need to sometimes say, Well, it's a venture bet, it didn't work out. We tried it, it didn't work. Right. Similar sometimes to expansion. Whereas usually what's in the core

You more or less have a pretty good sense of what's gonna work. And so in your particular case with an opsis. I think that you know, part of the way to look at this is to say, Well, what's our strategic position Generally speaking, you should look further than a year, although

most often further than five years in the tech industry Tends to be thinking that you overly know the future. There's a few cases, hardware, other kinds of things where you have to be in that longer cycle, but generally speaking, you don't know how competition's gonna change. Uh sometimes market dynamics change, sometimes geopolitic change And so generally speaking, you're kind of looking at a kind of a three, three to five year characteristic you can say, well, what's our total addressable market? What are the places where we can grow? We can increase our growth rate.

What are the ways that we have you know, kind of good business opportunities and then how do you balance that With core. expansion and venture. And then when do you know that it's too much?

It's roughly speaking when really important things are dropping off the plate or There is more than a little collision. in confusion and re prioritization and Key resources being

overly taxed. I'll give you an example. you know, one of our core strategies in LinkedIn for good. was to enable people to seek out non profits. to uh volunteer at, to work, to contribute to, and have nonprofits be another organization that's a a network node, just like people and just like companies uh within the LinkedIn ecosystem, but we found what happened is that had a huge collision on the prioritization of the search team.

The search team was really core to both the LinkedIn consumer experience and the LinkedIn, you know, prosumer experience and the LinkedIn corporate experience. And so we continue to do some of that stuff, but it went to a much slower rate because of that collision of resources. And so A little bit of scraping and collision is probably you're pushing hard enough, but too much. is challenging. And that always comes down to analysis of your team. specific individuals.

kind of your executives, the teams, capabilities, your market, your competition. And what things you see going forward. So one of the key things is knowing when you're a venture bet Or when your expansion bets are actually working, so you essentially graduate. Right, Venture Bets might become expansion or core expansion may become core.

And Usually that's a question of customer momentum. A question of competitive effects. questions of synergies. with your other core businesses.

And those sets of things cannot be mathematically determined in all cases. It's possibly something really important to us. Offensively or defensively, strategically. But it's at least, you know, in a baseball metaphor of getting on base and core. should be generally

Fairly predictable. And if you're off in your predictions, one of the things that you should be thinking about is how do you increase your ability to predict it well, where capital and effort will yield a certain return. And the graduation is to say, I actually think we can do this game now. We understand this well enough that it shifts up in the game, and then we make the decision and analysis based on that game. That was quite an answer.

This is Bob Safian back with you, and it's hard not to be impressed by the meatiness of Reed's answer to Mariano. If I had to draw your attention to just one element of Reed's advice I'd hark back to his seventy twenty ten framework. It's such a powerful and simple device for focusing your strategy, separating out core business, expansion efforts, and venture bets as different buckets. even if you end up allocating your resources at slightly different levels than Reed suggests.

The framework is incredibly useful. Our next question comes from Augustina Sartore, founder of a beauty company called Glam Street, which was acquired by Ulta Beauty in twenty nineteen. Augustina is based in both Uruguay and San Francisco. And she has a really significant question. About hiring.

It'll be familiar to anyone who's expanded into a foreign market, but in truth, it resonates with any founder who's making key hires. What we're all trying to figure out What can I hire someone else to do? And what work do I need to do myself? Here's the question.

I am Agustina Sartori, founder and CEO at Glam Street. Um we are an augmented reality company in the beauty space that enables virtual try-on experiences. Are there times When the entrepreneur themselves is actually the best

Even when in a foreign culture Or is it always best to actually hire somebody local? As a non native entrepreneur

How would I build trust with American companies faster. I had just moved to the US from Uruguay and we were trying to target the US market. And there are new things you need to learn, right? Language is different, ways of talking is different, presentations, quotes, and budgets, and everything works differently. So the advice that I got was Why don't you hire an American salesperson that will bridge this gap? Right.

of actually being able to generate trust and really generate a relationship with the potential customer. So I think that it might have not been the right advice for me because to generate trust you need to deeply believe on what you're doing. You need to deeply believe that you're gonna solve a problem. And people see that. It's hard to replace that passion. That is what

makes you unique as a founder? If we are self aware as foreign founders, Of our weaknesses. Анвиасефай о вот конate trust and what really generates value And we put

out there exactly like who we are, why we're doing what we're doing, and are really making an effort to show that and to be transparent and true, I think that is stronger than anything else. Augustina, congratulations with the success in Glam Street, you know, acquisitions to a Large. retailer is one of the ways that gets scale and leverage and it's one of the successful entrepreneurial outcomes.

And as I summarise your advice, it's kinda like well you got a a bunch of advice about how to connect with US companies. hire Americans hire people who are natives, hire people who understand the local market, and you're not so sure anymore. So the right way to think about the answers to these questions is to kind of level up to the problem you're solving.

Whether or not you're outside the US coming to the US, US going outside, or any kind of international Border crossings. What does the market look like? How do you do market entry? How do you partner well? How do you understand product market fit? How do you sell? Um You know, how do you address all these questions? And the most

General answer. is well, there's a bunch of things that are different, then you should hire people who know how to navigate that new market, know how to navigate that language, know how to navigate that culture, know how to navigate those partners. And that that's you know, bringing that expertise in through hiring, generally hiring local, is a very, you know, basic and good piece of advice. However As part of leveling up on this, you think, Well

Actually, in fact, as an entrepreneur, I'm doing a new product and I'm experiencing a new product market fit and I'm usually trying to do something that hasn't been done before. Like a a simple technological way of looking at it is I look at these entrepreneurial product games as it's either a version zero to version one. There was nothing there before, and now there's something, a version one to version one, which is look, it's an improvement, it's different. And then there's a version one to version two, which is it's it's a known category, but this is a massive step forward, a a game changing way of looking at it. And the entrepreneurial games are usually one of those kinds of games. And when you're doing that The most central thing, of course, is you need to have people who help you play that game, even in the new market entry.

Because that entrepreneurial awareness of that future product market fit, the passion and the belief in it, as you talk about, is really, really key. And so When you think about hiring that expertise to help you

get into a new market, a foreign culture, establish partnerships. It is good to think about. who will be heard, who will be believed, who will be trusted. But Actually in fact that can be built.

only if they also have that helping you with that future product market fit. that either version zero to version one, version one to version one, one, version one to version two. And that like here is how this product can go to this market. That doesn't necessarily mean that they're an entrepreneur themselves. But they have to be entrepreneurial, they have to be measuring that kind of product market fit. They have to believe in that vision. They have to be adjusting. They have to to have some judgment about when to come back to you and say, look, your vision is doesn't work exactly that way for this market, or look, we need to do this to make your vision work and and to have that right kind of adjustment.

And that's actually more fundamental. So for example, if you said Well, I have someone who is learning, for example, the US market. And they're a fast learner and they're gonna learn the US market, and that will take some time and that will be one of the costs, but they're really great at the entrepreneurship, at the product market fit, at the kind of like, here is how this product launches in this market, here's how we establish. partnerships of trust with other companies in this market, then sometimes that's the right pick because it's that future product market fit. that you most need and that the knowledge of that local market, the ability to operate in that local market is only one component of.

Reed's perspective here is that hiring choices have to be in sync with your company stage. What jumps out to me is Reed's focus on what sort of next stage leap you're planning for your business. Are you at stage zero, inventing something totally new? Are you at version one point oh and heading to version one point one? Or are you going one point oh to two point zero? This insight can extend well beyond hiring to all kinds of decisions.

Too few business leaders and entrepreneurs crystallize their plan with such focus. But once you do, your decision tree gets so much more clear. For our next question, we go back to the topic of deep scaling. Reed's answer here touches on a concept that I love.

What Reed calls paper testing. Here's the question. From Andre Faraz. I'm Andre Faraz. The co founder and CEO of Inloco.

A location based authentication and engagement technology platform. For mobile apps. I am from a city in the north east of Brazil called Recife. I think that the loss of privacy in an a hundred percent connected world might become one of the biggest societal problems of the next generations.

After ten years working on this I firmly believe that physical behavior can serve As an anonymous authentication and authorization tool. Add in local. We use a five factor sensor fusion to create a behavioral fingerprint, allowing us to engage and authenticate app users anonymously.

Our proprietary location technology Thirty times more precise and two thousand times more efficient than GPS. We now have two hundred people in Brazil. With seventy percent of them being software engineers. And I just moved to Silicon Valley to start our expansion into the US.

In Brazil. We are the dominant player. And we grew by selling to enterprise customers and providing very close customer support. And in the US. Our competitors have adopted a completely different approach.

Relying on existing technologies like GPS. And collecting personally identifiable information from consumers. Given that context of global expansion Which growth strategy would you adopt first? Channel partnerships.

Partnering with existing cybersecurity and Martec platforms to scale on top of their existing customer base. Enterprise sales. Selling to large B to C tech companies directly? More long tail. Провадиння сел серці.

For independent app developers. Growing from bottom up. This is Bob again, just to quickly sum up Andre's question. He has three strategic options. He can partner with existing cybersecurity platforms and scale on top of their customer base. He can pursue enterprise sales, which means selling directly to large consumer tech companies.

Or he can go after what he calls the long tail. Which is selling to independent app developers. Let's listen to Reed. Andre, congrats with all the success within Loko. It sounds like really great technology. And also, of course, welcome to Silicon Valley. Now

The detail of actually knowing which kinds of growth strategy to adopt first actually have a lot to do with the details of the business, uh natural demand cycles. where you're seeing a good product market fit per channel. There's a bunch of things that have the more detailed set of decisioning for you.

Yeah. you know, I hesitate to give detailed and structured advice because it may be wrong. given certain details of of your business. Now that being said,

The probably principle is what gets your distribution off the ground and moving in kind of a an order of magnitude of months. is probably where to focus the time frame on which of these successful things could work. Is it a Channel partnerships. Is it a B to B sales force, is a partner with B to C companies?

Is it a set of APIs for developers? You kinda say, Okay, which thing would get me most naturally towards the market I wanna be or close to the market I wanna be, and I would get traction And a cycle going within months. Longer than months is probably too long for figuring out if there's troubles with product market fit. You might also think about how you can test the channels and how you can measure Like which one will actually in fact yield that fast dividend and and winning cycle within months.

Obviously the one that's structurally least likely is the independent app developers and a set of APIs, unless that demand is already there. And that's part of what I was referring to is it depends a lot on where there's demand. Right. So like for example, if you've got a bunch of well understood kind of a go to market, B to B, you know, hire a sales force. Then you would tend to adopt that first rather than trying to go pitch B to C tech companies.

Because the B to C tech companies sometimes, if you're not in their priorities, can can be a long set of cycles going nowhere. On the other hand, of course, if B to C companies are already knocking at your door and saying, Hey, you got something that's interesting to us, you might say, Well, okay, we'll focus on that because they're already here and we can get progress on that in months. One of the things that frequently happens in experimenting with go to market strategies within B to C companies within direct internet companies. is to paper test things. So you might take out advertising on Facebook and say, Hey, you know, are you interested in this kind of product or service? And the people click through and they say, you know, you get to the buy button, the buy button leads to a give me your email address and I'll tell you when it's there. as a way of testing before you build your particular feature, your particular product, your particular service.

That's the same. People might want it. There's versions of that in the enterprise too. You say, Well, for example, in the very early days of LinkedIn We thought we were gonna be an individual subscriptions business for the first X years, though we're gonna be expense to the company. But we had companies to start coming and knocking on our door. And so we said, Well, is this a real signal or not? So we hired a sales guy.

generated a PowerPoint paper deck of here's the product we're working on, which of course it's a product we conceived of, but we were not working on. And we sent the sales guy out to go talk to some companies saying, Well, you know, here's the comp product we're working on. We're looking for feedback. Would you like this product? Would you buy it? And we got some details of change this or change that or this is more interesting or this is a higher priority. But we also got a measurement, this is our fundamental thing, of buy demand. And we realized that we should immediately scale up an enterprise product and an enterprise sales force. And that should be added to the corpus of work that we were doing with LinkedIn. And that was a version of doing essentially the paper testing within an enterprise context. But I think the most helpful thing I can say to you and to companies that are in your type of position Is how do I have an order magnitude months?

Could be two, could be six, could be nine, right? Shouldn't be twelve. that I'm beginning to get a feedback path that this is the right path, that I got the data for it, that it's going to compound, that it's going to be a a healthy channel, and I should really build around that. even as I might build around other things. And of course, just like any great entrepreneur, you're always measuring to are there other signals that suggest other ones are better. And sometimes you have to make a hard call, you started experimenting with you know, partnering with existing cybersecurity and Martech platforms. And then all of a sudden the BDC companies say I'm knocking at your door and you went, Okay, we're gonna put on the other one on slow boat and we're gonna move this one on fast boat because that's the hard call.

our first Masters of Scale live episode, and you're reading the signals and you're trying to figure out which signals would give you an answer within months. Good luck. Our next question comes from Davide D'Attoli, the CEO of Talent Garden, a European company that empowers entrepreneurs through co-working spaces and educational platforms. They're based in Italy with locations in eight countries.

I love the question you're about to hear from Davide because it's one that often sits kind of silently behind other strategic questions, and it's this. As your business grows, and especially when it grows quickly. How do you keep growing as a leader? Here's the heart of Davide's question.

There are a lot of entrepreneurs like myself. We are in the middle scaling phases. The real question from myself. is how you can adapt your skills and your abilities in order to grow the company. In a phase in which every six months the skills that are required are totally different and changing.

Today I manage a company of two hundred people. Just one year ago we were eighty. My level of delegation and leadership. has to be totally different and probably would be different again in one year When we will be three hundred people.

So how an enterpreneur But are also one hundred percent focus on the business development. Canada himself. Тобі з бік челендж. And how you can quickly evolve.

Into your role of entrepreneur. David U. Congratulations with all of the success with Talent Garden. And it sounds like you're doing a lot of the right things, which is to have a learning mindset. To be a learn it all versus a know it all.

And to be realizing that what you learn will be changing. And what you've learned so far. What got you here won't get you there. And so you need to learn the new things as well. And that is absolutely critical. as a mindset. And part of my first book, The Startup You, I talked about being in permanent beta, and that means you're always evolving anywhere you are as an individual. And that's the right mindset to this kind of challenge. Now as you know

Part of the reason why like I wrote Blitz Scaling and do Master the Scale is to s precisely deal with these kinds of scaling challenges and you know, moving from eighty to two hundred in a year. is classically that kind of chaotic Scaling. Now the good news for you is if you're moving from two hundred to three hundred, that's actually easier than eighty to two hundred, because the patterns of management, as we describe in blitz scaling, won't change that much. You won't necessarily have to change over your executive staff. You won't necessarily have to change over your communications, your onboarding, a bunch of different ways that you're operating internally, because the the way that you operate at 200 and 300 is roughly the same usually

But You've already referenced some of the really key things that entrepreneurs should be doing in order to always be learning here. You know, some of it is reading and knowledge, some of it is consulting with other CEOs and because your business is creating a co working space, you have a natural connection with that. sometimes you join CEO groups, whether it's you know, CO alliance or you know, Young Entrepreneurs Forum or Young Presidents Forum or any of these other organizations, you know, some things where you're structurally talking to COs in similar positions is also very helpful.

Sometimes you look for a coach. that you can reflect on and move at a faster cycle and be there reliably and be doing that, you know, week by week or every two weeks or whatnot. It's actually something that's also frequently very uh helpful is to get the right investors because if the investors have worked with other COs who've gone through this process, if they themselves have gone through this process, if they know What are the things to look for?

Who are the people to connect you with? in specific things. That's also very helpful in the learning curve. And obviously it's always good to find mentors or a network of mentors that help you with it. And as long as you are kind of really thinking about the question of

Look, I know the game will be changing. I know the things I've learned before, only some of which will apply when the game changes And so I think your question is excellent from a viewpoint of all entrepreneurs. of you know always be learning. And Be a learn it all. Not a no at all.

In this answer, I'm not sure which line of reads I loved more. The one he started with, which is classic for all entrepreneurs. What got you here won't get you there. Or the line he ended on, which should be a classic. Be a learn it all, not a know it all. That framework from know it all to learn it all has actually been a core part of the resurgence at Microsoft. That Satya Nadella has engineered as CEO since twenty fourteen.

Nadella said he wanted to make the company into a learn it all one instead of a know it all one. And that journey has sparked Microsoft to become a trillion dollar enterprise. Pretty good stuff. When you've built substantial wealth through your business, it's often tied up in a single equity position. The upside is real, but so is the risk, and knowing when to act isn't always obvious.

Creative planning works with business owners to build a strategy around concentrated equity. When to diversify, how to manage tax risk, and how to protect what you've spent years building. Creative planning where wealth works together. Learn more at creative planning dot com slash masters of scale. Humans will never be more intelligent than AI.

There's gonna be two types of companies. Those were great at AI and those that went out of business because they weren't. How do we build a future? That is human centered. I'm Rana El Khalyubi. And on my podcast Pioneers of AI, we answer that question and so many more. As an AI scientist, entrepreneur, and investor, I know what it takes to build AI that works for everyone.

Every week, I sit down with the pioneers shaping our future. And we take you behind the scenes of the AI that's transforming our lives. Find pioneers of AI wherever you tune in. Hey listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show. Because every Friday we release a second rapid response exclusively in the Rapid Response feed. The guests and topics are just as compelling and timely from Ford's CEO to NASA's administrator to the lessons from The Devil Wears Prada. It takes about 10 seconds to find, just search rapid response wherever you listen to podcasts and hit follow to make sure you never miss an episode.

I hope to see you there. This next question comes from Veronica Pasquale. Who's CEO of a robotics company with locations across Spain, Germany, France, and recently the US. She has a question about blitz scaling. And important to note. She's not coming at this as a startup, but as an established company with hundreds of employees and significant market share.

Let's hear from Veronica. Hello, Bree. I am Veronica Pascual.

See you. Ask T Mobile for about things. I acquired the company fifty years ago. That was me working doing conveyors and traditional material handling systems and transform the company into

The uh engineering production integration of to be defeated. Uh we produce around twelve hundred vehicles per year that we sell in seventeen countries worldwide. We are three hundred people company mainly engineers based in Spain, France.

Berlin and recently US North Carolina. So The challenge we have now is how to go to the next level of scale. Yeah.

Selling a few robots in different companies. Could be somehow Easy. But When you go into deep transformation of processes or for big

retailers either for example e commerce processes. This demands an important change. in the processes themselves and also in the behaviour of the humans using the technology. Six out of three. We'd be very much welcome.

Veronica, congratulations with all of the success with Asty Robotics. And these are a set of very important questions. around blood scaling. It actually in fact is never too late to blitzcale.

Um you have anything from uh existing companies that blitz scale an internal component like Amazon did with AWS, you know, the Amazon Web Services. to sometimes That's the pattern that you just end up in. Now the challenge

When you're not just doing it from a pure startup. into a blitz scaling company where It's to some degree easier. You have your capital focus on it, you have all of your team focus on blitz scaling versus preserving the current customers, the current platform, the current business. while also blitz scaling

you're usually driven to blitz scaling by competition or perspective competition. Or sometimes dynamics of getting to enough of a critical mass to be doing the business. And all of those things make the start up to blitz scaling simpler and An easier focused

Effort. When you have a existing three hundred person business. Global business. А сета кастомерсь а сетаворки процес.

The blitz scaling questions come down to More Difficult questions. So for example, Are you gonna risk the entire business? Are you just gonna say, Okay, we're now gonna get over our skis. We're going to push for getting to scale.

In a risky way where we're putting all our chips on the table and we may risk our existing business. Because that's the simplest thing for the whole company to blitz scale in order to do, but also maybe inappropriate. for the business. For

employees inappropriate for your customers, inappropriate for the best return for your shareholders. uh maybe competition. doesn't require that you do that. Now Sometimes by the way you just say, Well, actually in fact I'm not looking at blitz scaling

But I'm looking at Fast scaling. Like I just need to Take some real risk and capital. But I'd have to retrench and I'd have to like I I'd stumble some and it would c take me

Some extra years to kind of reset if it doesn't work. And I'm doing something that Chris and I describe in blitz scaling. As fast scaling. Which is Look, we understand some of the risk coefficients, customer acquisition costs, long term value.

But we're just trying to pick up the pace. We're just trying to To to move faster and we're taking risks in scale, not necessarily risk in business model, not necessarily risks in customer acquisition costs. And we're picking up the pace. And sometimes that's what you would end up doing. And

Almost always when you're an established company and you're not just simply moving the entire company into this high risk. Table stakes. you have to kind of get the company to buy into it. You have to set up some specific group or organization that the company understands

This sub group is going to behave differently. They're going to take some risks that the rest of the company is not going to take. They may be in separate space to do that. It's like the scout group, the platform enablement group, the new product group. that does that transformation and then brings the rest of the company along.

And that subgroup has to be empowered by the CO, the CO's brain has to be wrapped around it. And the company has to be thinking, this is good for us. Uh so good luck. With the decisioning and analysis and good luck with the work.

To figure these questions out. Our next question comes from Tomas Suroji in Brazil. It provides a window into how markets are merging and being created internationally. In this case, it's a tech forward company called Doctor Consulta that runs medical centers in Brazil.

Notice how Reed's answer brings together several of the concepts he's mentioned earlier. Here's Tomas. Hi there. My name is Tomas Sroji. I've founded a healthcare slash tech company in Brazil.

to eliminate medical homelessness. Eighty percent of the population in Brazil. don't have access to health care. So we've decided to redesign a care model. to

provide access at very, very affordable prices. We currently run sixty medical centers in three stays. We began collecting lots of data to become extremely efficient. to the point we uh broke even. And we began also helping

People to spend less in health care. So now that we've service two million people We feel confident to uh Start Нью технології проєкт will enable us to grow faster.

And to get to twenty million people. But we need to be very careful. Because It took us so long, so much time to perfect and become efficient to our core business.

that our biggest challenge will be How do we execute the new technology projects? To continue to disrupt the sector here. But also make sure that we continue to execute. With a lot of discipline and focus, the core business.

Tomas. Congrats with all the success with Doctor Consulta. And it's obviously a awesome mission. because getting people healthcare is one of the most fundamental things which creates happy lives, longevity prospers with children and family and has a knock on effects and economy. So it's a super important mission and congratulations on it again.

And the question you're asking is really one of these kind of classic entrepreneurial questions, which is You know, we've established a product market fit. We've gotten on base. And now what are the things we do to scale to a massive size? Is it doubling down on what we have? Is it adding new things?

And just like any kind of entrepreneurial effort, you know, you have limited time frames, limited capital, limited management bandwidth. And have to be very choiceful about opportunity. And so The decision algorithm on this frequently is okay on your core business.

Is there you know, ways that you can amplify it and move a lot faster. Before you factor out to other businesses, you really look at as a startup by really focusing on this, I get this thing to scale and I really go big. And this is the thing that I should put all of our time and energy and even though there's all these other interesting opportunities. That's because it's proven, it's there, your company is already a platform for it.

You know how to do it. Now, as you look at it, you may go, Well, actually in fact, it's pretty hard to accelerate the growth rate. It has a very natural growth rate, but it's hard to accelerate it. We have a total addressable market that has certain limitations on it. This establishment of this platform of this business. has really given us a lens that this other business is super interesting.

And while we don't want to give up the thing that we've gotten, it's good. moving towards that other business is really important. And sometimes that's all say, look, we have a fixed growth rate, it's great. We don't really know what we fully need to do, but we'll do some experimentation. I'm talking about paper testing or other ways to get data about what might be fruitful in terms of future product market fit, where there might be an interesting market or adjacency to what you're doing. Um, you know, frequently scale companies kind of invest their resources at seventy percent their core business, twenty percent at adjacent businesses, and ten percent as experimental venture bets, you may be on path to that.

And so that's the framework. For thinking about how you invest in new technology products and your current business. And then the details of it depend a lot on you know, which things you might be able to because of your market position, because of your product or service, because of your management team, because of your capital, because of the way the market looks, because of the way the competition looks.

All of these things come into Your analysis. And obviously this is also one of the reasons why you're part of a network like Endeavour, which is to Also get network expertise on all of those things, your organizational readiness, the competitors, product market fit, the extension, in order to help you

Kind of come to your own decision, which will always be a risky decision, will always be potentially a bold decision. About like where you'll be allocating your resources and what you'll be trying. And now to complete this episode's master class on deep scaling strategy, we have a question from Ahmed Hamdan.

The CEO of Uniphonic. Uniphonic is a cloud communication platform in the Middle East, which just raised a twenty-one million dollar series A round. Ahmed's question essentially is What comes next? Does Uniphonics stay focused on their core?

Do they add new markets or new verticals? These can be existential questions, and to answer them, Reed taps into his own personal experience with taking LinkedIn global. Here's Amet. I'm excited to have this opportunity to speak to you. I'm a big fan, I always listen to the podcast. So the challenges about the growth strategy.

Three years ago we focused to share the enterprise accounts. And this give us a high growth rate in the last three years, uh, which is on average more than eighty five percent. And one core market, which is uh Middle East, mainly, Saudi Arabia and UE. Now moving forward. The challenge

Are we gonna continue growing sustainably and at higher rates? In the next three to five years. To continue this cross. We should consider Different dimension.

One clearly is the product. What other Problems that we could solve. and projects that we could offer. The second dimension is the verticals.

We do specialise in surfing certain verticals. uh like e businesses, financial services, e government and logistics and retail. Then uh moving forward. Important question, should we keep that focused? As we expand beyond the current geography or market.

So every option or set of options is associated with risk and opportunity. Well Trying to figure out It's the right question that we should ask and factors to consider while deciding the way forward.

in order to maintain this uh growth in a sustainable way. Ahmed, congratulations with all your success with Uniphonic. These growth rate questions are kinda classic, you know, where to focus on the growth. And it's great that you have predictable growth ahead of you.

And so Part of what you may be trading off in your decisions is In our Core market. We have so much headroom.

That we could just continue to invest in that. And should we divert to anything else? And as you mentioned in your question, there's kind of three areas. There's the product lines, uh, which may be additional products, expansions to your product. There's geography areas. So whether or not it's Middle East, going to Europe, going to Africa, going to Asia, going to the US, going to other places. And then

There's also verticals. So one question is, okay, is there a highly valuable market That's open. But will become less open.

anticipated in the next few years and if you start later your competitive disadvantage would be such that it would be difficult for you to leverage into kind of a valuable place. And that

additional market could be an additional product line, that additional market could be an additional geography. And sometimes you make that decision. Either way, like oh my gosh, it's really important, it's highly valuable. We need to get into it. We realize that this will underinvest in our core business, which will be growing great anyway. And that's important because it's a market we couldn't take later. It's because it's really available now and we will get much harder. And so you want to get started.

On the other hand. sometimes you will make the decision to say, look, it's a it's an important market. It's stuff that we will do more later But actually in fact As we expand our core business And as we strengthen that

We actually think we'll have a better chance at that market. Even if competition comes in, even as the the market may be changing some Some of that may be strength of position of your business, some of that may be information. So for example, in the early days of LinkedIn, We had a number of competitors across Europe.

All of whom were focused on Their specific country. Their specific language. And we went and looked at it. I specifically I flew over and looked at it. And the way that I do these analysis frequently is go around and talk to entrepreneurs, because entrepreneurs are the professional category that most often tries to predict.

you know, kind of what is the future product market fit? Where are things changing? Where is the product changing? Where might customer demand be changing? Where might a new product get some fit. And so went around and talked to a bunch of them about the preferences between local products and LinkedIn. And what I realized was that in each market

There was a demand for a local product. that was above the demand for a global product. But the next demand was for a global product. And so it's like okay, well. Actually, in fact, if we continue to focus primarily on English for a while, we did localization later than uh many of our brethren. We focus on our feature set, we focus on making it very good for the individual and for the company. Then as we began to focus on Europe, which we have been for years now.

We're bringing a much stronger network effect, much stronger set of product that as we go much deeper and accurate in the localization, which, you know, all of us international product people know is not just language, but also the question of how this product fits within kind of culture and customer demand and expectations of interactions, especially in networking products like LinkedIn, we made the decision that way. So the decision was to go later because of this particular kind of analysis about What does that future opportunity look like? Now sometimes

you expand new product because it's super important to be defensive. You might say, Well We may have moderate ability to actually develop the leading the dominant product in this region or in this product line area. But If we don't have this offering

then we might actually start having our core business more challenged. It's a product feature that they actually really want. And so our current product needs to be there. In order for our current customers to continue to re up. There's unfortunately no simple formula.

'Cause you're making a decision about the future. You know, the classic kind of poetic phrase is you're looking through a glass darkly. And What are your competitors doing? What is the market doing? What is gonna be the response to new things that you're doing, right? Or just response to things in the future. None of which you can have a perfect prediction of And so you're blending in a set of

learnings and and hypotheses and theoretical constructs to actual data that you can sometimes measure and sometimes using, you know, startup like techniques, you know, paper product testing, you know, market research, other kinds of things are good ways to help give evidence this question, but you're still balancing data driven models together with your theories. and your understandings about how customers use your product. Don't you love Reed's description of the future of business as being seen through a glass darkly? So evocative.

And yet after listening to him It's hard not to feel more clear about how to approach everything. Whether it's paper testing or LinkedIn's experience. The seventy twenty-10 framework or identifying if your company's next move is from version one point oh to one point one or two point oh. Reed has given us a variety of tools in this strategy session to crystallize our thinking as we move forward.

Starting a business, scaling a business, it isn't easy, and it never fits a formula. But The perspective that others bring can open our eyes to new solutions. And that can drive performance. I hope Reed's answers have been as thought provoking for you as they have been for me.

And with that, I'll pass it back over to Reed. Read? All yours. Thanks, Bob. It's been a pleasure to have you as our guest co host today.

And I appreciate All of your contributions. To the show. Thanks also. Calinda Rotenberg.

Carmen Felice Tavares. Gabriel. Wilkerson Melnick from the Endeavour team for their partnership. And to all the founders from Endeavour who submitted their questions. If you want to learn more about Endeavor,

Or any of these extraordinary Fast growing companies. Head two Endeavor. And if you're a startup incubator or accelerator,

And you'd like to work with us on a future strategy session for your entrepreneurs. Email us at Hello. at masters of scale dot com. I'm Reed Hoffman.

Thank you for listening. Masters of Scale is a whitewater original. The show is recorded on site in California and produced at the studio inside SY Partners in New York. Our executive producers are June Cohen and Darren Triff. Our producers are Chris McLeod, Adam Skus, Jenny Cataldo.

Jordan McCloud. Catherine Clark Gray. Ali Bondi. and Ben Vanilla. Our supervising producer is Jay Punjabi.

Music and Sound Design by Ryan Holliday and Daniel Nissenbach. Mixing and Mastering by Brian Pugh. Special thanks. at Chris Yay. Alicia Schreiber, David Sanford.

Say it's a piada. Bob Safia. Christian Gonzales. And Sarah Sandman. Is it?

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