uva msc business administration: digital marketing track | semester II - period V (2023-2024) [by gycc]
RETHINKING STARTUP SCALABILITY:
PEOPLE AND ORGANISATIONAL ISSUES
[6314M0508Y] - lecture & tutorial notes
INTRO TO STARTUP SCALABILITY AND SCALING ORGANISATIONS
24.04.02 | WEEK 1 | LECTURE
Objectives
● Understand what is scalability and how it impacts startup organisations and their employees
● Reflect on theories about organisational design, team composition, and company culture as
they relate to startup scalability
● Evaluate challenges to startup scalability and scale thinking in entrepreneurship in light of
theories on diversity, equity, inclusion (DEI)
● Apply theoretical knowledge to develop practical strategies that startups can use to foster
inclusive scalability
STARTUP SCALABILITY
⇒ ability/capability to…
⇒ “what is it”?
⇒ = the capacity to synchronise internal organising (employees) and (exponential) growth
1
, uva msc business administration: digital marketing track | semester II - period V (2023-2024) [by gycc]
Linear vs. exponential growth
● Linear relationships = constant returns to scale
● Sublinear relationships = decreasing returns to scale
● Superlinear relationships = increasing returns to scale
● Exponential growth = scaling (periods could be short / interrupted / long)
What is meant with “synchronise”?
(the equation between employees and customers (demand))
● Early-stage (exponential) growth in resources and customer base exceeds the expertise or
managerial capacity of the founding teams and thus leads to “growing pains” – unique
organisational challenges related to scaling
● To keep on growing (remember: this growth is time limited!), startups need to tackle these
challenges / synchronise their internal organisation
● E.g. by recruiting specialised human resources such as managers and sales personnel;
adapting organisational structure and realigning culture
Time to scale
⇒ the point of time when a new venture transitions from experimentation to scaling
⇒ common time is when startups start recruiting their first managers (expanding personnel)
● Bootstraps startup = those with in-house funding (minimal and slow growth)
● Venture capital startup = those gain capital through funding rounds (short exponential
growth)
⇒ most VC-backed startups recruit first manager/sales personal right AFTER receiving their first VC
funding and just BEFORE scaling
2
, uva msc business administration: digital marketing track | semester II - period V (2023-2024) [by gycc]
Scaling involves evolution and revolution
Complexity
● Scalability consist of complicated issues due to sudden change in organisation and structure
○ So much change that the different stages feel completely different
○ E.g. from a caterpillar to butterfly (origin can be traced)
● “Expanding from 3 to 4 people grows the team only 33%, yet complexity may increase
400%”
● Complexity keeps growing exponentially (relationships multiply)
Scaling impact on organisations and their people
(this course focuses on
all three broad areas and
what needs to changed
and what should remain)
3
RETHINKING STARTUP SCALABILITY:
PEOPLE AND ORGANISATIONAL ISSUES
[6314M0508Y] - lecture & tutorial notes
INTRO TO STARTUP SCALABILITY AND SCALING ORGANISATIONS
24.04.02 | WEEK 1 | LECTURE
Objectives
● Understand what is scalability and how it impacts startup organisations and their employees
● Reflect on theories about organisational design, team composition, and company culture as
they relate to startup scalability
● Evaluate challenges to startup scalability and scale thinking in entrepreneurship in light of
theories on diversity, equity, inclusion (DEI)
● Apply theoretical knowledge to develop practical strategies that startups can use to foster
inclusive scalability
STARTUP SCALABILITY
⇒ ability/capability to…
⇒ “what is it”?
⇒ = the capacity to synchronise internal organising (employees) and (exponential) growth
1
, uva msc business administration: digital marketing track | semester II - period V (2023-2024) [by gycc]
Linear vs. exponential growth
● Linear relationships = constant returns to scale
● Sublinear relationships = decreasing returns to scale
● Superlinear relationships = increasing returns to scale
● Exponential growth = scaling (periods could be short / interrupted / long)
What is meant with “synchronise”?
(the equation between employees and customers (demand))
● Early-stage (exponential) growth in resources and customer base exceeds the expertise or
managerial capacity of the founding teams and thus leads to “growing pains” – unique
organisational challenges related to scaling
● To keep on growing (remember: this growth is time limited!), startups need to tackle these
challenges / synchronise their internal organisation
● E.g. by recruiting specialised human resources such as managers and sales personnel;
adapting organisational structure and realigning culture
Time to scale
⇒ the point of time when a new venture transitions from experimentation to scaling
⇒ common time is when startups start recruiting their first managers (expanding personnel)
● Bootstraps startup = those with in-house funding (minimal and slow growth)
● Venture capital startup = those gain capital through funding rounds (short exponential
growth)
⇒ most VC-backed startups recruit first manager/sales personal right AFTER receiving their first VC
funding and just BEFORE scaling
2
, uva msc business administration: digital marketing track | semester II - period V (2023-2024) [by gycc]
Scaling involves evolution and revolution
Complexity
● Scalability consist of complicated issues due to sudden change in organisation and structure
○ So much change that the different stages feel completely different
○ E.g. from a caterpillar to butterfly (origin can be traced)
● “Expanding from 3 to 4 people grows the team only 33%, yet complexity may increase
400%”
● Complexity keeps growing exponentially (relationships multiply)
Scaling impact on organisations and their people
(this course focuses on
all three broad areas and
what needs to changed
and what should remain)
3
