Building to Scale
Building to Scale

Competition, sustainability and infrastructure are some of the issues leaders face while growing their companies

INtoday’s evolving technological landscape, innovation alone doesn’t cut it. Companies have to excel at scaling their businesses.

At its most basic, scaling a business means increasing operating leverage as it grows. Widen the gap between revenue and operating costs, and you have yourself a scalable business.

But the path to successful scaling is not always smooth. Within those costs and revenue columns, businesses must consider staffing, competition and emerging technologies.

So where do companies start?

For Ethan Ambabo ’12, the answer is to start with what’s best for the customer. As a new business development manager at Google in Mountain View, Calif., Ambabo and his team are responsible for helping product and engineering teams solve external dependencies and launch new products. Whether that means obtaining the license for a new technology or finding partners to co-develop a new idea, Ambabo and his team essentially anticipate everything that product engineers need. 

Ambabo equates his early-stage involvement in projects to standing at the beginning of a very long runway. “A big challenge is just putting structure on the project and figuring out what’s the right way to think about everything we’re going to do,” he says. To do that, his team discusses scaling at every level. “From the moment we start, we have to think about how it’s going to scale. Does it achieve a sufficient amount of scale to be sustainable and deliver a real value for customers? If it does, then we know there is a real opportunity.”

To answer this question, Ambabo follows three general steps for launching a new product:

Define: Figure out what the product is and what it should do.  
Build: Create prototypes, then test and validate that approach.
Refine: Continue to revise, using feedback and lessons learned to make a lasting product.

If a product fails to scale, scrap it. “We continually ask ourselves, ‘Is this working? Is this going to be valuable?’” says Ambabo. If the answer is no, he takes a step back.

Grow accordingly

Fabio Sisinni ’03 has been at the forefront of scaling throughout his career. Prior to joining mobile app Shopkick in June, Sisinni worked at Motorola, PayPal and, most recently, Groupon.

As senior director of mobile products for Groupon, Sisinni helped grow the company’s mobile business to make up more than 50 percent of total transactions and expand in a few months its presence from one country to 48 countries. This fast-paced growth mode helped hone his instinct to plan for new opportunities. “In hypergrowth mode, the scaling issue you have to solve is the ability to plan in advance where you’re going to be in a few months,” he says, “because otherwise you will just not be able to scale fast enough.”

While Sisinni worked to scale across geographies, he also focused on adjusting the company’s scaling strategy as they added new classes of products beyond local deals. One of his main takeaways for success is smart staffing. “We needed to make sure to cultivate a high-performing workplace culture” while growing in staff exponentially, he says. To do this, Groupon worked fast to implement hiring processes and sticking to them.

He also learned the importance of embracing technology and change. As director of mobile products at PayPal, Sisinni grew mobile payment volume from $24 million to $4 billion in three years by directing the company toward mobile commerce with new technologies and a faster product development process.

At Shopkick, Sisinni is working on transforming the company’s mobile app — which sends rewards and offers to users’ phones when they walk into stores — to a useful store companion that helps more shoppers to make smart purchasing decisions. To achieve this, he focuses on defining the new product vision and testing incrementally his way out into it. “If you start planning for what you need now, you’re never going to be faster,” he says.

Innovate or else

When CEO Selim Bassoul ’81 took over The Middleby Corporation in 2000, the company was in trouble. Revenue had stalled at $100 million. Bankruptcy loomed. The stock was barely over $3 per share and customer retention was at 70 percent — “and we would brag about it,” Bassoul recalls.

From the moment we start, we have to think about how it’s going to scale. Does it achieve a sufficient amount of scale to be sustainable and deliver a real value for customers? If it does, then we know there is a real opportunity.”

Ethan Ambabo ’12
New business development manager, Google

Middleby had to grow, and to do that, the Elgin, Ill.-based company would have to innovate. But for a company known for making ovens and kitchen equipment for restaurant chains like Pizza Hut, Domino’s Pizza and Papa John’s, innovative breakthroughs had become few and far between. “People don’t change their ovens because the flame got hotter,” he says.

The key was to become disruptive. And after auditing both his customer base and his own research and development department, Bassoul decided on a three-tiered approach: move into new markets like processing and residential cooking, expand internationally and find new technology.

Instead of building out that innovation, Middleby began buying businesses left and right. Companies like the Australian-based Beech Ovens, which manufactures everything from tandoors to teppanyaki grills, and Denmark’s Houno, a leader in combination ovens, gave Middleby an entry point into several countries. Acquiring TurboChef and CookTek made Middleby a leading innovator in speed-cooking and induction technology.

And with its latest purchase, the Greenwood, Miss.-based Viking, Middleby had the premier brand in luxury kitchen equipment. “It’s allowed us to move from the commercial cooking into residential with a really strong brand,” Bassoul says.

In all, Middleby has acquired more than 50 companies of various specialties and sizes in 14 years. Coupled with a distinctive customer service policy — Middleby offers a no-quibble guarantee and four-hour service calls within the United States — and it’s easy to see why the company is closing in on the $2 billion mark in annual sales this year. 

The company has also expanded its chain penetration to include Morton’s, Chili’s, Subway and 7-Eleven, and its customer retention is now close to 100 percent. “I wanted to create a brand where innovation matters,” Bassoul says. “In order to grow, you have to create a brand.”

Keep an eye on upgrading

Curt Witte ’91 is a partner at Symphony Technology Group, a Silicon Valley-based private equity firm whose portfolio companies do $2.5 billion in sales worldwide. He is also the founder of Findly, a cloud-based talent management platform that lets job seekers track openings at preferred companies, recruiters track and analyze candidates, and employees build their careers at the company or beyond.  He started the company in late 2009 in a 300-square-foot office space in Palo Alto, Calif.. Now, the profitable company has more than 400 employees, 2,000 clients and $60 million in revenues.

 In Witte’s experience in scaling startups, companies that have this kind of hypergrowth need to think about scale at a couple points along the way, especially when it comes to infrastructure. A crucial one is when a company reaches about 20 employees and is poised for rapid growth. “When you have three people, there’s not a lot of infrastructure to build,” he says. But as they grow, companies will need to upgrade their infrastructure.  The good news, he points out, is that with all the cloud infrastructure software offerings available, scaling businesses has never been cheaper or easier.

Witte points out that Findly originally used a free Gmail plugin as a rudimentary customer relationship management program. But when they reached 20 employees, the company looked ahead at potential growth and realized it needed a more all-encompassing tool. “Those decisions laid the base to build us up to hundreds of employees,” Witte says.

That said, Witte warns against going overboard in thinking ahead for scale. “If you start to build infrastructure that’s ahead of where you’re at, then you’re going to spend a lot of time and you’re going to distract your business and you’re going to spend a lot of money that you probably didn’t need to.”