Since the WeWork story highlighted the risks of rapid business growth, the benefits of scaling up without excessive investment are appealing to startups.
Steven Bartlett, the youngest ever dragon from the BBC series ‘Dragon's Den’ and founder of the social media marketing agency Social Chain, told Euronews' team in Dubai that social media is key for startups when scaling up.
“If you're walking down the street and there are 20 people looking up at a building, you're going to look up at the building,” said Bartlett. “The way you decide whether to go and watch a movie on Netflix, or whatever, is based on reputation. We use the opinion of the tribe to help us survive because we don't always have the time to make those decisions for ourselves."
What is scaling up and what other levers do startups need to pull in order to get there?
You can see more advice from Barnett and his contemporaries in the video above.
The difference between growth and scaling up
In business, "growth" and "scaling" or "scaling up" are terms that are sometimes used interchangeably, but experts are defining scaling up as a specific type of growth posing less risk to businesses.
There's a key difference between typical business growth and scaling revenue growth. Business growth generally refers to increasing revenue but also the spending on resources at the same time. This kind of growth costs money. A business invests in more resources – more salespeople or products to drive sales, for example – which eats overall profits.
“Scaling revenue growth, by our definition, means adding revenue (top line) at a much higher rate than relative costs. Meaning generating more leads, clients, contracts and profits while using less money or time doing it," says President and Founder of The Revenue Growth Company Kent Billingsley.
“Anyone can burn money to buy growth,” Billingsley adds, "but learning how to achieve top line (sales and non-sales revenue) without burning bottom line (net profits) is what makes companies so valuable.”
Scaling with technology
Billingsley says that “scaling” can have two meanings: “The first is that you can ‘build out’ a part of an organisation’s capacity to exceed targets such as marketing, sales or operations – to maintain growth. The second meaning of scaling I use is to quickly create business wealth is by achieving ‘no-cost’ growth. That powerful subtlety is the difference between classic business growth and our scaling revenue growth.”
He gives an example related to a marketing department. Can a company’s marketing department increase its quantity and quality of leads without spending more time or money? If the answer is yes, the company can scale up.
Email marketing is often seen as a valuable tool in scaling up as it takes no more time to write and send the same email to 100 potential clients as it does to 1,000. Sourcing the data for the potential clients does require resources, either time for employees to find suitable email addresses or funds to buy an email list, but the costs in both cases should be less than the cost of hiring more full-time staff to generate more leads and this could spur exponential growth, referred to as scaling up.
Spawning unicorns through growth
When asked about the United Arab Emirates’ ambition to spawn 20 unicorns by 2030, Bartlett said building an entrepreneurial ecosystem to support Web3 businesses was the route to success. Web3 as a concept is a decentralised internet built on blockchain technology.
“If you think about the businesses that are going to be the next unicorns and the ones that are becoming unicorns fastest right now, they're pretty much all in the Web3 industry, such as blockchain start-ups and crypto start-ups,” said Bartlett.
“If I was the UAE and I wanted to capture 20 unicorns in the next 10 years, I would be trying to make this the home of Web3 businesses. I'd be trying to create the infrastructure, the talent pools, the funding, an attitude and a culture that’s friendly for Web3 start-ups.”
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