Hr LibraryInnovation

Start-Ups That Last

Source |  |  BY:Ranjay Gulati and Alicia Desantola


Why do so many start-ups that seem to have it all—customers, cash, a promising outlook—run off the rails? Ask a venture capitalist, and you’ll probably hear that they have trouble “scaling.”

What does that mean, though? VCs typically describe it as a need to “professionalize the organization” and “bring in grown-ups.” But those are simplistic fixes—poor substitutes for the substantive changes that need to occur. Start-ups these days grow so rapidly that it’s difficult for them to correct course once they recognize missteps. They can improve their prospects by understanding the mechanics of effective scaling before they reach that moment of truth.

Venture capitalist Ben Horowitz compares scaling to a “black art.” He and others have proposed useful ideas for demystifying it, but start-ups still lack a cogent framework for transitioning to mature firms. That’s what this article provides. Drawing on our extensive case studies of fast-growing companies and on 75 years of organizational research, we have identified four critical activities for successfully scaling a venture. Firms must hire 



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