I once worked for a CEO who would say that the first $20M in revenue that a startup generated was easy compared to the challenges of getting to $200M. His observation was that the skills, procedures and resources needed to grow to the next plateau are very different from the ones that got them to where they are now, whether it’s going from zero to $10M or $100M to $1B.
That makes sense. When a company is just starting out, it needs hustlers, problem-solvers, leaders and workers willing to take on many different tasks, even if they lack the skills and experience to play those roles. That’s part of the fun and excitement of working at a fast-growing startup. Founders get a rush from making all the decisions and doing all the work. They have complete control and their hard work entitles them to take credit for every success or obstacle overcome. Customers and employees are more tolerant of mistakes and shortcomings from a startup because they know that founders and early employees are doing work that they are probably not qualified to do.
But this issue doesn’t go away when a company matures. One of our clients, a solid digital business that grew over 20 years to more than $100M in profitable revenues eventually took on private equity investment. As the company matured and found its successful niche, it started to observe slower growth. Coupled with modest profits and new leverage resulting from their private equity deal, the company inadvertently locked itself into standard operating procedures and organizational designs that protected cash flows, but no longer focused on growth. It was not pursuing geographic or product expansion. It had become more risk averse and less likely to pursue channel partnerships or M&A. It productionalized bad habits that were created during its high growth phase.
Both startups and mid-sized companies run into the same issue: they lack key talent and solutions that are needed to get to their next growth milestone. We worked with this company to refocus on product, industry vertical and geography, and together with management developed a new “opportunity” roadmap. We took market feedback and introduced a new product platform. We introduced a new billing and business model. Finally, we worked with management and the company’s private equity investors to re-envision how to grow via partnerships and M&A. We evaluated over 30 potential partnerships and M&A deals, prioritized five and completed multiple deals over an 18 month period. The company resumed double digit growth and is optimally positioned for an eventual exit by its private equity investors.
Some companies will hire traditional management consulting firms to fill this gap. More than $150B is spent annually on these services. While this is a great solution for large companies, a $500,000 powerpoint presentation telling the corporation what it needs to do is not always the best way for a mid-sized company to achieve its goals. More frequently, a mid-sized company will need people who can actually deliver those objectives along with the powerpoints.
Meanwhile, post-pandemic, more American executives are checking out of large corporate careers in favor of a lifestyle that provides them with autonomy and control. These are former executives that have gone to top schools, worked at the most respected corporations, received leadership training, and gained specialized credentials and certifications. But they are frequently unfulfilled. They desire to work but do not want a large employer. They would work for a smaller company but their expectations can be out of reach when compared to compensation and benefits of their former employers. More than anything these former executives desire to have impact, to make a difference and to foster the growth of another company.
These two groups can benefit from each other. Former executives do not need to be employees or even work full time. Their main goal is impact. They are ideally suited for mid-sized companies because they bring the best practices, playbooks and leadership skills funded by their large company careers. They are also more impactful than a mid-level FTE because they know how to get things done from the start. They are adept at learning new businesses. But the current model – filling this type of gap with full time employees is not always designed to address it. A former executive who becomes a part-time growth leader at a mid-sized company is almost always going to be more impactful and efficient than a mid-level FTE.
At Stage18 our observation was that there needed to be a platform where these two groups can support each other with a commercial model that satisfies the objectives of both. A platform where mid-sized companies can assess their growth objectives and secure short-term, but high impact teams that can evaluate and execute rapidly. That’s where Stage18 operates – at the intersection of mid-sized corporate growth objectives and former executives that seek to have short term impact. We believe that this is a workforce innovation that is overdue and one where we intend to reduce the gaps.
Stage18 is the premier growth acceleration platform for middle market companies. Our high-impact solutions build topline momentum for both enterprises and private equity investors by uniquely combining the four elements that these companies need most: 1) extensive experience in driving growth, 2) durable and proven best practices, 3) prioritizing execution and getting stuff done, and 4) delivering exceptional value. To learn more about how Stage18 can assist your company, visit us at www.stage18.co.