Very few companies go from inception to behemoth without any bumps in the road. In love and in business, the path never did run smooth. Ambitious entrepreneurs aren’t hoping for an easy ride, however, they’re thriving in any crisis and handling whatever is thrown at them. Knowing potential pitfalls in advance means preparation and sailing right through and out the other side.
Ayman Al-Abdullah was the CEO of AppSumo across several key stages in its journey and now helps CEOs take their businesses from 7 to 9 figures, which marks the scale-up stage of business. Founder Noah Kagan had grown AppSumo to $3m in revenue before he began looking for someone else to run the company and Al-Abdullah’s skills helped grow AppSumo to over $80m in annual revenue.
The three steps in the AppSumo journey each required different leadership. Al-Abdullah stepped down last year after recognizing AppSumo was about to enter a different phase of company growth, with ambitious plans to scale to a billion dollars in revenue.
Al-Abdullah believes each stage has its own set of challenges to overcome, and that some companies hit a plateau they never grow beyond. Mastering the 12 plateaus of progress, says Al-Abdullah, is critical to building a billion-dollar company.
The start-up phase: person, product, promotion and process
“In the start-up phase, you only need to master four things,” said Al-Abdullah. “Your ideal client (person), your product, a way to sell it (promotion), and a process for running your business.” In its simplest form, you “figure out who your customer is, what problem you solve, how you get in front of these customers at scale, and a process for running an efficient business.” Then you execute.
Simple components, simple explanations, simply making money. But how many businesses plateau at the first hurdle? Until you’re making $5 million in sales, stay focused on these four basics. Ignore the multiple revenue streams, the new product launch, the complicated marketing channels and anything that distracts you from your sole focus of making the core business a success.
“During this phase you will play different roles,” said Al-Abdullah. You will be the “problem-solver, the innovative creator, the sales and marketing-driven hustler and the systems driven leader.” Your job is to set these up well and remove all bottlenecks to growth. Avoid taking on too much and avoid the shiny objects or the “I can do it all” syndrome that plagues most founders at this level.
The scale-up phase: people, performance, plan, profits
During the scale-up phase, everything gets a bit more serious. “Instead of just yourself, now you’re managing a team,” said Al-Abdullah. “You need to keep everyone on track with a plan, hire superstars, manage their performance, and reinvest profits to drive topline growth.”
By the time you hit the scale-up phase you have proven demand, proven your product meets it and proven your business model. Your processes are refined and you know what you’re doing. You know where you excel and what you’re steering well clear of. Now you are focused on creating a robust and serious company. You have transitioned from being a product-driven company to a people-driven one.
As a scale-up leader, you play different roles again. You are the recruiter “who assembles the best team possible”, and the metrics-driven leader, “who requires a more complicated dashboard,” which Al-Abdullah likens to “flying a plane instead of driving a car.” There are more moving parts in scale-up. You’ll also need to be the Socratic leader, “who facilitates intense debate and makes excellent decisions,” and work alongside a controller and financial team who “ensures your operational expenses match your plan.” The plateaus of progress in this stage involve having the wrong people in the wrong seats, not measuring the right metrics for performance, forgetting the plan and whittling away the profits without topline growth. Don’t fall into them to progress to the next stage: grow-up.
The grow up phase: psychology, pinnacle, protection and press
Once you’ve established a foothold and created an operational company, “grow-up is about legacy creation,” explained Al-Abdullah. Here’s where instead of executing a plan and running the operations, “now you must become the visionary and public face of the company. Instead of hiring all the employees, you attract and hire the best executives to run the business.” You have to hire the leaders who hire the leaders. Al-Abdullah knows that a key requirement for this stage is that you, “protect the legacy of what you’ve built,” believing, “everyone’s rooting for you to win until you’re on top. Then they’re rooting for you to fall.”
Psychology is where you “establish the culture and codify your operating principles.” Pinnacle involves you knowing “where you are going, as well as establishing your version of the Superbowl for the company to rally around.”
Grow-up requires, “the right people in place to make sure your legacy will survive” and requires that you improve your leadership style. You transition to the servant leader, “where you ask what your team needs from you rather than instruct them just because you’re the boss.” You also become the visionary and celebrity CEO who uses their personal brand to make their company stand out in its industry. “At top companies, everybody knows the CEO,” said Al-Abdullah. Don’t fall into the pitfall of hiding.
Additionally, you need to be the mob boss CEO who blocks and protects against competition.
Elon Musk did this by launching the Cybertruck to put a dampener on Rivian, Mark Zuckerburg did it by purchasing Instagram. You also need to learn how to work with the press to stay a public favourite. We all see how quickly companies can go from media darling to pariah in less than a quarter. People love to root for the underdog and “you are no longer the underdog.”
Start-up, scale-up, grow-up. Three stages of a company’s evolution with four plateaus of progress within each. Take the right action at the right time to progress sustainably and quickly towards success on a grand scale. Avoid the pitfalls that others fall into by preparing for them in advance.