Boris is the wise ol’ CEO of TNW who writes a weekly column on everything about being an entrepreneur in tech — from managing stress to embracing awkwardness. You can get his musings straight to your inbox by signing up for his newsletter!

When it was time to pick a school for my youngest daughter, we visited a few to see which one would be a good fit. The first one was the most prestigious, and it showed. They were well prepared, all the information was readily available, and nothing was left to chance.

The second school we visited was utter chaos. The teacher was late, she was sweating, and her face was red because she was dealing with some kind of issue with a bunch of kids in the other classroom. I can imagine a lot of people would lose their patience when being met with such ‘unprofessional’ behavior — but I loved it.

It wasn’t just the chaos I liked, it was what was causing it.

I could see that her first priority was the students’ wellbeing. Everything she did and said reflected that. She didn’t produce a perfect video or booklet, and her presentation wasn’t even that well-rehearsed. But it was clear she cared and she was ready to drop everything to help students. That’s why we chose that school for our daughter (but I’m also just a big sucker for chaos).

Over the next few years, I saw school newsletters going out late and important events not always being announced on time. There were basically a lot of little things that didn’t really go as planned, but the kids loved it because the big picture was all about them.

The school also reflected our own household. I remember duct-taping my daughter’s coat closed (I’m not great at sewing) while she was already late for school. I remember stuffing leftover sushi in a bag because I had forgotten to buy fresh bread.

Basically, I remember not remembering a lot of things — but I know our kids grew up in a household filled with love and attention.

It wasn’t maybe the cleanest or the most organized household, but it was very compatible with a school that also had the wellbeing of their kids as their first priority.

I thought about that school and our experience with it when I read this popular quote attributed to Germans when they were at war with the US:

“The reason the American Army does so well in wartime, is that war is chaos, and the American Army practices it on a daily basis.”

It’s both an insult and a compliment, and the ambivalence of that makes it interesting. I also relate to it in a personal way, as I find chaos often comfortable because I’m a deeply chaotic person.

When a lot is happening around me and structure seems to be missing, I’m both inspired and energized. I love finding patterns in things, and I somehow become relaxed when others are stressing out.

I also think a chaotic situation can be fertile ground for new ideas. When you envision an inspiring environment, my guess is it will be a space with lots of stimulants. Music, images, tools, colors, and all that jazz. Not a clean sterile room with white walls and nothing to interact with.

But… that’s me. It is also important to remember that your friends, children, or employees might have the opposite experience and need order and quietness to perform well.

The goal is to not enforce the wrong structure on your team. Find out who thrives in chaos and who needs order to perform well within your organization.

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How to bootstrap and scale your SaaS startup the RIGHT way

As the founder of a bootstrapped startup, people often ask me how I decided on which funding route I’d take when there are so many options for founders to consider.

While I don’t have a short answer to this, there’s one thing I can say: your choice of funding needs to be based on the nature of your business and the product you are dealing with.

The exact type of your business can be determined in a number of ways, but I find ‘Red Ocean’ and ‘Blue Ocean’ can be quite helpful. Coined by acclaimed business theorists, W. Chan Kim and Renée Mauborgne to classify all market strategies, Red Ocean refers to when there are a lot of competitors and you need a substantial amount of money to survive in it. Whereas Blue Ocean refers to a very niche market wherein you might see a lower growth rate but survive with considerably low investment.

While being helpful, there is of course no hard and fast rule to this theory — it’s often purely situational.

Our first product, BizTalk360 falls within Blue Ocean (no competitors, focused segment, and low customer acquisition cost) while our latest product, Document360, falls under the Red Ocean strategy.  With that product, we’re competing against companies like Zendesk, Freshdesk, Confluence, Notion, and so on, so we end up spending a lot on customer acquisitions for this product.

Now that I’ve given you a bit of the background on where I’m coming from, let’s dive into what made me ultimately decide on going the bootstrapping route.

The decision to bootstrap

The initial product idea for BizTalk360 was seeded at the Microsoft Global MVP Summit in Seattle in February 2010. The first version of the product was very well received by MVPs in 2011, which led to me to officially launch the startup the same year. Within a year, we onboarded 65 customers.

As we started to launch new products, we sort of banked on the success of our previous products and reinvested the revenues into the company to fund them. All our products have their own engineering, marketing, and sales teams working on improving the products and acquiring customers.

Today, our parent company kovaio has 1500+ customers. We have not had to seek external funding since all our products are generating revenues.

Great products will sell

When we launched BizTalk360, we knew that we still had a long road ahead. Building the product was not much of a challenge since I have the required technical know-how. Selling the product was the tricky part as I didn’t have much experience doing that.

I started blogging very early in my career. My blog used to be very technical in nature as I specialized in a particular domain which is the BizTalk server and gradually I was able to build an audience of 15,000 followers.

When I developed BizTalk360, the blogs helped me get my first customer (a casino) all the way from Hong Kong, which was completely unknown to me until that point. While my blogging activities might’ve landed us the first customers, it was the value of the product itself that kept customers loyal.

So no matter how good your acquisition is, the retention will always come down to quality.

Scale at the right time

In my opinion, most startups fail due to premature scaling. That’s why knowing when to scale your startup is one of the most crucial decisions you’ll face as a founder.

Most entrepreneurs just assume that once their product has been successfully launched, it’s time to scale up. But that’s not how it works. The product has to be periodically monitored and improved to make sure that it is not being overtaken by competitors. Your product needs to scale up along with your business.

Since our flagship product, BizTalk360, is a niche segment, we were able to be the market leaders right from the beginning and still continue to do so. The product matured completely in about fives years and the goal was all about maintaining the product, taking care of existing customers, and adding new ones. We then decided to diversify and move to new products, we simply replicated what had worked for us in similar situations.

Another thing you should do is structure your work model and business process. You should have systems in place to effectively monitor the stakeholders and processes in the organization.

But once you actually pinpoint problems through that monitoring, you need to react to them the right way. Many startup founders think that just hiring a person can magically solve all their problems, but let me be clear: it doesn’t work .

For example, hiring a Sales Manager when your product isn’t working properly is a rookie mistake. You need to be extremely patient and persistent in the process. Ensure that your product is a market-fit product before you consider scaling your startup.

Scaling your startup might seem tempting sometimes, but nothing is better than the slow, steady, and organic growth of your startup.

Check your finances — cash flow, sales, expense, and revenue — before deciding whether you want to scale up. It’s easy to overlook certain aspects when you are trying to manage multiple things at the same time. Even then, you should have an elaborate financial plan with forecasts for the future.

The bottom line is: take time to lay the groundwork before taking your startup to the next level.

Founder to founder: A guide to scaling a startup

When Henrik Gebbing and I founded Finoa in our shared apartment in Madrid back in 2018, little did we realize that within just three years we’d have team members across the globe with plans for exponential growth in the works.

Obviously, the way we ran things when it was just a handful of us would never suffice now. Scaling our business has meant overcoming some tough challenges in order to build a sustainable organization.

The biggest question I’ve heard from other founders is, “How do I know when my startup is ready to scale?” From my point of view, the answer is, “When you have found a winning business model.” This is a vital point here. You have to have a business model that works.

There’s no point in scaling if your minimum viable product is dysfunctional and you don’t have proof that you can monetize your product in one way or another. In other words, don’t scale if you don’t have customers who are willing to pay for your product.

Once you have a working business model in place and a group of paying customers, then you can think about broadening that client base. There are two ways that you can accomplish this.

One is by expanding into new countries or regions, the other is by expanding into new products. Each of these options will have some specific challenges, but here are my tips for how to prepare your company before scaling, so these challenges don’t derail your growth.

Expansions can fail without processes in place

Scaling a startup adds a lot of complexity — from straddling time zones to adding lots of new lines and boxes on an organizational chart. What happens to your operational processes as you add people in different regions, or at different management levels?

If you’re adding a new product, this adds levels of complexity to your supply chain situation, your billing department, and your development teams, just to name a few affected areas.

For example, if you try to scale a business with faulty project management and sales processes in place, you could end up with sales teams promising delivery of product updates that have not yet been finished and tested.

Management will end up spending too much time extinguishing organizational fires and not enough time making sure the core business itself is functioning properly — or on attracting new investors. This is an area where expansions can fail.

Where is your single source of truth?

The main challenge that scaling presents to internal communications is with the flow of information. When you have a team of five, it’s fairly easy to keep everyone informed about every little (and not so little) thing that’s going on.

With more people on board, it’s tough to ensure that relevant information is flowing to those who need it. Here, you may have to institute internal measures, including all-hands meetings, management meetings, communications tools like Slack, and even emails to everyone in the company when needed.

Remember, too, that internal communications need to be a two-way street: not just top-down, but also bottom-up. Having clear reporting processes in place will also help when you’re scaling into new countries or regions. Efforts in one location might be duplicated in another location, but may proceed in a very different direction.

As an example, if you have regional teams independently building product rollout roadmaps, you could end up with vastly different timelines that are in conflict with the launch plans underway by the marketing manager.

It’s vitally important to have a single source of truth in place, a central medium where all relevant and important info is gathered and shared, so that folks at each location know what the others are doing and who’s in charge.

Since many people are working from home and locations can be vague for some companies, this centralized structure should be set up by the headquarters and leadership so that there is a transparent flow of information within the company.

You can’t approach new markets with the same old messages

When you start to scale your company, you realize that it’s difficult to duplicate your image and brand onto a new product or to directly translate it into a new country. You see that a lot with car companies. They have different names for their vehicles, different ad campaigns.

The more your business grows internationally, the more important it is to align your branding and marketing to the target market, to accommodate for the preferences that customers in these countries might have.

If you’re headquartered in Germany, you would likely know what shows people tend to watch and when. But if you were to then expand into Spain, where you don’t know the market as well, you’d need to invest in support from local PR or marketing agencies who could help you localize your messages to be effective there.

The same applies to startups that scale by adding a new product. You might be selling comfort and usability for your first product, but perhaps the second product requires a completely different customer approach.

Scaling experience matters when it comes to hiring new managers

When you scale, you need to practically double or triple the team size, which will present problems to maintaining the company culture and DNA, especially if you are integrating diverse people across different time zones.

To minimize problems, you need to be sure to get people in management who have experience scaling. If you’re adding products, you need product managers who have experience working with that type of scale-up. They’ll best be able to handle any complications that arise as the new product is integrated into the company’s offerings.

If you’re opening an office in a new country, you need to hire a manager who knows the country, the market, and the local talent. Successful companies hire about 30% of their people from who they know and based on referrals . Therefore, it’s best to first look for a manager already working in your headquarters, who fits the company culture, and who has experience in or is from that country and knows the market.

Once you have a local manager in place, that person will be able to hire the right talent for that market. You can also work with international recruiting agencies that have supported scale-ups. They will have connections to talent and people in their markets.

For new teams in a different country or region than the headquarters, it will be important for leadership to spend some time with them on the ground in the beginning.

You have to really show your face so they know they are considered to be part of the whole company and not just external to it. There needs to be a strong connection here, and I highly recommend inviting these teams to the headquarters often and having in-person company-wide retreats where everybody can be together.

Get comfortable with ambiguity

As Finoa has grown, Henrik and I learned early on how quickly it can become too much for two founders to be responsible for everything. As a founder, you need to give away responsibility and become comfortable with ambiguity.

You are not going to know exactly what everyone is doing every minute of every day. It’s important to remember that you are still in charge of guiding the overall strategy and looking after the big picture, so you should not get bogged down in the nitty-gritty.

To do this, you need to increase the size of your management team and off-load operational responsibilities onto people you trust. Processes come into play here, too, since having these in place will enable you to collaborate with those people and maintain a surface-level knowledge of what is happening.

As I mentioned earlier, expansions can fail if the founders lose focus because they are drowning in work trying to do all the day-to-day stuff as the company grows.

You can’t prepare and scale at the same time

You want to make sure you are instituting systems and processes early on, as your company is starting to grow. Don’t wait until you have your minimum viable product and a customer base to start preparing to scale.

The longer you wait to get these processes in place, the harder it is to institute them with a larger team. By that point, everyone has already developed their own hodge-podge of ways to do things and it’s difficult to get them to completely switch to a new system.

Whether you are expanding into new regions or new product lines, having the above measures in place will help you successfully scale the operations of your startup, while maintaining your company DNA and keeping the big picture directly in your sights.