In this week’s Catalyst Partner Series podcast, we met with Chip Reeves, president and CEO of Beach Bank, and Brian Murphy, founder and CEO of ReliaQuest, a Tampa-based cybersecurity firm. We picked their very knowledgeable brains about scale — the advantages of scaling up a business, but also how to do it in the right way so that growth can be properly managed.
ReliaQuest has been fortunate to have received substantial interest and support from investors over the years, but scale isn’t something that can be achieved through funding alone. It takes planning, and Murphy says that’s his job as CEO, comparing himself to a sort of human “farmers’ almanac” who scans the horizon and anticipates the changing needs of the business.
“It’s kind of like driving a car,” Murphy says. “You want to make sure you’re aware of your surroundings.”
Another apt comparison is the nine innings of a baseball game. In Murphy’s experience, the early days — the first three innings — of a company’s existence are completely different from the middle and late stages. There’s usually an all-hands-on-deck, us-against-the-world mentality that permeates the office culture. “You might have one person doing three functions,” Murphy says. “Those functions are kind of small, but those functions grow, so you have to have the awareness that that person can no longer do those three things and we have to break those apart.”
As a company continues to grow and scale, difficult conversations might need to take place to make sure staff are focused on the future and not the past. “You start to hear things like, ‘Oh, that’s not the way it used to be,’ or, ‘Oh, I remember when …,’” Murphy says. “Then is not now.”
Another way for a company to successfully scale-up, Murphy says, is to be focused on solving problems, not just abstract ideas — and that means establishing and adhering to clear-cut values that don’t change over time. “For us,” he says, “it’s be accountable, be adaptable, be helpful, be focused. That’s our mindset as a business.”
Beach Bank, as a financial institution that takes pride in helping businesses grow, sees many common traits in companies that successfully scale up over time. Reeves says an entrepreneur who’s truly committed to the future of his or her company will accept the need to work on the business instead of in the business — as difficult as that might seem sometimes.
“You need to be able to take a step back and up, and many times you need advisors to help you get there,” he says. “One of the things that I love to see in an entrepreneurial company is if you put together — it can be informal or formal — either a board of directors or a board of advisors where you’re … getting advice from others who have scaled and done something perhaps that you have not yet.”
A pivotal moment in any attempt to scale up is when you’re in due diligence talks with potential investors. The process is not only exciting, Murphy says, but it forces you to take a long look at where you’ve come from, where you are and where you’re going — a process that can be uncomfortable, but in a good way.
“I like to tell the team, ‘We have to take this review, the results of this, and let’s go fix the questions that we did not want to answer,’” Murphy says, recalling the steps ReliaQuest had to take before it landed a $300 million investment from KKR and Ten Eleven Ventures earlier this year. “Think about the things you don’t want someone to ask you about your business, about your health … that’s what you should go fix, generally. To me, it was a really cool, introspective self-discovery process that the company went through.”
However, says Reeves, another key to scaling up is a desire for continual improvement.
“There’s a fine line between celebrating successes and moving quickly beyond them,” he says. “It’s how you get better.”
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