Written for Daily Hive by Nadia Tatlow, the General Manager of Shift, a desktop app for streamlining your accounts, apps, and workflows. She is focused on scaling the company while fostering a meaningful community for customers.
In 2017, Canada was the first country in the world to announce a national strategy for AI, receiving $125 million in investment capital from the federal government. More recently, in September 2018, Toronto alone drew over $1.4B in investment from Canadian and US investors. However, a small business’ success isn’t, and shouldn’t be, solely dependent on financial investment.
While financial investment should be welcomed, it does not necessarily guarantee the healthy economic development that startups need to succeed in the long-run. Our culture in North America is such that we tend to prioritize and then celebrate, only when it comes to funding rounds that exceed $100M; when what early-stage companies – and Canada’s major tech hubs – need instead, is to prioritize the foundation upon which they establish and scale their businesses. A foundation that pays greater attention to the other factors that support Canada’s tech players – to put it simply, begin with setting clear priorities and finding product-market fit, then develop strategic long-term business goals – to scale fast.
From point A – the point of ideation and creation – most tech entrepreneurs are focused on assessing the viability and subsequent roadmap required to scale up and get to Point B. At this beginning phase, the first challenge is sparking enough traction to sustain a level of momentum that eventually generates rapid growth. It’s important factors like access to early seed investment, expert talent and tools to retain this talent, and resources, that are essential at this point, and go on to inform, feasibly, what Point B looks like – making room for growth and scale.
Where Canadian companies are doing it right, the success speaks for itself – there are three main components to scale a startup into a scaleup, once product-market fit has been achieved: talent acquisition and investment, product innovation, and market growth.
- Canada is investing $2.25M in the BC Tech Association
- Vancouver tech firm Clio raises US$250M in record-breaking Canadian funding deal
- LinkedIn names 25 hottest Canadian startups of 2019
First, talent acquisition is an ongoing topic of discussion among startups, especially with the knowledge that a company is only as strong as the team executing the to-market strategy. But the process of recruiting new talent to elevate a workforce can be a challenge. With our proximity to Silicon Valley’s booming tech scene, and attractive homegrown tech hubs, HR professionals across Canada are feeling the pressure to select the right high-performing individuals from a limited and in-demand pool of candidates, and at the right price. With the greater goal of unlocking the next stage of growth, when transitioning from a startup to a scaleup – early-stage companies need to consider leveraging smart investment as it relates to talent acquisition, which inherently, will nurture long-term, sustained growth.
The second component needed for scalability is product innovation – first, making sure the product solves a real pain point. Prioritizing both of these things at the outset of a business model fast-tracks the path to scale. Traditional methods of innovation — developing new product ideas in-house, conducting focus groups and customer research to determine feasibility and market potential don’t always reflect customers’ actual needs and desires. To address this shortfall, firms have to put the customer at the heart of their innovation efforts, seeking out early adopters and product enthusiasts to provide invaluable feedback about the product, especially when there isn’t enough data to gather through an algorithm. Future iterations of your product should not only take into account the different markets your product resides in, but also address the gaps in those markets felt by the consumer. It’s imperative to actively listen to your customers – track insights and conversations, back up everything you do, and find ways to turn qualitative feedback into hard data. For Shift, this combination of qualitative and quantitative data resulted in guiding parameters for marketing campaigns, and a significant competitive edge. Being informed by a positive feedback loop will ensure companies are keeping their customer base happy, and will ultimately enable them to develop new products and services more quickly and cost-effectively, while minimizing the risk that products will underperform or, worse, fail outright.
Lastly, scalability needs to account for market opportunity and growth. If there is traction in a small market or with a small audience, it’s important to take the time to pinpoint what resonates with these users. Find that traction point and use it to make data-driven decisions to figure out what could deeply resonate with a larger audience. It’s also in this high-growth phase where risk can come into play very suddenly, making it even more important that companies take these traction points, prioritize them, and find a way to continue to test and optimize each winning theory, and build them into the product as quickly as possible. It can feel tedious at first, but product-market fit only matters if you can scale it. This is what builds momentum and expands the market base. Move faster with each optimization, like you’re running a race–because you are.
In order for tech startups to launch with a scaleup mindset, they need to be given access to the resources that allow them to envision long-term development. Scalable companies provide more than direct employment – they create spinoff activity, as they have the potential to create new industries and open up new opportunities to communities. A recent report released by Statistics Canada in May 2019 found that Canada’s tech hubs – BC, Ontario, and Quebec – accounted for the largest share of digital economic activities contributed to our greater economy, with BC and Quebec seeing the largest gains in digital economy jobs at 49.1% and 41%, respectively. In the long-run, fostering a tech ecosystem that can support scale is far more important than just innovation for the sake of innovation. It’s better for Canadian entrepreneurs, employees, and communities at large, positioning Canada as a more vibrant and forward-thinking country.