Running and growing any fast growth business in the AI sector comes with its own unique set of challenges, ranging from; establishing process, customer success, talent recruitment, scaling at speed, moving from founder to CEO and the pressure of constant change.
In the second article of a three part series* focusing on what founders are doing to navigate the fast growth AI industry, Information Age spoke to the founders of some the UK’s leading AI startups and scaleups to understand the ten main pain points of running a fast growth business in the AI sector.
*The first in the series, focusing on the main pain points of running an AI business, can be read here.
1. Establish process
Growing a business quickly means that founders often have to race through processes that would usually take a lot longer to complete.
Dr Alex Young, founder and CEO at Virti, suggests that a “big pain point, therefore, is ensuring you don’t cut corners to save time that might end up costing you down the line. For example, making the right hires is essential as you grow. You need to have a strong team around you that you trust and that can help facilitate further growth. When you’re growing you might need to hire people quickly, but it’s essential you don’t cut too many corners as getting the wrong people on board can be costly. The same goes for key processes like fundraising, or scaling your digital marketing output.”
Safe Hammad, CTO and co-founder at Arctic Shores, agrees and highlights that when a business is moving slowly, you can do things manually. “But high growth doesn’t afford you that same time, so you need better, more scalable processes.”
He also points to hiring at pace as an example. “How do you hire at pace? Can you still onboard effectively, now that you’re hiring several times more people than last year,” Hammad asks.
Chris Ganje, CEO and founder at AMPLYFI, adds that the “challenges of moving fast are often that we don’t have time to perfect these things [process], before the next challenge emerges. As a founder this is often challenging, as you have to “leave behind” things you would, in a larger organisation, polish.”
To help ensure good processes are in place to support the business, a watertight strategy and delegating tasks to line managers can help founders navigate this pain point.
“We work in two very rapidly evolving areas — AI for drug/material discovery and quantum computing — so developing and continually adapting and refining a strategy that will win requires a lot of careful thought and deep discussion.
“We have four founders at Rahko, and we come together very regularly for strategy sessions that can last several days, with the understanding that no one does anything else until we have answered the questions we need answered. This has taken a huge amount of discipline to maintain, but has meant that we are able to make really well thought-out decisions and head in what we believe between us to be the right direction.”
Ky Nichol, CEO at Cutover, adds that “it’s hard to maintain focus on strategic goals, with new opportunities and use cases for our capabilities emerging constantly, it’s important to maintain a resilient perspective and prioritise our strategic objectives.”
Tim Weil, CEO at Navenio, also agrees that developing a solid business strategy with a team that is all moving in the right direction is essential for the success of any fast growth business, in the AI sector or otherwise.
He says: “As we have seen over the past few months, now is the time that technology is really starting to accelerate in many sectors. Whilst it is exciting to be part of a business in rapid scale mode — it is important to make sure that the foundations have been set to support that growth. Juggling R&D with customer needs in a rapidly changing environment, as well as growing cross-border and adding the right talent to the team is not easy.”
3. Talent recruitment
Recruiting the right talent at the right time is another significant challenge for a fast growth business.
Ofri Ben-Porat, CEO at Edgify, explains that “being able to know when to hire is the first challenge. With fast growth comes a constantly increasing need for more hands on deck. The pain comes in when you reach a growth stage, because then it is a lot more difficult to hire the right people.”
Referencing the experience at this own company, Mark Nicholson, CEO at Vivacity Labs, says: “My role, and the role of the senior team, is changing constantly. We don’t have the full breadth of traditional leadership in place, and so we need to change hats very frequently — and then hire someone else to take on that role, when we haven’t done it at scale, so don’t know what we’re looking for.”
“Recruit the best you can get. Don’t recruit anyone who does not fit and if in doubt keep them out. If you end up with someone who doesn’t fit fire them early and don’t procrastinate. Recruit people better than you and then coach them to be even better — Peter Ryding, founder, VIC
4. Becoming a CEO
Arguably the greatest challenge for a founder of fast growth business is the transition from founder to the CEO of a big team (and in some cases, the ability to hand over the reigns to someone who is better placed to take the company forward).
Dr Young explains: “As you grow, you realise that you can no longer keep all the balls in the air alone. Sharing core responsibilities is a big transition and it can be hard to let go, but as you grow you need to be able to delegate and ensure everyone in the team knows exactly what they’re responsible for. This way, you can still ensure opportunities aren’t missed.”
Looking at the property market specifically, Tom Reiss, CEO at Roby AI, explains how important it is to detach sentiment from business decisions, whether that is handing over the reigns or how to expand.
He says: “For Roby AI, it was certainly the objective assessment of market stability and product market fit for expansion. I had to detach sentiment and take Roby AI across borders where it would have the strongest impact. I considered Berlin, New York and London.
“Weighing operations, property market regulations and innovation appetite was an impossible task. To me, the UK market had the strongest appetite for innovation, already going through a multitude of economic changes, I felt the time and place was right.”
UK’s leading AI startup and scaleup founders highlight the main pain points of running an AI business
As a business grows, “it’s hard to maintain the culture — you have to really work on it and instil the values and guiding principles into a growing workforce, whilst still maintaining the agility and atmosphere associated with a start-up,” says Nichol. “This is a huge priority for us, with our people as one of our defining differentiators, it’s important to dedicate time, focus and energy into the optimum high-growth company culture.”
6. Maintaining agility through properly managed data
Like maintaining culture, maintaining agility and adaptability is a challenge for a fast growth business. It’s important founders don’t lose their start-up mentality.
Matthew Hodgson, CEO and founder of Mosaic Smart Data, explains that rapid change — synonymous with fast growth — means businesses need to prioritise agility and adaptability with properly managed data.
Referencing capital markets, he explains: “Even before Covid-19, innovation in capital markets was gathering pace and the events of last year have demonstrated just how important it is to have the systems in place to improve your businesses performance. That is why it is absolutely essential to have the data and analytics that give all business stakeholders a full, real-time view of what’s going on in their business as well as in the wider industry. Business must be able to answer key questions like who their most valuable clients are, where their biggest opportunities lie and what they need to do to optimise their outcomes — all at their fingertips.
“If they don’t, how can they possibly survive, much less thrive during this volatile and pivotal period? Businesses will risk missing key opportunities and fall into avoidable mistakes in their decision-making, risk management and strategy setting. If you want to make sure your business continues to be fast-growth, then the value of properly managed data simply cannot be underestimated or ignored.”
7. Cash flow
Quick expansion often brings up the problem of cash-flow.
To accommodate the expansion, Daniel Cooper, managing director at Lolly Co, explains that: businesses need to invest in more staff and resources to meet the increase in demand for goods and services. This investment requires funds the small business isn’t likely to have yet. Numerous companies have fallen into this trap, such as 180s, a clothing firm that was recognised for its fast growth in 2003 before falling victim to high levels of debt in 2006 and nearly going bankrupt. Getting one’s ducks in a row and keeping them in that order is essential to avoid losing that growth.”
“Do you bootstrap, do you look for early investment? Are you prepared to stop working on the product and company to find the right amount of investment? Finding money is a full-time job. We have chosen to bootstrap for as long as possible, but I recognise that this doesn’t suit every business,” he says.
8. Customer success
“Customer success is one of the most important roles in a fast growth business,” explains Ben-Porat.
“As you acquire more and more customers, someone has to keep their fingers on the pulse of the customers you already have to make sure that they don’t feel like they have been forgotten. All the while ensuring that the new customers are onboarded in a seamless fashion.”
Cooper agrees and adds that fast-growing business face the challenge of providing an excellent level of customer service.
“Directors need to invest in their customer service to avoid losing customers and thus their momentum,” he says.
9. Scaling at speed
As customer demand increases, scaling at speed will always be a challenge for fast growing businesses.
According to Matovski, although “a steady and growing pipeline of customers is an amazing and ideal situation, onboarding new customers takes significant resources and there are times when we are forced to prioritise certain aspects of the business to scale effectively.”
Dr Alan Bourne, CEO and founder of Sova, also advises that as businesses scale, “it is important to collaborate with your original, likely pioneering, customer base. You need to understand the commonalities between your clients, as well as align your offering with the needs of emerging customers and your own business goals. This requires leadership and creativity to bring key stakeholders along with you.”
10. Constant change
The one constant at fast growth businesses is change.
“It can feel like you’re getting a major promotion every quarter — in that the job you did three months ago doesn’t exist anymore. Last quarter you may have been mainly an enterprise sales person, this quarter you are a marketing manager, next quarter you hire a marketing manager and you need to do product strategy or finance.
“Continuously growing teams means that every few months you hand over tasks and take on something new, so you’re constantly learning new things on the side: operations, marketing, strategy, management, HR, finances, software, IT security, you name it.”
To overcome this challenge of constant change, Bourne suggests that leaders must re-orientate regularly, unlearn and relearn quickly.
“It’s important to assess the next stage of the journey and how it is different. Being aware of this avoids standing still and basing things on what you’ve done before,” he says.