Andy Stinnes Of Cloud Apps Capital Partners On 5 Things You Need To Know To Successfully Scale Your Business
An Interview With Ken Babcock
Have deep domain knowledge. Be clear on what you bring to the table. Don’t start a company in an industry if you don’t know that industry inside and out. I see very smart people who target a legitimate industry and business problem, but one they don’t really know enough about. That rarely ends well as they aren’t credible in front of customers, can’t describe the problem in a way that’s compelling to industry insiders. As a result, they struggle to scale and make mistakes and can’t anticipate the obstacles that come their way.
Startups usually start with a small cohort of close colleagues. But what happens when you add a bunch of new people into this close cohort? How do you maintain the company culture? In addition, what is needed to successfully scale a business to increase market share or to increase offerings? How can a small startup grow successfully to a midsize and then large company? To address these questions, we are talking to successful business leaders who can share stories and insights from their experiences about the “5 Things You Need To Know To Successfully Scale Your Business”. As a part of this series, we had the distinct pleasure of interviewing Andy Stinnes.
As General Partner at Cloud Apps Capital Partners, Andy develops investment strategies, sourcing and leading new investments, and serving on the board of directors of portfolio companies. He is an expert in business software, business networks, enterprise-class product strategy and go-to-market. Andy is a creative mentor to entrepreneurs and uses his large network of cloud and customer executives to validate opportunities and help chart the exciting course from difficult problems to category-leading companies.
Thank you for joining us in this interview series. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’?
I’m a first-generation German American. My background is in mechanical and industrial engineering. I’ve built and ran teams on both sides of the Atlantic. I got into software early on in my career, focused on things like factory planning software and how to get the most output out of a factory. I was in sales first but soon discovered I had a knack for translating broad market needs into business-to-business applications. I grew that ability into product leadership roles at several cloud companies which allowed me to build deep domain knowledge and a large network in the cloud space. Ultimately, that led to a career in the cloud software industry, first as a successful operating executive and now as a venture investor.
You’ve had a remarkable career journey. Can you highlight a key decision in your career that helped you get to where you are today?
A key decision was to move into venture capital. At the time, I had various opportunities to continue my operating career as chief product officer or even CEO of smaller startups. I was also toying with the idea of starting my own company. But I realized I was most passionate about taking all the things I’d learnt over the years and applying them on a broader base to scale myself if you will. Rather than being nose to the grindstone dealing with one business problem or one domain, I wanted to do that for more than one company and more than one category. I wanted to multiply myself, and that’s exactly what being an early stage-focused VC allows you to do. I love that at Cloud Apps Capital Partners, all the partners can bring their experience as operators to our early-stage portfolio companies.
What’s the most impactful initiative you’ve led that you’re particularly proud of?
I’m especially proud of my contribution to the success of GT Nexus, where I served as head product executive for a decade, building the company’s industry-leading product from the ground up. When I started, we had almost no revenue, and we grew it to over $150 million at the time of exit. I built amazing teams globally and ran the entire European operation in addition to my product responsibilities. We signed on such marquee customers in supply chain as P&G, Pfizer, Adidas, HP, and Caterpillar and building those relationships and ensuring their success as the leading product executive was a tremendous opportunity — and an honor. Being able to help build a public-scale company from scratch was an incredible education. It gave me a deep understanding of organization building, of scaling a business, and of anticipating and managing the surprises that await around every corner. It’s an experience which is extremely useful for the role I have today as an investor and board member of similar companies.
Sometimes our mistakes can be our greatest teachers. Can you share a mistake you’ve made and the lesson you took away from it?
Absolutely: fail fast and learn. I remember once I made a rash decision to take a new job which at the time seemed great. But it was more driven by my unhappiness of where I was at the time and my desire for change. It was a situation where I was running away from something, rather than running toward the right thing. I spent less than two years at that company, and ultimately it wasn’t successful. But I learned a lot about analyzing opportunities better, my leadership style and where my limits were. And I also met some incredible people during that time who continue to have an impact on my career today. In fact, we even invested in two of those people who are part of current portfolio.
How has mentorship played a role in your career, whether receiving mentorship or offering it to others?
I had great mentors along the way. But I use the word “mentor” broadly. Some of those mentors were my bosses and others were just my peers and friends, and even people who worked for me. I call them mentors because I learned something from all of them, often unbeknownst to them. I believe you can learn from many people if you keep an open mind, and you are humble enough to question yourself. As I grew in my career, I found myself more and more often being the mentor, formally and informally. And if you look at what I do today, I am basically mentoring the founders and C-level executives in the portfolio companies I work with. And that’s very rewarding.
Developing your leadership style takes time and practice. Who do you model your leadership style after? What are some key character traits you try to emulate?
I don’t have one or two names I model myself after. I believe you must figure out your own style based on who you really are. There is lots you can learn and observe for others, so I’ve picked up many style elements from those around me — people who were above, below and to the side of me. But, at the end of the day, you must stay true to yourself and not try to be someone else. Otherwise, you are playing a role and that just isn’t authentic enough to truly lead. The traits that are most important to me are integrity, humility, and drive. I find most professionals really get inspired by people who make things happen and are always pushing forward.
Thank you for sharing that with us. Let’s talk about scaling a business from a small startup to a midsize and then large company. Based on your experience, can you share with our readers the “5 Things You Need To Know To Successfully Scale Your Business”? Please give a story or example for each.
1: Be very clear about who you are selling to. Startups live or die based on how well they serve a particular job title, whether it’s Head of Engineering, VP of Sales, Plant Manager in Manufacturing, Chief Compliance Officer — the list goes on. In every meeting we take, we ask the entrepreneur: what buyer title are you selling to and building your business around? We find that businesses that start with a product idea and then look for customers often struggle to scale their business beyond that initial product. But if you are very clear on who your buyer is, it is much easier to build strong relationships, listen, and find layer upon layer of additional value propositions and adjacent product opportunities over time. That’s how you scale more predictably.
2: Have deep domain knowledge. Be clear on what you bring to the table. Don’t start a company in an industry if you don’t know that industry inside and out. I see very smart people who target a legitimate industry and business problem, but one they don’t really know enough about. That rarely ends well as they aren’t credible in front of customers, can’t describe the problem in a way that’s compelling to industry insiders. As a result, they struggle to scale and make mistakes and can’t anticipate the obstacles that come their way.
3: Pick your early customers wisely. It’s so important to know who your early customers are, if and how well they represent the larger market, and how willing they are to work with you and be early adopters. All those things will have an outsized impact on your success and on what kind of company you end up building. If your first customer happens to be a massive brand name, then your whole company will be very different than if you start with a handful of smaller customers and grow from there.
4: Build a professional sales team. Many companies struggle with transitioning from founder-led selling to building a professional sales team. Some founding teams are never able to make that jump. You need to be very deliberate about making the transition and it takes discipline to make it happen. You might end up becoming frustrated with the sales team because they just don’t “get it” like you do. At first, that may be true. But you need to think long term and understand that these are professional salespeople. Don’t get frustrated with them. Get frustrated with yourself for not developing your product in a way that a professional organization can sell it. You can’t scale your business unless you get that transition right.
5: Have a great circle of advisors. Every entrepreneur has limitations. Nobody knows it all. That’s why it’s so important to have a great circle of advisors around you. When you start running into problems, you need to have people on speed dial who you can turn to for trusted advice. That’s also why it’s important to pick investors with real operating experience, who themselves have been company leaders and who can provide that kind of insight and advice needed to solve problems and accelerate growth.
Can you share a few of the mistakes that companies make when they try to scale a business? What would you suggest to address those errors?
A mistake many founders make is not thinking through how they will fund the business at every stage — from the very beginning to the point it reaches escape velocity. Often, entrepreneurs view each funding round in isolation. They think about the Seed round they need right now, but not about the Series A, B, C rounds they’ll raise over the next few years and how each build on the prior. You need to think of funding as a continuum and understand that fundraising is a marathon, not a sprint, and how decisions on terms in the current can become massive obstacles in future rounds. You need to pace yourself properly and think about your trajectory from start to finish.
Scaling includes bringing new people into the organization. How can a company preserve its company culture and ethos when new people are brought in?
I’ve been a believer that culture is extremely important and that it needs to come from the leadership team. What’s interesting, however, is how explicit you should be around promoting your culture. Many companies have posters on the wall trumpeting their values, like “put the customer first” and “always be honest”. This is all well and good. But in some cases, the actual “lived” culture of the company is something very different. Those slogans sound good, but does the company truly live up to them? I’d rather invest in a company that has great values and never talks about them, than a company that never stops talking about their culture, but whose lived culture is terrible. The key to preserving your company culture is not just talking the talk but walking the walk every day, particularly when no one is watching.
In my work, I focus on helping companies to simplify the process of creating documentation of their workflow, so I am particularly passionate about this question. Many times, a key aspect of scaling your business is scaling your team’s knowledge and internal procedures. What tools or techniques have helped your teams be successful at scaling internally?
I couldn’t agree with you more. Many high growth companies pay short shrift to managing knowledge internally. That’s a mistake. It leads to a world of tribal knowledge. When you start scaling the business, only the old-timers have that knowledge, but new employees don’t. And that’s when things can go off the rails. Startups need to get creative in how they capture and share knowledge. When I was at GT Nexus, I championed something called GT Nexus University. It was an enterprise social platform that encouraged employees to post short instructional videos, whether it was how a particular product worked, how to sign up for HR benefits, or how a given customer was configured. Anything and everything was captured in these short videos. We called them “knowledge nuggets” and we built a culture around encouraging every employee to submit nuggets and managers to build them into training curriculums for each role. This program was instrumental in scaling the business to nearly a thousand employees globally. When new people came on board, they were blown away by how quickly they could learn everything they needed to do their job.
What software or tools do you recommend to help onboard new hires?
There are a lot of great tools for that nowadays. But I am still a big believer in video. One of my favorite knowledge-sharing tools is Biteable, a simple platform that empowers companies — from startups to Fortune 500 companies — to engage and educate their internal audience with video. It is sort of like PowerPoint for video and contains all the footage, animations, and templates you need to create great professional videos very easily and quickly. We like it so much we even invested in Biteable.
Because of your role, you are a person of significant influence. If you could inspire a movement that would bring the most amount of good to the most people, what would that be? You never know what your ideas can trigger.
I care a lot about the environment. So, my movement is to stop the production and sale of single-use water bottles. Worldwide, the plastic recycling rate is well less than 10%. Much of the plastic we put in our blue recycling bins never gets recycled. All too often, these plastic water bottles get shipped overseas and then burned or buried or tossed in the ocean. It’s a huge tragedy and almost entirely avoidable. So, please, stop buying single-use water bottles. Get yourself a nice Hydro Flask and drink tap water, which in much of the developed world is of higher quality than what you get in bottles. You might not know this fact: if a water source is not of high enough quality for your local municipal water company, very often the big CPG companies will swoop in and buy that source to bottle the water and sell it to us!
How can our readers further follow your work online?
Follow me on LinkedIn: https://www.linkedin.com/in/andystinnes/
This was truly meaningful! Thank you so much for your time and for sharing your expertise!
Appreciate it.
About the interviewer. Ken Babcock is the CEO and Co-Founder of Tango. Prior to his mission of celebrating how work is executed, Ken spent over 4 years at Uber riding the rollercoaster of a generational company. After gaining hands-on experience with entrepreneurship at Atomic VC, Ken went on to HBS. It was at HBS that Ken met his Co-Founders, Dan Giovacchini and Brian Shultz and they founded Tango.
Andy Stinnes Of Cloud Apps Capital Partners On 5 Things You Need To Know To Successfully Scale Your… was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.