The Lessons I learnt by Scaling from 1 to 100 in 5 years (Part 1)
By Andrei Dolnikov Founder & CEO at BINYAN
INTRODUCTION: To Scale or Not to Scale?....
If you are like me and enjoy inhaling business books on a weekly basis you can get the impression that growing big and growing fast is the ‘holy grail’ of business achievement. However - anyone who has done it and lived to tell the tale will say that this is not the case at all.
At every size of company there are pluses and minuses and you need to make yourself aware of them so that the business you create ends up working for you as opposed to consuming you. If your business model is not right for the kind of size you want your business to be – you can run into trouble real fast.
They call this ‘growing broke’ and I have personally witnessed a company of someone I knew which was featured in the ‘Fast 100’ end up in complete breakdown within one year of the press release.
Not only is it a business decision, but its also a creative, lifestyle and personal decision – what size business allows you to have the kind of day to day work you love most. What size business fits with your stage in life and family commitments? And at what size can you truly realise your creative ambition?
The answers to these questions are far from obvious – and each business leader needs to look honestly at their goals and priorities to make that decision. I once heard one top creative strategist in Australia mention that he does not want to have a business larger than a school classroom – he sees himself as a teacher and mentor, and he feels beyond that size he cannot exert the influence and mentorship he would like to provide for his team.
For me, growing a world-class business and scaling it to 100+ people has been a passion and a very gratifying journey so far. While it has challenged me at every turn – my wife can tell you the tear filled debrief sessions in our bedroom after getting home at 11pm – it works for me and my strengths and values.
In our industry companies tend to be quite secretive about how they do what they do – which is understandable – but I personally am happy to share how we at Binyan got to where we are, and be as transparent as possible. Writing this series is a cathartic experience for me and I hope you will find it of value on your own journey.
To be most useful to the readers I will outline 5 areas of the business that we all encounter and how they may evolve as you grow your business. At each scale there are plus and minuses – it’s all about the trade-offs you are willing to make.
In the final section (Coming in Part 2 of this Article) I will address some of the most frequently asked questions posed to me in interviews.
PART 1: THE TEAM
When you start out your new arch viz studio it will have a small boutique feel, a band of brothers/sisters atmosphere. You will form deep bonds of trust and respect, even love. You learn together through your mistakes, you support each other, you sleep at your desks.
Negatives at this scale can include a key member not performing, getting sick or going AWOL – remember that at 5 people each team member is 20% of your workforce! Burnout can occur when everyone pushes too hard to meet deadlines.
As you grow to having more than 10 people in the team this allows you to develop a hierarchy and have a mix of seniors and juniors. This means hiring is easier, and new leaders hopefully begin to emerge to take some pressure off you - the founder/s.
These new leaders will typically ask for more money, and you will have to make decisions about how to value them – assuming you can afford it. Conflicts can begin to occur as former colleagues now become managers of one another. This was a tough period for us and we had to make some difficult decisions to ask some beloved early members to leave for the good of the team.
Once you exceed the 30+ people mark you begin to fill out more of the ‘on the business’ type roles. Instead of everyone doing everything the organisation gains more focus, specialisation and a slightly more ‘agency’ feel. You maybe recruit some experienced lateral hires from outside your industry to bring in new expertise you do not have in-house.
The big advantage is the opening up of ‘career pathways’ that simply do not exist in smaller companies. These may be more management roles, mentoring, new business, R&D and department head roles. If you play your cards right a crop of home grown leaders may emerge. For us this has been a very gratifying development – as most of our current leaders started out as juniors or mid level artists, modellers and project managers – we could not have dreamt in early days how much they could grow. The lessons learned here will likely inform what you look for in new recruits and what their long term potential may be.
Early team members need to constantly grow and develop. For the company the challenge is to keep investing in creating ways for these key people to keep learning and progressing - to be challenged keep the work fresh. Some of our early leaders have moved into management roles, others business development, others have become innovators with less focus on client projects – while others have taken on mentoring responsibilities.
Since we have grown to a larger size we have worked hard to maintain the early ‘family’ vibe that people tend to enjoy. When you get bigger it may not happen as automatically and you have to invest in amenities and social activities such as sports (we play soccer and jog), end of year parties (and end of financial year parties), foodies show and tell and other things that bring people closer together on a more personal level. For us maintaining a warm family like environment has been and remains a major focus.
If you choose to hire a senior person from outside your company be realistic about the risks this carries – do so with caution and take it slow. Gensler for example do not give a new lateral hire a formal title for one year from hire so as to ascertain where – and if at all – they fit in.
Our studios are ‘people businesses’ and as you can see, the way you manage and engage your people at every stage of growth is a huge factor in bringing success. Its also one of the most rewarding and positive things you can do with your contribution to the world.
PART 2: CREATIVITY & QUALITY OF WORK
When you start off as a small team quality control is easiest to achieve, often the owner finishes every image him or her self. The risks here are that if one image slips through, a key ‘genius’ is not available to work on an image or there are simply not enough hands on deck - the quality can suffer.
Having a medium size team allows for more time to think about overall creative direction, as well as gaining access to larger and more interesting projects.
At this scale, depending on your artists’ skills to deliver constant high quality work can be tough. If you have too many juniors or burn out some of the key people you will experience a dip in quality. Also, it may be tough to win the larger jobs with film involved that start to be offered, as your mid size firm may not be able to deliver the entire production.
With a large team the increased quality and size of clients provides access to higher budgets, particularly in film and animation. R&D investment allows for trying things that may not work but may still lead to new discoveries and future opportunities.
One of the most exciting aspects of getting to our size is the collaboration opportunities we have to work with some incredible partners – particularly in on film and animation projects. While we do a lot of the film and live action work in-house, frequently we will be working with renowned DOPs, artists, musicians and VFX specialists – this allows us to learn from them and elevates the work to a whole new level.
In some ways – in a larger the team it is harder to maintain consistency across projects. In order to continually improve the creative and quality standards the company is known clear values, principles & processes need to be developed so as to guide the creative ethos of the work, even as the team grows and diversifies.
PART 3: CLIENTS
The first thing any business needs is clients, and for a start-up they can be hard to come by. If you do have initial success and are very good at what you do, you can be picky with which clients you work with. The temptation to work with lots of great clients means you may quickly become over booked.
A small firm typically has a small pool of clients, who represent a large part of the business. If a project or two goes bad this can bring down your reputation, which is not easily regained. On the other hand, if you get too busy you may need to say no to some of your best clients – or risk burning out your small and loyal team.
As you scale to medium size you can accommodate larger projects with more established clients and larger budgets. It is however easy to lose the ‘flavour of the month’ appeal you had when you were smaller, so constant reinvention is key here.
As you scale to a larger size, clients begin to expect a more ‘agency’ type of service. While dealing with the artists one-on-one works for smaller clients, in the types of complex and large projects that involve stills, film, tech and experience, dedicated account managers may be required to keep everyone aligned and on target.
PART 4: MONEY, IT INVESTEMENT AND OVERHEADS
In a small firm most of the money goes to the founders. If you have a couple of great months all of a sudden your bank account can swell. On the other hand you can go through lean periods where there is not enough business, and the cash runs dry.
Your overheads are low. You can work in a shared space, your bedroom, or someone’s server room like we did. Being lean, fast and nimble means change is easy to implement, the IT setup is simple and relatively inexpensive. You can start with one computer, render in the cloud, and deliver work from a space with no special rendering IT setup. Plug & Play!
On the other hand it is hard to provide amenities for the team and for it to feel like a real company, so some senior people may not want to stick around. When you do want to invest in better hardware, software or tech the money may not be there or if it is it will need to come out of your salary.
Having money as you scale is by no means a certainty, as early as possible seek advice from people with financial experience so as to set up a proper plan for scaling up. Avoiding the truism “growth sucks cash” entirely may not be possible, but try to minimise it as best you can. We have come close to the precipice a couple of times and it is not a great feeling. As a business owner your self confidence can take a hit if you think you have failed in some way. Its important to seek good advice and keep a cool head – everyone can make mistakes. But try to only make small ones, as opposed to approving investment decisions that can put you in debt for years.
If you can navigate the turbulent waters of growth you can potentially reward your team much more than previously possible. With a good bottom line you may choose to compensate the team at a higher level, increase amenities, provide training education opportunities or invest in passion projects.
On your way to scaling you may have taken on debt like we had to, and this will require you repay the debt as a matter of priority. It is vital to repay the faith of those who believed in you in the early days.
Being at once entrepreneurial and prudent with money is a delicate balance, a great book on the subject of remaining profitable as you scale is “Profit first”. I wish I had read it earlier than I did.
PART 5: THE OWNER’S LIFE – AT WORK & AT HOME
As an owner of a small firm you tend to be involved in everything. It can be quite a rush, you are meeting clients, shooting photography, modelling, rendering, doing post, paying the bills. You learn fast how to do so many things at once and you can control the process end to end. The downside of course is that the owner needs to be involved in everything, thereby potentially neglecting some areas that need more attention. Things such as running the business side of the business, watching the books, and looking after the well being of a team all can be overlooked.
While here and there you may spoil yourself with an expensive purchase – I bought a fancy chandelier for our living room – it is very hard to find the time to go on a nice holiday, as there is no one to run the shop when you are not around.
By the time your firm is medium size – assuming you have good managers who are empowered to run their department like it is their own - you can focus on the areas you are best at, and the ones that bring the most value to your company.
It is crucial to hire people who are better than you at their function area. If you are the expert and best in class in everything your business does – you will be a lid on the growth of others and you will harm your business. Not to mention you will be working 100 hour weeks and may end up wrecking your marriage or your health.
I was once at a forum of business owners and of the 8 people in the room I was the only one not divorced – for me this is my number one priority, I have built a business that does not rely on me to solve every problem. The incredible result of this approach is that the people who’s job it is to solve the day to day problems feel engaged and motivated by the autonomy we provide. It’s a virtuous cycle.
If you can get this right – you can attain work/life integration -and can finally go on a holiday here and there. The reason I refer to it as life/work ‘integration’ as opposed to ‘balance’ is that I believe that the most fulfilling life is one where the various components are not polar opposites that need to be ‘balanced against each other’ – but rather complementary integrated parts. Parts that coalesce together to form a greater whole. Practically this could mean developing deeper – friend like – relationships with your business associates, or combining romantic getaways with your better half with business trips. It can also mean using your business success to support philanthropic and social causes, or collaborating with the arts and education community through your business. For me today these integrated opportunities are some of the most delight inducing.
As you scale to an even larger size - the role of the owner – who may now be known as a CEO - needs to focus on external and big picture activities. Great leaders and managers need to drive the day to day while the CEO ensures the long-term success, broad exposure and profile building of the company.
Having mentors and peers from other industries and constantly learning, be it informally or perhaps via an MBA is vital to keep yourself at the top of the game. The more external exposure, marketing and standing the firm has the more opportunities for new and unique projects, collaboration and pathways are created for your team. By this time you have a real megaphone – make sure to use it.