In January 2024, Kara Nortman, Julie Uhrman, and Natalie Portman, the founders of Angel City Football Club (ACFC) were developing the club's first three-year strategic plan. Founded in 2020, ACFC had a star-studded investor group, including Portman and celebrities such as Eva Longoria, Jennifer Garner, Billie Jean King, and 13 former players from the U.S. Women's National Soccer Team (USWNT). As outsiders to professional sports, the all-female founding team had rewritten the playbook for how to build a sports franchise by applying lessons from the tech and entertainment industries. They had harnessed digital platforms to establish and cultivate a global brand. Unlike typical sports franchises that built their teams and track records over many years before extending their brand beyond a local base, Angel City had inverted the model, generating as much global as local interest in the club within the first three years. ACFC's success was reflected in its estimated private market valuation of $180 million, the highest in the league. But perhaps equally important to ACFC, the club had made a positive impact on its local community and had started to bend the curve toward greater pay equity in women's sports-the club's ultimate goal. The founders knew there was much more to do to capitalize on the club's momentum. There were opportunities to build the brand further globally and to build out fan engagement and membership in the mobile app, but these would require investments in digital content and production, CRM systems, and e-commerce. There were also opportunities to build the "on-field product" (team and facilities) that would demand budget allocation to training facilities, the field, coaching staff, and medical rehabilitation facilities and staff. The founders weighed the most effective ways to build value for the franchise. Was it better to allocate the incremental budget dollar to investments in digital brand building or to investments in the on-field product?
Founded in 2010, Supercell was a Helsinki, Finland-based mobile gaming company that had developed and launched five global hit mobile games: Clash of Clans, Clash Royale, Hay Day, Brawl Stars, and Boom Beach. The company's early philosophy was that it could produce hits by designing the company with a structure and culture that would prove compelling to the world's top developer talent. Developers worked in small, autonomous groups called cells with little oversight. The formula was a success. Supercell had nearly $2 billion in annual revenues, and Clash of Clans alone had generated gross revenues of over $10 billion since inception. However, the company had not released a hit game in five years. In early 2022, Paananen asked in a blog post whether Supercell's best days were behind it. As a result, in summer 2023, he and Supercell's leadership decided to restructure the company into two divisions-New Games and Live Games. The New Game cells would retain the small team structures, which were largely flat and non-hierarchical, but the Live Game cells would add more traditional structure and hierarchy to exploit franchise hits. Now, Paananen wondered if Supercell could continue to attract top talent despite its shift to more traditional ways of managing the business. As importantly, what would it take to restore the company's winning streak by originating more new games and growing its global blockbusters?
In 2023, Darktrace CEO Poppy Gustafsson was contemplating her growth strategy at a leading U.K.-based cybersecurity venture, launched in 2013 by a group of anti-terror cyber specialists, University of Cambridge mathematicians, and artificial intelligence (AI) experts. Darktrace was also one of the few technology companies built around AI from the start prior to Generative AI, and it offered AI-powered solutions to protect customers from a variety of complex online threats. Two years earlier, Darktrace had gone public on the London Stock Exchange with a market capitalization of $2.4 billion. In the wake of the IPO, in 2022, both the chief marketing officer and chief revenue officer had approached Gustafsson to tell her they wanted to step down from their roles. They were cofounders, and Gustafsson had worked with them from the start. Gustafsson and her team were weighing the decision of whether to bring on external hires or to promote from within for the CRO and CMO roles. The goal was to scale Darktrace from $500 million in revenues to $1 billion. The decision to recruit externally had significant investment implications, given fears of recession, high inflation, and layoffs faced by many companies in the second half of 2022. Recruiting talent from the outside would change the organization's hiring model, compensation structure, and incentives. But there were other concerns. Would newly recruited talent from the outside mesh with the culture and organization that Gustafsson and her cofounders had built at the company's U.K. headquarters? She knew she would have to manage sensitivities on both sides. What was the best way to ensure a smooth transition, and what qualities should she be looking for in the two new C-level executives? Was this a necessary step to realize her ambitions for growth?
In October 2023, FIGS had revolutionized the medical scrubs industry with its fashionable and functional designs, but the venture was at a critical juncture. The digitally native vertical brand (DNVB) had gone public in a successful IPO in 2021 and reached $500 million in revenue in 2022. Investors had dubbed FIGS the "Lululemon of healthcare apparel." However, by 2023, FIGS was facing slowing growth, significant margin pressure, and a radical share price decline, exacerbated by macroeconomic headwinds and increasing competition. In response, CEO Catherine "Trina" Spear, who was also a co-founder, was contemplating three strategic growth initiatives to bolster FIGS' competitive position: expanding international presence, targeting healthcare institutions (a move into B2B), and establishing retail stores. Each avenue of growth held potential. International was a large market opportunity, B2B could unlock a stable new revenue stream, and retail stores offered brand visibility and synergy with the online experience. Spear had to decide whether FIGS's small team should pursue one or more of these opportunities, and, if so, whether to pursue them concurrently or with a phased approach.
In summer 2021, School of Rock was a youth-oriented music education company with 291 franchise- and company-owned schools globally. Before CEO Rob Price's hire in 2017, School of Rock's nonconformist rock 'n' roll culture led to variability in teaching styles, educational outcomes, and risks for copyright violations. The previous administration's attempts to standardize curriculum and processes led to friction with franchisees. Price smoothed over the tension by better listening to franchisees and clarifying core policies while giving franchisees freedom in certain areas. One of Price's major initiatives was the Method App which provided a structure to empower and guide work at the school branches, featuring nearly 100 show programs and 1,000 copyright-compliant song choices tagged with the associated skill levels, musical concepts, and corresponding show programs. When the app launched as a minimum viable product (MVP) in October 2019, it struggled to gain traction. Some franchisees felt the MVP's functionality was flawed; others worried that the app threatened their pedagogical independence. Price's team considered several options to increase adoption: a listening tour to communicate the app's value and collect feedback for improvements; an exclusive marketing campaign for schools with a minimum level of app usage; and incentives based on School of Rock's balanced scorecard that measured performance and other metrics. Which one or more of these options would drive app adoption without reigniting tension between franchisees and the corporate office?
Founded in 2016, Cobalt Robotics, based in Fremont, California, was a Robot-as-a-Service (RaaS) company that built autonomous workplace robots that were designed to replace or supplement human security guards. Outfitted with over 60 sensors, Cobalt robots patrolled workplaces, leveraging AI and machine learning to identify an array of security risks. Security was of critical importance to companies, and yet human security guards were expensive, exhibited high turnover, and were prone to discipline lapses due to the isolated and repetitive nature of the job. Recruiting suitable talent was also increasingly challenging in the wake of the pandemic and the "great resignation." Cobalt's robots could work around the clock, did not resent repetitive work, and were accurate in their work. By 2022, Cobalt had deployed hundreds of security robots at companies around the world, including DoorDash, Yelp, and Slack. As a Series C venture-backed company which had raised over $90 million to date, Cobalt was under pressure to scale quickly. Yet the company faced a series of challenges and decisions around how to scale, including how to overcome the human-veto factor, which verticals to target, and which distribution channel to use. As Cobalt looked to its future, it envisioned entering into other workplace robotic functions beyond security. The company wondered how this would impact its go-to-market strategy as well.
Founded in 2013, OhmConnect was a free consumer web app that alerted customers about peak hours of electricity demand, and paid them to lower their energy use at home during these periods. The company sold the aggregated reductions generated by thousands of households to the electricity market as "negawatt" hours. For each kilowatt-hour of electricity reduced, OhmConnect was paid the same as if a fossil fuel-powered "peaker plant" had generated that kilowatt-hour of electricity. OhmConnect shared a portion of this revenue with its customers in the form of rewards and prizes. By lowering energy demand when the electric grid was stressed, OhmConnect reduced the need for peaker plants to be fired up, saving money and reducing pollution. As of 2022, the company operated in three states in the U.S. with approximately 215,000 users. As a Series D venture that had raised more than $95 million in VC, OhmConnect was under pressure to grow. Yet regulatory hurdles and long lead times on electricity capacity procurement contracts had created significant challenges to scaling. OhmConnect needed to decide whether to continue to expand into new markets one-by-one with its existing business model or pursue a new national product that could attract national marketing partners, possibly lowering OhmConnect's customer acquisition cost. Establishing a national footprint could also enable OhmConnect to build a national data hub on home electricity usage, which, in turn, might open doors to alternative monetization opportunities down the road and allow the company to access broader funding sources, including from the U.S. Department of Energy (DOE).
Many start-ups experience enormous popularity and runaway growth, but only a few go on to become stable giants. What separates them from the pack? They all go through a developmental stage called extrapolation, say three business school professors. This stage isn't part of traditional organizational theory, which holds that businesses begin in exploration mode (testing out hypotheses about how they'll solve problems and learning whether people will pay for their solutions) and then move into exploitation mode (as growth slows and they fine-tune their business models to sharpen their advantage). But between those two well-known stages is the crucial extrapolation stage. During it, a company both explores and exploits. And most significantly, it works to ensure that each new customer brings in additional revenue while incurring only marginal cost-the secret to lasting, profitable growth. A new enterprise needs multiple strengths to navigate this phase-such as a proven monetization approach, a strong go-to-market strategy, network and density effects, and capital. It also must systematically identify and remove internal business-model constraints on growth that could prevent it from achieving scale.
In May 2021, Perch CEO Chris Bell needed to decide whether his e-commerce aggregator company, which bought and scaled Amazon Marketplace brands, should acquire up to three acquisition targets. The prospective acquisitions, Web Deals Direct, HomeCo, and Future Brands, were much larger in size and complexity than Perch's previous deals. Acquiring one or more businesses could help Perch grow but could also prove challenging from an operations and integration standpoint. In addition, Bell had decisions to make around financing the acquisitions. He had received a term sheet for $100 million from a private equity firm and an offer of up to $500 million from Japanese conglomerate SoftBank. The offer from SoftBank might provide the level of funding Perch would need to achieve market leadership in a crowded aggregator space but could put pressure on Perch to grow too quickly in pursuit of being a category champion.
TikTok's parent company, ByteDance, was launched in 2012 around a simple idea - helping users entertain themselves on their smartphones while on the Beijing Subway. In less than a decade, it had become one of the world's most valuable private companies, with investors confident that it could replicate a rapid ascent in China in country markets around the world. By May 2020, TikTok operated in 155 countries and, together with Douyin (its China app), it had engaged roughly a billion monthly active users, placing it in the top ranks of digital platforms globally. Some industry experts argued that it was the first consumer app operating at scale where artificial intelligence (or AI) was the product. TikTok had drawn the attention of competitors, regulators, and politicians, especially in the U.S., where commercial success was considered critical to ByteDance's long-term enterprise value. Both success and controversy raised a number of critical questions: What kind of platform was TikTok? How rapidly should TikTok's leadership attempt to validate and scale its monetization model outside of China? What effect would the COVID-19 pandemic have on TikTok's momentum and trajectory? Would TikTok become the first "Super App" with a global footprint? Or, if it moved too fast, did it run the risk of becoming "the next Vine" - a supernova that shone brightly only for a passing moment?
In early 2019, the founders of Anomalie, an online direct-to-consumer provider of bridal gowns, have just agreed to an $13.6 million Series A investment from a Silicon Valley VC. They are considering three major initiatives as they move forward. (1) To scale their very successful organic acquisition process that already engages 25% of the brides-to-be in an active discussion, (2) to automate their largely manual offering that allows the bride to design her own dress, or (3) to invest heavily in technology to support their unique strategy of buying direct from the factories in Suzhou, China bypassing both the distribution and retail channels.
In March 2020, Zach Sims, co-founder and CEO of online education platform Codecademy, prepared for a meeting with his Chief of Staff Kunal Ahuja to discuss the company's goals. Codecademy billed itself as the largest online resource for computer science literacy and programming skills in the world. It had 45 million active users in 190 countries learning to code by taking its online courses. Ahuja had engaged the leadership team, product managers, and others to outline strategy, with an eye to assessing the venture's longer-term growth prospects and financing needs. The business had only recently started to focus on monetization. It was early innings, but the company had doubled revenues year on year, it was cashflow positive, and the team was hitting its targets. However, 2019 had been a challenging year, including departures of several key members of its leadership team. Much of Sims' time late in the year was spent on recruiting to fill open roles, and dealing with inbound interest from investors. From Ahuja's perspective, the company was "growing up" after the success of its first paid product, Codecademy Pro. But many managers were experiencing burnout given the numerous organizational changes, the grueling work to meet aggressive growth targets, and a host of new processes. How should Codecademy pursue monetization, and how would this decision determine the timing and outcome of its next financing round?
On September 10, 2001, after speaking at an industry conference at New York's World Trade Center, Hotwire co-founder Spencer Rascoff boarded a flight from Newark to San Francisco. After returning home, Rascoff awoke the next morning to a phone call informing him that the same numbered flight from Newark he had boarded the day before had been hijacked and crashed into one of the World Trade Center's Twin Towers. That same morning, Rascoff's co-founder and Hotwire CEO Karl Peterson was about to give the keynote speech at a travel conference in New Orleans. Peterson saw the second plane hit the towers on the hotel's lobby television. With all commercial flights in the U.S. and Canada grounded for three days after the attacks, 15,000 Hotwire customers were stranded away from home. In the weeks that followed, customers demanded refunds for cancelled flights, and new flight bookings plummeted as Americans lost faith in the safety of air travel. To make matters worse, Hotwire's founders learned from the FBI that some of the 9/11 hijackers had purchased their flights on Hotwire.com. While 9/11 took an emotional toll on all Americans, the travel industry faced the additional burden of intense financial pressure. Hotwire's leadership team needed to make immediate and hard decisions to stem cash outflow and determine where, when, and how to let employees go, while trying to maintain morale. The business required a new capital raise on terms that would be acceptable to existing investors. And, while facing trade-offs in the use of Hotwire's scarce resources, the team needed to position the business for future growth amid a field of well-funded competitors.
In December 2019, Oliver Jay, Asana's Chief Revenue Officer (CRO), was reconsidering his go-to-market (GTM) strategy. Asana was cloud-based work management software that enabled users to break up projects into discrete tasks that could be assigned, scheduled, and tracked on a single, integrated platform. Jay was wondering how to increase annual recurring revenue by year-end 2020. Just three years earlier, when Jay joined Asana as its first CRO, thousands of companies were already using free and paid versions of its software. Since Asana was a software-as-a-service (SaaS) offer, all a new user needed to do was to create an account. This meant individual users and teams could onboard easily and initially for free, using an array of self-service tools, without purchasing approval from their IT departments on conversion to paid subscriptions and without initial sales support from Asana. This mix of free and paid users proved sustainable and profitable for Asana. However, reaching senior directors, vice presidents, and executives of potential client companies to drive larger, enterprise-wide adoptions was a challenge for the Asana sales team. Jay's desire to improve sales performance led him to a novel concept: to structure the sales team based on where customers were in their adoption cycles with Asana-that is, to organize sales by stages of the customer journey rather than by the time-honored approach of organizing by account size (e.g., SMB, mid-market, and enterprise). Was this radical idea the right structure for Asana to reach its revenue growth goals-or was it fraught with too much risk?
In January 2020, Founders Factory (FF) Executive Chairman Brent Hoberman and CEO Henry Lane Fox were considering FF's expansion strategy. FF operated as a venture capital (VC) fund built around an accelerator and incubator, and organized around sectors within technology innovation-media, education, beauty, travel, finance, home & hygiene, AI & big data, and retail. FF sought a quasi-exclusive corporate partner to fund investments in each sector. By 2020, FF had 11 partners across 9 sectors; it had raised more than £280 million and launched nearly 100 startups. FF had three offices in addition to its London headquarters-in Johannesburg, Paris, and New York City. Each was set up as an independent operating company with roughly the same ownership structure. Deploying a "franchising" model limited FF London's financial risk; it also enabled each satellite office to leverage FF's reputation and resources while operating with a fair degree of autonomy. Hoberman and Lane Fox were considering other approaches to adding their next international office. With those thoughts in mind, the pair were meeting with their leadership team to address a series of questions related to organizational design: should they maintain their current ownership and operating structure, and continue to establish each new office as its own operating company? Or should they pursue an expansion strategy with a centralized approach and scale by adopting a more traditional corporate structure?
TikTok's parent company, ByteDance, was launched in 2012 around a simple idea - helping users entertain themselves on their smartphones while on the Beijing Subway. In less than a decade, it had become one of the world's most valuable private companies, with investors confident that it could replicate a rapid ascent in China in country markets around the world. By May 2020, TikTok operated in 155 countries and, together with Douyin (its China app), it had engaged roughly a billion monthly active users, placing it in the top ranks of digital platforms globally. Some industry experts argued that it was the first consumer app operating at scale where artificial intelligence (or AI) was the product. TikTok had drawn the attention of competitors, regulators, and politicians, especially in the U.S., where commercial success was considered critical to ByteDance's long-term enterprise value. Both success and controversy raised a number of critical questions: What kind of platform was TikTok? How rapidly should TikTok's leadership attempt to validate and scale its monetization model outside of China? What effect would the COVID-19 pandemic have on TikTok's momentum and trajectory? Would TikTok become the first "Super App" with a global footprint? Or, if it moved too fast, did it run the risk of becoming "the next Vine" - a supernova that shone brightly only for a passing moment?
Nextdoor, striving to solidify its position as the leading global social media platform for neighborhoods, works to scale audience, geography, and revenue.