Eight essentials before start-ups can scale

The First-to-market Imperative: The tech start-up environment can be brutal. The first-to-market imperative means start-ups, such as app developers, must address scalability at the outset.


Despite often being cash-strapped, these businesses must be in a position to scale their offering as quickly as possible to secure a dominant position in their target market.

Mastering and implementing the following foundations are essential before tech start-ups can successfully scale:

Strong Leadership

The leader defines the culture of the team – a strong leader will be able to make the hard decisions and translate strategies to mobilise the team. Strong leadership is also vital for conflict management.

Let’s face it, when they’re working long hours and facing huge pressure to get the business off the ground, co-founders can drive each other crazy. It therefore becomes essential to have a leader who knows how to put out resulting fires and keep the team focused

 Team in Sync

The relationship between team members can make or break a start-up business. In this environment every move counts and the whole team need to be confident they are moving in sync towards a single unified vision.

Agility is the key to success and each member must bring something to the table. And, if they don’t continue to do so, the leader must be empowered to act quickly and decisively for the overall good of the company.

Robust Business Identity

The company might be focusing its energy on building the first app, but it’s also building a business, so the house brand can be just as important as app brands in the long term.

Important questions to be asked include: has a business identity analysis been carried out in the home market?; Do the results support the current business brand?; And can it be protected in present and future target markets? A ‘no’ to any one of these could give competitors an edge.

 Unique Product Branding

Be aware of the difference between business identity and product brands. There is no such thing as a new product idea, but every product has the potential to appear unique.

This can be achieved by creating a product name, logo and feel that is distinct from those of competitors. As much a matter of elimination as a scientific process, it starts with the simple task of coming up with options and investigating the competitive landscape.

Understanding Ownership Issues

Whether setting up contracts, creating brands, designs, apps, software or websites – it’s all virtual! If it hasn’t been investigated, how do you know the company actually owns it?

In the start-up scenario, it is common for co-founders or business partners to take responsibility for differing aspects on behalf of the company to be formed. What can be overlooked is transfer of ownership of all of these items to the company once it is established. The longer this is left, the more complex and problematic the exercise can be.

Intellectual Property Security

In New Zealand, software products are not patentable, yet they are the tech start-ups’ most valuable intellectual property asset. Without the right security checks in place, the company is exposed to risk every time someone accesses the source code repository.

Entrepreneurs sometimes underestimate risks when there is overwhelming pressure to build a revenue-generating MVP. There can be a false sense of security and over-reliance on trust and basic Non-Disclosure or Confidentiality Agreements.

These, in reality, cannot stop people from stealing unprotected intangible assets if they really want to, and thorough IP security procedures (with a back-up legal enforcement strategy) are essential.

Market-testing Expansion Plan

An appreciation of how cultures view the problem you are trying to fix with technology may be the ticket to successful overseas expansion.

We are lucky to have a diverse mix of cultures living in New Zealand and tech start-ups should use this to their advantage. Market-testing products with local cultural groups can help us make educated guesses as to which countries would be more receptive. This can be supplemented with industry-specific market research to get a more accurate snapshot for expansion plans.

Knowing The End Game

The terms ‘end game’ or ‘exit strategy’ can be misleading as they imply that this consideration should be left till last, whereas the contrary is true. Exit strategy should always be top of mind.

Most tech start-ups are born to solve a problem digitally, but chances are large established competitors are also attempting the same, or could expand to do so. Competing with the big-wigs becomes a race to eat and then be eaten.

Take the example of the iOS mobile application, Sparrow, which was recently purchased by Google for $25m US. Sparrow was able to capture the market for iPhone users who wanted to access their Google mail. Google’s own attempt was given the distinction of ‘Worst Apps Ever’ by The Huffington Post, but it paved the way for co-founders Dominique Leca and Hoa Dinh Viet’s successful exit.

Irreversible Damage: Avoiding these essentials may not stop start-ups from somehow getting off the ground. However, the risk is that leaving cracks in essential foundations unattended will eventually lead to irreversible damage, and the bigger the business grows, the more those cracks will extend.

It pays to get it right at the start of the journey even if the steps don’t seem to be most urgent; solid foundations will eventually give the business the best fighting chance in the global arena.

Contributed by Mike Battersby and Lucy Xie of Battersby and Co Business Lawyers (www.battersby.co.nz).