Ryan Downs: scaling Proxibid started with culture, right people, process

(Guest post by Ryan Downs) A strong culture is arguably the most important element for a business to have sustained success. Scaling a business is not easy. The demands on employees are heavy. There are surprises and setbacks along the way. Things don’t always go as planned.

Founder Friday is a weekly guest post written by a founder who is based in or hails from the Silicon Prairie. Each month, a topic relevant to startups is presented and founders share lessons learned or best practices utilized on that topic. July’s topic is about scaling your startup.

About the authors: Ryan Downs is CEO of Proxibid, an Omaha company that runs an online marketplace for high-value and specialized assets. Proxibid began in 2001 with a few employees and now has more than 100 in Omaha, New York and London. Downs used to be an vice president of worldwide operations at PayPal


It all starts with culture 

A strong culture is arguably the most important element for a business to have sustained success. Scaling a business is not easy. The demands on employees are heavy. There are surprises and setbacks along the way. Things don’t always go as planned.

A strong culture brings people together around a shared vision and not only drives innovation and commitment, but helps the team endure the inevitable difficulties a growing business experiences.

The most effective corporate cultures I have seen share certain traits: trust among team members, open and honest communication, innovation, teamwork and empowerment. Not only must leaders exhibit those behaviors themselves, they should be uncompromising in their hiring and firing practices to maintain those behaviors across the organization.

You can never have enough bench strength

A PayPal colleague once told me that in a fast-growing enterprise, talent is like water being poured on a hot frying pan. You think you have what you need and then you suddenly wonder where it all went.

Executives should always be focused on building the talent in the organization, not only to address today’s needs, but to address needs three months to one year down the road.

An executive should not settle when adding talent to the team, but should hire the very best individual possible with the resources available. I am an advocate of hiring a person who is over-skilled for his initial role, then moving that individual to a larger role when it becomes available. Executives must develop existing team members through training, feedback, projects, additional responsibilities and other opportunities. 

It is critical to think about succession planning, especially in the technology sector where recruiters are aggressively pursuing your best people every day. You need to know who will step in if someone leaves the company. Being caught flat-footed on succession can cause disruption and hurt momentum.

Make the difficult people decisions

A harsh reality exists in a growing enterprise: Some individuals can’t keep up as the growth and needs of the enterprise exceed the skill level of the employee.

That can happen because you made a poor hiring decision. I don’t know any leader who is perfect on that front. It can also happen where an employee did a great job when the company was in a certain phase – say its startup phase – but the enterprise has moved beyond the skill level of the employee, and the company needs to bring in new talent for the next phase of growth.

The only thing to do in these situations is to transition the employee out of the organization, and to do so quickly. Because this is unpleasant to do, too many executives “move the problem” somewhere else, either by creating an unnecessary role or transferring the employee to another team. This is not only bad for overall company performance and morale, it is not fair to the struggling employee, who will either fail in the new role or become mired in “make-work” that adds little value to the company. Be honest with these individuals and transition them out of the organization with dignity.

Understand your customers

While internal focus is essential to scaling an enterprise, don’t forget the folks paying the bills. When an organization is growing quickly, upgrading systems, adding new talent and introducing new products, customers also have to absorb a great deal of change. It is very important to stay close to the customers, to over-communicate with them, and to make sure they are getting the service they need. 

Feedback loops are important. Executives should always know how customers are feeling, especially top customers. Frequent interaction with the customer support, account management and sales teams is essential, but I am also an advocate of feedback management systems.

In our company, we use the Net Promoter Score in conjunction with a feedback management system, operated by Medallia, to keep a pulse on customers. Because we are surveying customers 24 hours a day, we have a current and accurate understanding of what the customers are thinking. We have weekly interaction with all of our large enterprise clients to ensure they are getting what they need. We also have periodic executive webinars to update them on the business and give them a chance to ask us questions directly.

Keep the system flexible

One of the more difficult aspects of scaling a business is scaling technology. You need flexible architecture that can adapt as the company grows.

In my experience, it is hard to know at the initial launch exactly what technology will be needed over the life of the company. First, technology changes so rapidly – look at the explosion of tablets in the last two years. Second, the external market dynamics change. The product with which you enter the market might not be the product that drives your growth over the long-term.

Given this uncertainty, companies should adopt a flexible, component-based architecture that allows you to rebuild or upgrade certain components with minimal waste and minimal loss of forward momentum. I have seen many instances where companies are dragging around a massive monolithic code base where it takes months to introduce features to the platform and the business is subjected to risk of outage in every release. Do everything you can in the early days to avoid this trap.

Introduce the right amount of process

Yes, fast-growing, dynamic, innovative enterprises need process. The key is to have just the right amount.

A young company will be strangled by the kind of process necessary to run a Fortune 100 company, but the complete absence of process is even more problematic. Companies without proper documentation, procedures and controls can face problems including security breaches, internal fraud, system outages, lost data, loss of institutional knowledge when an employee departs and inefficiency that impedes revenue growth, to name a few.

Find the right balance for your culture and phase of growth, but don’t ignore the need. Unlike fine wine, these problems do not age well.

Focus on the “must-haves”

Prioritization is key in a growing enterprise. What you decide not to do is as important as what you decide to do. All enterprises face the challenge of limited resources. Fast-growing companies seem to be even more impacted. Executives must focus on those things that will provide the greatest return for the enterprise and ignore some of the “nice-to-haves” until a later date. 

When I arrived in late 2010, two areas the teams wanted to address were the weaknesses in the underlying infrastructure that supported our production environment (i.e., the website our customers use) and severely aging desktops used by our employees.

As much as I wanted to upgrade the tools the employees used, I put that on hold and focused all technical resources on the production environment. System instability poses a much greater risk to our business than employee dissatisfaction or lack of productivity. So, the employees had to wait a year or two for upgrades.

Don’t get caught in the trap of trying to do everything “a little bit.” It won’t lead to excellence in any area. You have to prioritize what matters most. Remember, however, to do so with full knowledge of the consequences of your decision. You would assume that most initiatives employees want to pursue will have positive impact on the business. Not doing those initiatives will have some risk or cost to the organization. Don’t be too reactionary. Make sure you understand those risks or costs before pulling the trigger.

This story is part of the AIM Archive

This story is part of the AIM Institute Archive on Silicon Prairie News. AIM gifted SPN to the Nebraska Journalism Trust in January 2023. Learn more about SPN’s origin »

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One response to “Ryan Downs: scaling Proxibid started with culture, right people, process”

  1. […] Read more from Ryan Downs about how he scaled Proxibid through SPN’s previous coverage.  […]