Is it possible for a startup to scale up sans funding? Well, our latest host to hold an event on ScaleUp Greece, Skroutz, is such an example. That is not the only impressive fact about Skroutz.
This exceptional, non-venture capital backed company, has been trading in e-commerce in Greece for the last 15 years and has managed to become the Greek “Amazon.com”.
Previously, we shared the beginning of the story of Skroutz with George Hadjigeorgiou (Co-founder) at the helm, narrating their fantastic story to us and all of the attendees of the 4th ScaleUp Greece event.
As promised, today we’re going to go through the interactive part of our scale-up event. That’s the open discussion we traditionally have with the co-founders. During these Q&As, the co-founders usually share the challenges they faced and the insights they’ve gathered on hiring, management, teamwork and many other aspects of their business. And these are all factors that can, indeed, make or break a company.
In this second part of the series, we thought it would be nice to share the pearls of wisdom we got from our casual discussion with one of the co-founders at Skroutz, George Hadjigeorgiou and a few key team members.
George was really warm, open, and quite down to earth; a host that never hesitated to answer a question. He kindly walked us through the journey of the company and the entire team of Skroutz, from day 1 to date.
Growing from a startup to a scale up: The Skroutz way
Q1: What is the number one obstacle, in severity, you’ve come across all these years? The number one difficulty you’ve had to deal with.
As you grow, management gets difficult to handle; much more so if you’re growing fast. We started out as a team of engineers. The challenge, for us, was to shift our mindset at different stages, and prioritize people. It took us quite a while to realize that people are more important than technology, more important than funding, more important than anything else.
Q2: Was that shift in your mentality an easy course of action?
No, it wasn’t. And that’s because we were all engineers. As engineers, we believe that everything — even people — is in a binary state; and that there are no emotions. We thought you don’t need to pay attention to people’s worries. You just need to focus on specs. And that’s wrong.For me, it wasn’t easy. But once you understand the fact that when your company grows it’s because you’re growing along with other people — your team — then things change.
It’s your team that adds value to your company.
And how did we manage to understand that? Well, it took us a lot of reading, a lot of thinking and many discussions and disputes. It’s a process you cannot avoid and it’s one that is constructive. In the beginning, there was some resistance. Once we left that behind, we kind of got into a more constructive process.
Q3: Since you were all engineers, I guess in order to grow your business, there were probably some parts missing. For example, you weren’t experts in hiring, marketing or finance. Was reading these subjects enough to help you change?
Well, you need to challenge your comfort zone. And that’s not easy. Especially when you have no idea how to do these things and you need to start from scratch.I’d say that, apart from books, it also helps attending events and generally being part of an ecosystem. That way, you’ll get the chance to receive advice from people that have already been there and done that. You might learn something that will change your mindset entirely.
I believe that wherever there is a technical hub there is huge expertise; and that is of great value. Hitting a wall is not an easy thing; it might crush you. Especially in the beginning, when things are so unpredictable and you have no idea what will come your way the next day.
Q4: Today you’re one of the most preferred employers in Greece. How does the technology tools you choose affect your hiring? Walk us through your hiring process at Skroutz, right from the beginning.
First of all, hiring is difficult for many reasons. There’s too much competition today in Greece, making things more difficult. But that is also good, since it means things are changing. And there is also competition from abroad.
Now, for the stages of hiring we’ve been through. Our first hires were friends and acquaintances. Then we got some hires to work on Ruby, as there were people interested in this technology and our company was the first to use it. Then, as we grew, that method stopped working. It’s difficult to grow your team that way. And so, we did the usual way; with job postings. In this effort, we generally try to promote what we’re offering. That’s in order to be competitive, since the law of supply and demand affects hiring.
Again, hiring is a difficult process. You need to focus on your internal procedures, rather than the external ones. It’s difficult to explain. I’d say an HR department is really important, if you want to grow your headcount with the right people. HR affects employees’ life within a company.
Q5: Do you believe that retention is a really important metric when it comes to hiring? What helps retention? Is it offices and perks? Is it being competitive in payments?
There are many factors that contribute to employee retention. Every person has their own goals. Someone may be interested in getting involved with cutting-edge technologies. Another one may focus on finding a meaning in what he/she does, perhaps in having an impact on other people’s lives. The most important thing is the way people grow within your company.I’d say not all companies are for everyone. It’s not easy to realize and accept this truth. It’s difficult to accept the fact that someone may not want what you’re offering, no matter how great it is. There are companies that focus on the product; others focus on technology. There’s a book titled High Output Management that really helped us a lot. Another suggestion is Hard things about Hard things.
Q6: If you could focus on one thing that didn’t work for Skroutz, what would it be? A kind of a failure, something you believed was important and gave your best effort, but it never really worked — an activity, an initiative, an effort, anything.
It was in 2006, a year after we started and we had just made a huge mistake. We believed, back then, it was a good idea to cooperate with a big company in designing our brand, giving no less than 50% of our company.
We believed it would be helpful for us. That company had a subsidiary that was a design agency; it would help us with our design. We (naively) parted with 50% of our company, in the belief we’d get value out of it.
It was a decision that gradually stressed us more and more each year. Then, along came the financial crisis that made things even worse. Hopefully, two years ago, in 2018, we finally managed to get our 50% back.
That’s a great lesson learned — and a great story to write a book about — it would be titled “Things you need to avoid when managing a company.”
Q7: What if you had hired the right/skilled people to help you, such as people skilled in marketing and/or other aspects of your business? People that would help you avoid hitting walls and save valuable time in the process?
Well, there is a common dilemma in almost all companies. Do you do it yourself (with your own skills and the knowledge you have already accumulated)? Or do you hire someone to do it for you?
Personally, I believe that there are things you shouldn’t do on your own; because it might take you longer.
However, at Skroutz we had a unique characteristic. We never raised money all these years. And that means our resources — in terms of capital — were limited. Especially during the first 8 years, we had to be very careful with our decisions.
I’m not sure what the best advice is, to give someone. I think it depends on the case. But I believe that, in some cases, learning from your mistakes is really valuable. Especially, if you’re a founder. Mistakes will probably help guide your future decisions the other way. Say, in finding the right people for your team…
Q8: What advice would you give a small startup that is now at the beginning? What are the core skills a small startup needs to have, in order to become successful? Is an engineer and a product manager enough? Let’s say for a team of five people.
First, let’s make it clear that within a startup everyone does everything. (wearing multiple hats is common practice)
But if we want to focus on expertise, well, that depends on what you need to do. If it’s a software startup, I believe technical co-founders add value to the team. It’s easy for them to build the product rather than have someone else do it instead. If the company trades in anything else, let’s say hardware, they might need something else. For a SaaS company, engineering is important but not obligatory
We’ve seen companies that trade in technology, whose founder didn’t have a tech background.
But having some tech savvy is very important. He/she needs to understand technology, be familiar with tech advancements. That’s also true for us, even though we have a tech background. You need to have a 360 grasp of business, as you grow. You need to understand marketing, HR and business, in general. Especially when your role affects the company’s future and you are the one to make the important decisions.
As for our story, two out of three of us had a technical background and that was true for almost 3 years. We would do everything by ourselves. Then we did our first hires.
Q9: You said everything changes as you grow and nothing stays the same. But what does that mean, in practice? Can you give us an example?
When we were a team of two, we would just write down our tasks on a list (on a notebook), splitting our workload this way. There was no project management software, no specs or anything else. Things were so simple. That’s efficient when you’re a team of three people, max.
Q10: Did you use Agile or Scrum?
We were agile but didn’t apply Agile strictly. We applied Agile in a more abstract form. As long as we were less than 20 people, we used to apply a system that allowed us to work on two big issues and two smaller ones; let’s say a big feature and a small one. But that stopped being efficient when we became more than 20 people.
That’s very common as you grow. But once you reach 50 or 60 people, you reach a point where things become a bit stable. As you (your team) grow, you become more stable but you lose in terms of speed. The velocity we used to have when we were a team of five is five times the one, we have today. Numbers are provisional, but I guess you get my point.
Q11: What did you do about this issue?
Well, things have changed. Everything today is complicated. You’ve to take into account so many different parameters. Let’s take for example the front-end you need to test on mobile browsers, for all types of devices. (Android, iOS, desktop browser, mobile browser)
And what about GDPR?
Things used to be much simpler than they are today. We used to write some code tests in a browser and that was it.
To answer your question, there are a lot of things you can’t do. Maybe you need to focus on small teams of 6-7 people. That helps. There is a project by Google, called Project Aristotle. It analyzes the topic of the ideal consistency of a team.
Small teams are really efficient. Apart from this, as companies grow and as teams grow, things get better. But you need to grow teams of people that actually make things happen(programmers, content creators or any job position that offers tangible outcomes); not people that hold managerial roles. That’s what helps your company grow.
Q12: As a technical founder do you still write code? And how wise is this choice? What would be your advice?
Well, it’s been 6 months now, since I stopped writing code for Skroutz. My colleagues advised me to do so. They said:
“Stop writing code, you’re not helping us.”
As you grow, your contribution as a co-founder becomes more valuable in things other than coding.
Apart from that, you need to release yourself from such tasks and make some room for others — for example junior programmers — to learn and to grow, as well. There is no point in writing lines of code you’ve written a million times before. You might complete these tasks ten times faster compared to a junior programmer, but that does not add any value to the team.
If you love programming, you need to find alternative ways to do it, as a hobby. Maybe take part in an open source project. You cannot delegate your role as a top-level manager. It’s what adds value to the company. That’s your challenge. You have to make a company of 200-250 people work. I used to think that managerial roles are not that important, but I’ve changed my mind. Now I know that running a business is difficult and you need to have the right skills. Making a 250-person company work is really challenging.
Q13: How difficult is it for you, as a co-founder, after being for 12 years in charge of almost everything, to pass over roles to other people? And even to hear them say you’re wrong, we should not do it this way.
Well, first of all I’m very headstrong. I believe that having a strong opinion is useful. It helps you push things forward. Especially in the early years of your company. It makes you effective and efficient. That was very helpful in the early years. But as your company grows you need to change. You need to be more flexible.
What is also important to remember is that People need to understand the why’s in order to do things efficiently. When people just obey instructions, they will not do things with the same level of creativity.
There are many methodologies that help you whenever there is a conflict between opinionated people.
At Skroutz we use OKRs. These help you align the company’s goals with personal opinions. A methodology is not a panacea, though. There are plenty of them out there; you need to focus on one that works for you. These methodologies help you manage outcomes, not the way you accomplish them. If you plan to go from point A to point B, you need to focus on your destination, not on the route you’ll follow. That way, you eliminate discussion that is focused on opinions. You focus on method and metrics, not on opinions. Management by objectives started from Intel and today Google uses it in every aspect of the company.
Q14: So, you heard about management by objectives and you decided to apply it. Did you get a consultant, an expert to help you through?
No, we didn’t. And, once again, we hit a wall. The most difficult thing for a big team is consistency in direction. We need to focus on the same goal and go towards it. Hitting on a wall like this, is something common for companies.
At Skroutz we have 25 separate teams and we need to go towards the same direction. Cross-collaboration between different teams is of vital importance and it’s really challenging. When we don’t all go the same direction, it’s really difficult to accomplish anything. If you have 150 team members and there’s no consistency, you end-up with the dynamics of a workforce of only 50 people.
When we came across this problem, we tried to find ways to deal with it. What worked for me is reading. I’ve learned that Google uses that method and I read a book titled “Measure what matters“. This book helped a lot, it was as if I had a consultant giving me valuable advice. The most striking advice was that you should not get disappointed, it might take a year till it finally works out. That’s because you need to re-learn the way things work.
A consultant may be useful in helping you achieve things, but that’s not our culture here at Skroutz. We try to make it on our own, before we get an external partner to help us.
Q15: Have you been approached with the intention of a merger or acquisition?
Yes, that was back in 2012. It was a really interesting procedure. My advice, if you ever get in this position: keep in mind that all these proceedings are so disruptive, they might kill your business. You may be approached with the intention of acquisition; a year later you might need to shut down. It’s a really time-consuming process. You may end up neglecting your business and focusing on compiling XLS datasheets to answer all kinds of questions. You need to have a strategy to avoid being consumed by all this.
Q16: A technical question; As far as I know you’re using Ruby on Rails, among other technologies: How did you come to choose the specific technology? Do you regret building your entire platform on specific technologies? Would you switch to other ones?
The success of a startup is not affected by the technology it uses. For us, now, it would be a disaster to switch to a new technology. When it comes to huge platforms, as you grow, you break down the services. And thus, you can use different technologies in different components. There’s no use trying to change the technology for the entire platform.
But, to answer your first question, you’ll just have to choose a technology to use, based on your needs. Technologies come and go, they become trendy for three years and then they fade out. That’s how things work in engineering.
Q17: Is culture that important or is it just a concept that we value more than we should?
Every company has a set of values, its unique DNA. There may be companies that value competitiveness. Someone who is competitive, might fit in such companies. But that person certainly does not fit in at Skroutz. At Skroutz, we value teamwork.
From growth to sustainability
That’s what it takes to grow your startup to a scale-up. So far so good, but what about the next day? During our scale-up event, we also got the chance to discuss all about the future goals for Skroutz, with George. That includes, their company vision, whether growth is sustainable and a few other topics.
Read on to the final part of our discussion.