Scaling Startups Beyond the Product: Healthy + Smart
Organizational success has two components: 'smart' and 'healthy.' Are you giving enough attention to both?
As startups pursue rapid growth, they often focus intensely on metrics, goals, funding, strategy, and other markers of being ‘smart.’ However, they end up overlooking another, arguably more important, component for long-term performance and sustainable growth: organizational health.
Reface, the viral face-swap app, had already reached 20-30 million downloads when they raised $5.5M in a seed round led by Andreessen Horowitz. “We were growing like crazy,” according to Anton Volovyk, co-CEO of Reface.
Anton and I were on a panel together discussing superscaling the product and the organization, sharing lessons and insights on what it takes to scale in a sustainable way.
Reface was founded in Ukraine in 2019 to build and develop machine learning tools and AI for content magnification. Their most famous app is the one where you swap faces in videos and GIFs, turn yourself into celebrities, and animate photos.
Superscaling
In just a few years, Reface had over 200 million downloads globally, processing over 6 billion synthetic videos on their servers. At one point, they had to switch off marketing because they were unable to process all the requests from users and wanted less traffic on their platform because the backend system couldn’t handle the load.
Having made many mistakes and turned them into lessons along the way, Anton shared how hard it is to manage growth and advises that it’s better to grow slowly.
On one side, their technology and model were hard to deploy at scale. They had difficulties scaling the product too, because even though it was easy for them to acquire users, retention became an issue.
On the other side, they had to manage team growth. They needed people to execute on the technology, handle all the users, the data, design, and run A/B tests. So, they started hiring a lot of people—like a lot! Within a year, actually more like 7 months, Reface went from being a nascent startup to a 120-person organization.
Reflecting back on the rapid changes in their organization, Anton shared that in the beginning, you know everyone, you know the working styles of everyone, the culture fit is perfect because you hire people you know, you hire your friends. More importantly, he discussed how their roles have changed in this rapidly growing organization. He and other “senior” team members had to go from getting the results of their work and efforts directly as outputs to working through people — a.k.a. delegating. He shared that when others start hiring at that speed, it becomes very hard to maintain the culture. This quickly became an issue that needed to be addressed.
Overscaling
Anton says that if he could revisit the product development, he would proceed more slowly, allowing more time to refine the product. He believes this approach would create greater value for users and, once the product is fully ready, enable more effective and rapid marketing efforts to accelerate growth.
As for team growth, Anton believes in keeping the team as small as possible for as long as possible to ensure that everyone understands their roles and tasks. This is crucial because, in fast-moving startups, lack of clarity and alignment can lead to disorganization and a significant drop in efficiency. At one point, Reface had expanded too quickly and was forced to make the tough decision to downscale the team.
Long-Term Performance & Sustainable Scaling
So, how might startups achieve sustainable, manageable and efficient growth while ensuring performance?
By focusing on building both smart and healthy organizations.
The smart part, most startups get right. This refers to the organization’s strategy, finances, marketing, goals, and so on. These elements are easily quantifiable and measurable giving lots of data to benchmark 'success.'
Where many startups – and organizations overall – tend to trip up is when it comes to making their smart organization also healthy.
Healthy organizations experience minimum politics, minimum confusion, high morale, high performance, and very low turnover. Although equally important, these aspects are harder to measure in terms of progress and ROI, which may explain why founders, who often focus on hard data, tend to overlook them.
I'm so glad to see that the critical role of organizational health is gaining more recognition, and I love working with rapidly growing tech startups because the impact of this work is tremendous in these organizations.
Top factors that kill startups often directly result from being an unhealthy organization, including cofounder conflict, misalignment, and unclear vision.
Building a Healthy Organization
It requires an intentional focus and effort to create alignment, achieve clarity, and over-communicate everything.
As startups grow from small, tightly-knit teams with free-flowing information to rapidly expanding ones, people tend to start assuming that everything is clear and everyone is on the same page. Unfortunately, that’s often not the case. Starting with the leadership team and cascading down through the organization, team members need to continually recheck with each other to ensure all priorities are shared.
One tool I frequently use in my work with cofounders and leadership teams is the 'Five Behaviors of a Cohesive Team' developed by Patrick Lencioni.
Trust. This is the most important component for building a solid foundation. Without trust, nothing else matters. Trust is built through vulnerability, open communication, honesty and psychological safety; these are qualities that can be developed in teams.
(Side note: This is one of the reasons why, when we review startups for investment, we want to understand how well the founders know each other. We give higher scores to those who have worked together or have been through sh*t together and came out stronger on the other side, who know each other. This history indicates a certain level of trust.)
Conflict. Teams can't move to this next building block without trust. The conflict must be focused on ideas and result-oriented. It shouldn’t be an 'ego' conflict, which leads to unproductive discussions—a common occurrence when there’s a lack of trust. Instead, it should be 'idea' conflict that leads to decisions beneficial for the organization, enabling everyone to perform better. To achieve this, team members need to trust each other and maintain open communication, align on what’s most important, and feel psychological safety.
Commitment. Above healthy conflict, there is commitment. When founders know they can engage in conflict without judgment, they feel comfortable disagreeing with each other. Everyone voices their opinions and perspectives without feeling the need to conform for the sake of harmony. After an open discussion, a decision is made, and then everyone commits to that decision. There are no 'I told you so's—this goes back to avoiding 'ego' conflicts.
Accountability. Whatever the team has agreed on, whether it's their values or priorities, they hold each other accountable. This accountability extends beyond performance metrics; it's also about honoring their values. Just as team members should be recognized and rewarded for following through on decisions, delivering results, and modeling behaviors that align with their values, they should also hold each other accountable when they fail to do so.
Results. Building on top of all this is how you achieve 'the results.' This is where teams ensure that they have collective goals and priorities they are working towards. Individuals cannot pursue personal goals that don't align with the organization's top objectives – these objectives need to trickle down to ensure true alignment and produce results.
Benchmarking and measuring success through shared goals
There are so many tools and frameworks to get aligned on priorities as an organization, set and make sure that everyone had shared goals and then measure progress and results.
The one I mentioned on the panel, OKRs, was something Anton had experience with at Reface, and some lessons too.
OKRs: Objectives & Key Results
The purpose of implementing OKRs is to align the team on the same three to five organizational goals, agree on methods to achieve and measure results, and help team members understand how their tasks contribute to these goals.
The objectives are what you aim to achieve. These are the "big picture" ideas and ambitious, bold goals that inspire and drive the team.
The key results describe how you achieve and measure these goals. Each objective is broken down into measurable, time-bound key results that indicate whether or not you have achieved your objectives.
At Reface, they had success with establishing high-level OKRs and were still working toward those key results six months after implementing the model. However, it seems they went too deep into the details, writing down too specifically each thing the teams needed to accomplish. Don't think of your OKRs as a task list for your team, as tasks can change rapidly. In their case, in one month, those specific items became obsolete, and the team had to work on other things to achieve the overall goals but didn’t know how to move forward in a direction that differed from the tasks they wrote down a month ago.
A couple of things to pay attention to when implementing a tool like this in a rapidly moving startup:
Leaders as advocates: The founders and leaders must buy into, implement, and use the tool. They set the priorities and high-level objectives that then cascade down the organization.
Weigh in to buy in: As we strive to achieve alignment and commitment, it’s important to involve the team so they can identify their department-level OKRs that contribute to those at the organizational level. Again, it’s not a task list. How you get it done might change, but as long as the goal is clear, the team will still be working in the same direction.
Review quarterly, and check in with your team weekly. Startups move fast, and OKRs take time to establish a rhythm, so review them quarterly, even monthly in the beginning. Ensure you communicate these regularly.
Reface: Intentionally Romantic
Anton shared with us that they were very intentional about the DNA from day one; and paid a lot of attention to who they hired and how they onboarded. They strived to be a 'romantic' company, unlike the super-efficient, hierarchical, execution-focused companies. They wanted to create a place where people spent a lot of time discussing ideas, perhaps wrestling with a question for too long, bringing in more people to the discussion. Although this approach may have made their execution a bit messy, it also led to many initiatives and technologies at Reface to be developed from the bottom up.
Here’s why this seemingly simple statement by Anton is filled with insights and wisdom on hiring and culture. He shared with us that they were clear on what they cared about and made conscious decisions when hiring to find people whose values aligned with theirs. This is critical because culture is not something you create from scratch; it is something you shape with what you have inside the organization. So the most important decision is who to bring into the organization and how to select them beyond their technical capabilities.
Ask these questions to apply this approach to your hiring process and be more intentional about the ingredients of your culture:
What are the values and behaviors we love seeing on our team, in our organization? What do we want to see more of in the world?
Grow intentionally! You may be thinking about who you need, when you need them, and what you need them for, and that’s fine. But remember they also need to understand how they fit into the company and what value they create for the organization.
People are the most valuable resources in an organization.
What founders and leaders need to explore is how to turn the company into a place where people find a purpose for their capabilities, expertise, and passion. Do that, and you get a killer team going above and beyond the call of duty, caring deeply about the collective goals and showing up in a creative, resourceful, and energized way to work with you on your mission.
I can’t emphasize enough the impact that clarity, alignment, and communication—even over-communication—have on ensuring organizational health.
It requires intention, investment, and constant nurturing from leaders to build a healthy organization. Though it is the secret to long-term performance and sustainable growth, no startup can achieve this through strategy and mechanics alone.
Yes, sometimes we need to go through the experience ourselves to truly internalize these tips and insights, but I sincerely hope you’ll remember them when you most need them as you deal with the challenges of rapidly growing your team.
These stories, insights, and support ensure that founders feel more prepared and can thrive on their entrepreneurial journey.