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How To Scale Your Startup

Eric Schmidt has extensive experience scaling companies like Sun Microsystems and Novell. He emphasizes the importance of proper organization, interactive policies, and infrastructure to produce revenue and profit. Schmidt also stresses making timely decisions with fewer mistakes. Professionals should not act like they own the company. A company must produce scalable products and have a negotiable strategy for competitors. When recruiting, a company should "sell the dream" and hire people who can avoid past failures like bankruptcy. Empowering employees through positive speech helps productivity more than harsh approaches.

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John Cedfrey Narne
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84 views

How To Scale Your Startup

Eric Schmidt has extensive experience scaling companies like Sun Microsystems and Novell. He emphasizes the importance of proper organization, interactive policies, and infrastructure to produce revenue and profit. Schmidt also stresses making timely decisions with fewer mistakes. Professionals should not act like they own the company. A company must produce scalable products and have a negotiable strategy for competitors. When recruiting, a company should "sell the dream" and hire people who can avoid past failures like bankruptcy. Empowering employees through positive speech helps productivity more than harsh approaches.

Uploaded by

John Cedfrey Narne
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Eric Schmidt’s Guide in Scaling

Eric Schmidt is a computer scientist from UC Berkley College of Engineering who is


very knowledgeable and skilled about scaling as evidenced by his substantive career before
Google. He has worked for Sun Microsystems for 14 years and did the Java Maneuver. Also, he
went to Novell as CEO. He has done scaling in the most serious ways possible: theoretical deep
ways and teaches it in his entrepreneurial class.

Eric Schmidt, as a young manager, absorbed everything. His manager (Robert “Bob”
Taylor) in Xerox Corp. had a management style which 40 years later Eric had adopted. His first
impression in being a Sun Manager in the way that sun works is that he’ll encode in the next 30
years for development. However, he was surprised when he experienced firsthand leadership at
that time. After that, he emphasized on how crucial the next five to ten years of his career
because that’s the time firsthand leadership happens.

He described his experience on Sun mostly negatively rather than positive which as
follows: tumultuous, political and complicated. Additionally, he generally described companies
by their actions. Actions like: companies reorganizing prematurely, companies becoming
religious, and companies cannot react to “actual” facts. To support these claims: he gave his
low point in Sun as example wherein he attended a meeting comparing Sun Computers versus
PCs finding out that they can’t get the manufacturing costs equal to PCs. This is where he
learned to ask himself “What’s going to happen in the next five years?” or simply “the 5-year
question.”

After his career in Sun, he had gone to Novell under the “mistaken” idea of wanting to be
a CEO. Thus, he failed to do any due diligence. Without any due diligence, fraudulent acts in
Novell started (the books are cooked, people are frauds, and customers are not paying). His
Novell CEO experience was not pleasant but in hindsight, it had taught him many things about
cash which he used to create revenue when he became part of Google.

My initial thought on how business works is that it aims to create revenue. For it to
produce profit, it needs the following criteria: proper organization structures, interactive
policies, dynamic infrastructures for the company’s goals and well-developed plans for future
endeavors. I was aware that there are due processes in between but I did not know that these
due processes are lengthy and extremely hard to ensure success. Additionally, I believed that
the greatest assets of a working business are the people.

Eric’s perspective when making business decisions is that it’s not like the government.
There are no people in the government who regretted their decisions. Although that is half-
correct, he made this specific example to imply that businessmen tend to regret their decision
after a decision. Common phrases like “I should have done this sooner” is one example. Thus,
businesses should aim for “sooner” decisions and “fewer” mistakes.

Another point he stressed out is that professionals should not “imaginarily” claim the
company. Under no circumstances that professionals should act like they own the company
according to Eric. He refuses to do any press conferences right before the IPO. In contrary
young common executives today enjoy the press due to the attention it gives. He gave big
importance to the timing of appearing public. It should be done at an appropriate time with the
right reasons. Apparently, confusing one’s roles happens more common which means loss
usually for the professional.

He also voiced out his opinions on business growth. Growing everything as fast as
possible everywhere does not work according to Eric. Because “fast” does not create “great”
products, it is developed by small teams with strong leaders. Rushing products is not ideal in
most cases. A good example is the person who were tasked to improve Firefox (early released)
has managed to create Chrome (a better product).

Another business perspective Eric shared is that a company should have produced & sell
the products that can be scaled. Especially if it’s new, it can scale very quickly like Uber for
example. It has an app and business model that scaled very quickly in the United States. To
completely proof it from threats, it is also important to have negotiable strategy for other
competitors or barriers.

Lastly, his perspective about recruitment is that there should be a system in hiring better
people than anybody else. The phrase “Sell the dream” should be the core principle in hiring.
Let people’s reaction or desire to work for the “dream” be qualifications as to whether they are
better qualified. Reactions will imply that this person is quick on strategies and flexible
intellectually. He added that it is more effective if the interviewee possessed good GPAs.

To add more on his perspective on recruitment, Eric mentioned this phrase “You can only
be bankrupt once” which I personally liked. It can only happen once because when an
individual experience the terror of bankruptcy (war), that person will use all his skills to avoid
that situation. A very specific example Eric used is a former bankrupt CFO, who would do
everything to evade that moment. Thus, these CFOs are the potentially the best employees to
hire.

He also gave importance to managing employees in the business. Eric incorporates a


more empowering culture in Microsoft. Instead of saying “You are stupid and you have proven
yourself worthless to the world especially to the company.”, he says “I think this is the most
incredible idea I ever heard but I think you need to come up with a better approach.” This
“empowering” approach guides the employees to work more productively than the “harsh”
approach which only spreads negativity and promotes hate.

Incorporating all Eric’s business views to mine, I believe that we both value the welfare
of the employees. I believe we will both agree that a creation of empowering policies, provision
of good office culture, quality trainings and proper work evaluation are some of the appropriate
actions that will bring satisfaction to employees. Although he did not deliberately mention
these examples, I find them related to each of his business decisions on recruitment on or
before scaling.

I learned many new things from Eric: recruitment of employees, product scaling, product
plan, and the importance of knowing one’s place. Initially, I was not fully aware that these are
due processes done in a very long time. I realized my mistake as Eric started his long business
stories from his endeavors on blitzscaling. The due processes he had experience was indeed
lengthy, and arguably, hard to control for success.

As an accountancy student who aims to be an entrepreneur, I am grateful that I can use


his experiences as guidance for my company. It gave me an idea as to what factors I should
focus when organizing my startup business structure. One technique I can use is the “sell the
dream” technique. It will help me pick a candidate for key management positions. I can also
use the empowering speech approach rather than rude speech approach. I will use all the
insights and experiences he shared in starting my business to ensure better odds at success in
scaling or in the industry in general.

References:

https://www.youtube.com/watch?v=hcRxFRgNpns

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