The difference between scaling from 0-50 and 50-100+, according to HiMama CEO Ron Spreeuwenberg
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HiMama CEO Ron Spreeuwenberg had to learn a lot about scaling in the last several years. In 2018, HiMama had 50 employees — two years later, the company has grown to 100 employees and is actively recruiting for a number of roles.
HiMama, co-founded by CEO Ron Spreeuwenberg and CTO Alana Frome in 2013, provides a childcare app that fosters communication between caregivers and families, facilitates payments and helps caregivers manage the classroom. Throughout that time, the company has had to think about how to expand their total addressable market and attract the type of talent that comes with that scale.
We spoke with Ron Spreeuwenberg, CEO of HiMama, about what changed in HiMama’s processes as it doubled its headcount, how the company weighed profitability versus raising investment and the importance of staying true to yourself as a founder.
Scaling operations and headcount
As soon as a startup gets past the 30 to 50 employee mark, setting up systems and capabilities to scale is important as it becomes difficult to maintain the efficiency of a smaller startup, Spreeuwenberg says.
“As you get larger, candidates will compare you against larger tech companies like Shopify, so you have to have benefits packages that are comparable, or some other distinct differentiation.”
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And, talent retention becomes important to consider — in a startup’s early days, it’s not uncommon for employees to use their own laptops, and having competitive benefits isn’t always top of mind. But, if companies want to continue hiring top talent, these hires look for the competitive benefits and other perks to go with it.
“As you get larger, candidates will compare you against larger tech companies like Shopify, so you have to have benefits packages that are comparable, or some other distinct differentiation,” he says.
Startups should also take the time to invest in the onboarding process to ease the transition into the company. To do this, it involves three stakeholders: a people operations team for administration; an enablement team that helps run training for some of its functions; and HiMama employees themselves, who can get involved with helping new hires understand the day-to-day of workings at HiMama, as well as getting a sense for the culture.
“There's also a session with me so I can go through the history of HiMama and give people that context, and then we have somebody who does a session on early childhood education and understanding what it's like to be an early childhood educator,” says Spreeuwenberg. “I think it helps people to get that wider perspective versus just ‘here's the tools that you need, and here's what you do in your job day-to-day’, giving them all that context and those relationships.”
The investment stage
Getting to this level of scale also means thinking about where you want to be in the next two years and beyond, and whether you want to pursue profitability or seek venture capital investment. “It’s a juncture that really forces you to decide what you are aiming for,” says Spreeuwenberg.
“The fact that we balance growth with being sustainable about it, is something that I think is quite attractive about our business.”
In April 2019, HiMama raised a $7.25 million Series A from Toronto-based Round 13 Capital, with an introduction made at the SaaS North conference in 2018, and in May 2020, it raised funding from BDC’s Women in Tech Fund.
To attract investors, Spreeuwenberg said that the company’s focus on capital efficient growth rather than prematurely spending on expensive marketing campaigns (an issue he’s discussed as far back as 2016, during a TechTO event on being intentional about marketing efforts), has been attractive to investors.
“The fact that we balance growth with being sustainable about it, is something that I think is quite attractive about our business,” says Spreeuwenberg. “It allows us to be really transparent with our team about things like our financials, because we're not risking people's jobs by doing risky things financially, which I do think is an issue in the tech sector.”
Before raising venture capital funding, startups should understand the actual size of the opportunity for the company and raise funding that matches the opportunity. In HiMama’s case, Spreeuwenberg says its total addressable market (TAM) is large, but there is a limit.
“There’s 800,000-plus childcare programs in Canada and the U.S., but it's not so large that we can sell to every SMB customer in the world, for example,” Spreeuwenberg says. “We don't want to raise more capital than what is necessary for this business.”
"You don't want to lose sight of those qualitative things that really matter to you.”
However, the company has since found new areas of growth, expanding into FinTech with a tuition payments system for parents. And, there are opportunities to improve the work experience for child care operators; Spreeuwenberg notes that many still use pen and paper rather than software.
With over $50 billion in child care tuition payments made annually, and operations software still being very much a “greenfield” opportunity with most child care programs still using pen and paper, Spreeuwenberg says its market opportunity could be in the billions. “Creating a billion dollar business is a feasible milestone for us based on our market size, so it does make sense to get the capital,” he says.
Ultimately, while seeking advice from experienced entrepreneurs is important, Spreeuwenberg advises startups to trust themselves too — they know their industry better than any advisor. While staying true to your culture and DNA as a company can get harder as a company grows and the company becomes more metrics-focused, Spreeuwenberg says the social impact aspect of HiMamais huge, even though it is more difficult to sell to stakeholders because it cannot be easily quantified.
“You don't want to lose sight of those qualitative things that really matter to you. And those end up moving the numbers more than any incremental improvement initiatives you could ever do,” says Spreeuwenberg. “There will be hard moments and unless you're doing the things you're passionate about, you'll end up giving up. In Canada, when we want to see more companies get to significant scale versus exiting early, I think that's really important to keep in mind.”