In the past two decades, the business community saw a surge of unicorns, with over 2800 companies achieving a valuation of $1 billion or more. Clearly, something big is happening in the startup world. And yet, around 70% of startups fail at the scaling stage. Why?
There were three of us with just an inspiring idea when we launched Flowwow. In this column, I want to share some lessons we’ve learned through trial and error as we scaled Flowwow into a global gifting marketplace operating in more than 40 countries. While growth is exciting, it’s also where the real challenges begin.
The Scaling Challenge(s)
A major issue I’ve seen – both in our journey and across the industry – is trying to scale without a strong foundation. According to a 2023 Jitterbit study, 87% of business leaders cite manual processes and data silos as key barriers to growth. Meanwhile, 74% of companies lack fully integrated software solutions. That’s a dangerous setup for any startup hoping to grow sustainably.
Growth is often associated with rising metrics, new markets, and an expanding team. Yes, but in reality scaling comes with amplification of the existing problems: unstructured workflows, manual tasks crying out for automation, fragmented data. Yet, many startups continue to push for growth without addressing these critical flaws. Automation is the key. This helps keep things lean as you grow, meaning you might not need to hire as many extra hands. Plus, your team will have more free time to focus on more strategic work and minimise the risk of errors as complexity increases.
Take Krispy Kreme, for instance. In the early 2000s, they expanded quite actively – gas stations, kiosks, you name it. But their operational backbone couldn’t keep up. Quality control slipped, inventory management broke down, and over-saturation led to internal competition. It was a costly lesson as they were forced to restructure and rebuild consumer trust.
At Flowwow, operational scalability has been a cumulative effort of strategic adjustments. One of the biggest operational wins was building our own CRM system that is fully customised to our processes. We also stopped taking phone-based orders, even when it seemed like the industry norm. We introduced customisable support templates and seller onboarding checklists, and now we’re piloting an AI-powered WhatsApp bot to help onboard sellers faster and more efficiently. These steps may sound small, but together they’ve helped us scale without bloating the team.
The Local Nuances Challenge
Going global is a tempting milestone. Still, around 70% of international expansions don’t succeed due to poor localisation, which includes not only translation, but also underestimation of local market and cultural specificities at every stage of the customer journey.
Before entering a new market, map out how local users interact with similar products. How do people search for addresses? What payment methods do they prefer and what are the price ranges they find suitable? What social norms shape their expectations? What are their favourite holidays and cultural traditions? Accurate translations are merely the starting point, and the real magic happens when you make your product feel native to the user. Invest in cultural intelligence, work with local experts.
When Flowwow entered the UK market, we missed a simple but crucial detail: the importance of postcode-based address searches. We didn’t account for it – users struggled at checkout, and we lost potential sales as a result. It was a wake-up call.
As an example that really nailed localisation, I thought of Coca-Cola with their ‘Share a Coke’ campaign in Saudi Arabia. By replacing the brand name with 150 popular Arabic names, they tapped into cultural pride and personal identity. Sales jumped 26%, and the brand’s market share rose from 44% to 55%. That’s the power of truly understanding your audience.
The Process Transparency Challenge
Scaling always comes with complexity – and without transparency, complexity breeds confusion. Research by Gallup shows companies with high transparency get better customer engagement, better retention, higher productivity, and profit margins that are 21% higher than average. True, people can move faster and smarter when they know what’s going on. Foster transparency not just in data, but in dialogue. Make sure your team understands the “why” behind your decisions – it builds trust and enables better execution.
At Asana, for example, board and upper-level management meeting summaries are shared internally. This clarity helps teams align with company goals and make autonomous, informed decisions. We’ve taken a similar approach with Flowwow. Every employee can access key reports on financial and product metrics, and as we grew, we started hosting regular company-wide calls where wins, challenges, and strategic updates are shared openly.
The Hiring Challenge
One of the most expensive scaling mistakes? Hiring for volume, not for results. When headcount balloons without a clear purpose, productivity stalls and culture suffers. European tech startups, for instance, have reduced hiring by 40% compared to the previous year, rethinking their expansion strategies and a focus on more effective resource utilisation.
In 2022, TIER Mobility – a Berlin-based micro-mobility startup – had to lay off 16% of its staff as they had chosen to grow too fast without sustainable foundations. As the funding climate shifted, the company was forced to prioritise profitability over size.
I believe businesses that want to succeed need to always hire with intent. It’s worth focusing on building a strong middle layer – not just doers, but people who could design processes and stay metric-focused. You can’t scale a business if every key decision still requires the founder’s input.
The Neglecting Culture Challenge
Your business culture is what really holds everything together as you scale. AWS found that 86% of startup leaders believe culture fuels growth – and 85% say it’s critical for attracting both investors and talent. Moreover, a study from Oxford shows that positive corporate culture can boost team productivity by 30%. And according to Harvard Business Review, companies with strong cultures grow revenue four times faster than those with weak ones. So many numbers that truly speak volumes.
As Flowwow scaled, I couldn’t stay across every conversation, as hundreds of threads unfold daily on Slack. That’s where culture and trust come in. I rely on our directors to lead their teams and uphold our values. Misalignment here can undo months of progress. Culture isn’t just about perks – it’s about clarity, feedback, and shared values. In fact, 80% of our leadership team started in entry-level roles.
Scaling a startup is all about a perfect mix of moving faster and moving smarter. You’re sure to meet scaling challenges along the way, but with intentionality, the right systems, and a people-first approach, scale doesn’t have to mean chaos.
