Life After eBay: Kenyan Ambassador Meg Whitman Shares 5 Lessons On Scaling

For startup founders, scaling the company is both an aspiration and a risk.

US Ambassador to Kenya Meg Whitman is an oft-cited scaling success story. As CEO of eBay from 1998 to 2008, Whitman took the company from 30 employees and $4 million in annual revenue to more than 15,000 employees and $8 billion in annual revenue.

Factor[e] Ventures launched their new venture studio, Delta40, in Nairobi this past March. During the event, Whitman sat down with Delta40 Co-Founder and Director Lyndsay Holley Handler to discuss the African and global venture landscape. Holley Handler also has considerable scaling experience, leading clean energy company Fenix International through a pan-African expansion with MTN – which was acquired in 2018 by ENGIE, the French multinational utility company – and she’s helped scale 15+ ventures across the continent over the past 20 years. In the course of their discussion, Whitman shared five lessons for scaling with the investors, supporters, and entrepreneurs in attendance.

1. Have the right people in the right jobs at the right time.

While hiring the right team is standard operating procedure for founders, the approach evolves as a start-up scales. As Whitman told the attendees at the Delta40 launch event, the person who was perfect for a role when eBay was a $4 million company might not be the right person at $40 million, $400 million, or $4 billion. She also encouraged founders to trust their instincts – specifically, if it seems like a particular person is problematic in a role, they likely are no longer a good fit.

While it can be incredibly difficult to make personnel changes, especially when it comes to team members who helped scale the company, Whitman argues that founders who don’t have the right people in the right jobs at the right time are selling themselves and the rest of their team short. Role suitability isn’t just about capabilities, either – the team at an exit requires a different mindset than early stage startups, and so attitude is just as important as skills and experience.

2. Become an expert in your financial architecture.

While understanding revenues, costs, and volume seem like basic accounting any business should have on lock, it’s not uncommon for founders’ grasp of financial infrastructure to become weaker as the business grows and becomes more complex. That growth also directly changes a startups’ financial picture, as variable costs don’t scale with volume, but fixed costs do. For founders who do not have an instinct for financial infrastructure, Whitman’s advice is to ensure there is someone on the team who gets everything from return to invested capital to how to calculate the length of a startup’s runway. She said she is strong when it comes to financials but even so, she’s always had a CFO by her side to help make every decision, as the perspective is invaluable.

3. Know when to fold ‘em.

Following her success in scaling eBay, Whitman famously failed. In 2018, she and veteran Hollywood executive Jerry Katzenberg founded Quibi, a streaming service built to be a new way to watch video on the go. They raised $2 billion before launching in April of 2020… right at the start of the pandemic. Now, Quibi had a raft of reported issues, but the company was certainly kneecapped by launching a service intended to let users watch content anywhere just as most of the world settled in and stayed home. After six months, Quibi shut down and returned its shareholders’ investments. Whitman says realizing it’s not the right time to launch a venture doesn’t mean a founder is a bad entrepreneur – it just means the founder understands reality.

4. Put strategy above execution.

A startup’s strategy is arguably the single most reliable indicator of whether or not the business scales successfully. Whitman explained: “I always say perfect execution against the wrong strategy is a big problem, but if you have less than perfect execution against the right strategy, you win every time.” She took it a step further, arguing that perfect is the enemy of the good when it comes to execution of the right strategy – in other words, when advancing your strategy, it’s more important to progress than to execute flawlessly.

Whitman also encouraged founders to ensure profitability is part of the strategy, explaining that at eBay, there was one basic rule: revenues need to be greater than costs. Her view is that profitable startups are better able to weather constantly changing market conditions, which makes a strategy built around growth at all costs more likely to lead to a startup unable to dig itself out of a financial hole.

5. Don’t let fundraising get you down.

Back to Quibi for a moment – yes, it was launched with a $2 billion invested, but Whitman says even with Katzenberg’s and her notoriety, fundraising was a challenge, and estimated they delivered more than 200 presentations. She acknowledged that it’s almost always easier for an investor to say no than yes, and raising money is simply a difficult task. While there are certainly options to make fundraising more effective – for instance, the venture studio model connects founders to capital – securing investors still requires perseverance, patience, and grit.

Whitman acknowledged that eBay’s wildly successful growth occurred against the backdrop of an extremely favourable market environment, at the dawn of the internet, when e-commerce was just kicking off. She even trotted out that old chestnut, “It’s better to be lucky than smart.” While luck and timing are certainly factors in startups’ success as they scale, they aren’t the only variables. By focusing on strategy, team, and financial infrastructure, while being relentless when it comes to fundraising, founders position themselves and their startups to successfully scale.