KATE MITCHELL: Given our name, we’re biased, but the ScaleVP partners think the scaling phase of a startup is as important as the product you have built. Our experience with hyper-growth companies that achieved multi-billion dollar outcomes — Omniture and ExactTarget, as well as a new crop behind those — has colored our thinking.

    For startups, the first step toward scaling is to plan, test and evaluate your commercialization strategy. Once you see it working, the second phase is to scale your commercial efforts aggressively to position your quickly growing company as the dominant provider. If you do that successfully, you become branded in the eyes of your customers as the winner. That “buzz” is better than any marketing you can buy. We have also found that disproportionate rewards go to the winner in a market, whether that is measured in market share, share price or value to a strategic acquirer.

    See what other startup mentors have to say about what makes a startup scalable.

    Before we go further, we should talk about what a “scalable startup” means. Steve Blank has an excellent blog on the topic in which he describes what the elements of scalability are. One of the primary tests is the size of the market opportunity, which he says needs to be “not just big but huge.” A business that is scaling can more than double or triple its revenues every year, even when it is already selling more than $1 million a year. We have seen companies go from $1 million or so in sales to $50 million or even $100 million in less than five years. To do that, the market itself has to be growing fast, usually driven by some fundamental technology or customer shift. Think about big data and mobile as examples of broad, high-growth trends, which benefit companies with larger visions that take advantage of those trends.

    You need to be mentally and financially prepared to pursue the scaling phase. As my partner, Sharon Wienbar points out, you need to understand how to use cash wisely, how to balance your need to demonstrate growth vs. profitability and how to find adequate capital before you start the process. You will also need the human capital to be prepared to hire, hire, hire.

    Now on to answering the key tests as you begin to scale: Can I sell this? Can I sell it repeatedly? Can I sell it profitably?

    Your initial sales will let you know if the product-market fit is right, which is the first hurdle a scalable startup needs to clear. Be sure you know how to measure your progress. You can’t wait until your accountant comes in to do your monthly books to hear the answer. While you are in the initial startup phase, success may be measured in downloads, free to premium conversion or another form of positive market feedback that tells you that your product is getting early traction.

    The next step is to see if that sales process is repeatable. Repeatability is a litmus test on whether you have a scalable business. A repeatable sales process means that your product has little to no customization or other constraint that keeps you from going from 10 to 100 to 100,000 customers very quickly. That starts with the design of your product and continues into how your product is sold to your customers. Lack of friction in the sales process is the goal for a scalable company.

    Finally, as you scale up even faster to become the dominant player in the market, you need to be hyper-focused on understanding the efficiency of your sales and marketing. One of my partners coined the phrase, “magic number” to describe how to measure sales efficiency in software-as-a-service companies. The concept logically applies to all startups. How much am I spending to get a customer? Is that decreasing over time to the point that each incremental customer makes me more profitable?

    If, when and how to scale are critical questions for you to answer, so I will close with two additional resources. Spend some time reading what Mark Leslie, former CEO of Veritas Software and a professor at Stanford Graduate Business School, has to say about what he refers to as the sales learning curve. It is a useful construct for all companies, but particularly ones that plan to scale. Finally, spend some time with the data that the team at Startup Genome is gathering to help you understand what makes startups successful, the pitfalls of premature scaling and how to benchmark your progress versus your peers.