How to Scale a Startup: Insights From a LatAm Startup Operator

The difference between a business and a startup is that the latter must be tech-based, show exponentially-paced growth and be disruptive in the way it brings value to its customers.

Statistically, three out of four venture-backed startups fail. There are three main reasons why this happens: They run out of cash, do not find product market fit or get outcompeted. Building a startup is a lot harder than most people think, and growing them is a titanic task.

Franco Radavero, a top notch startup operator knows it, and for the last eight years of his career, he has been dedicated to figuring out how to scale startups in LatAm.

Radavero is now the Country Manager for Argentina at Tiendanube, one of the latest regional unicorns with a valuation of more than $3 billion, and was previously one of the leaders behind the expansion of Despegar and Acámica (sold in 2021 to Digital House) throughout LatAm.

In an interview with Radavero, The Org had the chance to pick his brain on how to grow and scale a startup in Latin America.

Building a startup is not for everyone

The first thing Radavero mentions is that the startup world isn’t for everyone.

“Usually, the profiles that fail making the shift from corporations or consultancy into startups are the ones that are unable to adapt to this type of context, in which there is no validated formula to follow, and where things happen very fast, not gradually or linearly,” he told The Org.

The startup world demands that people be able to unlearn the traditional way of doing things, and relearn new ones. As the futurist Alvin Toffler wrote: "The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn."

“The pace at which you have to acquire new skills and specific knowledge in startups is radically faster than in corporations: You don’t have time to waste,” Radavero said.

In terms of people, Radavero affirms that the first question any founder should ask themselves before scaling is, what kind of people do I need for the next step? “Not understanding what type of people you need can be the pain of growing. You need to have the right people for what you need to build in the next 18-24 months. Forget about degrees or CVs, focus on skills and capabilities,” he said.

You won’t know what you’re doing — and that’s okay

Radavero is often asked how to have a career at a startup and his answer is simple: “Do the work. Over and over again, just do the work. There is no formula for success—you just begin with a goal in mind, and build your path to achieve it, which is seldom so straightforward.”

Building and scaling startups demands that people do things that they, or no one, have ever done before. According to Radavero, being able to manage uncertainty, learning fast and being resilient with failure are fundamental in order to succeed in this type of business.

“For example in Acámica, we were trying to scale selling a new type of education. We were trying to carve our space in the market among universities or institutions that have been well established for the better part of a century,” he said. “How do we do it? We observe, build our hypothesis and set out to test. Many of the things we did failed, and that’s okay. When you find the levers that work, you double down on them, until they stop working, because they will.”

Every step should be an experiment

"If you want to get from A to B, but you don't have a map, how would you do it? You try to equip yourself for the terrain ahead, and bring your best guess on where to start,” Radavero said. “Then, go step by step, making sure you're moving in the right direction."

To be a successful startup operator, Radavero said, “you have to have clarity of where you want to go, and build the path to get there through experimentation.” In other words, he suggests viewing the process of building and scaling a startup as a scientific experiment, in which the team sets the objective, builds the hypothesis around it, and performs the action to test if it is true or false.

A tested hypothesis always moves you closer to your goal, Radavero said. “If you validate that the experiment works, keep doing it; if it doesn't, stop doing it. Whether you prove your hypothesis right or wrong, each action is a path builder that tells you where to go, or where not to. Just make sure you are going in the direction of your goal, and hopefully at the pace you need,” he said.

Radavero suggests thinking about scaling a startup in three types of experimental stages:

1. Experiments to explore the problem and the market, in which startups should validate how the product or service fits into the new market. Does the need exist there? Who are the buyer personas? What differences and similarities does this market have compared to others currently served?

2. Experiments to explore the solution in the market, where validation should focus on what would make your specific value proposition fit that particular market. What needs to be adapted or changed to get traction?

3. Experiments to conquer the market, where you hope to validate your growth model and identify growth catalysts. Which are the most efficient acquisition levers in this market? How could you lower the cost or speed to acquire new customers? What would improve the customer’s lifetime value over time?

“Entrepreneurship is a journey. You rarely ‘get there’, you’re always on the move, exploring or creating new avenues for growth. The way to do it is thinking about the next step, creating your experiment and generating new knowledge on each iteration” Radavero said.

What gets measured gets managed

“The only way to know if you are being successful is if the numbers add up; the only way to know if you need to continue or iterate, is measuring it,” Radavero said. He is crystal clear about data. “Without data you are just guessing. You need to define the key indicators or metrics you are trying to impact, how to measure them, and use the information they provide to make better decisions.”

This is not just a hunch based on Radavero’s experience. Less than 40% of organizations use data-driven insights to drive business, and companies with advanced data analytics capabilities are five times as likely to make decisions faster than market peers.

The term data-driven means that a startup is oriented to make tactical and strategic decisions based on data rather than gut instinct, opinions, subjective observations or pure faith. “Past experience, business sense and gut feeling are useful tools in management, but you need to pair them with solid performance metrics if you wish to act truly intelligently,” he said.

According to Radavero, the three basic usages of data are to inform and improve decision-making, revamp or refine operations and identify potential new streams of revenue or market opportunities.

Don’t cover problems with people

“In hyper-growth stages, it’s okay to be in ‘beta’ mode. Always testing and trying things that probably won’t scale. But at some point you need to streamline your operation,” he said. “A very common mistake startups make is to think they can solve performance issues by bringing more people onboard.”

It’s clear that people are the most important asset of any organization, and ultimately they determine the success or failure of any business. But without clear objectives, systems and processes that allow people to work in a way that is aligned, efficient and accountable, talent could be undermined or wasted.

Radavero says people working at startups should think of processes as enablers, which are meant to give teams and employees clarity on what they have to do. A process doesn’t have to be something complex and difficult. Instead, a process could be a checklist, a guideline or a flow map. Whatever works to align people and optimize resource allocation.

“Problems won’t get solved by throwing people into them. Things get solved when there is an established way of tackling challenges or opportunities,” Radavero said. “I do not agree with the culture of breaking things and then seeing what comes. You should and can be open to breaking things, but you should always have a process to try, learn and keep building. Otherwise, you’re just shooting in the dark.”