Business Strategy

Adapting to the Dark Side of High Growth

Post by
John Snyder

Adapting to the Dark Side of High Growth

In my previous reflections on two existential crises that shaped our 25 hard won years in business, I hinted at why establishing our identity apart from Duke was in our continual interests for self-preservation. In order to do so, we need to embrace rapid growth through diversifying our customer base and bringing more talent to support these new opportunities, even with the hiccups that it may create.

I discovered the hard way that there is such a thing as too much growth.

In 2009, when Net Friends was newly formed as an entity focused exclusively on providing IT support services, we had our best year ever and grew 40% in revenue and headcount. In 2010, we somehow repeated the magic and grew another 40%. We did it again in 2011, and again in 2012. Starting from 16 people in 2009, we swelled to 47 people by mid-2012. There were three major problems with this growth.

Challenge #1: Organizational Structure

For one, I personally failed to build out a corporate structure or develop one. What that meant was I went from having 14 people reporting directly to me in 2009 to 45 people, all while I was still performing about 30 hours of customer-facing work myself. We didn’t have anyone officially performing HR duties, so I was handling the hiring, as well as onboarding and offboarding tasks for everyone in the company. The workload was insane and driving me towards insanity! I don’t know how I personally persevered through 2012, but there was no question major things had to change in 2013 or I physically couldn’t keep going.

Challenge #2: Professional Development & Training

Another problem with all this growth was that several important areas were lacking attention. There wasn’t time to develop training and learning paths for everyone to nurture their careers and provide them with the support they needed. We surprisingly didn’t have a retention problem during this season; however, I know we could have and should have done more to facilitate our culture of community and skill acquisition. Every day was chock full of learning opportunities for all of us, but it was unstructured and more chaotic than it should have been.

Challenge #3: Nurturing Diverse Leads

Lastly, much of the growth was driven by a single customer: Duke. By the end of 2012, Duke represented over 65% of our business. Just in case we didn’t fully appreciate how devastating it could be to our business to lose Duke, we had a reminder that there were no guarantees that Duke would always be there. In mid-2012, someone from the Compliance Office at Duke alerted us that Duke’s Data Loss Prevention (DLP) tool detected some potentially concerning data sent from one of the systems under our care. It turned out to be totally benign test data that was being worked on by a developer that wasn’t part of Net Friends, but I remember asking the Compliance Officer to tell me what would have happened to us if it had been a data breach. The officer calmly told me “Our policy is that if a contractor is involved in a data breach and is found liable, we would rescind our Master Services Agreement with them and no longer work with that company.” Understandable, but yikes.

In 2013, we entered the year with a new organizational structure that included 5 managers and 5 newly formed teams, abandoning the flat structure where everyone reported directly to me. We invested heavily in new hire onboarding, promoted one of our teammates into an HR position, and built out an impressive library of training tools. We worked on growing our business outside of Duke, and by the end of 2013, we had grown into a safer position where Duke represented less than 50% of our business. This ensured that Net Friends was on a path to be increasingly less dependent on Duke. By 2016, Duke represented less than a quarter of our total business, and by 2020 Duke represented under 2% of our total business. We’re grateful for the opportunities Duke gave us over our first 20 years, but we also appreciate just how important it is to not have any one customer determine whether our company will be viable!

Looking Ahead

It’s been an experience writing up these 3 existential crises and sharing these stories with the wider world. I hope that it can inspire other business owners and industry leaders out there to innovate and endure tough times when the future is dim and grim. When I look ahead at the next 25 years for Net Friends, I’m certain we’ll encounter our fair share of new crises that we will need to wrestle with and find our path through. Our confidence has grown and our resources have expanded, equipping us more to thrive and emerge stronger than ever. I’m so proud of what we’ve built and what we’ve pulled through as a team, and I’m eager to see what the future has in store for us. Here’s to celebrating the past 25 years, and onward we go into the next quarter century!

Return to Part 1 to Read About "Our First Near Death Experience"

Overview of "Reflections on 25 Hard Won Years" Series

Part 1: Our First Near Death Experience

Part 2: Embracing A Schism to Clarify Our Mission

Part 3: The Dark Side of High Growth (You Are Here)

At Net Friends, we believe in the power of human expertise. While we leverage AI to enhance our content and processes, all blog posts are written and edited by our knowledgeable staff. You can trust you are getting insights directly from our team.

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