Scaling Up in Physical Industries

By Seth Winterroth and Jiten Behl As a founder, you’ve tackled tough challenges to bring your bold idea to life. But scaling? That’s a whole new level of complexity. Scaling in physical industries goes beyond growth; it’s about transformation. Each transition — from engineering to manufacturing to becoming a commercial entity — introduces new layers of complexity, organizations, leaders, processes, and infrastructure. Without being proactive and having a robust change management system in place, there’s a risk of triggering an “auto-immune” response where the existing culture resists or undermines its constituents. Oftentimes, you’re also working with commissioning complex hardware products in which mistakes are harder, costlier, and more time-intensive to fix. It’s during these critical points that founders and CEOs have to navigate through ambiguity, striving for the clarity that will push the company forward. Success hinges on your ability to identify key transition points early, plan your growth meticulously, anticipate obstacles, and build the right team before you scale. Here are a few operating principles we’ve found useful to set you up for success when crossing the chasm from prototype to scalable solutions: Hiring key leaders as part of your roadmap, not a gap to fill Many founders focus on perfecting product and engineering, but overlook the need to build a strong leadership team to handle growth challenges. When planning technical goals, consider their impact on revenue, market, and customers. Ensure you have the right team in place, ready to execute these plans. The specific roles depend on your business and your strengths, but scaling is challenging without capable leaders who can help carry the weight. Trust yourself and commit fully with high conviction that customers will come. Waiting until you have a need to build your team will lead to delays in your delivery. There can be no hedging—no plan B. Make the critical hires when you have the signal that the time is right. Believe in your product teams to deliver at production caliber. If you’ve made a hiring mistake, prioritize correcting it immediately. The only thing worse than an unfilled leadership gap is failing to address a mishire. Securing early customers with deep conviction In established industries, customers can be categorized as Resisters, Builders, or Partners:

• Resisters: Unaware of issues and don’t think they need tech.
• Builders: Understand issues and prefer to build tech in-house.
• Partners: Understand issues and are willing to work with startups.

Successful startups focus on engaging customers in the “partners” category early and often. These early customers advocate for revolutionary approaches to designing parts and products and serve as invaluable partners, actively shaping your product roadmap. For example, Cerebras collaborates with key institutions like the Mayo Clinic to spearhead AI solutions in healthcare. Bright Machines‘ collaboration with Microsoft Azure and Bristol Myers Squibb‘s partnership with Cellares mark a shift from technology to product to high-value commercial enterprises with anchor customers. The commitment from such key design partners often becomes a decisive factor when facing new challenges, an inevitable aspect of your startup journey. Effectively managing major growth transitions hinges on recognizing irreversible decisions, or “one-way doors,” as Jeff Bezos describes them. It requires deep scenario planning and analysis. For instance, at Rivian, we constantly weighed trade-offs on major strategic partnerships and customers, focusing not just on what we agreed to, but equally on what we said no to. These decisions carry significant weight and profoundly shape your company’s trajectory. Delivering world-class support amidst growth When you’re landing anchor customers, the challenge is to prioritize robust support — ensuring a strong customer experience, adapting communication styles and cultures, enhancing field support and sales organizations, while also managing revenue and data security. It’s during this phase that the phone starts ringing with inquiries from prospects. It’s exciting, but it also tests your ability to sustain growth while fulfilling existing commitments.

Navigating beyond the prototype phase in the physical space is a common challenge where many startups falter. But with strategic planning, early customer engagement, and a strong leadership team, you can successfully transition into a high-value commercial enterprise. If you’re building and scaling in the physical industries, reach out to seth [at] eclipse.com and jiten [at] eclipse.com