Get out of the way. In the beginning stages of a company, you need to keep things close to your chest. You are constantly evaluating if things work, if people understand how to use it, and you need to be hands-on. You want to talk and connect with customers early on. Once you reach the point of product-market fit, it is time to move aside. You need to create the tools for people to do their thing. You do not need to be in the middle or hands-on anymore.
Startups usually start with a small cohort of close colleagues. But what happens when you add a bunch of new people into this close cohort? How do you maintain the company culture? In addition, what is needed to successfully scale a business to increase market share or to increase offerings? How can a small startup grow successfully to a midsize and then large company? To address these questions, we are talking to successful business leaders who can share stories and insights from their experiences about the “5 Things You Need To Know To Successfully Scale Your Business”. As a part of this series, we had the distinct pleasure of interviewing Asaf Darash.
Asaf Darash is the founder and CEO of Regpack, an online payment management platform. With extensive experience as a developer, system architect, entrepreneur, and investor, Asaf has an innate ability to build versatile products based on achievable business models, which has helped him build three successful companies to date. He holds a Ph.D. from the Hebrew University of Jerusalem specializing in the way computer languages affect human action and has served as a visiting scholar and Fulbright scholar at the University of California, Berkeley.
Thank you for joining us in this interview series. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’?
The truth is I never intended to become an entrepreneur. I was set on being an academic that can research and build interesting things all day. But life has its ways, I guess.
It all started with my research. When I was a Fulbright scholar at Berkeley doing research for my Ph.D., I was looking for patterns to address one of the biggest problems with computers: the “private language problem.” The “private language problem” in computers means that you can create anything consistent because as long as something is consistent, it can work. So, on the one hand, it’s very easy to create a private language, or your own little world in computers, even without trying. But on the other hand, these are very complex machines, and you have to collaborate with other systems and code in order to get the machine to work as a whole. A private language hinders computer advancement. I think an example will explain it.
Let’s say I want to build software that will allow me to get alerts on changing stock prices in real time. I want to focus on that functionality alone. In order for that to happen, I need to be able to present information on a screen, connect to a network, and use computer memory. Then I also need to communicate with a system that will allow me to gather stock prices. I do not want to build all that. I just want to build the real-time functionality. So in order to create any type of advancement in computers, various lines of code and systems have to talk to each other, and it needs to be simple. So as you can see, the private language problem is critical. It means that if every developer creates their own private language, the systems cannot work together, and we would not have the computers we rely on today. So, my research focused on the various solutions that have been tried to solve this problem. Some failed, some succeeded, and there are multiple solutions in place today that work concurrently.
Normally when performing this type of research, it is best practice to present your theory in three different places for it to be considered a valid claim rather than a mere coincidence. So, in my research, I found this specific structure that existed in computer languages that enabled private languages to exist and, at the same time, to enable communication. I also found it in computer networking, but I needed to find it in one more place, and that place ended up being in databases. That was the key I needed to prove my theory.
After a lot of research, I eventually showed it in three places. The base of the private language solution is not to inhibit it, but rather to embrace it. Create endless private languages that have interfaces to communicate between them — basically, create something that has no constants. Then I got greedy. I asked, “Is it possible to create an application with no constants?” Or in other words: “Is it possible to create a meta-programming application for non-programmers?” Suffice it to say that it’s very complex to do that, but this question and searching is what eventually led to my company, Regpack.
[from a previous Authority Magazine article: https://medium.com/authority-magazine/asaf-darash-of-regpack-five-things-you-need-to-create-a-highly-successful-startup-2ac0fb31ebc2]
You’ve had a remarkable career journey. Can you highlight a key decision in your career that helped you get to where you are today?
I don’t think there’s a key decision, because I don’t think that’s how life works. People like to think that there’s this one key moment that makes things happen in your career or life, but it’s not true. I would say it is the very small choices you make every single day where you are deciding what is important to you and where you want to be.
If there’s one thing that really changed my life, it is the fact that I was not accepted to a program I wanted at MIT. Because of that, I actually got a Fulbright scholarship and went to Berkeley. That totally changed the way I think about business and computers and computer languages. Also, the people I met were very different than the people I would’ve met at MIT or at Harvard. So I would say that if you’re looking for one key decision, it’s actually my failure to be accepted to MIT, which may not be exactly what people want to hear. But, life is a little more complex than what people want to hear.
What’s the most impactful initiative you’ve led that you’re particularly proud of?
Teaching people that everything is their life. When you look at things that way, there is no disconnect between your wellness, your job, your hobbies, your family, your health, and your kids. It’s like the song by Lauryn Hill, right? Everything is everything. Once people are in that place, I do everything I can to inspire their creativity. It’s easy to go into this place in life where you’re just living it in a way like you’re waiting for something or you don’t exactly understand the impact that you have. Once you start living a life where you’re trying to create something, and it doesn’t matter what you’re creating — it can be that you’re creating your family or you’re creating your business — but, you’re creating something that is yours, that is connected to who you are. Something that is exactly you. That is when I think people flourish. They open up, and they change, and what they bring into the world is amazing. Until they’re at that place, they’re sort of just there.
Sometimes our mistakes can be our greatest teachers. Can you share a mistake you’ve made and the lesson you took away from it?
I have two different mistakes that are interesting to learn from. One is the time we worked on a feature that was extremely complex, and it just didn’t work. It took three to four months to build a basic prototype, and we were really excited about it. Then we presented the feature to 10 or 15 of our biggest clients. At the end of each presentation, the clients said, “That’s nice, but what we really need is…” I thought, What!? Seriously!? And that made me understand that before you build something, you really need to make sure your clients will understand the feature or the product you’re building and that it’s something there is a need for. That is a big problem with tech people, we tend to build something very beautiful, shiny, and technically complex, but then there’s actually no big need for it or the use case is extremely small. Because tech people just love tech, right? So we want to build cool stuff, but we need to ensure there is a customer demand for it.
The other mistake actually became a success eventually. It is one of our most successful programs today. We built a program called Purchase Protection that allows people to protect their order for purchased services. In the first year, the overall annual revenue of it was something ridiculous like $50,000. But the revenue of this feature today is close to a few million dollars, and we’re only three years in. So, how did that happen?
The mistake we made at first was thinking people wanted to decide if and how they should use Purchase Protection, however clients didn’t understand how to use it or what it was. So we automated it and offered it as a built-in element, then its success skyrocketed. The same thing happened with our subscription installments payment feature. Once we automated it with AI to adjust variables on how installment payments should happen, we suddenly reached 45% of payments through the installments feature and customers using it are seeing a 30% revenue growth.
So to put the lessons together, I wouldn’t say it is about deciding for people, but I would say automating the product to a level that it shows value right away is the solution. If you are not able to show value right away and you demand a lot of work from the end user, they lose interest and lose focus. It’s just over their head. But once you are able to show specific ways to use it that create value, then they’re like “Yes, this is great!” It makes sense, because, when you get into your car, you just want to drive, right? You don’t care how the car actually moves and how the wheels connect to the other elements. You don’t care about the details, you just want to do your thing. The same is with technological products.
How has mentorship played a role in your career, whether receiving mentorship or offering it to others?
As a Ph. D student, and a postdoc, you’re mentored a lot. I had an amazing mentor, Professor Horowitz from the AI lab at MIT, who taught me a lot about how to approach a technical problem or how to approach a problem in general. He helped me to understand the limitations of research, and how to perceive the limitations of science and where intuition comes in. He taught me essentially how to be a scientist that is connected to their non-scientific part. A lot of people think science is very strict, and there’s always a method, but I would say science is more like an art. You have assumptions and you have a hunch, then there’s specific ways that you are able to check that hunch. Professor Horowitz taught me how to do that and taught me to trust my gut in a way, even when you’re using a lot of scientific technical methods. At the end, you’re ultimately making an attempt to understand how things work, but a lot of that comes from within. This is, btw, why I think all the talk about AI destroying the world is funny. There is a major difference between humans and AI. The difference is in our ability to base an action on something that is not intelligence. To be artistic, which happens in every aspect of life if you let it.
I’ve also mentored a lot of people as a CEO. I teach my managers that they need to create something that regardless of themselves, will still function. Another big thing I’ve mentored my managers on is to understand not all people function the same. Once you understand that, you are able to mobilize people in a way that is important to them and useful to you. It’s easy to think that everybody functions like you and thinks the way you do. But then you get caught off guard and you’re totally shocked when they don’t, ‘like, why aren’t you thinking this way’? You’re thinking ‘how come? this is the right way, no?’ As a manager, you need to understand that the diversity in ways of thinking and the type of people you have is what makes you strong. It makes you resilient and enables quick reactions to different situations. Without diversity, you would just have a bunch of people like yourself. That is very problematic, because there’s a single point of failure — you.
This is also connected to how we hire at Regpack. Regpack is very diverse and versatile because we have people from totally different backgrounds, because I really see value in that. Having people that think differently is not hindering your growth, it’s doing the exact opposite. It might not be comfortable and it can even be very annoying sometimes, but if you’re looking for “yes men,” you’re not going to get anywhere.
Developing your leadership style takes time and practice. Who do you model your leadership style after? What are some key character traits you try to emulate?
I don’t try to model my leadership after anybody, and I don’t try to emulate anybody. I am a well-rounded person that has very different elements in my character, and I try to lead in a way that is true to myself. I hope every single leader does that. If they don’t, they shouldn’t be a leader.
Thank you for sharing that with us. Let’s talk about scaling a business from a small startup to a midsize and then large company. Based on your experience, can you share with our readers the “5 Things You Need To Know To Successfully Scale Your Business”? Please give a story or example for each.
- Get out of the way. In the beginning stages of a company, you need to keep things close to your chest. You are constantly evaluating if things work, if people understand how to use it, and you need to be hands-on. You want to talk and connect with customers early on. Once you reach the point of product-market fit, it is time to move aside. You need to create the tools for people to do their thing. You do not need to be in the middle or hands-on anymore. Create the value, but then get out of the way. When you’re in the middle, your business can’t scale. This is really hard to do because you want to be there and you want to see how things are functioning, but you’re only getting in the way. As you grow, it is a numbers game, so you might be able to connect to some people, but you need to move away as the numbers grow and look at the company from above through reports, statistics, tools. This demands a different skill set, if you have it then you will continue growing, if not you need to move aside, and let someone that does, control the company.
- Create a machine that is not dependent on specific people and is process oriented. This is extremely important because, in the beginning, it is all about the founders or partners and how amazing these people are. The reality check is that this is not how the world works. You need a long-term process separate from yourself. You need to create a machine that is able to function for 95% of your clients. Maybe for 5% it won’t work, but 95% will still go through the machine and it will take care of them correctly. Your machine needs to be built in a way that if one person leaves and you need to replace them, that’s fine. Someone might think this hinders creativity but it is the opposite. Since the main parts are taken care of people have the ability to step in where the process is failing and be creative in their solutions.
- It’s not about you — leave your ego at the door. One of the things I tell people at the beginning of every meeting is “Nobody cares about you”. It’s true. Clients care about their problems and their needs. They don’t care about our processes, they only care about how we are going to create value in their business. Once you understand that it is not about you, and it isn’t personal, then you can understand that you need to look at things in a more functional way rather than an emotional way. If you look back to the example I gave of one of the things that failed at first, you can try and force a new product and show them why you think it is important, or you can stop and say ‘This is not about me and my hard work, but it is about how to properly show value.’
- Not everybody needs to know everything. You need to create a team that is supporting one another, but don’t expect everyone to know everything. This is important as you’re scaling. If I needed to pick one thing that really becomes a challenge as you grow it would be internal communications. Understanding each other and conveying the information internally is important since you’re trying to get everyone on the same page and to get all the teams to work in a holistic way. This is really hard when a company is growing. I found the best way to do this is to create sections of knowledge. For example, sales needs to know how to sell a product at a basic level, but when technical questions come up, they should bring in somebody who knows technical issues as their forte. Marketing doesn’t need to know how the sales team works, but they need to know what types of clients are our best clients so they can target them. Oddly, this is how object-oriented programming works as a theoretical level: Each unit functions independently, there is full encapsulation and in order to create a holistic program, there are open communication lines between the units only on parts that you should communicate about. The same can be applied to a company, this creates a holistic experience for the client.
If everyone needs to know everything, you would need employees who can do everything, but that isn’t realistic when you grow to a few hundred people. Start-ups attract high-performing people looking for a challenge. This is especially true of founders. Oddly, these people can become detrimental to the company very quickly since it allows you to rely on their amazing skills but in doing so you do not create a machine. Hence, you are stuck in a phase that you can’t grow out of. If you’re only using A-level people, you’re not creating a machine. In sports, if you have an amazing player that regardles of the rest of the team will always solve the problem, then the coach will never set the team up for consistent wins. Relying only on A-level people is not how you create a long-term business. Use the A-level people to create your processes, your machines, then tell them to move aside and work on new aspects of the business.
5. Watch the money. Businesses are about making money, it is that simple. This isn’t sexy or very “Silicon Valley”, but if you’re not focused on how to make money and are watching your cash flow and finances, you’re going to fail. Money for a business is like oxygen. It is the main tool a CEO or founder uses to develop the company. You need to focus on where the money is coming from, how it flows in the company, and where you’re allocating it to. It would be like an athlete not thinking about their breathing while running. They will fail. If you’re a technical person and not money-minded, once you get to mid-sized, just move aside. You won’t understand the level of focus needed to keep the company breathing. It is not what you are good at and that is fine, not everybody needs to know everything.
Can you share a few of the mistakes that companies make when they try to scale a business? What would you suggest to address those errors?
People who can’t get out of the way. If you hold everything close to your chest because you want to control everything, that leader doesn’t create a machine, because they’re dependent on these A-level people. Then these A-level people suddenly leave and boom — nothing works anymore. These companies need to try to create holistic actions by realizing that not everybody can know everything.
Second, scaling and not watching the money. They might think, it’ll be fine, or ‘We’ll just make another million dollars’. But what happens if you don’t? You die. It is that simple.
I recently had this conversation with my kid when we were talking about mistakes. I told him, when you take a risk and you might fall into a pit, you need to make sure that it is a pit you can get yourself out of. Yes, it is great to take risks, and this is how we grow, but take risks that will not destroy you or that will not create a situation that you do not know how to get out of. I see this all the time with companies and people that do stuff with money that isn’t correctable. You see people buy houses that are above their ability or businesses investing in a change that if it fails will bankrupt the company. Then they become slaves to that mistake. As you grow the amount of resources at your disposal are larger. Therefore it might seem that “this cannot break us” but mistakes can compound and then once you have trouble making payments to continue the company functioning it is too late, the downward spiral is very fast.
Scaling includes bringing new people into the organization. How can a company preserve its company culture and ethos when new people are brought in?
The company culture and the department culture always comes from the head down. So you need to make sure your managers have the same goals you have Note I said “goals”, not that they need to be the same as you. Then those managers will trickle the culture down to their managers and eventually to the people that are doing the day-to-day job. Company culture is not created by you yapping around about it and telling people to behave a certain way. No, it’s about actually working with people in a specific way. A little like with children: if you tell your children to do one thing and act in a totally different way, it is not going to resonate with them no matter how many times you say it.
One example of this is something we do at Regpack, we have a culture where we say you’re treated as an adult. You have wings — use them! For example, if someone makes a mistake, you don’t come in guns blazing and say ‘Oh you idiot. What did you do?’ No. What you do is explain what was the mistake and you throw it back to them to fix it. Demand they come back with a plan on how you’re going to fix this mistake. Don’t fix it for them. Don’t tell them how to fix it. They need to come back with the solution for how to fix it and then they implement the fix. That is what being an adult means: owning your mistakes and fixing them. Very few people are malicious or do bad things on purpose, especially at their job. Everybody wants to be successful at their job and they want to be appreciated. If you give them the ability to do that you will be surprised how much people level up. It is pretty simple: don’t turn them into robots, don’t cut their wings but teach them they have them, don’t turn them into a child that just needs to do what they’re told. Trust them and believe in them, you will see them do amazing work.
So the company culture is really about how much you believe in people and what you believe people can do. If you’re trying to bend company culture to what you’ve heard a different company does and you try to mimic that, it won’t work. If you’re not already that type of person, you can’t force company culture to be that way.
Many times, a key aspect of scaling your business is scaling your team’s knowledge and internal procedures. What tools or techniques have helped your teams be successful at scaling internally?
The technique I would recommend is the one we talked about where you are encapsulating knowledge into specific teams. I also talked about creating a machine, which are the procedures. I think that these are the main tools and techniques you need to use to successfully scale. Implement encapsulation of knowledge and understand that it’s more about processes than people. Then, make sure you get out of the way. I would say that those are the three main things that you need to do when you’re scaling your business.
What software or tools do you recommend to help onboard new hires?
I have no idea. This is connected to encapsulation, because I don’t need to know what to do. I am not HR, so I don’t need to know the actual ins and outs of what HR does. If you’re a CEO that knows the exact tools that you’re using for HR, you’re doing something very wrong.
Because of your role, you are a person of significant influence. If you could inspire a movement that would bring the most amount of good to the most people, what would that be? You never know what your ideas can trigger.
I think what’s lacking in the world today is being creative and not being the same as everyone else. Be yourself and create something in the world that you can look at and say, okay, I’m happy with that. Once more, when people create in the world and reach the point where they are satisfied with their creation, I think the whole world will be a much better place. People will be much less angry, because it’s not about what you have, where you went, what you believe in, or what you like. It’s about what you created in the world. And it doesn’t have to be an actual thing. It does not have to be code, jewelry, or a painting. It can be creating a concept, a way of life, or your own rhythm of the day. That’s something that is yours. And I wouldn’t know what to call that movement or how to do that, but I think that’s really lacking in the world.
[from a previous Authority Magazine article: https://medium.com/authority-magazine/asaf-darash-of-regpack-five-things-you-need-to-create-a-highly-successful-startup-2ac0fb31ebc2]
How can our readers further follow your work online?
Regpack blog: https://www.regpacks.com/blog/
Regpack on social:
This was truly meaningful! Thank you so much for your time and for sharing your expertise!
Asaf Darash of Regpack On 5 Things You Need To Know To Successfully Scale Your Business was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.