Explaining 7, 17, 70

If you’ve spent enough time with anyone in our team or listened to our podcasts, you’re likely familiar with our philosophy around 7, 17, 70. As we are about to launch series six of our podcast How I Grew My Brand, we thought it would be good to explain exactly what we mean by it.

Its origin lies in site-based businesses needing to scale their teams and operations to account for the challenges of operating a business at 7, 17 and 70 sites. At each stage, a new layer of management is required forcing the team to adopt a different approach as they move further away from the end customer. However, over the last 30 years, it has also become highly relevant to the turnover of a business. In our podcast, founders often also find it relevant to the number of people in the team.

7,17, 70 signifies for us the key inflection points when businesses need to change how they do things in terms of brand, digital, tech, people, culture, sustainability and sustainable business model. Across the last 5 seasons of our podcast founders have resonated strongly with these inflection points as they reflect on their growth journeys.

Evolving the team & skills

The most important change that happens as businesses grow is in the team. People are good at and enjoy different stages of growth. It’s important to recognise this and shape teams accordingly without losing the culture.

From start-up to £7m, teams are homegrown with a strong entrepreneurial culture but typically have gaps in senior leadership roles. From £7m-17m, the leadership team needs external experience and an understanding of how to manage strategic growth as well as how to build the team, usually including a CFO, COO and CMO backed up by a board. From £17m-£70m, leadership teams are fully governance-led and have experience running larger organisations but with entrepreneurial instincts.

Different skills are also required from a CEO at different stages of growth. The typical skills of a CEO at the £0-7m stage are spinning plates, jack of all trades, getting stuff done, and being all over the details. At £7m-17m, it’s about hiring and motivating a great team, setting goals, holding people to account, paying close attention to the P&L, delegating and letting go of the details in many areas to those that they are managing, and building a strong team culture.

Finally, at £17-70m and beyond, it’s about delivering the plan through the SLT, driving a great business model, ensuring the right systems and processes are in place, managing key stakeholders, and ensuring good governance. Founders need to think carefully about the best role for them and not be obsessed with being a CEO.

Nurturing the brand

Brands need to evolve. We sometimes use the analogy of a child growing into adolescence and then into adulthood. At every stage, brands need space to thrive and grow at the right pace. If they are grown too quickly, they experience growth pains. If they grow too slowly, they lose their identity.

Often, up until £7m, what a brand stands for sits in the mind of the founder. Typically, the brand purpose and values haven’t been fully articulated or written down. Brand-building strategy is reactive, experimental (guerilla) and acquisition-led. Customer insight is anecdotal but in the team culture.

At £17m, there is a need for a Marketing Director to further build out the team, evaluating how much to do in-house and how much to outsource to agencies. At this point, brands should diversify their efforts allocating up to 30% of their investment in brand and have a greater focus on customer retention using CRM systems. The business needs to invest in market insight and speak to customers more robustly as the breadth of customers stretches beyond the early adopters.

As a business heads towards £70m and beyond, marketing will need to be led by a CMO, with senior Heads of Performance, Brand, CRM/retention, backed up by a fully diversified brand-building strategy – with a greater weighting on brand investment alongside performance investment and a focus on retention, brand ambassador programmes, and collaborations with big innovative brands. It should also have a data/business intelligence lead and a full customer and market/category insight programme.

Debottlenecking tech stacks

These days, tech stacks are far easier to implement at the £0-7m stage given the tools at the founders’ disposal. Yet as businesses scale from £7m to £17m, there will be a need to build a tech stack (ideally off-the-shelf with elements of bespoke) that can scale, ensuring that tech is never a bottleneck to growth. From £17m, attribution models and better customer data for decision-making become increasingly important.

To get to £70m+, businesses need robust systems that can handle more complex cross-border and cross-channel growth across different teams. With an eye to exit, these systems need to also be complimentary to potential buyers.

Sustaining profits

In the startup £0-7m stage, the business is mostly focused on topline growth and scaling to allow for a better business model and margins. Typically, towards the backend of £7-17m, the business needs to focus on profitability and margin improvements. From £17-70m should have a sustainable business model that drives mature profitability and reduces complexity.

At this stage, the business needs to use business analytics, market and customer insights to define a scalable product, channel and market strategy that increases the size of the addressable market and shows that there is room for future growth.

As a business scales beyond £17m, it will need to ensure that it has seamless manufacturing and operations, a diversified supplier base to reduce risk, best-in-class transparency and ethics throughout the supply chain, and a customer-led approach to supply chain decision making.

On sustainability, businesses transition from a ‘dream big’ phase at the £0-7m stage, with promises to save the planet, often a reflection of the founder’s personal mission, to reporting on their impact at £7m-£17m, and impact disclosures around supply chain, carbon and employees. By £70m and beyond a dedicated sustainability person or team is needed to keep the mission on track with reporting and unifying actions across departments and areas of the business.

Value drivers and pace of growth for exit

At Piper, although we have great respect for the raw entrepreneurial challenges of the £0-7m growth stage, we are expert partners for the £7m to £70m growth phase, helping brands transition through these phases so they can carry on growing successfully without hampering the customer experience or speed of growth.

We see too many business plans that are insensitive to the natural pace of growth of certain business models and channels as well as the inflection points that they will experience. We have got it wrong ourselves and so we spend time with management teams to understand what’s right for their business. Just like Rome, brand legends are not built in a day.

Ultimately, to become attractive to strategic buyers, the growth strategy needs to be led by well-defined key value drivers and a continual focus on what the key buyers are looking for, which need to be defined and redefined every year in light of changes to customer behaviour and competition.

You’ll hear a lot more about this in our latest podcast season, focused as it is on entrepreneurial brands heading towards and beyond the £70m inflection point. We are excited to start sharing the episodes with you, starting with Dishoom in a week’s time. Enjoy!