How Investors Evaluate Scaleups - with Ben Yoskovitz

Insights on Scaling, Leadership, and What Investors Really Look For

What does it take to move a successful startup toward the growth stage?

How do savvy investors evaluate which companies are positioned for long-term success?

Last week, I had the privilege to have an insightful conversation on this topic with Ben Yoskovitz, co-founder and managing partner of Highline Beta.

Who is Ben Yoskovitz?

Ben is no stranger to the startup ecosystem—he's been building and investing in companies for over 25 years. Since founding his first company in 1996, he has held roles such as VP of Product at multiple startups, including one acquired by Salesforce. Over the years, Ben has worn many hats: founder, product leader and investor. Today he is a cofounder and a managing partner of Highline Beta, a venture studio and VC fund and an author of FocusedChaos, a bi-weekly newsletter on navigating the chaos of building and investing in startups.

Ben is perhaps best known as the co-author of the book Lean Analytics, written together with Alistair Croll. Even more than a decade later, Lean Analytics remains a must-read in the product management world. Highly recommended if you haven’t had the chance to dive into it yet ⭐.

Q: What Led You To Found Highline Beta?

Ben: The driving force came from my diverse experience over the years. I've been in the startup world for a long time and always enjoyed the early-stage, hands-on work—validating problems, building the first version of a product, and getting it to market. At the same time, I was also passionate about investing and helping founders bring their visions to life.

In 2016, I decided to combine these passions into a new venture—and that’s how Highline Beta was born.

At Highline Beta, we’re not just passive investors. We’re actively involved in incubating ideas, building founding teams, and guiding startups from inception to scale. We help founders avoid common pitfalls by leveraging the lessons we've learned from our own experiences.

Q: What Key Factors Do You Consider When Evaluating Early-Stage Investments?

Ben: Our investment criteria differ from those of traditional venture firms. At this stage, we’re not overly focused on market size projections or detailed financial models.

First, we validate whether there is a meaningful problem that truly needs solving. It’s not enough to have a novel idea—we want evidence that customers are experiencing this problem and are willing to pay for a solution.

Domain expertise is also crucial, especially for first-time founders. A doctor who understands the medical system, for example, has insider knowledge that gives them an advantage to identify the right problem and craft an effective solution.

And, of course, we evaluate the founding team itself—their passion, skills, and ability to execute. Even with a strong idea, success ultimately comes down to whether the founders have what it takes to turn it into a scalable business.

At this stage, investing is largely based on promise, there is little data to look for evidence. At the early stage, a product often does not even exist. Or it might exist but there is limited data to rely on.

Q: How Does Investors’ Approach Evolve as Companies Move to Series A, Series B and Beyond?

Ben: The evaluation process shifts significantly in the transition from Seed to Series A.

By the Series A stage, the approach becomes much more analytical because there is now meaningful data to assess whether the company is healthy and on a positive growth trajectory. This is when business metrics become important.

At Series A and B, market dynamics play a bigger role. At this stage, the product is better defined, and the target market is clearer. It now becomes important to assess market conditions, competitive landscape, and the company’s ability to establish a strong market position.

While the leadership team remains a critical factor, expectations rise. We need to see not just passion and potential, but proven execution—a team capable of scaling operations and delivering on growth objectives.

Q: What Are Some Key Metrics At Those Later Stages?

Ben: At a later growth stage, revenue and growth metrics become critical—things like revenue per customer, average deal size, and sales efficiency. The goal is to assess whether the underlying economics of the business model are sound and can support sustainable growth.

Investors also start paying closer attention to operational metrics, such as revenue per employee. As headcount grows, maintaining productivity and efficiency becomes crucial—inefficient scaling can be a real killer at this stage.

And, of course, even at later stages, customer satisfaction metrics—like churn, retention, and product usage—remain essential. Maintaining a sticky, loyal customer base is key to long-term success.

That said, while metrics are incredibly important, companies need to be thoughtful about how they use them. As businesses scale, it’s easy to get lost in a sea of data. Teams often optimize for their own departmental metrics without tying them back to the company’s overarching goals. Product is shipping features, marketing is running campaigns, and sales is closing deals—but busyness doesn’t always translate into meaningful progress.

In my book Lean Analytics, we introduced the concept of One Metric That Matters (OMTM). The idea is simple: at any given stage, there should be one key metric that the entire company aligns around and focuses on improving. It’s not about tracking a million different numbers—it’s about identifying the single most important indicator of the company’s health and success at that moment. Each team’s efforts should ultimately connect back to this one metric to ensure alignment and real impact.

Q: How Do Investors Look at Leadership as a Company Grows?

Ben: Founders need to understand that leadership evolves dramatically as a company scales.

In the early days, they’re deeply involved—coding, designing, selling, and doing whatever it takes to get the business off the ground. But as the team grows, their role must shift from doing the work to leading people and building the company.

That said, I don’t think founders should completely step away from what made the business successful. If a founder has a deep product or design background, staying engaged can be valuable. In fact, their early involvement is often what made the company great in the first place.

But as the company scales, the founder’s job fundamentally changes. They need to learn to delegate, build systems, and empower teams. This transition isn’t easy, and not every founder successfully makes it.

Many founders who have gone through this say they had to completely reinvent how they lead—what worked before simply stopped working.

At 10 employees, you can just shout across the room when code needs to be shipped. At 50+ or 500+ people, you need structured teams, clear processes, and strong managers to keep things running smoothly. Career paths and leadership structures also become essential—not just for efficiency, but to retain top talent and prevent great people from leaving.

Investors pay close attention to leadership skills. They would evaluate if the leadership team has the ability to evolve, scale, and lead a growing organization successfully.

Q: How Much Do Investors Focus on the Technical Side of the Product?

Ben: At the early stage—where I typically invest—the product and technology itself aren’t the primary focus. We’re investing before much is built, and we know that early-stage companies are often developing things that don’t scale. The expectation is that they will iterate and evolve as they grow.

That said, while investors don’t scrutinize the technology itself in the earliest stages, they do assess the team’s ability to scale it later. They’re asking: Do I believe this CTO can grow the business, hire the right people, and build a scalable product? That’s the real focus.

As companies move toward Series A and B, technology and scalability start to matter more. Some investors are highly technical and can evaluate the codebase themselves, while many will bring in technical advisors for due diligence. They want to understand whether the foundation is solid enough to support growth or if there’s major technical debt that could slow the company down.

While technical due diligence happens at Series A and beyond, the bigger question investors are trying to answer is: Does this leadership team have what it takes to scale the business from a technical perspective?

Q: What Are The Key Reasons Scaling Companies Fail?

Ben: Most often, growth slows down as the company gets bigger, while costs continue to rise—you’re hiring more people, making bigger investments, and expanding operations. If costs grow faster than revenue, things start to fall apart. And that’s tough to recover from because, in most cases, the biggest cost is people.

This productivity dip often happens after an investment round, when companies go through intensive hiring. In the early days, everyone is aligned, moving fast, and focused on the same goals. But as the company scales, alignment weakens—people are working hard, but often not toward the same objectives. At that point, companies often face layoffs, which can be a painful experience.

We’re now seeing a new trend: building big businesses with fewer people with AI and automation tools. If this trend continues, companies might need far fewer employees than they originally expected, which would lead to less operational challenges.

Another reason? The founders step back from day-to-day operations. The people who originally drove the vision are now not part of the execution which could lead to dilution of vision—and when that happens, execution starts to suffer.

Then there’s competition. As you grow, competitors take notice. Suddenly, a few Y-Combinator-backed startups are doing the same thing and moving very fast. These small teams are nipping at your heels, forcing you to keep up while navigating the added complexity of a larger organization.

Timing also plays a huge role in whether a company can successfully scale. A business that raised a seed round in a "hot" industry two years ago might find itself struggling to raise a Series A if investor interest has shifted. Take consumer tech—four years ago, VCs were pouring money into it. Now? Not so much.

Ultimately, scaling challenges come from both internal and external factors. Internally, companies struggle with alignment, leadership transitions, and the growing complexity of scale. Externally, timing and shifting market trends can make or break a company’s funding opportunities and long-term viability.

Q: How Do Investors Assess the Clarity of a Company’s Roadmap?

Ben: I believe a roadmap is really an exercise in demonstrating your ability to plan and think through your decisions. Investors want to see that you have a structured approach to prioritization and execution.

But in reality? Roadmaps rarely play out as planned.

There are simply too many variables, too many external factors. Imagine you had a two-year roadmap—which some large software companies do—and then ChatGPT launches. Overnight, every company I know is saying “Our roadmap is in the garbage now because ChatGPT just came out”. Suddenly, they need to shift and adapt to this disruptive shift.

From an investor’s perspective, a roadmap shows you’re organized and have thought things through. But if you’re locking in plans a year out? That’s risky. The best approach is to focus on the next 1-3 months, keep iterating, and adjust as you go. Beyond that, roadmaps should be directional rather than prescriptive. It’s useful to have a vision, but agility is key.

Take Aways

Ben Yoskovitz’s insights provide a thoughtful look at what it takes to build and scale startups effectively.

The journey from startup to scaleup is full of inflection points—moments when what worked before no longer works. The best companies evolve, continuously refining their strategy, execution, and leadership to stay ahead of competition, market shifts, and internal complexity.

For founders and leaders, the key takeaway: scaling isn’t just about doing more—it’s about doing things differently. The companies that recognize this early, and adapt accordingly, are the ones that can succeed in the long run.

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Connect with Ben

A big thanks to Ben for sharing his invaluable insights on startups, investing, and scaling companies. His experience and perspective offer a lot to learn from for founders, product leaders or investors.

If you enjoyed his perspectives as much as I did, here’s where you can follow more of Ben’s work:

🔗 Connect with Ben on LinkedIn – Get sharp takes on venture building, product strategy, and scaling businesses.

📩 Subscribe to his newsletter, Focused Chaos – A must-read for anyone navigating the startup journey.

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