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Small steps, big vision: Scaling a purpose-driven business at CoachHub

Founded in 2018, CoachHub began with a question from one brother to another: What would it look like to democratize business coaching for millions of people around the world? The brothers built a basic website, delivered their initial pitch to coaches, and went out in search of customers. Today, the company is a global provider of digital coaching with more than 3,500 certified coaches and $330 million in total funding. As talent development becomes more personal and more valuable to a new generation of workers—and with hybrid work here to stay1The State of Organizations 2023: Ten shifts transforming organizations,” McKinsey, April 26, 2023.—the digital coaching market is poised for even more growth in the future.

McKinsey’s Alexander Baranov and Gisa Springer recently spoke with Matti Niebelschütz, cofounder and CEO of CoachHub, about the company’s journey to scale and the hard lessons learned along the way.

Key insight #1: Take small steps toward a big vision.

Alexander Baranov: What was your initial inspiration to build CoachHub?

Matti Niebelschütz: My brother Yannis and I are both entrepreneurs at heart, and we knew we wanted to create a business together. And not just a commercially successful business, but one that resonates with a greater sense of purpose and meaning.

We wondered why coaching was accessible to only a small percentage of the workforce. We had been fortunate enough to have received more than 15 years of coaching between the two of us. We knew coaching could be life-changing and could transform entire organizations. It should be accessible to everyone. Our vision is to democratize coaching for all career levels worldwide.

Alexander Baranov: How did you go about bringing this vision to life? And when did you know the time had come to scale the business?

Matti Niebelschütz: From the beginning, it was clear that we had to operate this business at scale to have the impact we wanted. But even when you have a big vision, you begin with small steps.

Yannis and I started with a blank piece of paper and wrote down three targets. One: build a minimum viable product. Two: secure 30 coaches. Three: get ten paying clients. We told ourselves that as soon as we achieved those three objectives, we would be ready for a seed round, for which you typically need an idea, a product, and some customer adoption. We got there in just a few months, by the end of 2018, and that’s when we started to scale.

Within the next three years, we launched operations in all European markets. In 2021, we managed to acquire MoovOne, the category leader in France. At that point, we began to focus on international expansion. Now we have more than 700 employees in 90 countries with headquarters in Berlin, New York, and Singapore.

Key insight #2: Find the right balance between agility and stability.

Gisa Springer: Even with all this quick success, all start-ups experience growing pains. What were some challenges for the company, and what did you learn from them?

Matti Niebelschütz: Our level of communication didn’t keep up with the pace of our growth. When you have five people in a living room or coworking space, communication is not a problem. But two years ago, we quadrupled our head count and diversified our workforce. And through M&A, we also had employees from different organizations joining our ranks. We found that the key to creating a consistent culture is frequent communication. I don’t think you can ever really overcommunicate.

We also found that, as we grew, we couldn’t improvise as much. We needed consistent, well-defined processes. We needed better training and proper change management, even for seemingly small changes.

Gisa Springer: That seems counterintuitive. You would expect that a disruption would call for more agility. But instead, you emphasized the importance of discipline and establishing structured processes.

Matti Niebelschütz: I don’t think agility and discipline necessarily contradict each other. You must be clear about your long-term strategy and how to get there. But within those guardrails, you can be flexible. You can scale aggressively, for example. But once you hit a certain size, you can no longer change course the way an early-stage start-up can. I think that’s why so many corporations struggle to incubate their own start-ups. It goes against the dominant culture, which is built for long-term sustainability.

Gisa Springer: How have your mindset and your vision as a leader changed as part of this journey?

Matti Niebelschütz: I’m a start-up guy at heart. I like to build things and break them. But once we had several hundred employees, I realized that I had to be a bit less impulsive. I still had the creativity and the hunger, but people want consistency. I had to steer the business with our long-term objectives in mind.

This perspective really helped us when COVID-19 hit. The initial instinct for others was to start refining the strategy. But we trusted our vision, stuck to our plan, and kept executing. After six weeks of our corporate clients being cautious with their spending, the pandemic ended up accelerating the trend toward digitalization and creating even more opportunities for us.

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Key insight #3: Let company values guide your decisions, and embed them into organizational processes.

Gisa Springer: How did you develop CoachHub’s values, and, more important, how do you implement them across a distributed global team?

Matti Niebelschütz: We co-created our values at an employee off-site three years ago. They have come to define what we stand for as a company: culture first, trust, drive, ownership, and growth. I believe that company values need to be consistent with the values of the founding team and early employees. Then, as the organization scales, new people are hired and onboarded with these values in mind. We try to embed our values in our people processes, from recruiting to feedback to promotions.

Our values are important because they give us guidance whenever we’re struggling with a decision. For example, we had to decide on the level of transparency in our organization. There are valid reasons for not communicating certain things—to avoid distractions and so on. But one of our key values is trust. We trust our people. They put their trust in us. Therefore, we chose to embrace the highest degree of transparency at CoachHub. We believe that sharing information can empower our people with more autonomy and ownership—another one of our values. We want our employees to take full responsibility not only for the task at hand but also for the broader company.

Key insight #4: Embrace technology as an enabler to scale.

Alexander Baranov: What role does technology play in your product and your business?

Matti Niebelschütz: Even though we work with coaches and people, we are a tech company at heart. Today, we have more than 100 people in product and tech roles, and we have invested heavily in machine learning.

It would be impossible to do what we do and at scale without technology. For example, we use matching algorithms that consider a broad set of criteria to generate the best match between a coach and a coachee. The process is fully automated, so people can find a coach in seconds, not days. And it works better and faster than human matching.

We also leverage artificial intelligence, which personalizes recommendations for content in our learning academy. If you are working on executive presence or time management, we have an algorithm that we developed in-house that can recommend related content. We also use AI to predict employee churn and flight risk. And in the long term, we envision AI as a tool that can help our coaches focus more on what they do best—coaching—and less on the administrative work. But we don’t see AI replacing humans in any scenario.

Alexander Baranov: Given this reliance on technology and digitalization, how do you address potential issues around information security and data privacy?

Matti Niebelschütz: We deal with employee data and personal information, and the coaching conversations with our clients can be very sensitive. We invest heavily in making sure that we are an extremely safe and compliant coaching solution for our clients. Among many other certifications, CoachHub is ISO [International Organization for Standardization] certified, TISAX [Trusted Information Security Assessment Exchange] certified for the automotive industry, and GDPR [General Data Protection Regulation] audited and certified. And because we own the entire digital delivery of our solution, we can explicitly cater to the various data privacy regulations across different geographies.

Key insight #5: Clearly define the business case, return on investment, and market potential for growth.

Gisa Springer: You need a strong business case to scale quickly and attract investors and clients. How do you measure the impact of a coaching experience, both for organizations and clients?

Matti Niebelschütz: We’ve seen many ways that coaching benefits an organization, including increased employee engagement and reduced attrition. In competing for talent, companies that offer coaching can also attract more people. Furthermore, coaching boosts productivity and innovation and improves the odds of success in a transformation. When you sum the benefits, you get a clearer idea of the ROI, which, based on our research and analysis, can be anywhere from five to 20 times depending on the use case.

Alexander Baranov: Looking ahead, how are you thinking about the next five years of growth for CoachHub? What trends are you seeing in the digital coaching space?

Matti Niebelschütz: More companies are realizing that the old ways of working and developing people are no longer sufficient. In the past, you would send employees to an off-site for one week each year where everyone is taught the same things in the same way. The problems with this approach are that, first, we are all individuals with unique strengths and challenges and we need individual support and strategies to learn, and, second, humans will forget almost 90 percent of what they are taught within four weeks.

Good coaching is tailored to the individual and the situation. The coaching you receive will be different depending on what you need. It’s also ongoing, so you can keep practicing and building on what you’ve learned. Finally, the next generation of talent is asking for more learning opportunities and professional development. This will also generate more demand for continuous, tailored learning.

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