(Startup) Scalability: A top priority or maybe the wrong thing at the wrong time?

“Focus is good, provided you’re focused on the right thing.”

– Neil Patel

The holy grail… of business!

You hear the term “scalability” being thrown around QUITE A LOT these days.

And this should come as no surprise. After all, it seems that “everybody” today wants to build a scalable startup.

In case you are wondering what it is really about, according to Martin Zwilling, “it simply means that your business has the potential to multiply revenue with minimal incremental cost.”

But is that even possible?

Well, if you think that there are many companies already doing it (Google, Microsoft, Spotify, Facebook, YouTube just to name a few from the ‘big boys’), at least in theory, the answer is yes.

So, what is ‘the recipe’?

Even though the answer varies depending on who you ask, most experts agree that putting together a system that enables you to produce (and distribute) almost unlimited amount of products with a click of a button is a key ingredient!

Sounds too good to be true? Well, it probably is!

But before getting into that, let’s first go and see why the scalability advocates argue that it needs to be a top priority from the get-go.

When Should Startups Prepare for Scalability? NOW.

Continuing from where we left this off, the reason why ‘scalability first’ is a common refrain is because, in its advocates’ opinion, scalability must get build into the company’s DNA and that can only happen during the inception phase.

As they add, if you closely examine companies that have ‘been there, done that,’ you’ll see that pretty much all of them “share a number of formulaic elements in their respective business models that allow them to grow the way that they have (and continue to do).”

Take for example the afore listed mega-companies. Other than a great product, they also share some common characteristics:

a) Cloneable product

What does that mean? Put simply, they developed a product that can effortlessly be duplicated with a click of a button (e.g. drugs). 

b) Fully-automated experience

As the name suggests, the end-user can buy and “consume” the product in an automated fashion (e.g. digital music).

c) Serving new customers costs next to nothing

The secret sauce here is that they incur most of the costs at the product development phase, but once the product is up and running, it can serve thousands upon thousands people for almost no extra variable production cost (e.g. software).

So, time to make scalability our first priority?

Nope!

Startups, stop worrying about scaling

Why do I say that?

No guesses here, unless you have a proven business model that works (one that produces something people want at a price they are demonstrably willing to pay), anything else is just a distraction.

And if you ask me, especially when it comes to digital products, this conversation is partly irrelevant, because most have an innate scalability anyways.

But getting back to my original point, scaling (or building to scale) something that doesn’t work makes NO sense.

Just think for a moment… how many products come out on the market and are either fundamentally flawed (because there is no market) or simply don’t work as expected?

I know, A LOT. And what happens after that?

That’s right. Either the founders throw in the towel, try to fix it, move on with something else, or pivot to a new business model.

In any of those scenarios, having a scalable model makes ZERO difference. Yes zero.

That’s part of the reason why Paul Graham famously advised new entrepreneurs at the beginning to “do things that don’t scale.”

The first thing you build is never quite right

Let’s burn this into our brain…

Making a better mousetrap is not an atomic operation. Even if you start the way most successful startups have, by building something you yourself need, the first thing you build is never quite right.” – Paul Graham

Which, as we said before, makes spending time building scale a form of waste!

But this line of thinking doesn’t stop at the product – it also affects your business model on the whole.

Which in practical terms means before we think scale, we have to nail these 5 things first:

– Market problem

– Target group

– Product

– Marketing

– Selling

Done with this?

Good, now time to scale things up!

Or maybe not?

You don’t have to build a scalable business

There, I said it!

Building a highly-scalable business that will conquer the world is NOT the only path.

Yes my friends – there are more than plenty different types of businesses and you should not get caught up in this automation frenzy.

I’d like to close today’s post with our friend Jon Westenberg’ advice:

“There are only 3 things to consider before starting a business. Will I make money?  Will I be proud of what I’ve built? Will I enjoy the work? They sum up the only three reasons to get into a business in the first place. You want to turn a profit, you want to build an asset you’re proud of, and you want to enjoy yourself.”

Today’s Key Takeaways

When it comes to startups, sustainability always comes first.

– The first thing you build is never quite right.

– You don’t have to build a scalable business.

***

Ok guys, that’s all from me for today.

If you enjoyed today’s post, check out my kindle book, The Aspiring Entrepreneur Entry Strategy: A practical step-by-step guide for finding a validated, winning business idea that stays true to who you are, that is currently available at Amazon.

I hope to see you soon.

Best,

Andreas

“The right business to build isn’t the one everyone else wants”

– Jon Westenberg’

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