Do things that don't require scale


If you're interested in startups, "Do things that don't scale" is something you've likely heard. To me it's execution advice - in the beginning use your relatively small size as a strength by doing things that have outsized short term impact but are infeasible in the long run at scale.

Here's a corollary for the business idea itself: also make sure you start by doing things that don't require scale.

If your small size is the only advantage you have for execution, you'd better make sure the actual business idea works when it's all you have, too, because execution doesn't matter if the idea fundamentally won't work.

It sounds obvious, but it's a mistake many people make - I've made it myself repeatedly - and it's especially hard to spot when you're caught up in how great you think an idea is. It might indeed be great, but you're just not in a position to make it work when you're starting from scatch.

You can do things that don't scale to accelerate a good idea, but by definition you actually can't do that if the idea itself requires scale. The idea has to work on day 1, for customer 1.

A common root of the issue, I believe, is looking at already successful products and imagining how they could be iterated upon or diverged from in new and interesting ways. Such divergent ideas are often very reasonable, good even, the problem is that they require the same scale to work as the products they are based upon.

It's all too easy to ignore that part, or convince yourself that the huge scale is somehow a positive since it proves there's a strong market for this product. It's the other way round: often the strong market & huge scale are the product.

Here's a few good ways to think about whether your idea is one that requires scale or not. Of course every product is different, and there are many more, but following the 80% rule I think most ideas can be caught with the following:

First, look at the history of the product it's based upon or one it's similar to. Did it come out of an already huge company? If not, how did it evolve as it scaled? Did it keep roughly the same manifestation and business model, or did these change substantially? Be skeptical if so.

Second, does it have network effects? These are obvious in B2C, less so in B2B. Be skeptical if you have a per-seat pricing model and your strategy is bottom-up expansion within organisations starting from a few accounts. Be extra skeptical if these accounts are free.

Third, how synchronous and mission critical is it? Be skeptical if it going down would cause interruption to workflows that couldn't be worked around or deferred. Be incredibly skeptical if this is true round the clock and on weekends. That kind of service level implies significant and robust automation and support, which require scale.

Fourth, how much does the business model depend on volume? Losing a bit of money on first customers as you bootstrap and learn is not an issue. Be skeptical, though, if this would need to be sustained to bootstrap your way to some required volume which is quite a way beyond those first few customers.