Newsletter #15: Do things that do not scale
8 minutes reading time. Thoughts on startups, growth, and technology 🚀
Hey there,
A few weeks ago, I wrote a post titled "what important truth do very few people agree with you on" where I gave a few examples of my thoughts on the topic.
Lately, I have been reflecting on another important "truth" where people rarely agree with me and felt like sharing: "do things that do not scale."
When you are running a tech company, you have the resources, knowledge, people, and tools that allow you to automate pretty much every idea that comes to your mind. Hence why, automation becomes your go-to strategy, the reasons being:
Automation will help you focus on other priorities
You will be able to handle the expected large demand with ease
There will be fewer mistakes as algorithms will manage the process instead of humans
Consequently, entrepreneurs prefer to automate every new product from the very beginning.
After all, when you do things that do not scale, the absolute numbers seem so small at first. The conventional wisdom is that famous startups were started designed for scale. Meaning, entrepreneurs expect to come up with an idea, build a scalable product, launch it, and handle an ever-growing usage and revenues.
While there must be some companies that were designed for scale from day one and took off, I would like to argue that such thinking is flawed.
You must implement your solution in a slow, gradual, iterative, and manual process until you have strong product-market-fit indicators.
Let me give a few examples of why doing things that do not scale works much better in the early days of any startup.
Acquisition
It's rare to see early organic user acquisition because a) your product is unknown in the beginning; b) most probably, it's not the best product out there.
You cannot wait for people to come to you. You have to go out there and convince them to use your solution.
Most founders resist acquiring users one by one manually for two reasons a) they are shy, b) they are lazy. No one likes to be rejected, and going from one user to another with a new product will result in a ton of rejections. On the other hand, if you go through all those rejections, you will develop resilience, unique insights about what people need and relationships with potential users.
Customer experience
It's always better to have 100 people who love your product instead of thousands who would use it once and never return to it. Working closely with a small sample of people gives you the ability to create an experience people love. You will have great insights about the features and UX that would delight your clients because of your relationship and a constant stream of direct feedback.
Focus
Scaling your product too early may result in missing opportunities to capitalize on niche markets and not monetize anything at all. Focusing on a subset of the market allows you to get a critical mass of users early on. That's exactly what Facebook did in their early days by focusing only on university students. When Mark Zuckerberg gave an interview at Y Combinator sometime back, he talked about how hard it was to create a course list initially for Harvard and later for other universities, but doing that made students feel they have an exclusive platform or communication and many of them signed up promptly.
Here you go, a few other immensely successful startups that did things that don't scale early on:
Stripe (current valuation $35B) - whenever someone showed interest in using the early version of the product, the founders would say, "Right then, give me your laptop" and set them up on the spot.
Airbnb (current valuation $26B) - the founders literally went door to door in New York to recruit new users.
Pinterest (current valuation of $12.3B) - the founder noticed how early users were interested in design and went to a conference of design bloggers to recruit users.
In Paul Graham's words:
The need to do something unscalably laborious to get started is so nearly universal that it might be a good idea to stop thinking of startup ideas as scalars. Instead, we should try thinking of them as pairs of what you're going to build, plus the unscalable thing(s) you're going to do initially to get the company going.
Doing unscalable activities will give you insights that otherwise, you could not have learned. You will develop a culture of delighting users that will last throughout the years.
Articles/podcasts worth checking out:
🎙️Sequoia’s Black Swan Memo | Roelof Botha | Adapting by Acquired - by longtime Sequoia partner and head of the firm’s US business Roelof Botha to discuss on what Sequoia saw leading up to the [Black Swan] memo and why they decided to publish it, how they and their portfolio companies are adapting to the new world it warned of, and what lasting changes might come to Sequoia itself from this moment. For anyone facing hard decisions and/or looking for ways to think about opportunity, this is not one to miss.
📝Do Things That Don't Scale - a crowdsourced collection of unscalable startup hacks and stories.
📝The Founder's Field Guide for Navigating This Crisis — Advice from Recession-Era Leaders, Investors, and CEOs Currently at the Helm | First Round Review Management - Leading a startup has always been challenging, even under the best conditions. Today, we’re decidedly not operating in the best of conditions. With a future that’s more cloudy than clear, the dynamics founders face are magnified many times over and playing out simultaneously — at warp speed. Whatever tactics and strategies were working in January 2020, chances are they’re not as effective now.
A quote worth remembering:
The author James Clear on failures:
“Most failures are one-time costs. Most regrets are recurring costs.
The pain of inaction stings longer than the pain of incorrect action.”
A book recommendation:
The Mom Test: How to talk to customers & learn if your business is a good idea when everyone is lying to you by Rob Fitzpatrick - I recommend it to everyone who builds products, talks to customers, work in startups or has the desire to sell any ideas/products they came up with or made.
Positive news worth sharing:
When you eliminate borders, you break down barriers. This e-passport gives new freedom to more than a billion Africans.
They’ll be allowed to live, work, learn, and love across a continent of 30,000,000 sq km. More trade. Deeper integration. A symbol of African unity.
Check out the source here.
Onward and upward 🚀