Nivi · February 17th, 2011
You can’t do all the work in a startup yourself. So you have to scale. Here are four ways to scale:
- People
- Product
- Capital
- Community
In detail:
- People. Hire people to help you. This will be your first instinct but it should really be your last resort.
- Product. Build product to do the work for you. Every single product in the world is a type of scale. Facebook has taken this to the extreme through automation.
- Capital. This is what VCs do. They raise billions of dollars, invest it, let their CEOs manage it, and hopefully profit.
- Community. This isn’t a recent innovation but it might seem that way. Communities have been banding together for a long time to form countries, topple dictators, knit, save the environment and so on. But now they’re forming quicker than ever and building products like Wikipedia.
Which kinds of scale are you using and why?
Note: I prefer the word leverage to scale because it implies that there is a goal and that one should not scale for its own sake.
Topics Misc
EventLoud is doing product and community scale. New versions with new features are being developed everyday to help form the community scale where the user base will drive the event posting and participation, thus enabling the social networking aspect of the application to connect people and have fun!
Though I’d love to get some capital scaling going on so there’s some marketing budget. It’s been really hard to form the community without marketing budget…
Where do partners fit? Communities? It seems a little different.
Nice article & agree 100% on not being able to do it all yourself.
Since funding & community in India is typically non-existent, we tried creating a cheaper & more affordable scale – http://stalkninja.com .
In Malaysia, its difficult to find people to help you with tech matters, I have been looking for a tech co founder for weeks now, still talking to people, but tech talent is extremely scarce here. My challenge as an entrepreneur i guess…. 🙂
I’ll take #2 Nivi! lol. A product that can scale itself without equal requirements of more capital and personnel is the best case you can have. This is the beauty of the internet since it fits that model.
If you can create something using the Tim Ferris 4-Hr WW ideology it should definitely have #2 all over it.
“Capital. This is what VCs do. They raise billions of dollars, invest it, let their CEOs manage it, and hopefully profit.”
I would argue that a CEO who is “owned” by a VC is just a manager not a founder. VC funding should be the last resort.
I absolutely agree. VC’s have a fiduciary responsibility to “their” owners, not you. Always keep that in mind.
VC should be seen as a last resort. Building your business with customer money.
My order would be:
1) Tap community to build brand awareness.
2) Develop product that scales (still working on this one as Chilmark’s product is research reports). Moving to subscription model.
3) Hire Great people that can truly think.
4) Look outside for other funding if needed.
Great, simple article. I talk to a lot of entrepreneurs who’s business quickly becomes demanding enough to make them feel as if they need four of themselves. Many don’t feel they have the time to find people and train them. I’ve always been most annoyed by the stuff that’s taking up my time (and not directly related to getting to success) not because I wish I had people to tackle my to-do list with, but because I haven’t automated it. I’m far more willing to take an hour to investigate tools and processes that’ll let me automate than I am to just power through tedious or repetitive or overhead heavy work.
We’re releasing updates to our site and product and positioning that’re highly focused on leveraging community to accomplish our vision of a useful food information database. It frankly can’t happen without real people, on the ground, pitching in (a la Wikipedia). Obviously a big source of real information about food, practices, and ‘where it’s from’ is the producers and businesses themselves, so we’ll continue to attempt to marry the ways we can help them promote themselves to the act of contributing and participating. Nevertheless, we think our product is intimately tied to leveraging community, which includes individuals, businesses, and partners.
Nivi, good post! Prompted me to write about the dilemmas of scaling – choosing which to employ when can be difficult: http://wp.me/p6mGk-1b
I agree about hiring being a last resort – it’s easy to think it’s a shortcut to fixing a scaling issue when it’s really the long way around.
I’m curious if that’s your line of thinking as well?
On the topic of leveraging people/community, it would be worth mentioning that early on you can leverage people or already existing communities to provide you with advice and/or constructive criticism. There are lots of ways to test concept or product viability before doing much work just by utilizing the average persons base instinct of telling the world whats on his mind.
People in the form of community is essential. People completely enrolled in the vision…and therefore execute in the early stages help scale and organization on the right foundation. Early on with limited capital you have little choice but to form community first.
Thanks for the post Nivi.
Great post Nivi!
My picks: Product (portfolio) & Community. Since I’m bootstrapping and shuttling cities, Capital and People are out of the equation, temporarily. Aiming to get those in by Q3 this year!
I see these things as all interconnected. As an entrepreneur, I think you have to leverage them in a connected way too – it’s like a spiral, you grow them all together to grow your business.
I can’t think of an example where a (successful) company has leveraged one factor without leveraging others of them also.
My thoughts:
Scale is the potential energy, leverage is the kinetic energy. You business needs to be able to convert from one to the other.
people can be generalized to resources – another response is to buy more machines, but product can reduce that need as well. cloud and crowd models change how people get that capability now.
community can be generalized to ecosystem – not just a community, also contains customers and partners, both equally valid avenues for getting your company leverage.
extended thoughts here
Don’t forget Procedures! As a founder/CEO I have found that having extremely well defined Procedures allows a company to actually reduce/eliminate the need for People. People are valuable for creating things, even creating procedures. But after something is created, people tend to make the mistakes and muck things up. We rarely fire servers, we often fire people. There’s a reason for that. So get your Procedures in place and you’ll scale 10x as fast.