“Mo money, mo problems.” – The Notorious B.I.G.
It all started with a heated discussion I was having with one of my WordPress agency partners. Anyone who knows me knows that I’ve been heavily involved in the WordPress ecosystem for a long time, and it’s a fairly different world than my other world –– the high growth tech startup ecosystem, so I get to see both of them side by side often.
This article is about the latter, the high growth tech startup ecosystem.
Among my WordPress friends and other people on the technical end of my social spectrum, there’s often a negative connotation to the term “scaling a business”. It’s kind of like the word “ambition”, which is a negative when pushed to an excess.
Everyone welcomes growth, right? It means more revenue, more income. Yeah but it also means more problems, bigger staffing, higher risk. So no, many people today are just looking to make a good, steady living, be able to pay their expenses, have study income without having a boss.
That’s why a lot of them turn to the agency or freelance model.
Also, web development agencies aren’t really inherently scalable. They are a linear model –– the more hours you work the more you make. You provide a service, get paid for labor. Many of them do scale to a certain size, but it’s linear, based on more labor, reselling other peoples labor.
“Why do you want to Scale?”
A developer and good friend of mine recently learned that I did a lecture series for several years called THE SCALABLE STARTUP. It is a topic I’ve discussed for almost my entire career and very central to my business philosophies. To some people its magic, to others it is confusing or frustrating. People react one way or the other.
My friend Amit asked me “Why do you want to Scale?” As if it was a bad thing. He equated “scalability” to big corporations, growth at any cost, greed, etc., was very negative on the word and concept.
Amit also felt that it ruined the collegial vibe that a tiny company has. “If you mess with a good thing, you can ruin it.” he said.
Now before I continue, let me state that I have a great amount of respect for this person, we were co-founders in a past company, and I’m part-time developer myself so I understand the comfort of a small team that has jelled and works together well. Simple, clean, manageable.
I get it, the dream life of the digital nomad, laptop on the beach in some exotic country or up in the mountains in a cabin. The lone wolf. I love it. I’ve done it! It’s a very romantic notion, and the right thing for many, for some period of time.
But I also don’t think it’s realistic in the long term for most. Grow or die is my motto for tech companies or even a small agency.
My opinion on this frustrates some people.
I never have been against “engineered’ growth –– the practice of trying to purposely, exponentially scale a business. In fact, I prefer it.
Why? Because no company can make their revenue stay exactly the same month after month, year after year. Also exponential growth usually includes some type of unique technology, which provides higher margins, escape from linearity, and protection of the hundreds of competitors all agencies and freelancers face.
The Magic Ingredient
Scaling is the magic ingredient for startups to actually persevere as a business. Anyone who’s felt the power of stable reliable growth knows what I mean.
Continuous growth, at least a little, and a growth mindset together create a positive pressure on a business, force them to expand and continuously improve. It’s more difficult –– adding people, scaling infrastructure, fighting with bigger competitors, but I believe it’s worth it. For any business.
It’s also an incessant challenge –– “We must keep growing!” To me that’s a good thing.
Often when a growth company stalls, they start looking to sell or merge their company, to prevent the slide back down the revenue curve and all the painful things that come with that. That’s O.K., and often provides some wonderful outcomes that wouldn’t have arisen if they weren’t set up as a scalable business.
Growth, scaling, growth, pizza…
One wonderful model for me is my friend Jace, whom I am helping to create a new food ordering startup. There are hundreds of food ordering startups already, so why would anyone do this in 2019, right?. Most will fail.
But we’re approaching it in a very different way, looking beyond the present. We’re designing the platform and pricing so that growth is very slow at the beginning then increases over time. We’re building proprietary technologies that we will use ourselves then expose to the world. Etc., etc.
We’re building scalability into everything.
Excitement
Growth businesses are also more exciting for a company’s team and friends and family and customers. As you build long term relationships with customers, investors, employees, they thrive on your continuous growth and actually help you to continue to grow.
I understand and respect the linear businesses, and I love the simplicity of the agency model, but they are vulnerable to change and competition in the long run.
So consider the scalable model for anything you do.
@tomnora
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All photos from unsplash.com