I read a great blog post by Y Combinator Co-Founder Paul Graham that showed why start-ups need to focus on activities that do not scale. Graham debunks the theory held by many start-ups that if they build a great mousetrap, customers will flock to it and if customers do not, then the product must be a failure. He points out that startups succeed because the founders make them take off (with a few exceptions).
Graham starts by pointing out that the most frequent non-scalable activity founders do is recruiting users manually. New companies cannot wait for users to find their product, they need to go out and get users. This could be by going to friends and family. It could be by going to other companies that you network with. It could be by knocking on door after door.
There are two reasons founders resist going out and recruiting users individually. One is a combination of shyness and laziness. They’d rather sit at home writing code than go out and talk to a bunch of strangers and probably be rejected by most of them. But for a startup to succeed, at least one founder will have to spend a lot of time on sales and marketing. The other reason founders ignore this path is that the absolute numbers seem so small at first. 10 more users may not seem like a big deal for someone who has just watched The Social Network, but if it moves you from 100 to 110 users in a week, that is a 10 percent increase. Keep increasing 10 percent every week and then they will be making movies about you.
Deal with fragility
Graham points to Airbnb as an example of non-scalable activity that founders do that eventually creates a huge success. When Airbnb was in its very early stages, the difference between success and failure was going out and actually engaging with users. Virtually every start-up is fragile in its early stages, and judging them against experienced businesses is a common error of investors (and even the entrepreneurs themselves). Following Airbnb’s lead, by going out and interacting with actual users, you can see the potential of your business and determine the must-have features that can allow you to scale eventually.
Create customer delight
Graham also shows how founders should take extraordinary measures to create customer delight for new users, not just get the users. Your first users should feel that signing up with you was one of the best choices they ever made. And you in turn should be racking your brains to think of new ways to delight them. Graham writes (and I agree), “A phrase to convey how extreme your attention to users should be, and I realized Steve Jobs had already done it: insanely great. Steve wasn’t just using ‘insanely’ as a synonym for ‘very.’ He meant it more literally—that one should focus on quality of execution to a degree that in everyday life would be considered pathological.” Creating delighted customers is also a key to generating word of mouth (a topic I wrote about a few weeks ago), as it creates the stories that people will want to spread about your company.
I have written previously on the importance of focus for a start-up, and in many ways that is also a non-scalable activity. By focusing on a very narrow market, it is easier to target and acquire users and delight them. You can then expand from that narrow focus broader and broader. Graham uses the example of Facebook, which started by focusing on Harvard students, then students at other colleges and universities … and we know the rest of the story.
Do things manually
A consulting-like, non-scale, way to recruit initially lukewarm users is to use your software yourselves on their behalf. Even more extreme, rather than use the software yourself you can be the software. When you only have a small number of users, you can do by hand things that you plan to automate later. This is very similar to a pen-and-paper prototype of a game and will let you know exactly what to create.
The undeniable truth
I have been part of many start-ups, and fortunately almost all of them have exited. Two principles laid out by Graham have proven repeatedly to be a key to that success. First, do anything to get users. It is less about funky growth-hacking techniques initially than rolling up your sleeves and getting people to try your product or play your game. Second, focus on creating customer delight. I have never seen anything bad from having very happy customers (and they can often lead to financing or viral growth) and it is probably the most neglected part of the current start-up culture.
2 thoughts on “Why scale should not be a founder’s focus”
Lloyd, Paul Graham’s article is one of my favorites. Kudos for highlighting it here. I think another reason that startups tend to ignore the “non-scale” phase is that the manual work of hitting the streets and knocking on doors just doesn’t feel as glorious as implementing some new product feature. Along with that, the hurt from having a potential customer say “no thanks, not interested” to you in person is much greater than a random visitor to your website deciding not to click the “Learn more” button!
You are completely right. You can have the most confident, smart Founder and they are not ready or willing to take on sales and the multiple rejections that come with it. I find it amazing how many people cannot or will not pick up a telephone, the core skill in successful business development.