Scalability — forgotten by many, remembered by the few
Ideas pop up every day, every minute around the world. A select few of them ultimately start, and even fewer grow on to built something meaningful in their lifetime.
To prove this point I want to talk about 2 companies, Webvan in the US and Big Basket in India.
Webvan delivered groceries and other FMCG products at an hour’s notice in 14 cities in the US. Webvan raised $800 million during the dot-com bubble in the 90’s. That is equal to $1.2 billion today (adjusted for inflation).
Webvan crashed and soon filed for bankruptcy in the year of 2001. Its profits ran in just 6 digit numbers after raising money in the 9 digit range. It died a horrible death. It had $800 million in losses.
Now let’s talk about an Indian startup that came up during the same time — Bigbasket.
Big basket did the same thing that Webvan did. It grew in drastically slow levels, building up its product which is market fit over time. It did not break even until 13 years later. It did not expand to cities within a matter of time, it decided to build its product in the three main cities in the country. It has grown only from the revenues it earns and did not try growing too big too fast. In other words, it did not follow the GBF business model which was famous during every tech bubble.
The mantra for Big Basket was to create an MVP, test it out, find the optimum product market fit over time. But a lot of startups today, and back in the 90’s had the GBF rule (Get Big Fast). No matter the product market fit, no matter the scalability, just blindly grow. Clearly, this lead to the dot com crashes in the 90’s all over the world.
The question is whether today’s startups are still following this same trend on some level. Even though it was not as wild as during the 90’s, the amount of money that is being raised and burned continue to be so.
It is always good to have one question in your mind when a company builds a product, a plan or a strategy.
Is it Scalable?
During group discussions and planning, ideas will flow and may even seem to add extraordinary value to the overall product sometimes. But we all need one person in our company who keeps an even mind and asks the question —
Is this idea Scalable?
Whether it is building a new feature, whether it is a marketing plan, or whether it is deciding to open up a new office, the question whether this plan or strategy can be scaled over time should be answered.
How to built a scalable machine?
Any company should be built to be a machine. Every pillar of the company (marketing operations etc) should like mortars of a machine. The machine should bring out value and profits at the end of the day.
A machine can always be scaled. An undefined process can never be.
So how to do build one?
Follow the 3 core rule that we work with at Billeasy
The 3 core rules to building a scalable machine.
1. Concentrate on the core of the product
The core values that the product provides should be product market fit. Other improvements in the product is a gradual progress. The gradual process takes money and resources.
Make sure that the core values that the product offers, in turn bringing in revenues which can be put into the gradual improvement of the other features. This improvement usually comes through feedbacks and usage data.
2. Building a Mortar
Make sure to automate all of the repeating activities. Even if the team is small there will be some activities that will be repeated in the future too even when the organisation grows. Automating it from the start itself may seem like a tedious and sluggish process but in the long run, the work is worth it.
- Automate the payrolls.
- Automate the email system.
- Automate the cloud and file systems.
- Automate the marketing processes.
- Automate the sales and operations processes.
- Build training modules for future employees.
3. Mind your marketing
Build scalable marketing campaigns. Do not root on for word-of-mouth and direct marketing since your marketing budgets are low. Salvage whatever budgets you have on different parts of digital marketing avenues. See which brings in maximum conversion rates and concentrate on that. It only makes sense to push your resources to market resources that will, in turn, bring you revenues. Using these increase the reach of your digital marketing campaigns. Scalability can only be achieved in marketing after putting on a strong foothold in one marketing avenue before moving onto the next one.
Digital and content marketing campaigns are showing the best of conversion that the marketing industry has even seen. Make sure to take full use of that.
Always remember to keep scalability in your mind no matter what you are building. From a set of Facebook content to put out, to a feature that you want to introduce, the scalability factor in these is important.
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