Premature Scaling: Why It Kills Startups and How to Avoid It

Josiah Humphrey
Sep 15, 2017 · 10 min read
Originally published at http://www.appsterhq.com

Repeatable and Scalable Business Models

“The creation of a repeatable and scalable business model is the point in the start-up lifecycle where a new venture finds ways to consistently acquire new customers for less money than the revenue they are expected to bring in, thereby generating profit.”

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6 Stages of Startup Development

What Is Premature Scaling?

“Premature scaling is an attempt to massively expand and grow your new company before you have successfully hammered out the intricate details of a repeatable and scalable business model.

Failing to nail down the specifics of your CAC and LTV can facilitate premature scaling and, thus, cause startup failure.”

Establishing a Problem/Solution Fit

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“List all the features you are considering implementing into the final version of your product and ask your customers, ‘If you had only $100 to invest in one or more features of this product, how would you invest your money?

Which features would you invest in?’ Naturally, customers will select the ones about which they care the most thus providing you with data with which to distinguish necessary from superfluous features of your product.”

Determining a Product/Market Fit

“In a great market — a market with lots of real potential customers — the market pulls product out of the startup.

When you get right down to it, you can ignore almost everything else besides the market.

A successful startup is thus one that has reached product/market fit.

You see a surprising number of startups that have nearly all aspects of operations completely buttoned down and yet they’re actually heading straight off a cliff due to not ever finding product/market.”

“The best way to think about product market fit is that the product should be a ‘must have’.

People have too many choices today to settle for a nice-to-have.

So what makes something a must have?

Essentially it needs to be both valuable and difficult to replace. The various survey questions are intended to function as leading indicators of it being a ‘must have’.”

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Originally published at http://www.appsterhq.com

The Startup

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Josiah Humphrey

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The Startup

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