When Is It The Wrong Time To Scale Your Startup?
“We’re in the first stage of a three stage fab expansion,” “Bob”, the CEO, proudly told me.
It was December 2000, and I was being recruited to run the Communication’s Division of Bob’s company. The economic bubble was bursting already, yet here was this CEO boldly proclaiming his company was expanding.
“Do you really think this is the right time?” I asked. “The ‘comms’ bubble appears to be bursting.”
“Hogwash!” (Yes Bob actually said Hogwash). “The market is going to come back strong in 2001. I know it will!”
Six months later, the company put the fab expansion on hold.
Nine months later, the company went through a massive layoff.
Determining when to scale and when to pull back is one of the most difficult things you need to do as a CEO. If you scale too quickly, you can end hurting a lot of people. If you scale too slowly, you can miss your opportunity.
As much as I want to fault Bob for what was clearly a faulty decision, I can’t do it. The answer of to scale or not to scale is never, ever clear.
