What can go wrong with 'Do things that don't scale'?
3 mistakes on the popular mantra
I’m doing a series on how popular startup advice gets misinterpreted.
Covered before this
5 mistakes when ‘getting out of the building’
4 errors when ‘building an MVP ASAP’
4 mistakes with ‘selecting a beachhead market’
This week’s mantra:
‘Do things that don’t scale’
The 3 most common mistakes
Holding on to non-scalable things too long
Ignoring the effects of non-scalable efforts
Only doing it once
The mantra: Do things that don’t scale
Many entrepreneurs have read Paul Graham’s essay on ‘doing things that don’t scale’. It suggests not worrying about efficiency, but obsessing about going the extra mile to delight customers.
“Wufoo sent each new user a handwritten thank-you note”, Paul writes. This strategy is not an end, but a means to gain traction and feedback. It doesn’t scale, but that is not a problem.
“A good metaphor would be the cranks that car engines had before they got electric starters. Once the engine was going, it would keep going, but there was a separate and laborious process to get it going.”
Why most founders don’t apply the mantra
Paul points out why founders shy away from doing laborious things:
“Another reason founders don't focus enough on individual customers is that they worry it won't scale. But when founders of larval startups worry about this, I point out that in their current state they have nothing to lose.
Maybe if they go out of their way to make existing users super happy, they'll one day have too many to do so much for. That would be a great problem to have. See if you can make it happen.
Enjoying this content?
Consider supporting me. It keeps this newsletter free. Is that a threat? Nah. At least I’m not plastering my face on all posts like Wikipedia extortion tactics to make you feel bad about the fact that you are not supporting them. Starting from €2.50 per month. Saved you a click there.
Mistake 1: Holding on to non-scalable things too long
⚠️ Why mistake: What got you here, won’t necessarily get you there.
🔧 Fix: Kill the sacred cows. Everything is up for debate.
Storytime: In 2019, PieterPot, a packageless supermarket delivering groceries in glass jars, was growing with relative ease in Rotterdam.
One of their USPs is their self-owned bicycle delivery service. They wanted to be the milkman, a tight customer touchpoint.
They weren’t profitable in their initial launch city. But with enough customers, they would become profitable, as bulk goods get cheaper with high volume.
Then, seemingly out of nowhere, that steady customer growth suddenly stopped. Digital marketing channels didn’t convert any more. They had an idea to increase volume: expand to another city. They needed to raise capital to do this.
That was a hard bargain. VCs declined and provided feedback: be profitable in one city first. It seemed like a catch-22. They required the capital to set up a warehouse with a delivery fleet in every city.
No scale → No profit → No capital → No new cities → No scale.
They would rather not outsource the delivery: a valuable customer touchpoint. Now what?
Pressure mounted as their runway dried up. With months to spare, they finally considered ditching their in-house delivery. If they partnered with a delivery partner, they required only one warehouse.
This would make the business model much easier. They bit the bullet and partnered with a nationwide delivery service. And it worked.
The effect on the customer experience wasn’t as big as they anticipated. People were fine, as long as they got their groceries. It allowed the company to grow and conquer the Netherlands city by city while raising €9M for future expansion.
💡 Key Takeaway
Don't be afraid to abandon non-scalable efforts when they become a burden.
Mistake 2: Ignoring the effects of non-scalable efforts
⚠️ Why mistake: You are doing these things to get customers and learn. If you don’t find take-aways, you are doing it wrong.
🔧 Fix: Reflect with your team how the customers are acing it
Storytime: Orderli (YCombinator S21 batch) was a growing QR-code menu startup. There are some signs of a tarpit idea. However, it appears that they have figured out execution, which is remarkable and highly praiseworthy.
On the surface, such a product could be self-setup. You send a tablet to a restaurant with instructions, they set it up, and boom: profit. Yet, after looking at churn, the team found one key thing.
Happy customers had their system up and running. Churning customers didn’t have the system active, even though the team designed the self-setup to be simple. They found out what was causing it: entering the menu is a tedious task.
All non-churning customers customers had a visit from an account manager. During that visit, the rep helped them set up the menu and the system. These bar owners would rather not fiddle with a digital menu: they want to focus on running their bar.
The moment Orderli realised this, they made this set-up visit part of their regular onboarding. Churn decreased. What they felt wouldn’t scale, actually scaled better than expected.
Read the full Orderli story here
💡 Key Takeaway
Non-scalable efforts should create value. Check regularly if it does.
Shoutout to a colleague:
Looking for content on scaling and raising funds?
The Founders Corner got you covered. After product-market fit comes growth. Their newsletter helps you to raise and scale by aggregating the best links of the startup internet. It covers practical insights on scaling, intel on the latest funds, and tactics for fundraising.
Check out a typical post and subscribe if you like it: The Founders Corner.
Mistake 3: Only doing it once
⚠️ Why mistake: You’re aiming to provide an exceptional experience. But, if you don’t consider the entire customer journey, you overlook important opportunities to create extra value.
🔧 Fix: Be obsessive with doing things that don’t scale throughout the entire journey
The previous story shows the importance of a good onboarding. However, not all products are the same. Some products require more help getting started.
Storytime: A B2B SaaS startup I mentored secured its first two business customers fairly quickly.
Both organisations had junior managers who could use help with structuring feedback conversations with their employees. The startup developed a tool for that.
A big launch event with cake, presentations, and drinks introduced the solution
At first, morale was high. Even employees who had been sceptical were excited. However, the enthusiasm went away after a few weeks. Luckily, the team overcame the issue by spending more time on extra guidance and personal check-ins.
Launch events spark initial excitement. But, without consistent follow-up and proper support to encourage adoption, the momentum can quickly fade.
Many founders I’ve worked with stay in regular contact with their early customers, often through the phone, Slack or WhatsApp. Proactive instead of reactive. This helps to provide quick support and make sure everything is on track. It doesn’t scale but favours your success odds.
💡 Key takeaway
Exceptional experiences shouldn't stop after onboarding. Continue providing tailored support throughout the customer journey.
Now, ask yourself
Which parts of your business are you holding on to that may no longer serve you?
What is the impact of your ‘unscalable’ efforts?
Could they be improved, or automated, or should they be reconsidered?
What is your favourite non-scalable tactic? Let me know in the comments!
Thanks for sharing. Insightful points!