Scale is a four letter word

I’ve been in fund raising mode, if not actually raising money then at least mentally, since 2001. I have had mixed success, raising a round in early 2000s and various debt rounds since then.

The thing that matters most when raising money from seasoned investors is scale. Scale means getting as many customers as you possibly can in the shortest amount of time as possible. But charging for something adds friction to the process and thus slows scaling. So the idea of generating income from what you produce can be anathema to scale.

This is why we have so many free software products these days. Funding dictates this due to the god called Scale.

I was addicted to this for years. We needed low priced and free products because the way you make money is to charge a little to a lot of people, and you can’t have a lot of people until you have scale. Of course I didn’t have venture funding to help me out so we constantly played games, releasing some free and some paid apps in an attempt to scale and make money at the same time. I was praying at the alter of two completely different gods, two that rarely got along.

By realizing my true calling as a grinder, by now focusing on building a sustainable business that lets me grind away at my chosen craft for years and years and years, I no longer have to pray to the scale gods.

And that changes how I think about our products, how we price them and deliver them. I don’t need scale. What I need are enough customers willing to pay me a fair wage to use our products, and I need enough of them to be profitable and make a living that can pay for a small team, for my house, my family, and save for the future including my kids’ college funds. I no longer have to be the cheapest solution and I don’t have to appeal to everyone. I can now focus on being the best once again for my core group of customers.

Praying at the alter of two gods — revenues and scale — was very hard. I no longer feel pulled in two directions.

10 thoughts on “Scale is a four letter word

  1. That’s very nice of you to say. My father mentioned that when I was heading to college. At the time we discussed whether some form of technical writing was my calling.

    • Beyond technical writing. You have an understanding of yourself and the ability to put this understanding into words. Not everyone can do this. Verbalized insight helps you understand yourself and ,when you share your understanding ,helps others understand themselves.

  2. Great observation, and very true. I feel like there are multiple ways of getting there. I’ve been looking at SalesForce as an example. They started out by building custom solutions to a few clients. They were charging enough to pay the team for the dev time and learned what the market wanted in the process. Only after a year+ did they decide that they understood the market enough & refined they product enough to focus on creating a generic tool that could be adapted to different businesses.

    A potential strategy is to focus on building (revenue) and then scale

  3. I like that, @persisten. Most experts would insist that staying focused on a single customer segment at first is the only way to launch any new product. Great example regarding SalesForce. I didn’t know that about them.

  4. I don’t think there are two gods. In business there is one god, profit. Scale is just one of many ways to get profitable.

    Similarly, knowledge only has one god, education. College is just one of many ways to get educated.

    It’s common to get distracted from the end in pursuit of the means.

    There is nothing wrong with scale or college, as a means. But there are a lot of broke scaled companies and a lot of dumb college graduates.

  5. Yes, I’m just echoing my agreement with you. Just been busy, I’ll be back gradually. I’m happy with the direction you’ve decided with your business.

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