Next Step, Scaling Up

A startup begins with assumptions, speculation, and hope. As the business goes into production mode, the assumptions are put to the test. Rare is the situation where the majority of the assumptions are correct. The team is faced with the task of tweaking the business model to deal with the real world realities. This early phase is both exciting and frustrating. Some experiments work out, while others turn out to be a waste of time and money (critical resources generally in short supply).

Then it happens. A winning formula is discovered. Unlike other seemingly promising experiments, this model has sustainable momentum. Let's take a fire analogy. You can ignite a fire with matches and lighter fluid. If the lighter fluid can not transfer its heat and flames to a more sustainable material such as firewood, the fire burns out as quickly as it ignited. However, if the lighter fluid does transfer its heat and flames to the firewood, then keeping the fire perpetually lit requires little effort. Simply throw on more firewood and let the fire do the rest of the work. A startup needs to recognize the difference between an artifically fueled success, and a sustainable one.

Once the business model proves to have organic and sustainable growth, then it is time to scale. The business challenges are still many, but the path to success is much clearer. Scaling at the right pace, recruiting the right resources, and managing cash flow is crucial during this period.