Why Scale? You don't need to..

Why you don't need to follow the VC playbook for success July 2, 2025

I just had an interesting chat with a founder the other day. He was incredibly stressed as he wasn’t sure he would be able to scale. First for some important context: he has successfully bootstrapped his business to achieve product market fit. He has a small but growing team of five and a number of major clients. His software product fixes a problem in the market, which currently causes significant financial loss, and  is starting to disrupt the incumbents successfully. Yet he’s not sleeping at night. Not in a good way. In a blind panic. When I asked why he said because he wasn’t sure he could truly scale? When I asked why he needed to scale he replied that’s because it's what successful start ups do. But do they all need to?

The scale myth is similar to the 'genius idea' concept or the visionary who spots an unmet gap in the market. These all make good stories but they’re not the standard means of startup success. One of my favourite lines is there may be a gap in the market but is there a market in the gap? In other words will people be willing to pay for the solution you have found to a gap in the market? Or is there a gap there for a very good  reason i.e. no one will pay? I've learnt this lesson the hard way. Either they don’t care enough or it’s just nice to have. On top of that most markets are pretty well developed so finding a gap of an unmet need can be really quite hard.

Lots of businesses are launched because someone has just worked out a better way of doing things. The billionaire entrepreneur, Richard Branson, always says he just looks for an area where the product is poor and the customer service is really bad and then he goes in to disrupt it. His airline, Virgin  Atlantic, and its successful assault on British Airways is perhaps the most famous example of this. With all the processes that are being rapidly replaced or improved by digitisation and Gen AI there are a myriad of industries where better execution will create a sustainable business. So if you don’t need a genius idea to start then why do you need to scale? The short answer is you don’t.

Don’t get me wrong if you have invented a brand new product in a new or previously untapped segment and you can acquire customers without increasing costs and there is an opportunity to scale then absolutely go for it. 

But scale and growth are two different things. Growth is obvious – you acquire more customers which increases your revenue. When you grow,  as well as your revenue increasing, your cost base also increases. You need to spend money to onboard or service new customers or to increase product output. Ideally as you grow your margin continues to improve but there are always ging to be cost increase as well as revenue increases. Good operators will focus on the delta between costs and revenue and drive that relentlessly.

True scale is the ability to grow revenue without increasing costs although most businesses consider a very small cost increase as acceptable. This means that as you grow your margin increases exponentially – this is scaling and very exciting for all those involved.

 As a a founder you don’t need to scale. There are plenty of businesses where they are just a market leader with perhaps a dominant market share or even just a significant one and that’s fantastic. Growing quickly to arrive at this position is a huge goal and a remarkable achievement and not to be dismissed so lightly. Growing quickly can still be, and often is, highly lucrative. Whether you’re looking to build a lifestyle business or achieve an exit, both are possible outcomes when you focus on fast growth. Your focus and how you think about growth and costs will  be different depending on whether it a lifestyle business or you’re building to an exit . It’s important you decide which path you’re going to take as it will impact your business decisions but fast growth is just as good as scaling. Potential buyers will be equally excited.

Fast growth and achieving it is hard and to even stand a chance you need a great product market fit, you need to be fixing a problem that people will pay money to solve, you need to be disrupting the existing incumbents and you need to follow it up with fantastic customer service and product evolution. This in itself is both an enormous challenge and an incredibly exciting journey to go on with the highly desirable goals an attainment of wealth creation as part of the end result. Do you need to be truly scaling to achieve this? No you don’t so why worry about it. If like the founder I spoke to you are in a position where you can achieve all this then that in itself is an amazing goal and an awesome achievement when you accomplish it. Don't beat yourself up because you can't scale.

I get that its great that we have all these founder stories circulating in the media as it encourage more and more people to try and start their own business which is fantastic for both individuals and society on many levels but at the same time beware the hype. Scale is great but most businesses will find it hard. Fast growth and market dominance are equally exciting so don’t ignore them 😊