Software startups typically face a big challenge early on: Scaling up their user base to show traction. And in the LaunchPad methodology a startup is defined as a search for a scalable, profitable business model. You need to have a market that is large enough for growth and profits as you grow. So the pressure to build a footprint and constantly expand can be pretty intense, especially if you have investors watching that growth and measuring your success against it. So it may seen counter-intuitive that one of the leaders in the startup accelerator world has written a lengthy and convincing argument for scaling slowly as a strategy.
Manually Add Early Users
In a post titled Do Things That Don’t Scale, Paul Graham advocates for scaling slowly and getting things right for those early customers and supporters. Let’s look at some of his logic:
“The most common unscalable thing founders have to do at the start is to recruit users manually. Nearly all startups have to. You can’t wait for users to come to you. You have to go out and get them.”
When you’re working with a minimum viable product (MVP) that is barely operational, this makes total sense. Sign people up manually, add users one by one and build functionality as you learn during the process. We’ve seen several of our teams do this early on, helping early adopters build profiles, set-up usage models and generally cobble together enough functionality to get started.
Watch Your Weekly Growth Rate (10% per week can add up fast!)
“The other reason founders ignore this path is that the absolute numbers seem so small at first. This can’t be how the big, famous startups got started, they think. The mistake they make is to underestimate the power of compound growth. We encourage every startup to measure their progress by weekly growth rate. If you have 100 users, you need to get 10 more next week to grow 10% a week. And while 110 may not seem much better than 100, if you keep growing at 10% a week you’ll be surprised how big the numbers get. After a year you’ll have 14,000 users, and after 2 years you’ll have 2 million.”
This is a technique called ‘reduce to the ridiculous’ that is often used in sales as in ‘you can have a nicer car for only pennies a day’ or ‘for less than the cost of a caramel latte once a week you can…’ When you’re sweating growth early on, setting little incremental goals can not only make it seem easier, it also keeps you motivated as you reach these easier goals. One of the rules of goal-setting is to choose goals that are achievable. 10% growth weekly seems doable, yet it adds up. Setting a goal of 14,000 users in your first year seems pretty hard until you break it down like this.
Handholding, Coddling and Happy Users
“You should take extraordinary measures not just to acquire users, but also to make them happy. For as long as they could (which turned out to be surprisingly long), Wufoo sent each new user a hand-written thank you note. Your first users should feel that signing up with you was one of the best choices they ever made. And you in turn should be racking your brains to think of new ways to delight them.”
Early customers who have a great experience will be loyal customers even if you screw up. They like the personal attention that even a small effort entails and they are likely to refer others your way. But isn’t this really time-consuming? Yes, but that’s what you’re here for!
“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.”
Scaling is integral to getting your new business off the ground but it doesn’t have to mean reaching thousands or millions in your first year. Treat each new user as a gift and work at keeping them coming in slowly but steadily and you’ll get there.
And read the whole article. He has worked with hundreds of startups and this a is a core strategy he and his partners at Y-Combinator recommend to their company founders.