Scale isn't everything

· by Steve · Read in about 4 min · (788 Words)

If you limit your reading material to articles on TechCrunch and similar sites, you’d get the impression that to succeed in business requires that you plan to scale to a massive level. The received wisdom is that if you’re not targeting a user base of several million, and are not raising capital in Silicon Valley commensurate with that aim, then you’re not doing it right.

This is nonsense, of course. It simply reflects one end of the spectrum of business ventures - that which is high-risk and high-reward. There are many groups with a vested interest in this extreme being perceived to be the only valid approach - not only the media companies which hype them to generate news (big wins and big failures are news, the middle ground isn’t), but also the venture capital machine requires a steady stream of people willing to roll these high-stakes dice, because the unfortunate reality is that most of them will fail. The fact is that at the high-stakes end, you have to keep feeding the wood chipper in order to keep generating the minority of successes that fund the rest - it just sucks for you if you’re one of the majority who flame out. Failure can still be a good experience of course, and in the US past failures do not carry the stigma that they seem to in Europe, but still, being back at the start a few years on with probably a burn-out or two is not the outcome you were shooting for.

And at its worst, this can have a serious negative effect on would-be entrepreneurs - those people who are not in their early 20’s with no commitments, and who do have something to lose (houses, families etc). The perception that the only startup business worth doing is one where you move to Silicon Valley, pitch to VCs and then sleep under your desk for a few years can appear so daunting and high-risk that someone with anything to lose is likely go white and run back to the ‘safe’ world of employment (the actual safety of which is vastly overestimated of course, but that’s for another time). And yet in reality there are countless ways those over 30 can start their own business without risking destroying their lives, particularly if they’re creators themselves - programmers, artists, engineers, writers and so on, by profession or by hobby - whether part-time or full-time, and the Internet has made many ventures largely location-independent in practice. Sure, if you want to start the next VC-funded über-growth company you probably need to move to Silicon Valley, but seriously, that’s not the only kind of business that makes sense.

Here’s a truth that you rarely hear in the rarefied world of tech business journalism - a successful business is one that makes more than it spends, and ideally increases that margin over time. That’s it. If you can do something that you enjoy doing, and you can make more money than it costs you to do it, you’ve won. Don’t listen to people who imply that success comes in some kind of first-class and second-class offering; that you have to be on the cover of Wired and have millions of users every day to be successful. If that’s how your business model works, great. But if it isn’t, if you make money by giving a tiny niche audience something they like and they reward you for it with enough money to pay your bills, that’s awesome - don’t for a second let anyone make you feel that it’s not. Don’t get into willy-waving competitions with the ‘go big or die trying’ crowd, it’s pointless and just legitimises what is often a poorly disguised frat boy competition.

Running your own business and seeing it work is a fantastic feeling, and I think anything which encourages more people to dip their toe in that water, at a risk level that they’re comfortable with, is a good thing. The bar that TechCrunch et al set is the precise opposite of that - it’s a kind of elitism, really, designed to keep out all but those who think in that particular way.

I’ll just finish by referring you to 37 Signal’s Bootstrapped, Profitable and Proud page, which is a collection of companies who took a different, bootstrapped route and have done extremely well. Not that I think the $1m revenue benchmark on this page should be considered a threshold for success either; the only success factors I believe make any difference are being happy, and being profitable. If you can nail those two, it’s party time - whether you get to ring the NASDAQ starting bell or not just isn’t as important, IMHO. 😀