Demystifying Startups (Part 2) - Scalability of Product.


In the previous blog I discussed about how you should push yourself to build something ‘Unique’, ‘Innovative’ or ‘Different’. However, one needs to realize that unique is not always better. Customers do not necessarily like ‘Unique’ products/services, they like ‘Better’ products/services. Customers focus on two main things: things that can save their Time and Money. It is important to remember that ‘Newness’ will fade away over a period of time but the fact that you are ‘Better’ always hangs around for a longer period of time.


In this blog, I will be briefing you about the Scalability part that is associated with the product.





Let’s make an effort to learn and know more about the scalability part that is associated with a product or a service. It is very important to understand the difference between Scale and Scalability. Ever thought about it? 



Any company that has grown from scratch or from being very small to being very large today is known to have Scaled. Scale basically refers to “size” of an organization. Can you think of an example?


Walmart! In 1962, Sam Walton opened the first Walmart store in Rogers, Arkansas. Started by one man, it grew from owning 24 stores ringing up $12.7 million revenue to owning 11,496 stores ringing up $524 billion revenue. This shows how Walmart is able to Scale its business and operations.



Scalability is when input and output are disproportional. Taking the same example, if Walmart wants to double the output in terms of their sales when compared to their current sales then they will have to set up more stores, invest on infrastructure, hire employees etc. In this case the input and output are proportional so we can say that the company has scaled but it is not scalable. 


Anything becomes Scalable when input and output are disproportional. A small increase in input leads to an increase in output by a significant margin.


Talking about an app that we check every day as soon as we wake up, yes! 

WhatsApp is what exactly I will be talking about. It had a team of 20 when they were serving 1 million people, 30 people when they were serving 10 million, 33 people when they were serving 100 million people and 34 people when they were serving 500 million people. So going from 1 million to 10 million to 100 million to 500 million, the amount of input that they had to do was going from 20 people to 30 people to 33 people to 34 people which is not proportional, so the model of WhatsApp focused more on Scalability.



If you open a pharma store or if you start a tuition class having a physical space, say teaching students of GMAT aspirants then it is very much likely that you will be able to achieve scale but that model is not scalable because if you have 100 students and then 500 students, number of faculties will also increase from 10 to 50.


Alternatively, if you look at Byju’s then you will end up observing that input and output are disproportional. You can have the same number of lectures/lessons in order to teach 500 kids or 1000 kids. It has got both scale and scalability and that is an important characteristic that we all need to remember.


From the above examples we conclude that "any startup may not have scale in the beginning but the model should be scalable!"

If you found that this blog added value to your existing knowledge and you enjoyed reading this blog, share it with your friends and colleagues!


If you are interested to know more about other aspects that are associated with demystifying startup, stay tuned and wait for the next blog! Happy reading!


Attaching the link of the next blog: https://www.yashshah.in/post/demystifying-startups-part-3-growth-focused


Until next time,

Yash






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