Scalability is not always the most important consideration
Ability to scale is of course required if the goal is to build a large and profitable company. However I think there are a few situations where scalability is not the most important thing to worry about. In fact, doing things that are not scalable can be beneficial in some cases. Below are some thoughts with support from some quotes from Jason Freedman and Paul Graham.
“In the pre-product-market fit stage, you are really just running an experiment. Anything you do that allows you to test your thesis faster is worth it—even if it means doing a bunch of manual work that will have to be replaced later.” - Jason Freedman
A startup’s riskiest assumption at first is that it’s something people want. If it’s not something people want, scalability doesn’t matter. Because there will be nothing to scale. Doing things that don’t scale at first can help you test faster.
“It would be a little frightening to be solving users’ problems in a way that wasn’t yet automatic, but less frightening than the far more common case of having something automatic that doesn’t yet solve anyone’s problems.” - Paul Graham
Brand, feedback, customer support
“You should take extraordinary measures not just to acquire users, but also to make them happy.” “For most successful startups it’s a necessary part of the feedback loop that makes the product good.” - PG
Doing non-scalable things can help in getting customer feedback. I’ve noticed a lot of startup products I use are extremely attentive to my needs. When I ask a question I get quick and thoughtful responses. It improves my perception of the company and I’m sure it helps them understand how people are using their product and what they may need to do to improve it.
As an example, AirBnb flew to New York while at Y-Combinator to help users improve their listings by taking professional photographs. It was a product and user experience improvement that showed measurable growth in revenue.
“Tim Cook doesn’t send you a hand-written note after you buy a laptop. He can’t. But you can. That’s one advantage of being small: you can provide a level of service no big company can.” - PG
A business doesn’t have to be at scale, or even scalable, for it to be a great business for the founder(s). For example, angel investing and VC firms don’t scale, but they don’t need to. They just need one or two home runs and they’ll have a great business. Being an entrepreneur is even less scalable (time is less scalable than money). As another example, a small, or “lifestyle business” can provide a great return and lifestyle for the founder(s).
As a final example, some larger agencies, consulting companies, and other service firms have tons of employees and revenue and are quite profitable. Service work such as wealth management, advertising, strategy consulting, etc. is not “scalable” because of how much manual human work it requires, but these companies can still grow to be large, profitable, and by most definitions, “successful” companies. The growth may not be as fast, but what’s wrong with that?
Non-scalable growth channels can lead to more scalable growth channels. For example, Direct sales or partnerships is costly and difficult to scale, but can lead to other, more scalable channels of growth. Using sales or partnerships can prove a concept and improve “awareness,” which can lead to more scalable channels such as virality or search.
As an example, AirBnb famously flew New York to manually recruit users while at Y-Combinator. This is not scalable, sustainable, or profitable. But it allowed them to prove the concept and it’s clearly lead to more sustainable growth channels.
Scalability should certainly be a concern if the goal is to do so, however I think some people get overly concerned with it, especially early on. Doing things that don’t scale can have many benefits, and may not be necessary at all depending on goals.