Scaling · Market research

How do you identify a product that can not scale?

Bogdan Mirkac Electronic engineer / business development manager

September 20th, 2016

I am in the process of putting some capital on the side to make some early stage bets in the startup ecosystem. Not a lot to others but still a lot to me. I am putting my investment thesis around online communities and network effects. Do you have some recommendations overall on red flags that I should be looking out for that will tell me that a company will be unable to scale its product? Thanks!

Kyle Bailey Managing Director at Frontburner Marketing, Speaker, Author

September 20th, 2016

Great question, Bogdan.

One easy (and probably simplistic to some folks) way is to think of it like this: "Can I train 20 people and put them in a room assembling this (or performing this service)?"

If the answer is no, that's not great. Is it already being done, but is this new way an improvement, or are you breaking new ground? That's another good question, because if it's already being done, you can go look at what other people are doing and observe whether or not it's scalable.

Hope that helps. Are you following any of the Startup Week stuff going on around the country? I'll be producing some interviews on my blog on my site at frontburnermarketing.net. Below are a couple of previous interviews. One is with Paul O'Brien, whom I highly recommend. You can see his stuff over at seobrien.com. 


Here is another interview with a startup in Austin, Tx.

Gabor Nagy Founder / Chief architect at Skyline Robotics

September 20th, 2016

Hi Bogdan. Is it hardware or software?

Samir D'Monte CEO, Clarity 3D Printing

September 21st, 2016

I assume you are talking about a service, because by and large, a physical product can be scaled easily.

From an investor's point of view, services can fail to scale because of two types of reasons: one, there is no demand for the product, and two, the delivery system has some inherent flaws that hold it back. 

Generally, businesses that cannot scale do so because of bottlenecks created by human performance. If the system is largely software, it can scale easily. The bottlenecks can be several: difficulty in capturing user inputs, or difficulty in processing information, or delivering a result to a customer. 

Businesses that own hardware also face problems, as this can break down, and require installation, training and maintenance. Placemeter is an example; it is a combination of software and hardware that requires human intervention. This means that it will be slower to scale.

Does this help at all?

Bogdan Mirkac Electronic engineer / business development manager

September 28th, 2016

Sorry for the late answer.
Thank you for the all the help, it means a world to me since I am new in this.
The product we are talking about is a service.

@Kyle Bailey I subscribed to your newsletter. Thanks.