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At Scale - Viral Marketing Hero

In the last chapter, we talked about one commonly-used, ultra-vague buzzword: critical mass. It’s a term that is misused so often when discussing growth and business strategy that it should be made illegal.

The reason? It lacks specificity. Critical mass doesn’t happen all at once, and when it happens for one group of people somewhere, it doesn’t happen everywhere, for everyone. It’s simply the moment in a product’s growth journey when a milestone is reached that causes the growth strategy to change.

Now, in this chapter we’re going to address another equally-vague buzzword: scale.

Being at Scale Doesn’t Refer to Fish Skin

 

If you run in circles with people who like to talk about business or startups or growth strategies, you’ve likely heard the word “scale” used before in sentences like:

  • “We’re prepping to scale.”
  • “You have to do things that don’t scale.”
  • “When we’re at scale, we’ll need to figure that out.”
  • “That strategy can’t scale.”

The dangerous part is we THINK we know what it means, and we THINK we’ll know when it happens. But if I forced you to tell me what metrics officially demonstrate being “at scale,” what would you say?

If an answer came to your head, did you just randomly pull it out of thin air? 

That doesn’t count – and you know it.

Identifying a Key Moment

 

The “critical mass” moment of your product will typically occur when your product reaches the minimum required size for your application to work and be valuable, without a user having to recruit others to use the product first.

For certain product types, this will happen at different times. But this moment will be prolonged if you and your team opt to build product features that don’t match your audience, or worse, don’t provide value for the users you’re acquiring.

For example, which of the following would you say has reached a moment of critical mass?

Scenario 1:

  • An online forum acquires 500 users in Des Moines, Iowa who actively engage with each other on a regular basis about disc golf. This discussion includes where they plan to play that week, what techniques are superior, and upcoming outings and events for forum members.

Scenario 2:

  • An online forum acquires 500,000 users in 100 countries – evenly distributed across each country – that provides a place to discuss 50 different topics. The average user is interested in 1-2 topics of the 50.

So which has obtained critical mass? If you said the latter, you’re sadly mistaken. Don’t let big numbers fool you.

In the first scenario, the disc golf forum is driving very specific value for a very specific audience. It is doing its job, and users are sticking around. In all likelihood, there aren’t too many more hardcore disc golfers in Des Moines, Iowa that will be so interested in the sport that they’ll socialize around it online. Thus this forum has reached critical mass.

Since this is the case, the growth strategy of the people running that forum will need to change. They’ll either need to expand the forum topics to one or more related topics in order to acquire a broader audience in Des Moines, or they’ll need to expand their focus to other geographic locations.

In the second scenario, the forum will contain on average 500 users per country. Of those 500 users, only about 15 will be interested in the same topic. So the value of interacting with so few people in this forum will be dwarfed by the value offered for the users in scenario one. But since there are likely quite a few other people not in the forum from each country interested in the those topics, growth strategy would not need to change to reach them.

Granted, the second scenario isn’t a completely realistic example since the chances of distribution being even roughly equal across each country is next to impossible. However, we can still see why the product in the second scenario is likely to fail. Specifically because of the ultra-fragmentation of the audience and the value they want. Their strategy spreads the focus of the team running the forum so thin that no audience will receive much catered attention.

The takeaway is to not get ahead of yourself and act bigger than you are before you can get there.

Take Facebook. It might now seem like a brand that offers a product for virtually everyone, but don’t forget that it started by targeting a very specific audience in one single location: college students at Harvard University.

By trying to please everyone, you end up pleasing no one.

Attaching Viable Meaning to “Scale”

 

Now that you’ve seen an example that helps illustrate critical mass, let’s shift our focus back to scale.

A product reaches a certain scale when it reaches a certain size that internal processes must change in order to continue to maintain the high level of service customers have enjoyed to date. It is often measured in the total number of customers served.

For example, when you start a new tee shirt company, you’ll likely be shipping out all new orders yourself. You package your orders. Label them. Then drive to the post office, and drop them off.

As things start to pick up (let’s say at 100 sales per day) you find that you’re spending so much time packaging and shipping orders that other things you need to focus on (such as customer service or ad optimization) are not receiving the attention they deserve. You decide you need to hire a new employee to focus on order fulfillment, allowing you to focus more on other areas.

This was a moment in your company’s journey when you hit a certain scale. Your internal strategy needed to change and you needed to hire a specialized employee for a time-consuming task to maintain a high level of service.

See where I’m going with this?

To Scale or Not To Scale

 

Now let’s go back to those two scenarios again.

Which do you think will have hit one or more moments of scale?

Scenario 1:

  • An online forum acquires 500 users in Des Moines, Iowa who actively engage with each other on a regular basis about disc golf. This discussion includes where they plan to play that week, what techniques are superior, and upcoming outings and events for forum members.

Scenario 2:

  • An online forum acquires 500,000 users in 100 countries – evenly distributed across each country – that provides a place to discuss 50 different topics. The average user is interested in 1-2 topics of the 50.

This time, the second scenario wins.

The first scenario is delivering great value for a core audience, but the overall audience size is small. Even if everyone is submitting support requests to admins every few weeks, the overall magnitude is likely still so small that one person could handle the volume while still spending a ton of time improving the experience on the site.

However, the second scenario has 500k users. If they interacted with support at a similar frequency, one support person would get pummeled and 1-to-1 interactions would suffer tremendously. In all likelihood, this forum would require multiple support agents to keep up with this sort of communication volume.

All of which means forum number two has a big problem.

How Scale Can Kill Your Company

 

The first scenario above has already hit a moment of critical mass. It is delivering enough value for enough of a core audience in a specific location that it has now saturated the market. As a result, the company’s growth strategy needs to change. However, volume is still pretty low. It hasn’t reached a moment of scale yet, so it can still function with a smaller staff and very manual processes.

The second scenario has NOT hit a moment of critical mass. It’s value is fragmented across 100 different countries and 50 different topics. The market is still very unsaturated and the growth strategy doesn’t need to change to compensate for that saturation. However, volume is pretty high at 500,000 users, and it has likely already reached at least 1-2 moments of scale.

Which company do you think is about to go up in flames?

(Spoiler Alert: It’s the second one.)

Many novice (or ignorant) founders or growth engineers think that the goal of their company is to achieve a certain scale, which will signify their success. These are what we call vanity metrics. They are cool to tell your mom about – but that’s about all they’re good for.

What most don’t realize is that without reaching one (or hopefully a few) moments of critical mass FIRST, scale will eat their company alive.

When You SHOULD Scale

 

Retention is our foundational metric. It ensures that when we add “water” to our “bucket,” it does not leak. Retention comes from value, and value is offered by building a product that serves the needs of a very specific subset of users.

By focusing on THEM, and ensuring you can make THEM happy, you can then expand bit by bit.

So only scale when your company can boast real growth metrics.

What’s Next

 

Okay, so now we know when to scale our company and when to expand our business. But before we can achieve a sustainable, healthy growth and continue to earn more money in the long run, we have to take into account one last important concept.

This is it! The last step in our process before you can officially cape yourself a Viral Hero. Are you ready?

Let’s do this!

 

Is the Growth You Get the Growth You Want?

Not every user your product acquires will be a valuable user. At least not in terms of your business’s growth and profitability. So in the next chapter let’s make sure you’re not left with empty pockets after all your hard work.

 

Travis Steffen
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Travis Steffen

Travis Steffen is a Silicon Valley growth engineer, data scientist, and serial entrepreneur with multiple exits. He is currently the founder and CEO of FlashCourse. He's also a crazy adrenaline junkie, is obsessed with fantasy football, and can grill a mean rack of ribs.
Travis Steffen
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