Why You Shouldn't Scale Your Startup One of the biggest startup killers? Scaling too fast, too early. Here's how to grow more deliberately.

By Walter Chen Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

Startups are at their sexiest when hundreds of millions of people around the world use something that a couple of guys and girls built in their garage.

But I've noticed how that perception lays a trap for many first-time entrepreneurs. With their sights set on serving the masses, first-time founders often conclude that they must build a product that will work for millions of customers -- before they even have one.

This is such a major problem that Startup Genome identified "premature scaling" as the number one cause of startup failure. Surveying 3,200 startups in 2011, the startup-community hub Startup Genome found that a whopping 70 percent failed because they tried to scale too early -- expending resources on add-ons like expensive marketing and hiring salespeople before they truly had a product to satisfy a sufficiently large market.

Here are three ways to build a business organically:

1. Do things that don't scale.
Paul Graham of Y Combinator fame explicitly implores his companies to do things that don't scale, like finding ways to pay attention to and delight individual customers early on instead of dismissing such moves as unscalable or trifling.

In Graham's experience, first-time founders mistakenly believe that startups either take off or don't, and that's why they often impetuously prepare for startup glory. By relying on the patterns and models of well-established startups, founders miss a pivotal stage in their company's own life and therefore fumble.

Ryan Smith, founder and CEO of Qualtrics, a research software maker in Provo, Utah, describes the correct order of operations: "Nail it, then scale it," he says. Founders and their companies must go through an "adolescence phase" to nail who they are, as starting a business requires a period of growing up, self-learning and tuning of their product, identity and approach. After all, you have to learn to walk before you can run, right?

Related: The Race to Scale: How Fast Should You Accelerate?

2. Make something people want.
Part of the adolescent stage involves slamming doors on ideas and features that distract from your product and path. When it comes to making something that people want, the hard part most often is figuring out the "what people want" part. You can build something, but is it the right something?

To discover what people will pay for, find the right market, study and experiment with your product and talk with customers. The great advantage of making what people want is having a product that markets itself.

Related: Bootstrapping Your Startup to Scalability and Profitability

3. Sell it before you build it.
I've seen first-hand how successful startup founders initially gained real, paying customers before writing a single line of code -- and then scaled up their technology and personnel second.

Zirtual, a virtual-assistant service, grew its business for a year and a half without any real technology. The new customer-signup form on its website just sent an email to founder Maren Kate Donovan to alert her that someone was trying to sign up. She had to add that customer to the new customer spreadsheet and email the new customer manually, and then scan through her pool of virtual assistants to find the best fit. Signing up a new customer took an amazing 45 minutes.

Donovan and her co-founders went through this pain to make Zirtual happen in spite of their technical limitations to be absolutely sure they were building something that people wanted before they scaled up and raised a $2 million seed round.

Related: Biggest Mistakes: How JackThreads Overcame Its Growing Pains

The San Francisco-based startup ZeroCater also spent time working off a spreadsheet in its early days. New customers came from in-person sales or cold calls over the phone and were managed in a spreadsheet, all by solo founder Arram Sabeti. ZeroCater grew to tens of thousands of dollars' worth of paying customers before Sabeti decided to scale the company bringing on a developer and join Graham's accelerator, Y Combinator.

No doubt, it's scary to sell before you build and to step outside of your comfort zone. But as Graham put it in a recent blog post: "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."

How did you know when to scale your company? Let us know with a comment.

Walter Chen

CEO & Co-founder, iDoneThis

Walter Chen is the founder and CEO of iDoneThis, the easiest way to share and celebrate what you get done at work, every day. Learn the science behind how done lists help you work smarter in our free eBook: The Busy Person's Guide to the Done List. Follow him on twitter @smalter.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

After a 12-Year-Old's Side Hustle Made Over $4,000 in 1 Day, He and His Dad Grew the Business to Nearly $50,000 a Month: 'It Takes Commitment'

Madden Forrest and his father, Steven, turned their passion for football into a lucrative business.

Business News

Investment Firm CEO Tells Thousands in Conference Audience That 60% of Them Will Be 'Looking for Work' Next Year

There were over 5,500 people at SuperReturn International 2025, making it the largest private equity event in the world.

Business Ideas

70 Small Business Ideas to Start in 2025

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2025.

Business News

Here Are the 10 Highest-Paying Jobs For New Graduates With a Bachelor's Degree — and They All Start at Six Figures

According to a new report from Resume Genius, finding a high-paying job as a new grad is possible, even in this market.

Growing a Business

The Best Way to Run a Business Meeting

All too often, meetings run longer than they should and fail to keep attendees engaged. Here's how to run a meeting the right way.

Business Solutions

Discover How AI Can Transform the Way You Work With This $20 E-Degree

Learn how to make AI work for you with the ChatGPT and Automation E-Degree, now for just $20.