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That depends on what you mean by "require" - one successful startup strategy is to make something that _functions_ for a small user base, but operates at a loss

That depends on what you mean by "require" - one successful startup strategy is to make something that _functions_ for a small user base, but operates at a loss until it hits some critical size. Like, in the early days at Square, we lost money on literally every transaction, but as the number of transactions increased it was possible to negotiate a bulk processing rate, (and then much, much later scale the number of transactions high enough to pay for the engineering department). But the customers saw value immediately, and the trajectory was convincing enough for investors to provide the bridge.

bmh100 6y ago
Based on the article, I believe the author would say that Square is an idea that requires scale, since you "lost money on literally every transaction, but as the number of transactions increased..." I might be misunderstanding something, but it seems that Square becoming profitable required reaching a certain scale.
- jes5199 6y ago
  I guess I'm trying to split a hair here, but I feel like some ideas don't even minimally work until there's a critical number of users. Like if you're building a user-contributed database of any kind, it has to be useful at the small size before or else it won't ever grow to be useful at a large size. I feel like I've heard pitches that only talk about the large size. And that process is sometimes separate from the more "business" concerns of cost versus profitability. IDK, the author wasn't totally clear about what domain we were talking about here.
  - yawnxyz 6y ago
    you just helped me understand that the key is probably to very quickly understand whether the thing you're building can remain sustainable without scale, or absolutely needs to hit scale so it can be sustainable, and like you said that hasn't been distinguished in this article... idk like in my head building a personalized black car service vs. building a bus-service fundamentally requires different conversations around scale b/c of the different domains

bmh100 6y ago

Based on the article, I believe the author would say that Square is an idea that requires scale, since you "lost money on literally every transaction, but as the number of transactions increased..." I might be misunderstanding something, but it seems that Square becoming profitable required reaching a certain scale.

jes5199 6y ago
I guess I'm trying to split a hair here, but I feel like some ideas don't even minimally work until there's a critical number of users. Like if you're building a user-contributed database of any kind, it has to be useful at the small size before or else it won't ever grow to be useful at a large size. I feel like I've heard pitches that only talk about the large size. And that process is sometimes separate from the more "business" concerns of cost versus profitability. IDK, the author wasn't totally clear about what domain we were talking about here.
- yawnxyz 6y ago
  you just helped me understand that the key is probably to very quickly understand whether the thing you're building can remain sustainable without scale, or absolutely needs to hit scale so it can be sustainable, and like you said that hasn't been distinguished in this article... idk like in my head building a personalized black car service vs. building a bus-service fundamentally requires different conversations around scale b/c of the different domains