If there is one thing that makes life easier for a startup, it's a business model that scales. This is one of the key lessons for serial entrepreneur Wil Schroter, founder of GotCast.com, an American Idol meets YouTube site, and GoBig Networks.
"There's a big difference between growing a business and scaling a business," he said, in this short video clip where he offers up lessons to entrepreneurs, based on his experience. "Growing a business is what you do when you add people, as you add revenue. Every dollar you bring in, you hire another person to service that revenue. It’s a crappy model. I tried it, and it didn’t work out so well.
"Scaling is different from scaling a business. Scaling is when you create a product and it sells itself without additional support." To this end, Wil only gets involved in startups that show that scale is at the "core."
The two other pieces of advice from Wil are 1) have the biggest vision possible 2) avoid raising money and start with your own and get customers.
The distinction between growing and scalling is a good one. However, I don't necessarily agree about going for a big idea versus a small one. The essence of entrepreneurship is to go for what you are passionate about and what you are good at in order to be competitive regardless of the size of the opportunity. Mind you, not every business is going to be a blockbuster worthy of VC funding, but that does not make the venture less desirable. From a financial point of view, and contrary to common belief, there could be instances where owning 100% of a small pie is more financially rewarding than owning a small percentage of a big pie. Another advantage for those who think small is that they truely work for themsleves and not for VCs. As far as raising cash last by resorting to bootstrapping, I couldn't agree more with that wise advice.