3min chapter

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How to Scale a Start-Up

HBR On Strategy

CHAPTER

Intro

This chapter delves into the intricate journey of startups as they move from inception to achieving profitability at scale. It highlights the significance of 'profit market fit' and the need for adapting business models to overcome internal constraints while expanding.

00:00
Speaker 3
Welcome to HBR on strategy. Case studies and conversations with the world's top business and management experts, hand selected, to help you unlock new ways of doing business. Growth is always good, right? It turns out even growth can be complicated. For young businesses, rapid growth can create more problems than they can handle. That's because startups aren't just designed to grow. They have to also figure out how to sustain profitability at scale. Harvard Business School's senior lecturer Jeffrey Rayport says that is a huge stumbling block for many new organizations. In this episode, he explains how to successfully transition out of the startup phase. He argues that that has a lot to do with an organization's cash flow and its ability to meet growing demand. But it also involves something Rayport calls profit market fit, when an enterprise becomes financially sustainable. This episode originally aired on HBR IdeaCast in December 2022. Here it is.
Speaker 2
Welcome to the HBR IdeaCast from Harvard Business Review. I'm Kurt Nickis. As a startup founder, it's got to feel exhilarating to see new customers streaming in and paying for your product or service. To get to this point, you've gone from conceiving your idea, building a small team, and getting those early funders to help you test it in the world. Considering how many startups fail, watching customers put money down can make you feel like you've slayed a dragon. But watch out. There is another dragon waiting around the corner. Even fast growing startups that get glowing reviews from customers and the media often end up flaming out. Despite all that positive momentum and growth, they're just not able to stay profitable at scale. This scale up phase of entrepreneurial ventures is a huge challenge. And today's guest has researched the stumbling blocks to long lasting lasting He says you can overcome them by expanding your business model while at the same time systematically removing internal constraints on growth. Jeffrey Rayport is a senior lecturer at Harvard Business School, and he's a co-author with professors Davide Sola and Martine Kupp at ESCP Business School of the HBRR Institute. He's a senior lecturer at Harvard Business School, and he's a co-author with professors Davide Sola and Martine Kupp at ESCP Business School of the HBRR Institute. He's a senior lecturer at the Harvard Business School of the HBRR Institute. He's a senior The Overlooked Key to a Successful Scale-Up.

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