HBR IdeaCast Why Some Start-Ups Fail to Scale
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Dec 13, 2022 Jeffrey Rayport, a senior lecturer at Harvard Business School and co-author of a pivotal HBR article, discusses the hurdles startups face in scaling after initial success. He emphasizes the importance of adapting business models and addresses common pitfalls that lead to failure. Using case studies like Friendster and King Digital, he highlights the need for strategic planning and a strong organizational culture. Rayport also contrasts the growth paths of SoundCloud and Spotify, shedding light on the significance of effective market strategies for sustainable profitability.
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Scaling Phase Definition
- The scaling phase starts after confirming product-market fit, not necessarily high revenue.
- It involves a steep growth curve towards achieving "profit-market fit."
Extrapolation Phase
- Scaling isn't simply exploitation after exploration, it's "extrapolation."
- This middle stage requires bridging product-market fit with profitable scaling.
Startup Failure Modes
- Friendster's demise exemplifies failing by scaling too fast for supply.
- Other failures include insufficient capital, weak organizational culture, limited market size, or ineffective go-to-market strategies.