A study of over 32,000 startups suggests that scaling too early can derail startup success.
October 02, 2024
Jonathan Kitchen/Getty Images
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Silicon Valley often touts rapid scaling as the best strategy for achieving startup success. However, new research reveals that scaling early, particularly within the first 12 months, significantly raises the risk of startup failure, especially for two-sided platforms. The key takeaway for entrepreneurs: Be cautious with early scaling and prioritize a culture of experimentation. Taking a “slow-and-steady” approach to scaling may provide a more sustainable path to long-term success.
In the fast-paced world of entrepreneurship, success seems to hinge on knowing when to seize the opportunity to expand and when to bide your time. The question is: Does the “fast and furious” or “slow and steady” approach to scaling reign supreme in the race to startup success?
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J. Daniel Kim is an assistant professor of management at the Wharton School. His research is at the intersection of entrepreneurship, strategy, and labor markets. He has conducted studies on the drivers of venture scaling and performance, acquisitions of startups, and the broader role of entrepreneurship in the US economy.
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Saerom (Ronnie) Lee is an assistant professor of management at the Wharton School. His research examines how firms acquire and organize their diverse employees at the early stage of their life cycle and how they adjust their organizational design to meet the needs of their distinct challenges in venture scaling.
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