Investing in things that don't scale

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All I need is 100,000 users, paying $10 a year, and I’m a millionaire.

Scale is funny like that.

The last company I was at operated entirely this way. If we could just convert 1% of our 12,000,000 free customers to paid customers, we’d kill it.

People were reduced to numbers, and aside from this being an overly optimistic business strategy, it left me feeling hollow.

The work was meaningless. I was just pulling leavers and watching the numbers on a dashboard.

But there’s another way. A way to approach our businesses, our relationships, and the experiences that punctuate our lives.

It requires we do just one thing, reject scale.

For the past three weeks I’ve been traveling in Argentina. So far, I’ve stayed in two Airbnbs and one real family-run Bed & Breakfast.

And I’ve realized one important thing.

Bed & Breakfasts don’t scale.

AirBnbs however, do. And over the past decade we’ve all felt the effects that scale has taken on our experiences staying in them.

I remember hosts used to sit you down, with a laminated map, and walk you through each neighborhood in the city. They’d give you advice on how to get around, what museums were good, and which you could skip.

They transferred their local knowledge to you, in an extremely personal way.

Today, I’m greeted by a lock-box mounted to the front door, and an automated message sending me the code and the WiFi password.

My host doesn’t even live in the same country, let alone the same building that I’m staying in.

But it wasn’t always this way.

Airbnb used to talk about the 11-star experience.

It’s inspiring when you read it, but it’s a mirage. A figment of Brian Chesky’s imagination. Airbnb has become more expensive, less personal, and strangely I have to tidy up and pay a cleaning fee?

No one is getting mindfucked by Airbnb anymore. Scale has shattered any hope of that.

Today I’d like to share with you three stories illustrating the advantages you’ll gain by rejecting scale.

Not only will a rejection of scale help you build better business—and viral products—but they might just help you discover more meaningful life experiences as well.

Let’s get started.

1. Low effort, High Impact

Yesterday before checking into our Bed & Breakfast in the Argentinian countryside, I was sent a WhatsApp message from our hosts.

And it blew me away.

Claudia, the chef, started by introducing herself. I’ll let the screenshots speak for themselves.

That night we enjoyed a lovely communal dinner under the stars. Claudia grilled us spectacular Argentinian meats table-side, and poured us endless glasses her favorite wines.

We laughed, swapped stories, and shared this meal with our neighbors.

This doesn’t scale.

Claudia couldn’t send 1,000 messages out for dinner every night. She couldn’t host everyone, remember their names, and pour them glasses of wine. She couldn’t ask them about their backgrounds, and share stories of the Argentinian food culture she loves.

These are the magical experiences we remember.

The punctuation marks of our lives.

and they do not scale.

But when you think about it, she’s not doing anything that special. She’s just cooking us a meal, and chatting us up. She’s doing the same thing your mom does when you come home for the holidays. 

She’s treating you like family.

It’s not hard to do, but it’s an art form that’s forgotten in businesses seeking scale at all costs.

So when trying to build a community, a company, or an experience, remember that it only takes a modicum of extra effort to make an unforgettable experience.

2. Escape Competition

I have a good friend.

During COVID, his company was in trouble. They were a software business, serving hundreds of restaurants all over the world. Overnight, his business was decimated.

He had a critical choice to make. High touch, or high scale.

He turned to a mentor for advice.

Here’s what he was told:

He had to pivot, and when he did, he would differentiate by making it as hard as possible for his competition to copy him. Sacrificing scale, in order to become truly untouchable.

His solution was brilliant.

Leveraging the connections he already made in the restaurant industry, he began hosting private dinning events.

He would fly in the biggest name chef he could, and create an intimate experience guests would never forget.

He personally sent out the invitations, greeted guests by name, and bought the ingredients at the local farmers market.

He ran a $30,000 per night event like a mom and pop restaurant.

I can’t share the specifics, but over the past year, he’s certainly generated over $1M in revenue by completely rejecting scale.

By creating an ultra-premium and personalized experience, you escape the competition.

You won’t be copied, because the sheer effort required is daunting—but more importantly you can’t be copied. You’ve created something unique to you, you’ve imbued the business so deeply with who you are, that any attempt at copying you would fall flat.

It would be a cheap imitation.

The rejection of scale not only creates an unbeatable competitive advantage, but is the pathway to better products. Which is our third and final advantage.

3. Build the best product

The strange thing about Italy is, after visiting once, people just keep going back.

I never understood why, until I started thinking about scale.

Italy is a country that hates scale.

This is nowhere more typified then how they create traditional balsamic vinegar. Done properly, it takes decades. It cannot be rushed. Just one single ingredient and time.

It’s fascinating really.

Traditionally—in the Modena region of Italy—when a family had a baby girl, the balsamic making process would start.

Her father would take a single wood barrel and fill it with grape must.

On the child’s first birthday, he would take half of the grape must, and put it in a smaller barrel. He’d then top-up the original barrel.

Each year, he would take half of the mixture from the barrel before, filling a new smaller barrel.

The last barrel—as you probably guessed—is pure gold, and is ultimately gifted to his daughter’s husband on their wedding day.

That last barrel is real balsamic vinegar. I’ve only had it a handful of times in my life, and it’s truly a wonder. Nothing else comes close.2 

But this is the Italian way.

There’s a meticulous attention to detail, to tradition, and preserving the human element in everything.

That’s why they’re never going to be the richest, biggest, or most innovative country in the world. Italy lost the game of economics, but won the admiration of everyone on earth.

Italian products: art, design, food, and cars are the envy of all.

They sacrificed being the biggest, for being the best.

Good enough is the enemy

Now, back to my gripe with AirBnb.

The problem is, they’re not actually that bad. The service is convenient, it works, and most of the time my experience is good enough.

I always leave wanting to give 3-4 stars, but I end up giving 5 out of guilt. Nothing really went wrong, so how can I fault them.

But then again, nothing really went right either.

I wasn’t “mindfucked”, I wasn’t even pleasantly surprised, I just kinda “was”.

and that’s the problem with scale.

When things are good enough, we don’t do anything to change them. 

We keep sending out subpar dishes, we keep shipping subpar products, and we keep creating subpar experiences. The wheel keeps turning because nothing is really broken.

But that’s not what I want.

That’s not what any of us want.

We want to be blown away. We want to meet the chef after our meal. We want people to remember our names, we want to have wine with strangers, and have those strangers become friends.

We want a life reduced, and the human element restored.

Scale is for robots.

More Bed & Breakfast, less Airbnb.

—Zac

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