Scalability

The ability to serve many more customers without costs rising proportionally.

Example

Serving 10,000 users on infrastructure that costs barely more than serving 1,000.

Important

Scalability is what makes venture returns possible. If every new customer needs another person hired, the model is a services business.

Related terms

• Startup — A new company built to grow fast by finding a repeatable, scalable business model. The defining feature is the search for scale, not the age of the company or whether it uses technology.
• Gross margin — Revenue minus the direct cost of delivering it, as a percentage of revenue.
• Unit economics — The profit or loss on a single customer, once you strip out fixed costs.

Lessons that explain it

• What actually is a startup? — A startup is not just a new company, and it is not the same thing as a small business, an agency or freelancing. The difference decides how you fund it, how fast you must grow, and what counts as success. (12 min)
• Gross margin — Why software gets funded and services usually do not, and why a low-margin business cannot grow its way out of trouble. (10 min)

All 176 terms in the Founder glossary