What does "scalable" mean?
"Scalable" means a business or system can grow without proportional cost increases. Here's what it really means and why investors care about it.
What it means
Able to grow in size or output without requiring proportionally more resources. A scalable business can handle significantly more customers without significantly more cost per customer.
"Is the model scalable? Can it support ten times the users?"
"Software is scalable in a way that manufacturing isn't."
Why it matters
Investors love scalable businesses because growth becomes increasingly profitable. Once the infrastructure is built (a software platform, a delivery system), adding more customers costs relatively little.
Scalable vs non-scalable
- Software: highly scalable (one more user costs almost nothing extra)
- Restaurant: less scalable (more customers require more staff, space, food)
- Consulting: less scalable (more clients require more consultant hours)
As jargon
"Scalable" became a buzzword in startup culture. "Is it scalable?" is asked even of things that clearly are or clearly aren't. Use it precisely to avoid sounding like you're filling space.
What does "scalable" mean?
Able to grow in size or output without requiring proportionally more resources. A scalable business can handle significantly more customers without significantly more cost per customer.
"Is the model scalable? Can it support ten times the users?"
"Software is scalable in a way that manufacturing isn't."
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