Blog 3 Week 3 (ENT 670)
Rebecca Elizabeth Wiggins Cutler
Hey everyone. I’ll talk a little about Premature Scaling. For Entrepreneurial Strategy 670 Part 2, we are reading The Four steps to the Epiphany by Steve Blank. In this book we learn everything about the startup and failure of Webvan. I think this book is very boring, but there is a lot I’m learning at the same time.
Webvan was a dot-com company and grocery business that filed for bankruptcy in 2001 after just 3 years of operation. The company’s headquarters was based in Foster City, California, United States. Webvan was a business that delivered products to customer’s homes within a 30-minute window of the time they chose when ordering.
Webvan first began only delivering food groceries. As time went on, they expanded their products beyond food grocer items to electronic items, pet supplies, kid’s clothing, and OTC drugs. Webvan’s biggest downfall for what could have been potentially an extremely successful business, was they were guilty of premature scaling.
What is premature scaling? Premature scaling happens when your business expands faster than you or your product is ready for. Rapid market expansion is a great example of premature scaling. Another cause of premature scaling is over-staffing your employees and having unmanageable customer acquisition. It is evident that Webvan aggressively expanded to far too many cities without proving its business model in its first market.
Blank, Steve. The four steps to the epiphany: Successful strategies for products that win. 5th ed Colubia: Quad, 2013. Text.