Happy Sunday, everyone! A couple of weeks ago, an old friend shared an article that resonated with me, and that continues to percolate in the background processes of my mind. The gist is this: things cannot scale infinitely; in fact, there is a limit to both the magnitude and rate of scale, and ignoring that maxim can be lethal to the system (whether corporate, biological, etc) in question. Essentially, there is, “a proper state where things work well, but break when you try to scale them into a different size or speed.” This is not new, but it got me thinking about how we as a community of investors approach the market, the companies we back, and the firms we’re building.

My hunch is all of you think about this with respect to your own firms and the entrepreneurs you back. The key ideas here are so simple and distilled that I thought this was a great framework: 

• Rapid scaling breaks the systems you build. Always has, always will. 

• There is likely a point at which rapid scale is not necessarily the right goal. The equilibrium point, once reached, is important to take note of. As Howard Schultz of Starbucks wrote in his 2011 book Onward: “Growth, we now know all too well, is not a strategy. It is a tactic. And when undisciplined growth became a strategy, we lost our way.”

• That point of equilibrium, which the article describes as “the most convenient” size for a business, can be thought of as the rate at which customers think the business should grow. 

This idea of the “most convenient” size or growth rate for a company reflects my own belief that the notion of growth-at-all-costs is dangerous. It’s interesting to apply this idea to the companies we work with, and to the growth of our own firm. Where is that point of equilibrium, and how do we (a) achieve it; and (b) know it when we see it? 

I hope you find the article interesting and useful as a framework, and I hope you find the scale you’re after (without breaking everything in the process).