“That will never scale!” (and other myths)
Entrepreneurs are really sensitive about being told their startup is “not scalable.” That’s why pitch decks are full of good news and growth curves. But the most unique, and investable, part of a story is often the difficult, non-scalable stuff startups did at the beginning (or still do).
So this is why I need to talk about bananas.
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This post is not (just) about bananas.
If you’re a founder trying to grow a startup and pitch it for funding, it’s natural to think startups are hard. But you are wrong. Because what’s really hard is trying to sell bananas.
Bananas spoil two weeks after they’re picked. Imagine starting a banana company in 1895. You need to clear jungle to grow bananas. They have to be shipped quickly to the coast by rail. By the way, you have to build that railroad. You need favorable winds because your ships have no refrigeration and are powered by sail. At your destination you have only a few days to get your bananas to stores before they rot.
So this is a product that depreciates to zero in two weeks and requires a complete vertically-integrated operation to ship a single banana.
Let me introduce you to Samuel Zemurray, aka “Sam the Banana Man.” He was an American entrepreneur based in the US Gulf Coast. In 1895 he discovered this exotic new fruit which was just being introduced to American consumers.
To give you a sense of just how interesting his story is, I will not even mention him overthrowing the government of Honduras or helping to pass Resolution 181, which led to the creation of the state of Israel.1
One night, Zemurray noticed dockworkers throwing away bananas that were too ripe to be sold, but still edible. Called ripes, these bananas were considered garbage, too far gone to make it all the way to markets in time.
With his life savings of $150, Zemurray bought the discarded ripes to great chuckles from United Fruit, the company he bought them from. I’m sure they were shaking their heads and saying, “poor guy, that will never scale.”
The clock was ticking. He had only a few days to sell his bananas, so he loaded them onto railcars. Because he couldn’t cart them to each store along the way, he telegraphed ahead and had merchants wait to buy bananas from the side of the train. Prices were cheap, and fell with each passing stop, but he made a profit.
He continued this high-stress banana run, eventually saving enough money to buy his own ships and plantations. Plus getting involved in the Bay of Pigs. You really need to read his story.
Tell your non-scalable story.
The story of Sam Zemurray and the banana industry is a reminder that things that don’t scale can lead to things that scale. Instead of rushing to say what’s working perfectly, a better pitch isn’t afraid to talk about the hard stuff.
Doing non-scalable things builds credibility.
How did you and your team discover your problem? Most entrepreneurs don’t ever mention this. Sam Zemurray hung out with dockworkers in Mobile, Alabama and found discarded fruit. If I were investing in banana startups I’d invest in the person hanging out at the docks not buried in spreadsheets.
What’s the origin story of your problem? How did you find it and what did you do to immerse yourself in it? Like getting out of the building and spending time with customers, or sleeping in a banana-filled train car?
When founders think about describing a problem they mostly worry about making it seem big. But it’s more important to show you have a deep understanding of the problem. That passion and knowledge is what helps build a successful company.
The less obvious the problem, the more unique your insights are
The non-scalable things you’ve done make you more credible, not less
How did you come up with your solution?
Sam Zemurray’s problem was he had to sell bananas in under five days or they would just be props in a slapstick comedy routine. His solution was: low price, a unique supply chain, and lots of hustle. What’s yours?
When you talk about your solution, it’s not just a sales pitch for what you’ve built. You should talk about the unique insights that led you to develop your unique solution. Here are two contrasting examples:
“The intake process at a vet is really cumbersome. Introducing our AI-powered mobile intake app.”
“We spent months with hundreds of vets and realized how difficult and stressful the intake process is for pet owners. We think conversational AI solves this problem by making communication better without adding additional work.”
The first one sells the product. The second one tells a story about a unique approach and how they got there.
Also, don’t be afraid to talk about failure paths. Your solution isn’t unique if it was easy and obvious. Just showing a demo does not explain all the other possible solutions you discarded.
Don’t undersell the effort (hours, dollars) you spent earning your solution, even if that work would never scale
Talk about failed solutions too, it shows your solution was not obvious
What non-scalable things has your team done?
Everything I’ve said also applies to your personal origin story and those of your team. Founders, especially first-timers, struggle to know how to write their bios. But even if you don’t have the “right credentials” you can still have a convincing origin story.
Focus on what led you to care about this problem, to go that extra step and dig that little bit deeper. A great way to talk about your team is describing the work you did to build the early prototype or MVP, assuming you actually did the work. It’s a team origin story where you can show not only hard work but an ability to learn.
Highlight non-scalable things you and your team have done in your bios vs just listing degrees and work experience
Include early work you did together in this company, not just prior experience
How to talk about early traction.
In my Good Neighbors pitch deck, I made this Traction slide for a pre-revenue company.
It has no sales numbers but includes non-standard metrics like knocking on doors and # of tools borrowed.
Traction shouldn’t be seen as a quarterly earnings report. It should lead to in-depth conversations about the future, e.g. acquiring customers, growing your product metrics and revenue.
The inflection point where things start to take off may not happen for awhile. But that hockeystick growth probably won’t happen without you doing non-scalable things at the beginning. Make sure your traction slide talks about those things and answers the question: why does this traction matter?
Own the hard things.
Don’t be in a rush to pitch your startups as a well-oiled machine generating good news month over month. Talk about the hard things you’ve done. If you’re building something new, this is where you’re living, and where innovation happens. Own it! It will feel uncomfortable, like you’re flouting investor expectations and inviting someone to say “that will never scale.”
It won’t be easy. But it’s still easier than selling bananas.