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Bessed is Not Scalable

September 29, 2006

One thing I’ve learned in the age of the Internet is that many people will talk to you, especially if it’s via e-mail on their own time versus you trying to force them to get on the phone with you. I’ve been surprised at the well-known people in a varety of industries I’ve managed to converse with simply by e-mailing them.

That said, as Bessed is launching, I told a few people about what we’re doing, and the opinion I heard most frequently is that the human-powered aspect makes it not scalable, meaning we’d need more and more people to run it as it gets bigger, which means more and more costs.

The ideal, especially from a venture capital perspective, and especially these days, is something that uses technology to do all the work and/or has a user-generated aspect to it, so that your company just supplies the tools and it grows by people providing content and then driving traffic to their content.

This is an understandable opinion, and the scalability question is one I’ve struggled with. On the other hand, when I read thing like this report on the DEMO show, which is supposed to showcase these hot Web 2.0 companies, but instead prompts the writer to exclaim “People, these are extensions, not companies!”, I can’t help but think that the race to be hands-off, let the user create the value, results in worthless ventures.

The strategy of “create something, anything, and let’s hope a bigger company buys us out so we don’t have to find a business model” is certainly one way to go about things. But doesn’t it make sense to build a company that has a larger value, even if that means it’s going to take a lot more work/time/money/people to get the product/service to a place where it’s at a high profitability?

From my understanding of the venture capital game, they’re looking for companies that they can throw a few million into with the hope of taking $30 million out down the road, but the things they invest in give you the impression that they just throw their money across 10 or 15 companies and hope one gets lucky. It’s sort of an insane diversification model.

So, when I hear the comment about Bessed’s scalability, it doesn’t discorage me as much as you’d think (or maybe as much as it should). There are very few successful companies that are spewing cash with small numbers of employees and a technology that does all the work. Even Google needs massive numbers of employees and facilities to run a technology that is insanely powerful but needs an insane amount of power.

If you’re going to be big and successful, scalability is an issue no matter what industry you’re in or what technology you’ve created. So Bessed will plunge forward, build, and see what happens. I feel good about our chances.

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