Scale is Coming

Who will dominate the Age of Scale?

20 years ago, George R.R. Martin published the first book of A Song of Ice and Fire. Things were different then. It cost millions of dollars to launch a startup, and expanding a company worldwide meant spending tons of money to find new customers.

Today, it takes a few thousand dollars to launch (and you can create a landing page and test your idea practically for free). Winning companies can achieve exponential growth and pay less and less for each new customer that finds them.

Those two facts mean one thing, and it’s our investment thesis at TheFamily: Scale is coming.

And yes, we can say it: right now, Silicon Valley is the scale factory. The Bay Area consistently turns out superior results in terms of scaling, and its infrastructure for doing so (based around money, talent, and ambition) is incredible.

But still, Silicon Valley doesn’t have a monopoly on scale and the tools needed to achieve it. We’re living in a world where anyone can be an Entrepreneur. All of the information, knowledge, contacts that you need are just a Google search or a Twitter DM away. When you need to learn something new — how to code, how to produce a decent-looking design, how to understand a financial statement, and all the other stuff that an Entrepreneur deals with — you just click over to YouTube, CodeAcademy, EdX…the list goes on.

Even technology itself is more and more accessible. Software is not only eating the world, it’s available to anyone who wants it. Putting together existing pieces in new ways can create value for a mass of customers. New services are popping up every day to help Entrepreneurs, and they cost less and less to use them. Today’s Entrepreneurs can focus on execution and growth, not on reinventing the wheel.

And yet, like we’ve been saying since we founded TheFamily in 2013, Europe is having trouble getting to scale. Even though there are great assets here — talented engineers and dedicated workers, users waiting for solutions to their problems, attractive living conditions, and more — there is a big problem. Scaling requires risk-taking and bold ambition — two things that Europeans struggle with. So while there are tons of incubators and accelerators to help create companies, very few of them help grow companies at scale, and many actually hurt Entrepreneurs and their ambitions.

That’s why TheFamily’s infrastructure is designed to search for scale, in all industries and in all sectors:

• We have an upstream position and develop real relationships with Entrepreneurs, pushing them to grow huge and not settle from Day One. There is no time limit to TheFamily — we’re there to provide support for the lifetime of the company, and even beyond.
• As Entrepreneurs show promise and real growth, our 40-person team pours even more time and effort into helping them, since they are the ones who will build dominant businesses in the digital economy.
• We reduce the frictions that everyone battles when trying to grow companies. That goes from finding the best talent at the right moment to incorporating without wasting time to communicating with the right people in the right way about a real problem and how you solve it. When the time is right, we mobilize capital, reducing the time and uncertainty involved in fundraising.
• And let’s be clear: if your business doesn’t find an ability to scale, we’re going to push you to kill it and start something new. Why waste your time on an idea that isn’t working, when you can take what you’ve learned and go make a killer product that everyone wants?
• And to be even more clear: not everyone needs to do this. TheFamily’s job is to help Entrepreneurs who want to build business that dominate on a global scale. If someone wants to run a local restaurant and be a neighborhood institution, that’s great — but it’s not our focus, just like that restaurant owner isn’t focused on building a worldwide leader.

This infrastructure optimizes the best opportunities, making sure they benefit Entrepreneurs, their users, and their investors. And today those opportunities can take over any industry, even those that think they’re immune from disruption.

Healthcare, government, energy, agriculture, construction and housing, and many more: all value chains are going to be attacked. This isn’t a prediction, it’s an inevitability. And the winners will be the ones who provide value not simply in terms of efficiency but also in terms of scaling new networks and interactions.

That’s why we’re proud to be supporting Agricool as they develop urban agriculture that takes advantage of technology in terms of growing produce, creating powerful network effects, and expanding career opportunities to people with no prior experience in farming. That’s why we were early investors in Heetch, pushing them to become not just a new option for on-demand transportation, but also a fun experience that benefits both drivers and passengers. That’s why we’ve loved encouraging the expansion of Menu Next Door from its beginnings as a Facebook group in Brussels to an international provider of quality, home-cooked meals connecting communities of chefs and diners.

All of this being said, when you look at business today the question becomes simple: do you prefer to attack and create new value, or to ignore things until the paychecks dry up?

We’re proud to be part of the attack, with hundreds of Entrepreneurs, dozens of investors and millions of users. So keep checking back with us — we’re going to be publishing regular articles here on how scale impacts various industries, explaining how we see markets and their opportunities thanks to that one simple fact: Scale is coming. TheFamily is here to push it forward.