Scaling a Service Business Is HARD

Originally written in October 2015 on the Jakt blog.

Starting a business is hard. Then you realize that getting started was easy, compared to step two: scaling.

My company, Jakt, is a service business. This makes scaling even harder; scaling a service business is much different than a company that sells physical products. Rather than revenue being tied directly to product sales, a service business has it’s revenue tied to the services you provide. These services are then connected to the people on your team providing the service. It seems like a simple equation: the more people you have = the more revenue your company can generate. Unfortunately, that simplicity is also where the challenge arises. This creates a cyclical chicken before the egg situation.

  • More People = More Overhead
  • More Overhead = More Work Needed
  • More Work = More $

At this stage, if there is a slower month with less work, we have potentially large losses. It’s a high risk, high reward type business. Service businesses do not typically have the high reward that a product company can have with an IPO (unless you are Shake Shack,

How I Deal with Uncertainty

For the first 2 years of my business I had a partner. At the end of 2014, he left and I had a very difficult decision to make: should I keep the business or move on to something else? I was so used to running the business with someone else that I honestly wasn’t sure if I could do it on my own.

For those of you that know me, you know that I can pretty much power through anything with hard work and grit. I’m absolutely convinced that if you don’t stop, you can’t fail. However, this was the first time in my life when my confidence in that belief was really questioned. I wasn’t sure if I could do it on my own. And I was scared that if I tried and failed, that meant I wasn’t good enough and I couldn’t lead and run a business. It was a very trying and emotional time for me.

Among all the uncertainty, I just kept running the business. And while I was “still deciding” whether to keep it or not, 4 months ended up going by. And then I was like,

Burnout is Real

I was basically drunk, even though I hadn’t had any alcohol. I couldn’t think straight and felt delirious. And then I crashed for 12 hours. I had hit a wall.

I slept less than five hours a night for the past month. And I’ve probably averaged five hours a night for the past few years while starting my company.

You think it won’t catch up to you; you’re different. But no, eventually it does. You may have held off longer than others, but sooner or later the crash comes.

For those that know me well, they know I can push myself to the limits and outwork most people.  Burnout is very real. I used to think it was bullshit and only people who weren’t mentally tough experienced it.  I was wrong. Sooner or later the body and mind just gives and you have to take a day (or a week) off.

I’ve recently become obsessed with preventing burnout. I want to get the most out of each and every minute while not pushing myself over the edge to burnout. It’s a very fine line. Quite frankly, it’s a challenge. But like most entrepreneurs,

From Frankl to Sinek: How to Reapply the Why

sinek

I’m a sucker for quotes. Amidst the flood of my Instagram feed, news articles, Presidential campaign speeches and more, discovering the famous German Philosopher Friedrich Nietzsche’s quip caught my attention:

“He who has a why to live can bear almost any how”

I came across this insight in Viktor Frankl’s Man’s Search for Meaning.

As his book’s title suggests, Frankl’s “why” was to share his experience and understanding about man’s search for meaning. This helped him endure the horror and escape the fate of the 1.1 million prisoners exterminated in Auschwitz, the network of Nazi extermination camps. He internalized his “why” to overcome the “how.” Believing his life had meaning and a greater purpose allowed him to persevere through hell-on-Earth. And as Frankl details in his book, those who survived weren’t the necessarily the most physically strong, but rather were those who had found a purpose and meaning for their life — a “why.”

Perhaps the reason I was so struck by this quote and story was it recalled Simon Sinek’s famous book and TED Talk, “Start With Why?” Sinek argues the best companies start with a Why.

Principles for Building a Company That Lasts

Recently I went on a trip to Portland to meet with Ziba, a design firm that was founded over 30 years ago. I’ve been running my development studio JAKT for almost four years now, and I thought I’d been in business a decent amount of time. Visiting Ziba made me remember that I’m just at the start of the journey.

On my visit I was keen to learn more about what enabled Ziba to be successful over such a long period because any firm that lasts more than 30 years is doing something right. Over the couple days I was there, I was lucky enough to spend a lot of time with Ziba’s founder. Here’s a few things I took away with me on what it takes to build a long-term business that can outlast the original founder.

Culture is the foundation.

A business that does not have a great culture founded on strong values will not last. A culture is what survives over time, past when the original founder started the company. Look at any great company that has been around for a long time and you will find a great culture.