Feb 8, 2015

5 lessons I learnt on startup scaling


Around 3-4 months back, I visited a new health themed restaurant to have lunch with my family. We were the only visitors that Sunday afternoon. The car parking lot right outside their entrance was completely free. We had a delicious and filling meal and the service was good too. They offered a nice spread (thali) with multiple healthy dishes. And the prices were very reasonable. We came back with happy memories of this place. I shared a short review of this restaurant with my friends in Facebook too.

Last week, we had some errands to run in the same vicinity where this restaurant is located. So we decided to have lunch there. To our surprise, there were no parking lots available. When we went inside, the restaurant was packed, with 2 waiters running around. I sat with my daughter in one of the free chairs, which a graceful elderly couple shared. Since we were hungry, we placed the order while waiting for the tables to free up. After around 15 minutes, a family left a table and we quickly grabbed the seats. The used plates were lying around for nearly 5 minutes and we had to "ask" the waiters explicitly to clear the table. There was a young lady, seated next to our table who was arguing with a waiter about the delay in serving food. It took them another 15 minutes to serve food for us. By then, my toddler girl was getting restless and wanted to run around. The even more surprising factor was that the menu had been changed, with reduced spread of dishes in the thali. The price had been doubled for less quantity of food. Though we gobbled up the food and would have eaten more, we were in no mood to top up our order, as we realized it's going to take ages for them to serve additional dishes.

When we reached the billing counter, there was still some more waiting time in getting the bill ready and making the payment. Overall, it was the exact opposite experience that we faced in the same restaurant, just a few months back. After this bitter experience, we decided not to go back there again.

This whole experience taught me five important lessons that startup founders need to keep in mind, as they scale:

1) Customers don't care whether you are growing or not. They expect the same level of service and experience that they received from you when you were a small, hustling startup in the proving stage.

2) It might be hard to predict the customer demand but there has to be some parameters that need to be well understood in order to meet the demand, as and when it arises. This is even more applicable for service based industries. What are the different situations/scenarios that would motivate a customer to reach out to your product/service? For instance, in the case of a health focused restaurant that's gaining popularity, they should be able to plan for certain demand triggering factors - a Sunday afternoon, no festivals/long weekend, first Sunday of the month, a New Year just started (early Feb is still new year!) when people make health based resolutions etc.

3) Understand the factors that are important to your target audience. These don't change whether you are small or growing fast. In this scenario, reduced portion sizes for higher costs, longer waiting times and service delays were the key issues that marred the experience. Healthy food is an important differentiating concept. But this factor alone wasn't sufficient. Also, more than the increased costs, the poor service levels really pushed us to the limits. I sensed the same feeling around.

4) It is not only important to understand your customers' needs but also to have a clear idea about your own strengths and limitations/constraints. In this case, since you know you have limited waiters, it would have better to stick to a fixed meal menu than provide for an ala-carte. Yes, ala-carte gives customers more choices and in the process, helps you to increase your prices but it leaves a bad taste if you are not able to meet the demands.

5) Last but not the least, one bad experience can render all your initial good efforts to wow your customers useless. Talk about the power of recency effect !

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