Mycroft: On-demand startups need 5-10x minimum scale before unit economics focus
Frank Mycroft · 20VC: When To Transition From Growth to Profitability & The KPI's of The On Demand Economy with Frank Mycroft @ Booster Fuels · Jul 8, 2016 · at 12:25
Frank Mycroft is the founder and CEO of Booster Fuels. He provides a framework for when on-demand startups should transition from pure growth to unit-economic profitability.
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“Take what you think is your minimum viable scale, right? That the minimum level at which you've got the density to make money on a consistent basis. And you should probably multiply that number By five to 10.”
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More from Frank Mycroft
Mycroft: Copying successful business models into new verticals leads to failure
“I think that any entrepreneur, any starting company that is trying to simply apply what was a successful business model in a different space to their new vertical is setting themselves up for failure.”
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“This allows us vast levels of efficiency in our operations that we wouldn't have if we were trying to do this purely on demand, and that helps us keep our costs very low, and it lets us actually be more affordable than a gas station.”
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“If you focus too soon on the unit economics, you may never get to the scale and the growth that you need for that engine to actually continue on its own.”
Mycroft: Gas station distribution is the primary barrier for carbon-neutral fuels
“And what's interesting about these solutions is that the number one thing they struggle with is distribution. It's very hard to get into a gas station. It's very hard to get your solution blended into the mix. And no gas station wants to put in another undergr…”
Mycroft: Starting a company is irrational unless driven by deep obsession
“You should never start a company. It's actually a pretty irrational thing to do from a probability of outcome perspective, so only do it if it's rubbing at your soul and eating at you every day that you're not going out and creating this idea.”