Why building bigger from the start is the smarter bet

Fast Company

5 hours ago

For two decades, conventional startup wisdom followed a simple mantra: Build one killer feature, win a devoted audience, and expand later.
Startup luminaries like Paul Graham and Sam Altman championed this approach. They argued it was better to start small, focus narrowly, and earn the right to grow. Many of today's most iconic companies followed this path, launching with a single tool that eventually evolved into a suite.
But what if the problem you're solving doesn't fit neatly into one feature? What if starting small just means setting yourself up to rebuild everything later?
In an increasingly complex world, customers no longer have patience for point solutions or disconnected workflows. They expect products to understand how their systems work and to match that reality with integrated, end-to-end experiences. That's why a new model is emerging.
The rise of the compound startup
The 'compound startup,' a term popularized by Rippling CEO Parker Conrad, describes a company that builds multiple, deeply integrated products from day one. In a January interview with Y Combinator CEO Garry Tan, Conrad explained that the goal of a compound startup is to address systems of problems, not just isolated pain points.
It is a model built for how people and businesses actually operate. Most business functions don't exist in a vacuum. In Rippling's case, payroll connects to benefits, onboarding, compliance, IT provisioning, and more. Customers don't want to piece together tools to manage each of those functions. They want a system that works together out of the box.
At april, we didn't just stitch together a few tax tools. We built an entire suite of products from the ground up. Filing, forecasting, planning, optimization—all designed to work in sync, and all tailored to distinct taxpayer segments like investors, small business owners, gig workers, and everyday banking customers.
We chose to build in tax, one of the most complex, fragmented, and regulated categories in fintech, because the problem demanded a compound solution. Tax laws shift constantly. Each state and jurisdiction operates differently. We could have licensed a white-label provider and shipped faster. Instead, we built our own tax engine, became the first new nationally licensed e-file provider in more than 15 years, and now operate a full-stack platform with fewer external dependencies. That decision has given us speed, adaptability, and product depth our partners can't find elsewhere.
Why compound startups make more sense today
The shift toward compound startups isn't just philosophical. It's practical.
Today's challenges rarely sit in one lane. Managing personal finances touches tax, payroll, planning, and compliance. Running a business involves HR, inventory, scheduling, payments, and reporting—all at once.
Point solutions force users to become their own system integrators. They juggle multiple tools, manage disconnected data, and learn mismatched interfaces. Compound startups flip that script. They build coherence into the product architecture itself and unlock several key advantages:
Unified data: Integrated platforms break down silos and allow smarter decision making across use cases. At april, data moves with consent across workflows, powering real-time tax insights, planning simulations, and filing automation.
Shared UX patterns: A consistent interface builds user trust and reduces friction. Most april users complete their return in under 23 minutes—a far cry from the 13-hour average reported by the IRS.
Durable switching costs: When workflows span multiple integrated tools, the platform becomes stickier and more valuable as a whole.
Platform-wide network effects: When more users adopt more of the suite, value compounds across use cases.
Compound startups don't just solve tasks. They solve workflows. And that makes them more durable, more useful, and more differentiated in crowded markets.
The long-term payoff
Of course, this approach comes with tradeoffs. Building multiple products in parallel strains focus and burns capital faster. It forces earlier decisions around architecture, compliance, and team structure. It's not the right move for every startup.
But for founders tackling systems-level problems, the risk of starting too small is greater. You can't increment your way to coherence. We've seen the payoff at april. Our compound architecture has allowed us to respond faster, deliver richer experiences, and scale without compromise.
The future is compound
The startup playbook is evolving because the problems we're solving have evolved. Systems are messier. Users expect more. Point solutions can't keep up.
Founders shouldn't be afraid to build big from the start. The world doesn't need more single-purpose tools. It needs products that actually solve the full problem. The future isn't just compound. It's integrated, full-stack, and built to scale from day one.