Latest news with #blitzscaling
Forbes
5 days ago
- Business
- Forbes
How Scaling Deep Beats Scaling Up Fast — Lessons From Uber And Routematic
In a business world obsessed with blitzscaling, one CEO is advocating for a different approach. At a recent executive event hosted by venture capital firm Shift4Good, Sriram Kannan, CEO and cofounder of Routematic, told his peers that his company's growth has come not from chasing new markets, but first mastering a few. Routematic has deepened its service in just five Indian cities, building density, loyalty, and profitability before expanding further. The message surprised his peers who assumed growth is about expanding the customer base, not deepening the current base. Kannan's message jars in an era where the default playbook is Silicon Valley orthodoxy: raise capital, expand everywhere, dominate markets. Scaling deep doesn't mean slow growth; it means more measured and resilient growth. Kannan's argument warrants attention, especially given the mounting evidence that rapid expansion can destroy more value for companies and communities than it creates. The Allure of Scaling Up and Fast Almost every startup founder dreams of explosive growth and a lucrative exit. The formula is straightforward—raise capital, expand geographically, dominate markets. But fast geographic scaling multiplies complexity—regulatory environments, customer expectations, cultural norms—and often requires huge capital infusions before revenues catch up. Yet this approach regularly destroys companies. Consider WeWork's spectacular implosion in just nine years. The company expanded from one New York office to 528 locations across 29 countries. When it attempted to go public, investors discovered a company hemorrhaging cash with no path to profitability. Instead of a lucrative IPO, WeWork filed for bankruptcy. WeWork isn't an outlier. Rapid growth creates predictable problems: executives lose operational control, customer service deteriorates, and organizations become overextended and unstable. Companies get ahead of their skis, moving faster than their ability to manage effectively. The Alternative: Scaling Deep Some markets reward depth over breadth. Scaling deep means building stronger ties within existing communities rather than rushing to new geographies. Researchers Dr. Suntae Kim and Dr. Anna Kim examined this phenomenon through two Detroit-based business accelerators. One pursued rapid geographic expansion; the other focused on deepening local relationships. Their research, published in the Academy of Management Journal and the Harvard Business Review, revealed that ventures scaling deep created jobs, products, and spillover effects that stayed local and addressed community-specific problems. Deep scaling encourages companies to use resources efficiently—either by reaching full capacity or finding creative ways to repurpose existing assets. Deep scaling is often more cost-effective than geographic expansion, leaving more cash for reinvestment rather than requiring external funding. This approach can actually contribute more to sustainable competitive advantage than spreading thin across markets, as competitors find it more difficult to penetrate the market. Uber vs Routematic The contrast between Uber and Routematic reveals two fundamentally different approaches to growth—one focused on operational depth, the other on rapid geographic breadth. Uber is a consumer-facing platform that connects individual riders with drivers for on-demand travel. Its core business is a real-time marketplace, matching unpredictable demand (from airport trips to nightlife to daily commutes) with flexible supply. Uber does not serve enterprise clients with known scheduling needs, but rather operates in a volatile consumer space. Uber exemplifies the Silicon Valley scaling playbook. After launching in 2010 with $1.25 million in seed funding, Uber expanded to five U.S. cities within its first year. By 2014, it was launching in one new city every single day. This hypergrowth strategy required massive capital injections. Prior to its IPO in 2019, Uber had raised over $12 billion, although much of its capital injections are undisclosed. To put color on this number, Uber made a profit for the first time in 15 years in 2023. Uber CEO said in a 2023 earnings call that the first-ever profits proved 'that we can continue to generate strong profitable growth at scale.' Today, Uber operates in more than 71 countries in more than 15,000 cities, yet many markets remain unprofitable. Routematic, by contrast, is an AI-powered enterprise transportation services firm that partners with information technology companies to shuttle employees to and from work. Its clients, like Infosys, operate around the clock, with as many as 49 different shift start times in a single day. Routematic uses real-time traffic data and AI-driven routing to ensure employees arrive punctually and safely. It operates as a B2B service that companies purchase for their workforce—offering predictable demand patterns, recurring revenue, and optimized fleet management. Routematic's growth strategy was the opposite of Uber's. Routematic mastered local markets before expanding outward. Starting with just 10 cars and one client in Pune, the company spent two years optimizing fleet utilization across multiple corporate clients with different shift patterns. It expanded only after it was profitable in Pune by expanding next to Bangalore and then to other cities. Today, Routematic operates in just five Indian cities. Its measured growth to date has built a robust foundation for further expansion. As Routematic grows, it will continue to build its organizational assets, rather than scaling so quickly that it puts them at risk. The contrast between Routematic and Uber is stark: Even though Routematic operates in only 5 Indian cities for fleet services relative to Uber's 110+, Routematic has one-fifth of Uber's total Indian ride volume. Whereas Uber is unprofitable in many of the cities it operates, Routematic ensures profitability in every location it operates. Its deep understanding of local transportation patterns, consistent service delivery to corporate clients, and disciplined expansion strategy have enabled high asset utilization and strong margins. Two companies, two models. One is focused on transactions and scale; the other on relationships and resilience. The Architecture of Scaling Deep Routematic's success stems from three key innovations that would be impossible with rapid geographic expansion. These are systemic enablers of profitability for deep scaling. 1. Grow from profits, not investors' cash: Uber's approach to funding expansion relies on massive venture capital infusions, whereas Routematic operated profitably in Pune before expanding to Bangalore. As CEO Sriram Kannan explains: "You have to improve your the knife, then you can deploy it in any other city." This approach builds confidence among employees, customers, and investors while eliminating the financial risk of burning through investor capital across unproven markets. 2. Master one market before opening others: Uber's operational model prioritizes rapid market entry with standardized processes that can be quickly deployed across new cities, often learning and adapting on the fly while managing the complexity of hundreds of simultaneous markets. Routematic took the opposite approach: starting with just 10 cars and one client in Pune, the company faced a utilization challenge where corporate transportation demand is "lumpy"—many employees need rides simultaneously, leaving vehicles idle between peak periods. Kannan spent two years aggregating multiple corporate clients with different shift patterns, to achieve higher vehicle utilization rates throughout 12-hour shifts. This deep understanding of local transportation patterns would have been difficult with rapid multi-city expansion. 3. Focus on relationships, not transactions: Uber treats each ride as a separate transaction, with drivers competing for trips across multiple platforms and bearing the income uncertainty of gig work. Uber customers and drivers choose between multiple apps simultaneously, including Ola and Rapido, demonstrating little loyalty. Instead, Routematic focuses on relationships with businesses and drivers. It offers reliable transportation services to a business, so the business increasingly relies on Routematic as an increasingly sole provider. Routematic also guarantees drivers 12-hour shifts regardless of trip volume. This creates a stable income foundation that is a magnet for the best drivers, while enabling sophisticated route optimization across multiple clients. Routematic has built intimate understanding of local market conditions, while building strong driver loyalty. The Community-Wide Benefits of Scaling Deep The benefits to communities of scaling deep should not be underestimated. For drivers, Routematic offers a stable income, whereas Uber offers gig work. Routematic builds relationships and networks with its customers and drivers, offering stable service for businesses and stable income for drivers. This provides drivers a much better standard of living for a sustained period of time. Further, the Routematic approach opens up opportunities to reduce its environmental footprint. The efficient routing service means that cars are filled to capacity, both taking employees to their shift and taking them home. Efficient routing eliminates "dry runs" (empty vehicle travel), reducing both emissions and congestion. As well, the 12-hour shift has permitted rapid electric vehicle adoption. Routematic has adopted a fleet of EVs, which they are rolling out in the National Capital Region (Delhi). Routematic leases its EVs to drivers, absorbing higher upfront costs while benefiting from lower operating expenses. Scaling Deep Means Higher Margins--not Lower Profits It's easy to confuse a step-wise, measured growth with lower profits. In fact, it can be quite the opposite. Scaling deep challenges fundamental assumptions about speed and success. Instead of measuring progress as the number of customers or transactions, scaling deep measures success through operational excellence, customer satisfaction, and community impact. Routematic has achieved 8-10% month-over-month revenue growth while maintaining profitability. By scaling deep, Routematic has built a sustainable competitive advantage, while also contributing to stronger communities. This dual focus on corporate performance and community resilience creates a compelling strategic advantage for any firm. As venture capital grows scarcer and more expensive, scaling deep offers a compelling alternative to traditional expansion strategies. It delivers operational excellence, employee stability, customer loyalty, and market resilience. Sometimes the smartest path to growing the firm and its profits means going deeper, not wider. I developed this story, based on insights gained through a presentation to Shift4Good CEOs, a private interview with Routematic CEO Sriram Kannan, and additional desktop research. I chair Shift4Good's impact committee, but have no financial interests in its investments. Fact checking by Minali Giani.
Bloomberg
20-06-2025
- Business
- Bloomberg
Silicon Valley ' s ‘ Tiny Team ' Era is Here
In the era of startup ' blitzscaling,' which lasted roughly from Facebook's IPO in 2012 until WeWork's bankruptcy filing in 2023, market capitalization and total capital raised were prized metrics. The ultimate milestone was reaching 'unicorn status' — a $1 billion valuation that was often accompanied by rapid hiring. These days, bragging rights are going to entrepreneurs who keep headcount the lowest.
