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Naval Ravikant, a brilliant entrepreneur and investor, has a powerful message for anyone starting a business: Stay small until you figure out what works. It may sound counterintuitive in a world where everyone wants to scale fast, but this advice is rooted in a key principle—find your winning formula before you go big.
Steve Blank, a professor at Stanford and successful entrepreneur, describes a startup perfectly: It’s a search for a scalable and repeatable business model. And until you find that model, staying small and lean is crucial. You’re in the exploration phase, searching for the right approach, the right product-market fit, and the strategy that will take your business to the next level.
Why Staying Small Works
When you’re small, you’re flexible. You can experiment, make mistakes, and pivot without the huge financial burden of a large team or complex operations. Staying lean means your expenses are low, giving you more room to breathe and learn before taking the big leap.
This is the core of the Lean Startup movement—test, learn, and adjust until you know what works. Once you have that, you can scale with confidence.
Examples of Entrepreneurs Who Stayed Small Before Scaling
Take Paul English, co-founder of Kayak, the travel search engine. Before Kayak became a massive success, English and his team spent years refining their product. They stayed lean and focused on getting the user experience just right. Once they cracked the code, Kayak exploded onto the scene and became one of the top travel sites globally.
Another example is Steli Efti, founder of Close, a sales-focused CRM. Efti didn’t rush to grow his business. Instead, he focused on finding the right product-market fit and developing a tool that truly helped salespeople. By staying small, Close was able to experiment and evolve without the pressure of rapid expansion. Once they found their sweet spot, the company scaled efficiently and successfully.
The Search Phase is Critical
Both of these entrepreneurs exemplify Naval’s advice: don’t rush. The search for a scalable and repeatable business model is the most important part of building a successful company. If you stay lean, test your ideas, and only scale when you’ve figured it out, your chances of long-term success skyrocket.
So, if you’re in the early stages of your startup, embrace the search phase. Stay small, stay flexible, and don’t be in a rush to scale. Once you’ve found what works, the sky’s the limit.
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