[MUSIC] So what is scaling? Well, NASDAQ has published a report called making it big, scaling strategies for social enterprise. And in there, they very succinctly define scaling as increasing the number of people who benefit from a social innovation. There are many different models of scale and we're going to talk about a lot of them this week. At the same time as many organizations increase the number of people that they serve. They also find that there's a dynamic pressure to increase the number of products and services that are provided to the people they serve. So scaling can sometimes have a multiplier affect where you begin by just scaling the volume of one single product or service. But then at the same time, you might also find that you're adding on additional products and services, to serve your customers and clients. So what's the big deal with scaling? Why is everybody so excited about it? Well the social enterprise movement has had a very heavy emphasis on scaling, a sort of passion for scale if you will, what's that all about? Well, I think it's really yearning for more efficiencies in the market of social innovation. Historically, there's been a lot of duplication, replication, kind of inefficient allocation of resources. And so the field of social enterprise is really looking for models that can create more efficiency, economies of scale, if you will. And ideally, hopefully serve many many more people at a lower cost per product or service delivered but what does it really mean to scale? Well scale can take many different forms and types in social enterprise. And we see organizations like change.org, Toms, Brack, and Grameen Bank have all already achieved tremendous levels of scale. The point is that scaling actually takes a long time and a lot of iteration. You can't just go from idea to scale in one fell swoop, why do you have to actually be careful about scaling? Well in the report called the Start-Up Genome the authors found that 74% of high-growth text start-ups failed because they scaled prematurely. So, you actually can scaled too soon and just like, for example, with children, enterprises have to go through stages of development. You have to learn to crawl, before you can walk, before you can run and so, what do you actually need to figure out before you're ready to scale? You first must have a proven need, it's surprising how many entrepreneurs actually enter into a market without a very precise understanding of the client or the client's unmet need. And it can sometimes take years too figure that out with the kind of precision you need before you're ready to scale. The second thing you need to figure out is a business model that also can take years of iteration. As we've looked at in previous classes, building a business model and understanding your financials takes a lot of different perspectives. A lot of iteration, and figuring out what I call the Rubik's Cube of your business model. So you might be thinking about your pricing, you might be thinking about driving revenue, reducing cost. All of that can also take years to figure out, the third thing is you have to have the systems ready for scale. It also takes organizations a long time to build the right team for scale, the right processes, the right culture, the right know-how. And if you try to scale before you have these three things in place, your probability of failure is actually much, much higher. Than if you wait to scale when it's appropriate time for your organization. When you are ready, the scaling is really about bringing additional capital and additional distribution to your idea. [MUSIC]