When Do Startups Scale? Large-scale Evidence from Job Postings

Abstract

Scaling at the right time is a critical challenge for high-growth startups, but little is known about this timing due to a lack of empirical measurement. As startups formally hire professional managers and sales personnel to accommodate for exponential growth in employees and customers, we propose that the timing of scaling can be measured using the first manager and sales job postings. Leveraging a dataset of online job postings, we show that startups, on average, begin scaling four years after founding. We also find that, despite potential first-mover advantages, early scalers are more likely to fail but not more likely to achieve an IPO or a large acquisition. We theorize that this increase in failure occurs because scaling early can curtail experimentation on product-market fit.