Spanish SaaS valued in millions collapsed due to wrong partner

Why starting without scalability wastes your effort

A Spanish entrepreneur with nearly twenty years of experience and several projects behind him launches an uncomfortable thesis: almost everything he built without the possibility of scaling was wasted time. "Don't waste time like I did on things that weren't scalable, because in the end the work is just as brutal," he summarizes. The paradox is that his best year, 2021, closed with very serious profits thanks to consulting: the archetype of a business that doesn't scale. He works alone. He has an insurmountable ceiling. And precisely for that reason, he issues this warning.

The advice, then, is not "don't start anything." It is start things whose production cost does not grow at the same rate as revenue. An idea that sounds like a business school manual but that almost no one applies before signing the first transfer.

The same effort with two abyssal ceilings

The catalog is broad: a motion graphics production company in 2002 that morphed into social media, affiliate websites, a B2B consultancy that funded its own product, a SaaS, and finally, independent consulting. "I made money with all of them. Some more, others just enough to survive," he admits. The difference wasn't in the effort. It was in the ceiling.

A production company requires a human team that grows with each client. Software sold a hundred times has a marginal cost close to zero. The work of building either one, he argues, is "brutal" in both cases. The production company, at best, gave a decent figure. The software, however, pointed to millions. That's the crux of the matter, and that's where the rosary of regrets begins.

The partner who blew up a SaaS valued in millions

The company that came closest to hitting it big was precisely a SaaS. It had long-term clients, total scalability, and a valuation in the millions with investors already interested. Everything fell apart. The problem wasn't the market or the product. It was the partner.

The company was set up without investors, with money generated by consulting and hours stolen from the day. It worked until the travel companion backed out: "He had cash needs far superior to what one should have when starting a business." Here the lesson isn't about scalability but character. A project that requires two years earning little breaks down sooner with a partner who needs monthly liquidity to sustain their lifestyle than with the numbers themselves.

The flip side: non-scalable businesses that pay well

Not everyone buys the thesis. Some argue that the obsession with scalability is the starting error: "Not everyone needs to become Amancio Ortega." The argument is not negligible. It prioritizes survival and salary. If you end up billing half a million annually and the setup can't do more, it's a dignified life, not a failure.

Non-scalable businesses, they defend, have a real competitive advantage: the competition is less fierce. No big player wants to enter to compete for the crumbs of a small market. And that space allows combining several legs: three or four medium-sized businesses provide a cushion that doesn't depend on a single revolutionary product. The assumed cost: you'll never be Elon Musk.

Why innovating is the worst advice for startups

One of the harshest arguments points directly against innovation. "Creating an innovative product that no one had is the WORST advice you can get," says one participant. Innovating increases development costs, lengthens the sales cycle, and multiplies the risk of creating a product looking for a market that doesn't exist.

The technical corollary points to over-engineering as a recurring problem: a participant recalls that a Fortune 500 company uses basic tools for certain departments without the building collapsing, and argues that simple works 80% of the time. Product brilliance doesn't pay salaries.

Concrete cases: from pallets to vans

Among the concrete cases, a variety of juicy data: there are businesses that wash pallets, others buy them for five euros per unit, others repair and resell them. The discussion also lands on luxury car dealerships in industrial parks, where a participant raises the hypothesis of money laundering, without any confirmation.

The best-told case is that of an individual who, working in public administration, saw half a dozen employees moving folders from one building to another every morning. He set up a van and offered the same service as a company. The work was identical. The margin, infinitely better. The idea was worthless; the context was everything.

The ceiling that doesn't break with hours

Even so, the conclusion doesn't quite close. Scalability gives you the option to hit it big and lose an entire company because of a partner with their own debts. Non-scalability gives you immediate freedom and stable billing that never multiplies by a hundred. Almost no one achieves both at once.

Is it worth risking two years of income for a ceiling that may never be reached?