Scaling is an integral component of high-growth entrepreneurship. A major challenge underlying successful scaling is synchronizing the growth in the product market and the growth of internal organization. This paper examines how a key choice of scaleups in the product market – speed of customer acquisition – interacts with a key choice in the organization design – scope of human capital – to jointly shape competitive advantage. Drawing from the strategy literature on capabilities and learning, the paper argues that firms that speed up new customer acquisition accept two fundamental trade-offs. First, they forego gains from specialization to increase their exposure to a diverse set of customers. Second, although they can capitalize on the resulting customer diversity by expanding the scope of the tasks, rapid broadening of task scope comes at the risk of higher employee turnover. The paper shows empirical support for these trade-offs using a novel dataset comprising monthly information on inflow and outflow of customers and employees for a sample of over 300 Business-to-Business Software-as-a-Service scaleups. Post-hoc analyses provide support for the underlying mechanisms (i.e., the trade-off between the depth and breadth of learning and capabilities) using measures for firms’ product market scope (i.e., scaling vertically or horizontally), their use of data-driven (i.e., analytics) tools, and their employee specialization (i.e., specialists or generalists).
