[wushupork]

Does a startup need to be scalable on day one? Would you consider Nintendo a scalable company? They started selling cards in the beginning - which isn't very "scalable" in your mind. Would you consider Samsung a scalable high-tech company? They started as a trading company and diversified into textiles, insurance, securities and retail before also adding electronics.

Or to use a more relevant example 37signals, their humble beginnings was a design studio which then had a string of unsuccessful products such as the usability report before finally hitting it big with BaseCamp.

Lots of retail based businesses are highly scalable through a franchise model. If they can nail down the playbook - they can license that and repeat with new locations.