Lessons in Entrepreneurship and Exponential Growth
To be an entrepreneur, you need to employ exponential thinking at all times
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What makes an entrepreneur? What makes one idea result in stratospheric triumph versus an idea that has been frittered away and lost to the realms of 'what could have been'?
As the CEO and co-founder of a successful global travel search site, I'm often asked what the secret to entrepreneurial success is. What made this idea work when others have failed? Certainly, this site wasn't the first business idea I had, but it was the only one where I really dug my heels in hard. The biggest thing that paved its way from an idea scribbled on a beer-mat to where we are now is the "entrepreneurial growth mindset' that my Co-founder and I adopted. It is this, more than anything else, I attribute to my company, making it across the line from pie-in-the-sky idea to a viable business prospect.
What is an Entrepreneurial Growth Mindset?
To begin with, let me indulge in an anecdote. As a teen, I loved to ski, and was at one point the British Artificial Ski Slope Champion. Always looking for ways to improve, I once created a device attached to my skis. It would slowly release washing-up liquid on the base of skis to reduce friction on artificial plastic slopes. Unfortunately, I failed to obtain a patent…if fact, it was not required, this "invention' having sunk without a trace. When I explained the idea to others, it was invariably pointed out that to use it would render me an idiot, a cheat or both.
Failed patents aside, I use this example to illustrate that entrepreneurial thinking is not inbuilt. It is instead an attitude, which can be acquired and adopted by anyone. It's worth noting that entrepreneurship is a very broad term. There's a lot of fluff and mystifying around it but it doesn't require you to set up a company and create the next-big-thing. Entrepreneurship can be displayed within your current team, your current role, in a business that isn't necessarily yours in name. In short, anyone can adopt an entrepreneurial mindset, and anyone can be an entrepreneur – your role and seniority are immaterial.
Incremental Growth vs Exponential Growth Thinking
When growing a business, either your own or one you are part of, disregard incremental thinking. To be an entrepreneur, you need to employ exponential thinking at all times.
What's the difference? Well, an incremental growth approach might take the strategy of gradually building users, increasing by a small number daily. Perhaps this increase would have been achieved by making more people aware of a product through, say, spending money on ads, then spending more money to gain even more users.
That's the premise of many start-ups, but this doesn't equal success. Increasing acquisition spend on increasing users is not highly sustainable if your product isn't what those users want.
Instead, exponential thinking would leave you to keep integrating and improving the product there is. This can be difficult, especially if you're under pressure from funders or management.
It's often a lagging indicator. In my company's early days, when we were a team of twenty, we were regularly urged to get some investment and spend it on advertising, rather than fiddling about with the product, making tweaks. Its growth has always displayed the "hockey stick' effect on graphs. It looks like it suddenly goes exponential, and we're often asked, "What happened there? What changed? Who did you hire?" The truth is: that's just reflective of geometric progression.
The more recent big change has simply squashed down the rest of the year. The blue line below illustrates exactly this; applying units of effort to exponential effect. Note that at the beginning that exponential effect is, in absolute terms, quite small.
*graph taken from Harvard Business Review's "How to Create an Exponential Mindset'
The mental image I have around this is of a Swiss mountain railway If you imagine the wheel turning and cranking in the next cog, you're doing the same thing each day, going higher and higher, and what happens when you get things right. That's why the fundamental nature of exponential growth is a squad, a team of cross-functional people who get together and achieve something, not through super-human effort, but through efficient working that is not burdened by interference (whether from investors or senior management). Exponential growth may be about x10 and not 10%, but it doesn't mean you don't achieve it in increments.
This thinking can be applied to any business, at any stage in that business' growth: you need not be a two-person start-up. It's important to say that there was no "golden age'at our beginning where exponential growth was more possible than at any other time. The restrictions faced in those early years were severe, though, granted, so were the opportunities. We were very small then, maybe with three or four software engineers. I'd now argue that it is now easier, at the size we are, to take steps towards our x10exponential growth goal than it has ever been in my organization's history. Exponential thinking and a growth mindsetare what keep us growing at pace, both then and now.
Three Ways to Start Exponential Entrepreneurial Thinking Today
1. Ideas are key. If you don't have any ideas as to how to kick-start exponential growth, I'll bet your colleague does. The source of these great, interesting ideas is immaterial. If your colleagues don't have those ideas, the internet does; there are heaps of ideas out there to aid in your exponential growth. A lack of original ideas is not a restriction on achieving an exponential mindset. It's what you do with these ideas that is important.
2. What does stop the exponential entrepreneurial mindset? FEAR. That is, the "Fully Evaluated Assessment of Risks'. You must get over FEAR. If you have that 10x idea, you may have people who just assume it's stupid, or they may well resent you for that 10x idea. Ideas where everyone agrees tend to be predictable and non-contentious and therefore not a source of value. The x10 ideas require persuasion, which is a problem but not a surmountable problem.
3. Talent or tenacity? It's amusing that as my company achieves a measure of success, I as a co-founder and CEO am presumed to have a measure of proportional impact on that success. People tend to attribute that in terms of talent, or intelligence or such like.
Rather, it's all about tenacity. In a 24-month period in my firm's early years, the following things tested my own personal tenacity: founder disagreements, potential investors telling us we had a lifestyle business (39 out of 41 pitches resulted in "go away, you idiots'), being in fairly significant debt personally, competitors zooming past us, at one point sleeping in my car for ten nights…it was not easy.
My Co-founders and I had to retain a vision, when metasearch didn't even have a term to explain it. And yet, it was tenacity that got us through. Tenacity will allow you to create something great and is key to the entrepreneurial growth mindset.