Once an entrepreneur has gained some traction, product-market fit, and the beginnings of a repeatable customer acquisition process, one of my favorite exercises for them is the 10X scale. The tenet of this scale is the idea, “What would the business look like at ten times its current scale?” So, we’re talking ten times the size, ten times the revenue, ten times the customers, and ten times the opportunity in the market.
As entrepreneurs, it’s easy for us to get caught in the weeds, to focus on the thing that’s right in front of us. It’s also easy to neglect allocating time to the bigger picture, to where we’re going, and what it will take to get there. This 10X exercise is designed to slow down our day-to-day tactical work and really back up to look at it from a longer horizon.
Some questions to ask when doing the 10X exercise:
What does our employee org chart look like with ten times the scale?
What will our customer mix look like at ten times the revenue?
What types of funding sources and capital stack will I need to fund the growth of the business to achieve this scale?
What types of partnerships, infrastructure, and geographic locations will be necessary to 10X the business?
Often, entrepreneurs think more linearly, such as where they want to be next quarter or the quarter after that, maybe as far as their plans for the following year as part of annual planning and budgeting. However, the exercise of thinking about being 10 times the size, about having 10 times the customers, and about having 10 times the revenue forces a longer-term perspective on things. What I’ve found is that entrepreneurs, when going through this exercise, often see that certain executives on the team might not be the right people for 10X the scale. They might be suitable for doubling in size, but when you start thinking about 10X in size, it’s a gut check, and there’s a sense that this person might not be the right one. When you start looking out at 10X the scale, you might realize that we need more internal management programs, more focus on employee development, and more emphasis on developing our internal skills so that our employees can grow as fast as the business grows.
One of my favorite entrepreneurial adages is, “The startup only grows as fast as the entrepreneur grows.” In the companies that I’ve seen achieve the most success, the entrepreneur has grown as fast, if not faster than the business, and continues to do so for many years.
Once entrepreneurs achieve product-market fit and have the start of a repeatable business model, they should undertake the 10X exercise. Thinking through what the business would look like at 10 times the scale, 10 times the revenue, and 10 times the customers is crucial. Going through this exercise will help foresee some of the challenges, start conversations on potentially challenging elements of the business, and overall help the entrepreneur orient more towards a long-term horizon.
Jeff Bezos once said, “If everything you do needs to work on a three-year time horizon, then you’re competing against a lot of people. But if you’re willing to invest on a seven-year time horizon, you’re now competing against a fraction of those people… Just by lengthening the time horizon, you can engage in endeavors that you could never otherwise pursue.”
Entrepreneur
via https://www.aiupnow.com
David Cummings, Khareem Sudlow
