David Cummings on Startups

Thinking Big or Thinking Small

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David Cummings

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Earlier today I was talking with a friend about startups. He commented that most entrepreneurs have a tendency to think small in the grand scheme of things. The context for this part of the conversation was scaling a sales team from 10 sales reps to 100 sales reps. Often, an entrepreneur that currently has five or 10 sales reps sees 100 sales reps as massive, and to them its thinking big. If Groupon had stopped at 100 sales reps they wouldn’t have grown nearly as fast.

Today, Groupon hires 100s of sales reps per month and has several thousand sales reps on staff — all hired in the past couple years. Think about it for a second — Groupon believed that the market opportunity was large enough, and growing fast enough, to support a literal army of sales reps. Alibaba, based in China, has one of the largest direct sales force in the world with tens of thousands of sales reps — that’s thinking big.

The next time you’re dreaming big, ask yourself if’s truly big, and take it out to a magnitude (10x) larger and see how that feels. Are you thinking big or thinking small?

What else? What are your thoughts on thinking big or thinking small?

Comments

2 responses to “Thinking Big or Thinking Small”

  1. Larry Avatar
    Larry

    The reason to go big, if there is indeed the opportunity, is because leaders in markets are worth substantially more than the 3rd or 4th place company in the market. On the low end, leaders are worth 10x more, but it’s probably more realistically 100x+ more. Think about how much the 3rd or 4th place company is worth relative to the market leader in sectors like: daily deals (Groupon), search engines (Google), SAAS CRM (Salesforce.com), CDNs (Akamai), social networks (Facebook), tablet manufacturer (Apple), etc. You could even pick smaller markets like email marketing (Constant Contact), VoiP (Skype), remote collaboration (Webex), online video destination (YouTube), auction site (eBay), etc. and the same holds true. You could basically pick almost any segment and the value differential between the leader and the 3rd or 4th place company is, at a minimum, an order of magnitude.

    But, shareholder value is only one kind of value. There are other reasons to keep a business closely held and to not go for it that have as much merit as creating a valuable company.

    Reply
  2. dmaportland Avatar
    dmaportland

    Reblogged this on dmaportland and commented:
    DMA Portland: Think BIG!

    Reply

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