Continuing with 7 Takeaways from Mike Maples on the Black Box of VC at the end of the slide deck the author introduces the 6/10 Law as a growth framework to evaluate the scale necessary to build a legendary company. Generally, the idea is that the IPO sweet spot is between years six and 10 such that a startup needs to reach a scale in that timeframe to achieve escape velocity. Here’s the 6/10 Law process:
- Select 3 Analogous Companies (high, medium, low success) with similar business models
- All 3 should have gone public
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Thought Experiment:– Can we grow at those rates?– How much money did they need to raise and when?– When were they IPO-ready?– What did their businesses look like? Revenue, growth, margins, G&A, R&D, etc.
The next time you’re looking for a leadership team exercise, or a personal thought experiment, go through this process and analyze your startup relative to a legendary one with a similar business model.
What else? What are some more thoughts on the 6/10 Law growth framework?
David Cummings on Startups 