Last week I was talking to an entrepreneur and the topic of scale in the context of success came up. Some entrepreneurs do the impossible and build massive companies while others do an incredible job, but the company is still relatively small. Of course, the scale of success is not nearly as important as positively contributing to the world and making a strong impact on the community. With that said, scale and size is an important consideration when thinking about level of ambition and effort.
Yesterday, I was reminded of this scale conversation when reading Michael Dell’s new book Play Nice But Win: A CEO’s Journey from Founder to Leader. The Dell Computer Corporation story is well known, but even with that background, learning hundreds of new details and anecdotes made it even more amazing. One detail stood out the most, especially in the context of scale: six years after founding the company, the business made the Fortune 500 with ~$1 billion of revenue, all done organically with almost no capital. Simple stunning. The Fortune 500, by its very definition, is the 500 largest public companies in the United States as ranked by revenue. To build a Fortune 500 company in a lifetime is rarefied air, but to do it organically in six years is unfathomable.
What does this have to do with the scale of an entrepreneur’s success? Markets. Markets drive everything. No matter how talented the entrepreneur and team, without a great market, the level of success will be stunted. There’s an old saying in the startup world from Andy Rachleff, founder of Benchmark Capital, “When a great team meets a lousy market, markets win.” Ideally, an entrepreneur will pick a great market initially, or pivot into a great one fairly quickly, but without that, the chance of major success drops dramatically.
Entrepreneurs have a tendency to rush into the next shiny opportunity that presents itself. The lesson here is to step back and spend more time evaluating the market. What are the trends? How big is the opportunity? How much is it a must-have product? What’s holding back adoption today? Naturally, there’s no way to predict how a small market today will turn into a massive market tomorrow. With thoughtful research, it is possible to evaluate markets and make the best decision with the information available.
When it comes to the scale of success, markets drive everything. Choose wisely.