Entrepreneurs

The Invisible Exponential Growth Drivers In Startups And Entrepreneurship

Growth is the defining trait of startups. The main reason for this incredible scalability is that the fastest growing startups utilize exponential rather than linear growth. Startup = growth.

For example, with the magic of the internet, word of mouth gets amplified a great deal. Imagine you have only two customers. They post about your product online, and on average you get two new clients from each one of your existing customers. Your new clients repeat the process. If this happens once, you’ll have 4 clients. If this happens 10 times, you’ll have 1000. If this happens 20 times – more than a million. 30 times – more than a billion.

Moreover, in this example, 50% of all of your users would be acquired in the last cycle. In other words, the late cycles absolutely dwarf all of your early growth efforts, even though the growth rate from cycle to cycle stays constant.

Compound growth can be hard to understand intuitively. Humans have evolved in an environment where most relationships are linear. Yet, understanding exponentiality conceptually is key in the information era where everything that’s published online has potential for virility.

That said, compound growth isn’t just applicable to user and revenue growth. Your professional efforts compound in a similar manner.

Your initial efforts would usually yield close to zero results, but as you continue the grind, two important things would happen.

Growing Competence

First, your skill and intuition will grow significantly, and competence itself increases productivity exponentially.

“It looks to me as if you were trying only half as hard as you could, and in trying it’s the second half that brings results.” – from Letters from a Self-Made Merchant to His Son by G. H. Lorimer.

In a competitive field where most people perform averagely, the few people that perform extraordinarily well usually reap most of the rewards.

Growing Network

Second, as you work in a given field besides increasing your expertise you naturally also increase your network. More and more people know what you are doing and what you are good at, and at the same time, you know more and more people (with professional networks of their own) who are formidable in their own fields.

Just as users, networks grow exponentially. This effect could further be amplified by good social media usage since people could learn about and follow your work even if you haven’t built a personal relationship with them.

At the start of your professional journey as an entrepreneur opportunities would be extremely scarce. But with time, the combination of a good reputation with an extensive and powerful network starts bringing a lot of high-quality opportunities.

Persistence = Growth

These two effects – your exponentially growing productivity driven by competence and your exponentially growing opportunities driven by your network are the two main reasons that make persistence the single most important quality of a successful entrepreneur.

Starting to invest early makes a huge difference for a portfolio due to compound growth. The same principle applies to your startup journey. Failed projects aren’t a real setback as long as they increase your competence and network (hence the importance of failing with grace), as those are the two leverages that would help you find an out-sized success in the long run.

Because of this, building your startup in the open and letting your social circle know what you are up to are powerful habits. Opportunities might come out of unexpected places, and hopefully, your growing competence would let you make good use of them once you are building your startup.

In Summary

Don’t expect to see results early in your professional journey, but be very persistent when you are building your startup.

While in your early years, success will be scarce. Your later years, however, will bring outsized returns thanks to your competence and good reputation.

You can use social media to amplify this process. You don’t necessarily have to deliberately strive to become an influencer in your field. Nonetheless, keeping your network up to date on what you are working on could bring life-changing opportunities in the long run.

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