Getting to Initial Scale

Imagine a World With Unlimited Capital, and See Where It Takes You

echojason@gmail.com'

Jason Lemkin

yesThere’s an exercise BigCos do, that I was asked to do, that at first, I thought was a waste of time.  The exercise is:  “How would you  run your business if short-term revenues didn’t matter?”

I thought (and still think) in that context it was a bit of a trick question.  First, of course revenues matter, in the end, they (and profits) are all that matter, and in SaaS, you need short-term revenue to beget long-term revenue.  Second, I couldn’t imagine a world where it was a better idea to run a B2B business without regards to revenue, even in a F500 tech company, even if you could nominally “grow” faster.

But since then, I’ve turned this around into an exercise that I think is one of the best planning exercises you can do for a post-traction SaaS start-up company.

The question, and exercise is, “What would you do, if you had Unlimited Capital?”  Ask this not only of yourself, but even more importantly, of each member of your senior team.  Not every day, but as an integral part of the unscripted part of your planning processes.

In other words:

  • For Sales, who would you hire, and when, if you could hire as many people as you wanted?
  • For Marketing, where would you spend if the ROI could be ‘any’ ROI?  What brand marketing would you do?  What new programs would you develop?
  • For Product, what new areas would you enter?  What new products would you build?
  • For Engineering, what would another 10, 20, 50, 100 engineers do for you?  What would you rebuild?  Improve?  How many more features could you push out?  What could you do that is simply, super cool for your customers?

In a BigCo, this question would be an exercise in fiefdom.

But in a start-up, I’ve found it’s a terrific way to plan for where you want your business to be in 12 and 24 months.  Because assuming you are post-initial traction (say $1-$2m in ARR), and are growing 100%+- at that point, in 12-18 months, you’ll have what Seems Like Unlimited Capital today.

You’ll be so much bigger, that you should have already started things on your Unlimited Capital list.  And in start-ups, there’s a self-limiting factor as well.  No one really wants to triple their team overnight.  No one wants to dilute the core.  Even if you had unlimited capital, you wouldn’t spend marketing dollars on say, search terms with zero ROI, or building new features no one would use.

So in fact, the answers will be great.  They will plan the near and mid-term for you.  And they’ll push you to make the growth decisions earlier, as a team, and as founders and as CEO.

Do this with your CEO Trainer, too.

Currency image from here.

Published on December 6, 2012
Share This