M&A, IPOs & Exits

Why I’d Go Big. And Why You Should Ignore Me, and Most of the Others That Tell You That.


Jason Lemkin

Screen Shot 2013-05-16 at 9.05.29 AMEverything on the web, and in SaaS, these days is about Going Big.  Larry Page at Google I/O wants Google to start doing brave new things that build billion dollar markets.  Peter Thiel wants the best of us to skip college and go straight to building the next Pallantir and PayPal, just bigger.  Elon Musk (bless him) takes out a $150,000,000 loan from Goldman (because even though he’s a “billionaire”, it was almost all paper money at the time) to invest $100,000,000 into Tesla at a $10,000,000,000 valuation.

And the related message is:  if you don’t Go Big, you’re not Part of It.  You’re some sort of short-term loser, or at least, a penny player.

I get it.  And you know what, I agree.  If I did a third start-up as a co-founder … a big if … I wouldn’t settle for Less Than a Billion.  Period.  Not interested otherwise.  Don’t talk to me about F-You Money, Selling to Google or Salesforce or whatever.  I.  Want.  A.  Billion.

But why?

The truth is, and I think this is especially true of Go Big VCs and Founders … Going Big … In Most Cases, It’s Just Math.  Disguised as a Religion.

My obvious learning, with time and hindsight, is just this.  In start-ups, you can’t do 10 companies at once as a founder.  You can only do one.  And in SaaS especially, it’s at least a 7-10 year journey.  So you don’t get a ton of at-bats as a founder.  Maybe 2-3 if you do well, a few more if you are Elon Musk.  But even there, not much more than that.  And even VCs, they only do 1-2 deals each a year, on average.  It takes time for them too.

So let’s imagine you are a centimillionaire VC or founder.  (I’m not, but I can imagine).  If you have $100m, and you start a company, or invest in a company, and you make $10,000,000.  Then, dude, it wasn’t worth it.  It’s too much work, and more importantly, too much time.  Too much opportunity cost.  You only added 10% to your balance sheet for all that work and time.  If you have $100,000,000 … or $10,000,000 … or $1,000,000 … you need to shoot for An Order of Magnitude Bigger Next Time.

There no other way to grow, get ahead, and make the math of time and limited at-bats work.

So here’s the (sometimes pernicious) effect that comes from Order of Magnitude Math.  The advice you get is heavily biased by the advisor’s Order of Magnitude Math.  And that may or may not align with your math:

  • If it’s your first start-up, period, you just want to learn.
  • If it’s your first start-up as an executive, you want to learn how to manage, grow and scale.
  • If it’s your first start-up as a founder, and it doesn’t totally explode relatively early … you just want a Real, True Win.
  • If it’s your second-at-bat, and the first one was a success — you want 10x or more of the last one.

I want you to Go Big.  And I want to Go Even Bigger Myself.  Don’t get me wrong.

Just don’t necessarily listen to me, or them.  Of course, don’t do something Small.  That never pays.

But you change the world by doing great things, and then having great markets multiply the effects of those great things.  Aim high.  But get there the way that works for you and your team.

Published on May 16, 2014


  1. Oh man, I couldn’t agree more. It’s definitely near-religious. 🙂

    Hey I saw from your bio on your book with Aaron Ross that you love all things Hawaii. We’ll have to share our passion for the islands over a Mai Tai one of these days. Hope you’re doing well. Dave

    Dave Yarnold CEO

  2. Jason, do you think that Silicon Valley becomes a place where only BIG companies should be trying to succeed?

    Here is the thing: seed-stage companies have a really hard time hiring people because the cost of hiring anyone decent is really really high nowadays.

    So… say, if you’re going for 100m not a billion, should you do it elsewhere?

    btw, this is not about us, we’re going for a billion and you should definitely invest ))

    1. Silicon Valley has become really expensive. If you can’t afford it, at a minimum, you may need a signficant portion of your team outside the area.

  3. Jason, I’m no VC but I don’t necessarily agree with this approach, and it’s certainly isn’t a one size fits all, sometimes great companies take time to build to last. We saw what happened to the likes of Groupon when they tried to go big at all costs. The hype was epic, crazy valuations and the capital raising followed until the music stopped and everyone worked out it wasn’t such a great business after all at scale.

  4. Jason, I think that an important additional consideration for your writing here would be the point that Elad Gil raises here: http://blog.eladgil.com/2010/10/benefits-of-thinking-small.html which is that many companies we think of today as “thinking big” actually started off by “thinking small”; it’s not a polar opposite. You can start by thinking small, having focus and executing and then increasing the size of your vision. Often starting by thinking big may lead you to be unfocused at the start.

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