When Apple co-founder Steve Wozniak left Apple in 1985, he did so because he did not like the growth. He missed the early days in the garage. He wanted to create a computer for hobbyists whilst Steve Jobs wanted to create something much bigger. Jobs clearly got his way and Wozniak left.
Some co-founders of tech businesses identify with Steve Wozniak more so than with Steve Jobs. And quite often founders do not see eye-to-eye on this topic, which creates permanent tension. The bigger the gap, the bigger the tension, and the more likely that the issues will be driven to conclusion sometime soon. If the tension is mild though, it might not be driven to conclusion, and as a result it could plague the business for many years to come.
For the purposes of this blog, we define “stay small” as less than 10% growth per annum, and “grow fast” as 20% or more in growth.
Some people might argue that the “stay small” person is better off because they’re having more fun, their marriage is still intact and they’ve been spending more time with their children. And this position can be true if the fast growth business option is executed badly. We are convinced that fast growth, done right, can indeed be easier than “stay small”.
So let's explore a few myths here:
Myth 1: A small business is more fun
Babies and toddlers are fun, right? How would you feel if your toddler never grew up? A 10 year old small business is not the same as a new small business. If the idea of a new small business translates to feelings of excitement and novelty, then the idea of an old small business would translate to something very different, we’ll let you decide. For an old small business, the only source of excitement is the customer, the hope that the next customer would bring some novelty into our lives and present us with a problem that we find interesting. But even such novelties wear off eventually, and we find ourselves yawning at any new challenge thrown to us by our customers.
OK so the first point here is that a small business can seem like more fun, but only if it is new.
The second point is this: The perception of fun only happens in retrospect. This is like climbing a steep mountain. Think about it, what do you actually enjoy? Do you enjoy the muscle pain, the blisters, the rain, the slippery rocks, the fear of death? No, you don’t enjoy any of that, but when you look back afterwards, you say “That was fun!, when can we do it again”
If Steve Wozniak wanted to build computers in his garage again, he could do that at any time. But he doesn’t, because it won’t be the same as the first time.
Myth 2: A fast growing business is painful
A growing business is a natural phenomenon and it is easier to manage than a business that does not grow. Raising a baby that grows ½ inch to 1 inch per month (which is the norm) is easier than raising a baby that doesn’t grow. We nurture babies and we anticipate their growth. If we nurture our business (for growth) and if we anticipate growth, it will happen, and it will feel normal.
Will it be free of pain? No, there will be pain. But a small business that doesn’t grow has pain of a different kind. To have no business at all has pain of its own. To have children is painful. To grow old without children is painful in its own way. Choose your pain.
Myth 3: A large business is less innovative.
A large business can actually be more innovative than a small business. Jeff Bezos (Founder and CEO of Amazon) has proved this with his 2 Pizza rule. He argues that smaller teams are more innovative, so his rule is: If a team cannot feed off 2 Pizzas, the team needs to be broken up into smaller teams, so that innovation can continue to happen. This simple rule is considered by many as the secret to his success. Jeff Bezos basically provides evidence that if the leaders value innovation, they will find a way to preserve it in a growing business.
Myth 4: A large business has too many rules
A large business will typically have more rules, and as entrepreneurs we hate rules, right? This should be kept under control, obviously. But even if the rules accumulate gradually, consider this the norm. But is it really a problem? The employees will only consider this a problem if their perceived freedom is under threat. And freedom is an interesting thing. More than 50% of US citizens don’t have passports, out of choice! However, these people still consider themselves “free” as they have more than sufficient space to move around. If the US was the size of the world’s smallest country, The Vatican (100 acres), they would feel different.
So give your employees enough space to move around.
In a large company employees might not have the freedom to buy their own laptop and get reimbursed, but they have other kinds of freedom: more career options, more staff who could step in when they go on leave, more parental leave, unlimited budget for buying ebooks, etc. The benefits that come with growth can actually increase the level of perceived freedom.
Myth 5: A large business is less spontaneous
When you’re steering a large boat you cannot drive it like a Ferrari. Decisions need to be made more thoroughly and all the major parties need to be onboard. The business might have a board of directors that give direction to the CEO who then formulates an execution plan for the management team, etc.
However, the spontaneous culture will continue to exist if the owners make it a priority. Break the business down into smaller teams and give them as much autonomy as possible. Give each team leader freedom in their execution, and give them some budget for innovation and entertainment, even if it’s small. Let each team go out and have fun on their own terms. If they blow their entire entertainment budget in one evening, then let it be.
Myth 6: A large business is less personal
This is only true if there are no thriving sub-cultures in the business. If the only interaction employees have with the company is a quarterly webinar where the CEO broadcasts her view of the world, then the experience is very impersonal indeed.
However, if the company has a strong culture within the teams, who cares about the CEO or the founders. Keep breaking the company down into smaller teams, encourage personal relationships at team level, and check the pulse regularly.
Myth 7: A fast growing business requires longer working hours
The working hours of a business is more closely related to the culture and market position rather than the pace of growth. A business that is not niche, and poorly positioned in the market, need their staff to work long hours to stay ahead. This often creates a culture of long working hours. In the IT services space we have seen companies that work long hours and others that don't, and there's no visibly correlation with success or growth. The working hours are really a choice. With smart hiring and delegation, this myth can be bust!
Myth 8: A small business is easier than a large business
We’re making a case for the opposite. A large business is easier. Ask any Tech Services Entrepreneur who grew a large business with 100s of employees, sold it, and then started over again. Ask them if it is easy to be small. Do not be surprised if they say it is very hard. How can anyone argue that DIY is easier than delegating to competent staff. Going from owning a big company back to a small one is the equivalent of a Formula 1 driver stepping out of a Formula 1 car and back into a go-kart. And whilst it is easier for a beginner to drive the go-kart, once you know how to drive the Formula 1 car, it will certainly become your preference. There are few people who are as committed to growth as somebody who stepped out of a large business into a small one. They know how much easier it is to run a bigger business. And like so many things in life, it is easy once you know how to do it.
Thus we see that three things make a business enjoyable:
All three things bring joy to your world, and all three of them are present in a successful startup.
Novelty: Researchers have found that novelty releases dopamine in the brain. Whilst many people are happy to work in a business that stays the same, our natural desire is to experience novelty and to anticipate a regular supply of future novelties. We’re not saying you should be chasing novelty and lose focus of your direction. The argument is rather that you should step out of your comfort zone regularly and move the business up a level.
Growth: Think about old people how much they love gardens and babies. Old people struggle to find growth in themselves but nothing stops them from enjoying the growth of plants and humans. Old people are not alone in this. We all love growth, whether you’re an entrepreneur or an employee, we love to somehow be part of something that grows.
Hope of future achievement: Napoleon Hill (the pioneer of the self-help era) argued that the “hope of future achievement” is one of the key ingredients of a happy life. Note with great benefit that the hope of achievement rates higher than the achievement itself. It rates higher even than Financial Freedom.
Now think about your own business. All three of these things were present when it was a new business, but if it would stop growing, it all disappears. Very little novelty, no growth and little hope of future achievement.
A growing business on the other hand challenges you to step out of your comfort zone and into the world of novelty and growth, and by setting aggressive growth targets you always have this hope of future achievement.
Robin Sharma says your biggest achievement should always be in the future.
So set yourself some aggressive growth targets, learn the skills of growth, and give your mental health a boost.
