The Two Paths to Bigness

Check out Joel Spolsky’s ChangeThis manifesto titled, Strategy Letter 1: Ben & Jerry’s vs. Amazon. In it, Joel outlines which types of companies are better suited to ‘grow big fast’ and which types of companies are better off by ‘growing slowly.’

Brand Examiner Paul and I have had many discussions on answering the age-old question of “What is the best strategy is to meaningfully grow a business?” We’ve decided the answer is to ‘Get Big by Being Small.’ That’s what Starbucks did. They didn’t just open up thousands of locations in one day. Nope. They opened up one store at a time, one community at a time. In essence, Starbucks got big by being small.

Joel’s Strategy Letter 1 manifesto has helped me to crystallize my thinking on the underlying strategies behind ‘getting big by being big’ and ‘getting big by being small.’

Below are my takeaways from his manifesto:

Get Big by Being Big if …

No established competitor exists

Getting big is easier in categories where there are lots of customers and not enough companies to satisfy them.

The ability to leverage the network effect is present

Think eBay and how it systematically grows because of its linked network of buyers and sellers.

Tremendous amounts of capital is required to simply 'be in business'

Investors, with significant financial involvement, will most likely want to see an ROI sooner rather than later on the money they invested.

Maximizing revenue is your main motivator

Success is all about the ‘Benjamins.’

You can make mistakes and no one will notice

Many times at growing companies when you’ve noticed a mistake, it’s too late too do anything about it.

‘Making a Difference’ is all about making money

One word: TRUMP.

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Get Big by Being Small if …

Lots of established competitors exist

With a crowded competitive landscape, you will need to grow one customer at a time.

It is impossible to systematically exploit the network effect

But you can (and should) exploit the unsystematic ‘word-of-mouth’ network.

Minimal capital is required to be in business

Ben & Jerry’s Ice Cream began with a $12,000 investment and sales are now $200M+.

Sharing your passion is your main motivator

Success is measured by how many lives you can positively impact.

Making any mistake, no matter the size, becomes a lesson learned

Small mistakes at small companies can make for big problems.

‘Making a Difference’ goes way beyond making money

Success is measured not by money/fame but rather by impact/purpose.