From $1M to $100M in AdSpend Managed in 24 months. How quantum physics helped us keep a 10X year-over-year growth
This story was originally published as GuestPost on AdEspresso, Dec 29th 2015.
This has become a fun checkpoint. Every 6 months or so we take a moment to pause and reflect on the major learnings so far, hoping they will be helpful to other founders out there. Around 6 months ago we wrote about how we hit $1M runrate and profitability in 5 quarters, sharing the 9 lessons learned in creating an impossible company. Around 12 months ago it was about 7 counterintuitive things we avoided doing to grow 10X in a year. Around 18 months ago we documented step by step how we raised $1M on AngelList. It’s been a exciting journey, that’s for sure. And a fun one, too.
Frankly, also a very unbelievable one. If you took the DeLorean to go back in time to 24 months ago and asked us the chances of getting to $100M in Annualized AdSpend Managed, we’d definitely laugh at you. Same thing if you said “look, 24 months from now, you’ll be doing more monthly uniques than PandoDaily”. Or if you said: “believe me, by the end of 2015 you’ll be one of the Top2000 Apps worldwide by daily usage of the Facebook Graph API”. Or: “seriously, you’ll be able to grow 10X year-over-year for 2 years straight”. Our reaction would have been: yeah, no f@#&%ing way.
Now, truth is: talking numbers is great. You need them like the air you breath, and you have to keep your eyes on them every second of every minute of every hour of every day of every week. But what’s most interesting is always the story *behind* those numbers. And the reality is that companies are defined by what they start doing as much as by what they stop doing. Because your job as a founder is to find the right answers in a playground where questions change all the time. I’ve been thinking a lot about the learnings of the last 6 months, and that’s the most surprising one.
It’s also the most counter-intuitive thing, and the one early-stage founders understand the least. In some regard, it’s an approach extremely similar to quantum physics. Everybody is to some degree comfortable with the Schrödinger’s Cat Paradox, right? The cat which is at the same time dead and alive, and you can find out which one of the two only by looking into the room/box (depending on the versions) thus generating one of the two outcomes, effectively either killing or saving the cat. Bullsh*t? Maybe, or maybe not. Bear with me for a moment, maybe it won’t sounds so crazy anymore.
Here’s the thing, if you think about it for a moment: your startup really is both alive *and* dead. It’s dead if you do nothing, or if you do the wrong things; it’s alive if you do the right ones. Except you don’t know yet which the right ones are, so you have a likeliness of finding out or not, which changes over time based on what you know/do. Same for a funding, or a big deal, or an important hire. The default state is: nothing happens. Then you enter the equation acting in ways you hope will change the outcome, and some of them increase the likeliness of the alternate reality to exists.
That likeliness goes from 0% to 10%, then 25%, then 65%. Until at some point, in some cases, it tips over becoming 100% and the fact actually materializes; and you can start all over again. Your job is to: a) identify the desired outcome, b) move chances in your favor to make it happen. Easy right? The hard part is that what’s true now it’s not gonna be true six months from now, or even next week. The even harder part is that you have to factor in not only internal elements (you and your team) but also external ones (the competitors or the market). Direct forces and indirect forces.
The consequence to this approach is that there are no right answers in general, but only right answers as a function of what’s the context and the timing that will increase the likeliness of the goal you want to materialize. Is your nose bleeding already? I know, I know… it may sounds a little philosophical; but it’s frankly very real to us. If I look back at our story, the main question for us has been always the same: “how do we grow as fast as possible?”, but the answers were completely different as we were continuously redefining the last word, “possible”. A couple examples:
- If you asked us a year ago, we would have told you we’re not so much about hiring aggressively, because it’s better to optimize/scale processes and efficiency… except for the fact that last month we hired 5 new great software engineers in a week, effectively doubling our Dev Team.
- If you asked us a year ago, we would have told you we’re not so much developing other products on top of the current one, better to double down on what’s working… except that now we’re doing it (no way I spoil the surprise, tho; stay tuned for a few big announcements coming soon!).
Logical conclusion: either we were idiots then, or we are idiots now, or both are good answers based on the context and the timing that generated them. Timing and context being, in our case: engineer enough growth to go from $0 to $300k+ annualized runrate in 2014 and then from $300k+ to $3M+ in 2015. In our case it wasn’t so much about the absolute numbers, it was more about the growth rate (doing 10X year-over-year this year as well was our *wildest* dream). Of course, the question now for us is: “what’s possible in 2016? and how?”. Fun problems. So, what can you take away from this?
- an unlikely event/goal with an extraordinary expected value/impact is actually less interesting of a likely event/goal with a high expected value/impact.
- your job is to prioritize events/goals factoring in not only likeliness and value/impact but also the effort (time, capital, people) needed.
- you really win if the goal/event materializing generates as a byproduct a leverage you didn’t have before, pushing you nearer to your endgame.
- interestingly: there are ways to increase the likeliness of events/goals with an extraordinary expected value/impact, if you just look hard enough.
It’s kinda like doing a knight ‘L’ move in a chess game, kinda like when two plus two equals five. The fun part is that this simple framework can be applied to pretty much any type of decision/scenario, from the smallest to the biggest one. The hard part is that what can increase leverage/likeliness is very often extremely peculiar to the decision/scenario you’re looking at, more often than not something hidden in plain sight… that others people could have seen as well, but didn’t. So, next time you look at your next challenge think about this, more often that not is how the most extraordinary things happen.