Growth is the essence of startups. As a reminder, a startup is a company designed to grow fast, and to grow fast the opportunity being pursued must be big (or humongous, depending on your appetite). Only the sky can stop you!

Startups and competition

Unfortunately, the larger the opportunity, the more people will be working on it to crack the code. And it makes perfect sense: the perspective of large profits will attract entrepreneurs. In technical terms, the expected value of a project increases with the size of the opportunity (keeping the probability of success constant). This is why more entrepreneurs are working on driverless cars (transportation is a $4.7 trillion industry) than fax machines (they still exist, apparently). If your chances of success are 0.1%, project #1 has an expected value of $4.7 billion while project #2 is worth much, muuuuch less. People are somewhat rational.

What it means is that you won’t be the only one working on the issue, and be sure that the obvious solutions have already been found. You need to bring something else to the table.

Startups and diversity

Usually successful startups happen because the founders are sufficiently different from other people that ideas few others can see seem obvious to them.

— Paul Graham

That something else is diversity. More than a hot concept, it is an absolute necessity. You need to look at problems with a different set of eyes in order to find solutions (or problems) that have been overseen by everybody else. To be a successful entrepreneur, you need to be different. This is why innovation (at least at the beginning) is unconscious: it seemed obvious to Brian Chesky to put his extra room for a short-term rental online (Airbnb). It seemed obvious to Salman Khan that people should have access to better quality education over the internet (Khan Academy).

Startups and technology

To simplify, success comes from finding a problem that is small today but will become huge tomorrow, or from doing something in a drastically different way than what is being done today. This is where leveraging technology yields great results — and maybe explains why most of the recent success stories are tech startups.

First, technology accelerates the pace at which a tiny problem/opportunity becomes huge. The internet was a way for scientists and researchers to communicate and share their work before it quickly became the technology we all rely on. Econometric models were used by a fistful of economists and bankers, now every company wants to derive information out of big data.

Second, the way we do things changes thanks (or because) to technology. Factories are now full of robots, i transfer money internationally through a Messenger bot, order essentials at the click of a dash button and trade stocks on my phone.

Startups and optimization

If there is one thing technology is all about, it is doing things better, faster and more efficiently. In one word: optimization. Interesting… Let’s borrow that idea and apply it to startups. What if we treated them as an optimization problem. What should you optimize for you ask? Simple: growth — the essence of a startup.

Sweet, you just made your life much easier. Instead of having to solve countless different problems, you are now solving for a single factor, growth. Every problem you look at, every decision you make is to be taken in regards of its effect on growth. Will this or this help you reach your growth target? Optimization thinking brings you a laser focus. Focus brings you speed — aren’t you much faster at your job when nobody comes in and disturb you? Focus also helps you to solve A problems.

Growth and North pole

Growing at a rate of 3% per week means that you are growing your startup by more than a 1,000% per year (Excel did the maths). A weekly target is a good timeline for a startup. Startups need to act fast and get feedback as soon as possible. The pressure of a weekly target will get you moving instead of strategizing. Guts feelings and vision often prime over “board room” strategy.

If you are reaching your weekly growth target, it means that you are doing something right. The constraint of growing at a fixed rate will make you do more of what works and abandon what doesn’t really fast. You might end up with a completely different product/startup than what you started with, but look at the numbers! Growth will lead you places you would have never imagine. Growth doesn’t lie. It is a little bit like science in that regard. You can have an hypothesis about what should happen, but it shouldn’t keep you from following the truth. Numbers are cold proof.

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Written by Thomas Taieb.

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