Create good problems for yourself!

I was talking to another entrepreneur about how the quality of our problems should get better as we grow. At first we’re fighting to survive, but eventually we’re fighting to grow. So what’s a good problem?

• Signing a big enterprise customer—and being forced to develop a new product for them by a certain date.
• Successfully raising money—and now you have to get to work growing the business.
• Launching an app—and having it be so popular that your servers are crashing.

Each of these would be the first step in a new chapter of your company’s growth, so these are all good problems to have.

Each of these is much a better problem to have than spending a ton of money to build a product that no one wants to use, for example. No customers is a bad problem to have.

If you’re building a successful business you’ll always have problems, but the quality of your problems should get better over time. Last week Amazon reported disappointing earnings that shaved $20 billion off of their $450 billion market cap. It’s a problem, but definitely a much better problem to have than trying to sell their first book.

Discomfort equals growth

The paradox of being an entrepreneur is that the only way to grow is to intentionally make yourself uncomfortable.

Think about it: if you keep doing what you’re doing then you’ll stay in the same place.

But starting a business is incredibly difficult! Sam Altman from Y Combinator says:

“One of the most consistent pieces of feedback we get from YC founders is it’s harder than they could have ever imagined.”

So once we get our business working we finally feel comfortable for a minute. It’s been such a struggle up til now. And our instinct is to sit in that comfortable place. I have customers! I’m making money! I can pay my bills!

This is true for my consulting business, where I’ve pretty much maxed out how many hours I can work and how much I can charge. To grow will require me to change—probably by creating products to help entrepreneurs I’m not able to work with in person—but I’m so busy and comfortable in my routine that it’s easier to just keep doing what I’m doing. And I’ll stay where I am as long as I don’t push myself.

I talk to a ton of entrepreneurs who’ve hit a similar wall in their own growth. They often think that money will solve the problem, but my experience is that the solution is actually discomfort.

The typical growth curve

We need to push ourselves out of our comfort zone in order to grow. How?

Google tells employees to set OKRs with the expectation they will achieve 70%. Both Scaling Lean and the 10x Rule recommend setting stretch goals way beyond your comfort zone. The thinking is that you probably won’t reach your goal, but you’ll get much closer than you would if you didn’t try.

We talked a little about the exponential growth curve that many businesses experience. Basically this means that it’s very slow at the beginning — for longer than you’d like — and then kicks into gear.

Ray Kurzweil became famous for discovering that technology growth happens on an exponential curve. He points out that the human mind isn’t good at understanding what this means, so we overestimate our results at first and then we dramatically underestimate where we’ll end up.

Here’s Quora’s growth chart:

And here’s Airbnb’s growth chart:

Strategies for growth

Ash Maurya shows us how to turn exponential growth into a strategy in Scaling Lean. His three-step process is:

1. Get to meaningful traction in the first 3 months (which is achievable if you do lots of discovery and sign up customers before you launch)
2. 10x your traction by the end of year one
3. 10x your traction again by the end of year three

In order to achieve this you’ll need to keep pushing yourself outside of your comfort zone, because what works at $10k won’t scale to $100k. Here’s what it looks like:

This plan says that we’ll get to $10k monthly recurring revenue (MRR) in three months. That begins to validate the business model but it’s not enough to pay the bills.

Now what?

Now we push to 10x our revenue by the end of year one. It’s important to time box it so that we’re forced to stick to a schedule. Deadlines are a great tool for pushing ourselves out of our comfort zone, which is part of the reason OKRs are so powerful.

So at the end of the first year we’re at a $100k MRR. Now what?

We 10x it again within the next 24 months. This is incredibly hard! At $100k we start to feel comfortable, but we will have to change pretty much everything in order to reach our goal.

We’ll have to find more customers. We’ll have to improve both our product and our development process. We’ll have to add (and maybe fire) employees. We’ll have to get a bigger office. We’ll have to cut costs. We’ll have to find a partner with a distribution channel. Etc.

These are all good problems to have, and it’s the improving quality of our problems that tells us we’re on the right path.

Recap on how to grow exponentially

1. Set stretch goals beyond what you think you can actually achieve.
2. Time-box everything, so you’re always on a deadline.
3. Don’t stop pushing yourself out of your comfort zone no matter how successful your company becomes.
4. Plan for exponential growth, which may mean being patient during the slow part of the curve at the beginning.

Mike Lingle is obsessed with helping founders grow their businesses. I’m a serial entrepreneur, mentor, and executive in residence at Babson College. Check out my Rocket Pro Forma if you want to quickly create your financial projections.