What’s Wrong with a Company Staying Small?
In my opinion… nothing.
Is expansion always the dream with entrepreneurship? Do all founders start a company with the hopes that it will one day be the next Amazon, or Apple, or Google?
I hope not.
In fact, I love small companies. More so than I like large corporations. I believe in them and I’ve had enough personal experience with startups to know that the genesis of every good idea is a small company.
It’s no surprise that a large company is often born out of the aggregation of all the growth of small companies over time. Most of the big leaps forward in technology come from big companies buying a bunch of little companies and stitching them together. And I can appreciate that some things, some ideas, require scale.
But I find it ironic that the creativity and the ideation that happens in small companies kind of disappears once it forms part of that big conglomerate. Small teams are where creativity is born, where creation occurs, where vibrant debates are had. I love to build stuff, have a crazy idea, put it on paper, discuss it with other people, have violent arguments, throw a few chairs and then go have lunch.
From all of that comes a better solution.
Don’t you think it’s cool when small teams are focused with a passion on a singular point and then figure it out together in sometimes turbulent, ambiguous, stressful ways? I sure do.
One of the reasons that small companies are able to have that creativity is because they are not large companies. In large companies, they have to deal with layers of approval and bureaucracy and checks and balances. I appreciate that there are folks who love to work in those layers of bureaucracy, cranking out memos and taking stuff out of their inbox and sending it to someone else’s inbox. Good on them. Hallelujah. Someone has to do it.
All of this is necessary but, by definition, they inhibit the creative process and don’t let people take risks. Large companies play not to lose but rather to swing for the fences and shoot for the home run.
Some land a grand slam. Some strike out. That’s why the death rate of small companies is significantly higher.
Luckily, the new marketplace has created an area in which for small companies to thrive; I call it the brokerage rule. It allows companies to be more effective, accelerate their growth rate and increase their lifespan.
There is value in the creation and the distribution of industries. Not necessarily in the manufacturing of products, as much as in the past. Take a look at some big companies, Apple and Amazon. Apple doesn’t make anything; they design it and market it. That’s what small companies can do: create a brokerage environment where they go out and build a network of suppliers and partners and co-conspirators. That network allows them to bring in quality talent to fill in the gaps, allows them to stay in their lane and be world class at what they do. They can find the great engineers, manufacturers, distributors and so on. They don’t need to do it themselves.
Amazon is a facilitator. You can get much more leverage by being the Amazon of your industry, rather than being the supplier. It’s the idea of sitting in the middle of a marketplace, facilitating the necessary functions and processes between company and consumer.
The secret to success for small businesses is not necessarily turning themselves into big companies that are completely vertically integrated. Because the problem with doing that and bringing all the functions in-house is that it squeezes out the genius of whatever got you to that position in the first place.
So am I a raving advocate for small companies? Yes, I am.
Do I believe in the value of big companies for the efficiencies and scales they provide on certain projects and ideas? Yes, I do.
My preference is to be part of the creative process, to be part of building something from nothing, in finding the niche needs in the marketplace that only I can fill. Those are the things that only small companies can see and have the guts to try.