"If you cannot measure, you cannot repeat. If you cannot repeat, you cannot scale."
I love this quote. I believe the first time I heard it was from Seth Lieberman from Pangea Media. He may have created the statement. I have no idea. But, I do love it. And I feel like it is the simplest way I can relate to the idea of "scaling a business." In order to scale a business, you must be able to repeat a process over and over again. Ideally, it is a process that has some sort of repeatable monetizable event on the sales side of the business, and some sort of repeatable viral loop on the user gen side of the business.
But how do you allow certain processes to repeat?!?! You must be able to make choices, spending your most valuable resources of time on things important to the business. Things that affect scale and growth. And in order to that, you must be able to set up hypotheses and test those hypotheses. You must decide what you're going to measure, and focus on, and what not to.
If you cannot measure, you cannot repeat because you will not know what to continuously repeat to get to scale. And if you never repeat, you'll never get the growth needed to scale beyond your initial hypotheses. If you cannot measure, you cannot repeat. If you cannot repeat, you cannot scale.
I went to visit my friend Carmen Scarpa at Tudor Ventures recently to get advice. Carmen grew up in my hometown of Andover, and then went to Harvard for undergrad and Harvard Business School to get his MBA. I highly respect his opinion. Very honest. Very direct. And very thoughtful. The kind of guy you want by your side as a mentor.
While in his office, I asked for his advice on a variety of subjects. I was also very interested in hearing about markets and industries of interest to him. I have always been naturally curious how venture capitalists and investors view industry evolution. As people whose jobs entail working with entrepreneurs who literally are aiming to transform industries, you'd think venture capitalists would have solid advice. Turns out they do. And while I could dive into what Carmen thinks are interesting industries to invest in or build products for, what stood out to me was his advice with regards to focusing on market size, rather than topic.
Carmen said: "Ryan. If you're going to fish, go fish in big ponds."
Or in other words: Think big, and go after big markets.
Carmen could easily have substituted the word "big ponds" for "big lakes" or " big oceans." The word to highlight here is "big."
Now, any entrepreneur who understands how VC firms operate would say... "Well duhhh. How else would VC firms get the returns their need to justify their investments without having a few of their companies win big in big markets?!?!?" And while we could have an entire conversation on that alone, I want to stick with this one statement. Because to me, it aligns perfectly with the way I always used to think about the world.
If you're going to fish, go fish in big ponds.