What does “scaling” mean in the IPESSI process? It means growth – it means intentionally taking your startup or business from where you are today to a new place that is bigger.
Scaling also means imagination and planning. In order to scale, you have to be able to imagine and plan out a bigger future. The maximal version of scaling is described in pages like these:
- How Startup Stock Creates Transcendental Wealth
- Prototyping a $1 billion startup
- How to Think Big about Your Startup
Scaling can means lots of different things though, because every business is different. Here are several examples:
- If you own one restaurant, scaling could mean opening a second restaurant.
- If you own four restaurants in one city, scaling could mean starting to colonize a new city. Or it could mean starting a franchising arm that takes your restaurant concept across the country.
- If you are a 17-year-old student in high school who has been doing web development on the side as a lone wolf, scaling could mean growing to the point of having two or three employees and enough work in the pipeline to keep them busy. [example]
- If you have a web site, scaling could mean an ad campaign that doubles your number of visitors or your subscriptions.
- If you have a product that you have been selling successfully on Amazon, scaling could mean getting your product into Walmart and Target.
- If you have made it through an accelerator, scaling could mean closing on Angel money that lets you greatly expand a small marketing campaign into a nationwide campaign.
- And so on…
Under Armour Example
Think about the progression of the company Under Armour. UA started very small, and then scaled massively in several stages. Take a look at its history:
- “After graduating from the University of Maryland, Plank developed his first prototype of the shirt, which he gave to his Maryland teammates and friends who had gone on to play in the NFL. Plank soon perfected the design creating a new T-shirt built from microfibers that wicked moisture and kept athletes cool, dry, and light. “
- “Under Armour was founded in 1996 by Kevin Plank, a then 23-year-old former special teams captain of the University of Maryland football team. Plank initially began the business from his grandmother’s basement in Washington, D.C. He spent his time traveling up and down the East Coast with nothing but apparel in the trunk of his car. His first team sale came at the end of 1996 with a $17,000 sale.”
- OK, so he is selling T-shirts out of the trunk of his car. That is his business. This led to some organic growth: “People began to take notice of the brand when a front page photo of USA Today featured Oakland Raiders quarterback Jeff George wearing an Under Armour mock turtleneck. Following that front page, Under Armour’s first major sale came, when an equipment manager from Georgia Tech requested 10 shirts from Plank. This deal opened the door to a contract with NC State, Arizona State, and other Division I football teams. With positive reviews from players, word began to spread and orders began to increase.“
- What is his first scaling step? He needs a factory: “That same year, Under Armour launched with several new apparel lines including ColdGear, TurfGear, AllseasonGear, and StreetGear. By the end of 1996, Under Armour had sold 500 Under Armour HeatGear shirts, generating $17,000 for the company. In 1997, Plank had $100,000 in orders to fill and found a factory in Ohio to make the shirts.”
- The next scaling step is product placement and an ad campaign: “Under Armour received its first big break in 1999 when Warner Brothers contacted Under Armour to outfit two of its feature films, Oliver Stone’s Any Given Sunday and The Replacements. In Any Given Sunday, Willie Beamen (played by Jamie Foxx) wears an Under Armour jockstrap. Leveraging the release of Any Given Sunday, Plank purchased an ad in ESPN The Magazine. The ad generated close to $750,000 in sales, and nine years after starting the company, Plank finally put himself on the payroll.”
- The next scaling step is a big round of investment: “The following year, Under Armour became the outfitter of the new XFL football league, gaining even more attention during the league’s debut on national television. In 2003, consumer sector focused private equity firm Rosewood Capital invested $12 million into the company. ” UA starts expanding its product line.
- The company scales up again by going public and opening stores: “The company IPOd on the NASDAQ in November 2005, raising $153m of capital. In late 2007, Under Armour opened its first full-line full-price retail location at the Westfield Annapolis mall in Annapolis, Maryland. “
- And so on…
The Under Armour company improves and scales, improves and scales…
All of these examples, from tiny to massive, are valid ways to grow. Your approach all depends on your personality, your drive, and what you hope to accomplish/achieve with your company.
If you have read the section on startup stock and transcendental wealth, and the section on the $1 billion startup, scaling often means growth through investors. In many cases, you need money to scale. If you wish to follow this path, you need to think big from the start. Jump to the Thinking Big article > > >