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Scaling a Business is Hard

Posted on Nov 26, 2013 by in Leadership, Sales and Marketing | 0 comments

Scaling a business is hard.  It is suppose to be hard.  As I have shared in previous writings I am busy studying how businesses, specifically technology businesses, scale to become large transformational businesses.  Why is it so hard to scale a large business?  I’ve been giving a lot of thought to this very question.  Is it team, is it idea, is it market size, is it timing.  Yep, you guessed it, it is “E” all of the above.  Scaling a business is difficult and having a team that is capable is important, the idea must be game changing, a huge market certainly helps, and timing is always a key ingredient.

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Did you see this article: Welcome to the Unicorn Club?

– We found 39 companies belong to what we call the “Unicorn Club” (by our definition, U.S.-based software companies started since 2003 and valued at over $1 billion by public or private market investors). That’s about .07 percent of venture-backed consumer and enterprise software startups.

– On average, four unicorns were born per year in the past decade, with Facebook being the breakout “super-unicorn” (worth >$100 billion). In each recent decade, 1-3 super unicorns have been born.

– Companies fall somewhat evenly into four major business models: consumer e-commerce, consumer audience, software-as-a-service, and enterprise software.

– It has taken seven-plus years on average before a “liquidity event” for companies, not including the third of our list that is still private. It’s a long journey beyond vesting periods.

– Inexperienced, twentysomething founders were an outlier. Companies with well-educated, thirtysomething co-founders who have history together have built the most successes.

Atlanta has created some unicorns in our day.  Of course Coca Cola and Home Depot immediately come to mind, but don’t forgot about Internet Security Systems.  All signs point to AirWatch as Atlanta’s next unicorn, but is there one out there hiding somewhere?  Clearly AirWatch has a path to a billion dollar valuation / exit, if they are not already there with the most recent round of financing.  AirWatch is in the enterprise software category, it has been around for more than 7 years, and it is lead by a very experienced founding team.  Atlanta has everything we need to create 2-4 more billion dollar companies over the next decade, I look forward to helping.

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