02.09.23 - Scaling the “wrong” way
The power of scaling down
The power of scaling down.
Wow, what a thought, eh?
Why would anybody do this?
In business, there are equilibriums.
Usually companies stall out at these equilibriums where the market caps are being challenged by sellers & buyers.
I am not trying to help you go public, so I’m not going to go too deep into that right now.
Let’s tackle this from another angle.
One of our models (there are 15 or so at the moment that run our business decisions for us) is “REV PER HEAD.”
I was talking with a client last week…
His calendar is a mess.
But one day — he showed me — it was filled with things he enjoyed and you could tell.
He smiled while describing it.
Talked about how fun it was.
Then, it ended… abruptly - all smiles gone as we got to the next day. More meetings. More problems… more obligation.
I said, “What would have to happen for every day to be like THAT day?”
Then I answered it for him.
Your team’s too big.
You’re supporting an army that isn’t supporting you.
They show up to meetings and bother you with problems. You solve them.
Then you pay them for the privilege.
You’re overstaffed on bodies.
UNDERSTAFFED on talent.
And the quickest way to make EVERY day like THAT day is select your top 3 and go have a blast making the world better.
You mean, you can actually DO that?
Why don’t more people do that?
Because they’re trying to scale and keep up with random humans on the internet. Most of whom aren’t even happy… but they have big numbers.
You don’t need this.
Scale is mostly stupid.
I’ve done it a lot.
Scaled very big, and very fast.
But here’s a real metric — it isn’t topline — it’s rev per head…
Take your staff count.
Multiply by $400k.
That’s your target number.
Alternatively - take your revenue, divide by your staff count.
That’s your current number.
8 people on a team need to produce $2,400,000 per year. Or you’re overstaffed on bodies, understaffed on talent.
The fastest way to a peaceful business is to honor this metric.
You don’t “have” to do anything for anybody.
You are the owner.
Unfollow anyone who tells you otherwise.
If you need help with this, I’m sure we can help you… going deeper into this model there are “tiers” of teams & different frameworks that tell you WHO to hire first and what not.
But the basic premise is this: small is amazing.
It can be hella fun and hella impactful.
I’ll explain more later — because it doesn’t have to be a ”trade.”
That’s all for now…
I love this. Obsessing over your new model since I’ve been following you.
As a caveat...
McKinsey's revenue $11 billion, 30k+ employees, revenue per employee $350K+
BCG $11 billion, 22k employees, $450K revenue per employee
Not sure if that means anything though. Different world. They are in consulting though.