The Fallacy of Instant Success
It feels as though every day we read a headline of some money losing technology business that just eclipsed a $1 billion valuation in a short period of time. Constantly reading such things distorts reality and exacerbates a disjointed view of the effort and timeframe needed to create an exceptional business.
Few exceptional businesses are created quickly. While studying Intelligent Fanatics, one thing that becomes evident is many of them put in years of intelligent, diligent, and obsessive work before they hit their inflection point.
The inflection point, if visualized, isn’t an explosion but a wave. It is the result of countless incremental improvements or breakthroughs that build up over a period of years that finally crest and accelerate the business at a rapid pace.
Truett Cathy opened the Dwarf Grill in 1946. He tinkered. Twenty-one years later he opened his first Chick-fil-A.
James Dyson developed his first vacuum in 1980. It would take another twelve years until a small mail order catalog in the UK took a chance on him.
Gustavus Swift would run a small butcher shop in Clinton, MA for 14 years before revolutionizing the cattle-beef industry and becoming one the richest men in the world.
It would take Clessie Cummins twenty years to tinker with the diesel engine before going on to create one of the most powerful brands in American automobile manufacturing.
U2 wouldn’t produce their first big hit until their eleventh year together.
Sam Walton would buy his first Ben Franklin variety store in 1945. He would open fourteen more over the next 16 years before pivoting in 1962 and opening his first discount concept store called Wal-Mart.
Colonel Harland Sanders started serving chicken at a service station he managed in 1930. A food critic took notice in 1939. He developed his secret recipe in 1940. He franchised his first KFC in 1952.
For 15 years, Mary Kay Ash would work at two direct selling companies gaining experience and getting frustrated before starting Beauty by Mary Kay in 1963.
John H. Patterson, whom we highlight in our first book, bought National Cash Register in 1884 and was ridiculed by his peers. No one knew they needed or wanted a cash register. It took him more than a decade to reach an inflection point.
The incredible thing about the examples above is it took them 10-20 years before they even got off the ground.
James Carse wrote a book called, Finite and Infinite Games. The infinite game is where the time horizon is very long, if not eternal. The decisions an entrepreneur, business owner, or investor makes playing a finite game are different than those that play an infinite game. Intelligent Fanatics decide to play an infinite game right from the beginning.
In, Blueprint to a Billion, David Thomson analyzes 387 public companies (5% of public companies) that grew revenues to $1 billion since their IPO between 1980-2005. Thomson found that the companies had three discernible growth patterns (Variable Runway -> Inflection Point -> Variable Growth Rates) and three distinct growth trajectories (Four Year, Six Year, and Twelve Years) that occurred after the inflection point to reach $1 billion.
Thomson found that the time from a company’s founding to inflection point was variable amongst Blueprint Companies. Google only took 2 years. Cisco took 7 years. Fifth Third Bancorp literally took 120 years to reach their inflection point. Inflection points are hard to predict and control.
As an entrepreneur, it’s important to focus on what you can control, which is continuously making incremental improvements and compounding small daily decisions. If you do the right things long enough, eventually the wave of positive momentum will crest. Focus on the long-term and don’t get discouraged. It took many intelligent fanatics 10-20 years just to hit their inflection point. You will too.
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