A while ago there was a discussion amongst colleagues about how Apple Inc took 38 years to get to a US$1 trillion valuation and only 2 years thereafter to get to US$2 trillion. There are many explanations for this phenomenon if you will call it that but there’s one thing that should be focused on above all others, I will call it exponentiality.
What is it?
Exponentiality is simply put the ability of something to grow exponentially. Exponential growth is growth on growth or compounding. So if apply 100% growth to one dollar, it becomes two dollars. If we apply 100% again to the dollars they become 4 dollars. So you can see that the rate of growth stays the same but the output of it grows. So what does this have to do with Apple’s stock valuation and more importantly your business? Simply put the more you do something the better you get at it. The process of making your first $1000 in business will take longer than making your second thousand all things being equal.
Where does it apply?
Well, there are various places where exponentiality applies, it is a natural law. Sometimes you will hear it described as the learning curve, where the more times or the longer you’ve been doing something the better you get at it. Building a habit like saving and investing is another area this applies to us. We often struggle much more to get started but once we have started each monthly contribution to paying ourselves becomes easier and easier. Exponentiality also applies to providing your product to your customers. If you are producing a good there is no doubt that you get better with it as you go. Same goes if you are providing a service, including providing goods, you get better as you do it more times. You learn. You grow.
What it means for you
The big lesson here is for beginners or those who want to or have been forced to try something new. The adage and immortalised song lyric “it gets better with time” has some truth to it. There are many hidden traps and dilemma that only come to light in the business world when you are deep in the trenches. You learn what is key and what is not. Howard Schultz principle for Starbucks was to make one excellent cup of coffee and repeat. You may have also heard of the 10000-hour rule associated with Malcolm Gladwell from his masterpiece Outliers. It takes so many hours of practice to reach a certain level of proficiency.
I always want to stress that this is not a time thing. The 10000-hour rule is about 10000 hours of practice, not 10000 hours of just being there. Exponentiality is not a time thing as we can see from Apple’s case. It’s about learning and learning is about iteration rather than duration. What this means is it’s about the number of times you do things not how long you’ve been doing them. So you will see a lot of people complaining about how they are not getting better at something even though they have been at it for so long.
How to use it
Simply do more. Whatever it is you desire to get better at, do more of it. That activity that your customers appreciate and come to you for, do more of it and more often. Are you starting? Do more of whatever it is that you intend to do. No customers? No problem? Find customer number one, do some free work, to begin with. Test on friends and family. I realise the murky waters of pay by exposure are a difficult area so I will not talk about that here. Whatever your success factor or deliverable is, do it more. And don’t focus on spending more time on it, do it more often. This applies to anyone. You could be a landscaper, Baker, foreign currency trader, vendor, investor, technician, musician or anything else.
The ultimate goal.is to employ exponentiality in your favour. It doesn’t have to remain something you read about in a StartupBiz article, it is real and at work in our daily lives. Unfortunately, exponentiality is not a selector and if you have bad habits they can grow exponentially too. It is always at work around us so the idea is to put it to work for us.