What is thunder-scaling and why is it the only way to success and survivorship?
Thunder-scaling is an aggressive approach to grow a startup. The founder needs to treat his company like a body and a brain, and feeds both organs well to foster longevity. The body must be strong, agile and should fear no risk.
Thunder-scaling is the evolution of blitz scaling. It means an exponential, aggressive and sustainable business growth — although not in that order but it’s at the same time. In nature, thunders are usually preceded by lightning. If the startup world represents a sky full of lightnings, only the biggest crack that makes the loudest noise would be heard.
This is applicable to startup companies where tech plays a very crucial role in scalability.
For many tech companies it is either do or die. Time technology doesn’t really have a barrier to entry and so to succeed one needs grow fast and build the only possible barrier to entry: switching cost.
Switching cost is the only barrier that allows you to leap ahead of your competitors. My favorite example: I am a loyal Spotify user. If google music comes with an offer that is 5 cents lower, I would still stick with my Spotify. This shows why acquiring clients fast is key and the importance of thunder-scaling.
Just having some traction alone is not enough to sustain a startup, in order to succeed the growth should be:
Exponential: for the first 18–36 months the growth curve should be “exponential” and not marginal.
Aggressive: focus on growth rather than short term profit. Selling, even at a loss, is the only way to foster growth and to be able to do that you need to have big shoulders. This is why investors and money in the bank plays a pivotal role. Money will ensure an aggressive growth focused on acquiring users that will be retained in the future.
Sustainable: growth is often destabilizing. An excellent team and clear leadership are the way to drive the boat at maximum speed with no cup-sizing.
This is the first scaler advantage. If there are 3 competitors in the same space, the first one able to scale faster has the highest chance not to just survive but thrive and wipe the others away.
There are three considerations: Market size, Virality and Margins.
Market size: you need to be in a space where the market is big enough to give an incentive to investors to put money in. Investors are putting money at play betting on big gains.
Virality: growth is how fast the adoption is and how the value of the company increases. The goal is to maximize the number of users who are willing to adopt within a short time.
Margins: the higher the margins (or potential) the better. The investors will see that. Isn’t it contradicting to sell at no profit for market share? No, it’s not. You sell first at no margin, lock client in and tech will do its magic: once you start charging, the margin shall and must be vast.
Thunder-scaling requires a big ambition, a great dose of risk tolerance and risk management. Luckily the tech industry embraces audacious thinking and thunder-scaling is the only way to stay alive during the time of crisis. The risk that you take is more than mitigated by the fact that, if you don’t take them, your company would grow at a relatively slower pace or worse, disappear eventually. You need to attract enough capital to come to you not your competitors in order to move forward therefore, scaling fast is the only way to make your efforts worthwhile.
Entrepreneurship is a game for bad-asses and there is no space for “just dreams”. Dreams make your life meaningful and give you joy, but if your dream is more than a dream, then you would need to implement them aggressively, exponentially and sustainably to get there — otherwise you will become one of many crosses resting in peace at the startup cemetery.