Exponential growth has changed the world. It has changed our lives, the way we consume resources and by extension the way we grow our businesses. This makes is all the more important that we understand exponential growth and the difference that this has made to various businesses. I am using a few examples to illustrate the same below:
Founded - 1962 Founded - 1995
Reached a turnover of USD 100 Billion - 1997 Reached a turnover of USD 100 Billion - 2015
Duration for growth - 35 year Duration for growth - 20 years
Retail has been around for the longest period of time and Amazon was a company that entered the fray to change how retailing is done and began the journey with books. In half as much time as Walmart, Amazon probably sells more categories of goods that Walmart ever has. It has managed to reach a turnover of a 100 Billion dollars in almost half the time that Walmart took. There is a case to be made that there are more humans on a planet than when Walmart started and that the capital needed for brick and mortal meant that they spread a lot more slowly and that is precisely the point. Human population growth is a exponential scale product and when you layer technology on top of it, we get growth that is unprecedented and unimaginable.
Launch year - 1985 Launch year - 2008
Peak sales - 360 Mn units per year Peak Sales - 1.3 Billion units per year (hasn’t peaked yet)
Duration to peak - 24 years Duration to peak - 9 years
Windows ushered in the era of personal computing and probably put a computer in every household. While this was powered by technology and was quite swift, Android makes that phenomenon look glacial when you compare the numbers. The difference - Windows happened before the internet; Android did not. In less than half the time that Windows took, Android has put itself in the hands of half of human population.
Founded - 1927 Founded - 2008
Inventory of 1 Mn Rooms - 2017 Inventory of 1 Mn Rooms - 2017
Duration - 90 years Duration - 9 years
Marriott had some of the same challenges that Walmart did, but even if capital had not been a constraint to enable the kind of distribution that Airbnb has enabled would have been impossible for a company like Marriott. Its a combination of latent resources coupled with technology and internet scale distribution that has resulted in a company like Airbnb reaching a Million rooms across the world.
Founded - 1903 Founded - 2003
Sales in 2017 - 2.5 Million units Launch sales of Model 3 - 325,000 units in a week
Duration - 114 year Duration - 14 years
Ford invented production on a conveyor belt. They revolutionised the way things were made, not just cars. It changed the way manufacturing was viewed forever. Human - the one component that slowed down that production chain are slowly being eliminated by robotics. The global scale distribution gives a company like Tesla the capability to sell a third of a million cars in a week, but also the audacity to assume that the charging network will find its way to support customers.
Things that would have been unimaginable 20 years ago are common place today and investors are making bets as such. The acceleration of technology coupled with the acceleration of human populations has changed the scales of businesses and the rate of percolation of technologies. It is important to think on these scales, at rates that are exponential to understand the effect that a business can have in the long run.