The Non-Obvious, Obvious Idea of Scale

If you can’t explain something to a child then it’s likely you don’t know what you’re talking about.

Seems obvious when you think about it: memorizing buzz-words is far from understanding, so if you’re speaking in terms you’re not saying much of anything. There are two main reasons people complicate ideas; they don’t want you to understand because they profit from the confusion or they have no sweet clue what they’re talking about.

There is the human you come across who is too smart to create normal sentences for the rest of us peasants but they’re actually rare in my experience and you know them when you see them. I love those people. They’re so smart they can’t communicate the work so they need me to communicate it for them because I’m stupider. More stupid? Stupider? You see what I’m saying.

My first exposure to clarification by simplicity was when a friend ran something I’d written through a readability program. The result was that I wrote the piece at a post-grad level.

My immediate response was ego: wow I’m writing at a post-grad level, I must REALLY have a grip on this stuff. I’m so smart!

WRONG.

What it meant was I’d memorized a few buzzwords, strung them together in a convincing way and made everybody else squint trying to understand what I’d written.

This is a huge problem because how we make sense to each-other has real world consequences.

Watch the difference:

Ex: Jeremy Rifkin’s concept of the Third Industrial Revolution is that when new modes of communication combine with new energy systems and new forms of mobility, our economy is about to radically change.

Seems complicated, but it isn’t.

Ex: Life as we know it changes when these three key technologies change at the same time:

  1. New forms of energy that we use to power our daily lives.

  2. New forms of communication that we use to coordinate our daily lives.

  3. New forms of mobility that people use to move around.

There are several repeat offenders when it comes to explaining things using complicated words (or people pretending they understand when they really don’t which is equally as likely).

  • Crypto = Internet Money

  • Blockchain = A distributed ledger of transactions = A record of exchanges made between people that is public

  • Startup = Creating a product or service and exchanging it for money

  • Decentralization = What was exclusive to a small group of people is now accessible to many people

  • 10x = Multiplying your productivity by 10 (please for the love of all that is sacred never say this again)

  • Side Hustle = You do one thing for most of the day and then do something else on the side for the rest of the day (they’ll tell you you need one to be cool in 2019 but you don’t)

  • Disruption = Creating something different and better that makes the thing before it look bad

  • Scale = Big-time growth over the long-term

Scale may in-fact be the most insidious because it is so poorly communicated.

SO, here is a look at a basic, completely obvious form of scale that you’ve never understood until now.

Let’s say you have a product that you sell to customers who want or need it. Good on you, you’re an entrepreneur. I know they made it seem like it was a big scary thing that only happens on the West Coast of America but actually it’s the mom & pop shops that make up the vast majority of entrepreneurs (they just don’t have a podcast).

You sell your product in exchange for money (duh).

You’re selling day in and day out but you’re just doing OKAY. You’re putting food on the table but nobody will be drinking Mojitos in Tahiti any time soon.

So you wonder, what is next? There must be more!

There IS in fact more and the promise land is SCALE!

Your problem is that you are what they call production limited.

Here’s what’s happening: your feeling handcuffed because you put yourself in a position where you only have two controls: the cost of your product or the amount of products you sell.

You have to change at least one or you’re going nowhere pal.

Even if you DO change one there is a ceiling for both: you could be the best cafe on the planet and nobody will be paying $100 for their morning Americano. Simultaneously there are only so many people who can come through the door at one time, on one day, in one shop.

You have a scale problem my friend.

Luckily it’s 2019 and there is a road to the promised land.

You have to create something that isn’t constrained by your current problems. What are our problems?

  1. Cost = the price can only go so high

  2. Amount of goods you can sell = you can only sell so many

  3. Time = You will never get rich renting your time (thanks Naval)

So take these controls out of the equation!

Create something that has a marginal cost of 0.

  • Marginal Cost of 0 = your cost of producing the thing and your time to create the thing does not change if 1 person buys it or if 1 million people buy it.

You need something that makes you money and creates leverage for you while you sleep: something that does not take your time and that works for you even when you ARE on the beach drinking Mojitos.

Can you think of some examples? Now you’re REALLY turning on the after-burners.

Here are 5 for free. You want to work together 1 on 1? That’ll cost you.

  1. Online Course

  2. Podcast

  3. E-book

  4. Music

  5. Subscription platform