3 Secrets for Growing From $1 Million to $100 Million in 3.5 Years
Do you seriously want to be successful? If so, how fast and how much revenue do you need to get there? One of the smartest ways to become successful is to apply your greatest strength to a market that is small now but will become huge in three years; build a great team, as well, so you can hit $100 million in revenue (today's IPO threshold).
After talking to about 200 entrepreneurs and startup investors for my 2012 book, Hungry Start-up Strategy, I dedicated a chapter to that approach. It's required reading in my entrepreneurship class at Babson College, which Money chose as America's best college in July 2014 and which U.S. News & World Report has ranked No. 1 for undergraduate entrepreneurship education for each of the past 17 years.
One of the most successful startups I interviewed for the book is Fiksu (the word means smart in Finnish). Since the company started selling in 2010, revenue has grown 216 percent, from less than $1 million to $100 million in a mere 3.5 years, with only $17.6 million in venture capital.
Speaking of smart, Fiksu's CEO, Micah Adler, loves algorithms, to develop procedures for solving difficult problems. After his undergraduate degree at MIT, he went on to earn a Ph.D. from Berkeley and win tenure as a computer science professor at UMass Amherst before quitting to start a company.
Fiksu has put some amazing numbers on the board. Its Programmatic Mobile Demand Platform now delivers, according to the company, "mobile media inventory and advanced optimization to more than 800 customers, and promotes more than 2,300 mobile apps. Its data now includes profiles of nearly 60 percent of the world's smartphones and tablets, three billion app downloads, and 3.5 trillion marketing events."
Customers, including Disney, Topps, Dunkin' Donuts and Groupon, keep Fiksu's 260 employees--expected to reach 300 by December--busy in offices in Boston, San Francisco, and Northampton and in the U.K., Finland, Singapore, South Korea, and Japan.
At the heart of this rapid growth is a startling improvement in efficiency that Fiksu's technology provides those who want to encourage people to download apps. Within six months of starting, Fiksu had reduced the cost per app download from $3 to 0.26 cents, according to my August 2013 interview with Adler.
In an August 8, 2014, interview, Adler shared three secrets on how to grow fast.
1. Be the best at what you love.
No matter what you're good at, you should try to be the best. If that skill happens to be something that the market values highly, you are going to be rich.
Adler is very lucky to be smart at developing algorithms--something that the market values. And he is one of the world's best at it--having earned a Ph.D. in the field from one of the world's best schools.
Initially, Fiksu strayed from the focus on algorithms and did not do so well. And when Adler returned Fiksu to betting on algorithms, its fortunes soared.
Fiksu's initial focus was on building apps, but a major insight led it to a change in course. As Adler explained, "We built a news aggregation app like Google News that was optimized for mobile. For a few months in mid-2009, it was more successful than The New York Times or CNET. But we went from tens of thousands of downloads a day to 50 a day within two months. I said, 'We need to do something beyond PR to get recognition and downloads.'"
So Adler went back to his first love. "We started to develop algorithms to make digital marketing efficient," he said.
2. Bet on a market that will get big fast.
If you want to get ahead fast, funnel your pile of chips into a market that is getting big fast.
Mobile app marketing certainly fits. By 2012, two years after Fiksu had started, this market represented $19 billion in revenue growing at more than 60 percent a year.
Since then, this market has just gotten bigger. Exulted Adler: "Digital media is now bigger than TV as the place where people view advertising. And 51 percent of digital media is consumed on mobile apps. All of a sudden, advertisers are allocating their marketing budgets to mobile apps. And our technology answers key questions for them: How many apps were downloaded? Are they any good? Did they lead to purchases?"
3. Hire and motivate the smartest people.
No matter how smart you are, nobody has figured out how to build a $100 million company with just one employee. A founder must hire lots of other people who are also very smart and who can work together well instead of fighting.
Fiksu seems to have figured out how to do this. Adler says, "The five most important secrets of Fiksu's success is hiring a great team. We hire people with great intellectual horsepower who have low egos and enjoy working with others. We have a fantastic culture of transparency, openness, no offices, flat organization structure, and no office politics."
Fiksu recently hired Ken Goldman, a veteran of Salary.com's IPO, as CFO.
If that hire is preparation for Fiksu's own IPO, you'll be able to read more of the secrets of its success--maybe in 2015.
For now, apply these three to your startup.
Strategy consultant, startup investor, teacher, corporate speaker, pundit, and author of 11 books, Peter Cohan has invested in six startups, three of which were sold for a total of $2 billion. Before founding Peter S. Cohan & Associates in 1994, he worked with HBS strategy guru Michael E. Porter.