Keynote Speech at Money Live
I was honoured present a key note speech at the Money Live summit (London), and among the great questions and participating audience, I felt there was one main point that seemed to hit a nerve so I’d like to share it in case it’s valuable to you.
As part of my presentation I was asked to showcase the typical pitfalls, and challenges involved in scaling start-ups and SME’s, especially in Fintech. Everyone wants more market share and more customers to grow. So how we do that, and how do we overcome that challenge wisely?
You Only Have a Certain Amount of Fuel
Each one of us has a certain amount of fuel in our tank at any given moment. The same is to be considered whether we think about our personal energy, our emotional resource, or our companies bandwidth to handle challenges and growth at scale. One of the many problems we have, is how can we grow sustainably, without falling foul of running out of fuel or doing things that are not-so-obviously counterproductive to our plans.
The magic takeaway is planning how far we want to go in a particular direction. I used the analogy of a rocket ship…
If it takes 50% of a rocket ships fuel to reach 80% of it’s speed. Does the other half of the ships fuel accelerate to 160% of it’s maximum speed?
Of course not. What we see is a natural law where things can only go so fast, and there are certain barriers in the way of reaching certain goals. An investment of something getting us from here to there, doesn’t mean that doubling the spend will double the results. Usually it’s far from the truth albeit a logical idea.
Be careful when aiming at targets
If I wanted to acquire 1 billion customers in the UK alone, it would take all of the money, time, resource available and it would be infinitesimally difficult (basically impossible) to achieve, due to the fact there is nowhere near 1bn people currently in the UK. So if I acquired 100,000 customers for £100,000 in the UK. I can’t assume £500,000 will acquire 500,000 in the UK, and for sure £1B will not acquire 1B users in the UK. An overly simplified example, but you see my point.
This natural law reflects the exponential rise in cost for increasingly smaller gains, and we, as humans, often fall victim to it. Scaling a company usually means growing a team, however doubling the size of a team rarely doubles the number of problems that arise. It’s more likely that doubling your team may quadruple the number of interactions, and further multiply the number of potential problems arising. This even further multiplies the resource needed to solve the off shooting issues at scale. It’s rarely (if ever) linear.
I sometimes find it difficult to keep an audience fully engaged during public speaking. However, there was a particular moment in this talk where I could feel a shift — the energy in the room connecting with a key idea. It happened when we explored a simple but often overlooked concept:
Whether we’re pushing ourselves to hit bigger personal goals, risking burnout for marginal gains, or expanding our business departments too quickly, human nature isn’t wired to anticipate the exponential rise in complexity that follows a linear increase in fuel-usage. This is the same whether you consider your personal energy, or your companies resource, or your market penetration. All have exhaustible limits, and exponential trends of increasing cost.
This, I believe, explains the persistent sense of overwhelm many people feel when building or scaling a business, and how badly things can go wrong for companies that don’t plan market penetration carefully, or scalability in a sustainable manner — especially in the digital space.
The same principle applies to user acquisition in Fintech which was the center point of this particular talk, or even marketing to consumers in general. Every market has a defined size and a measurable cost per acquisition of a new customer. These systems have limits. That’s why it’s essential to plan not just where we’re going, but also how far we intend to go. Without this, we can’t plan how much fuel we realistically need.
If we go into the situation not knowing how much fuel we realistically need, we can risk falling short, or alternatively overspending needlessly.
Main Takeaway from The Money Live Summit
The big takeaway from the money live summit was to be sure that the systems you’re using to market your product and acquire your customers are accurate and functional. This is vital to see in real-time how your market penetration or market share is augmenting as you’re deploying your resource. How much was your cost per acquisition of a new customer when you began? How much is it now? How is it trending? Is it a linear increase? Or is it exhibiting an exponential rise?
Basic analytical platforms can do a good enough job for you to be well-versed in your companies metrics. Assuming they are accurate!
You may find that 80% of the job can be done with half your fuel, while reaching 85% might burn through all of it. How important is that extra 5%? maybe it’s vital… Maybe it’s not. We rarely assume this type of cost-increase occurs, or how erratic the rise really be. We rarely forecast the numbers of problems quadrupling when we double the number of moving parts.
I need to remind myself of this all the time, I make this mistake frequently, and chances are, you might be making it too. Taking care to analyse your ambition and measure the completion of goals while realistically assessing how much fuel you’re willing to spend to get most of the way there isn’t easy. It takes work, but it’s also a more and more crucial part of why some teams are absolutely crushing it, and others are not.
Business analytics, results of advertiser accounts, and 1st party data infrastructure give the insights necessary to realise when you are entering an exponential cost crisis, and burning fuel to little or no avail, or alternatively it shows you if you have a huge un-tapped opportunity ahead of you to make effective investments to increase market share at a fair price.
The navigation systems (analytics) and engine dials (ad accounts) on the rocket ship are vital, but it’s common to overlook them.
Look after your fuel, and spend it as wisely as you can.
