How to Identify 'Big Business' Potential in Startups

The answer lies in the number 25,000 (25k).

A business that can efficiently serve 25k customers, has big business potential.

25k is a weirdly specific number.

Why not 24.9k 23k or 19.5k - which is the seating capacity at Madison Square Garden?

For one, it's an easy number to "math" with. Here are some examples:

If a business can serve 25k customers and each one purchases products/services worth $40, that becomes a million dollars in revenues.

At a 10% conversation rate, it'll need an audience size of 250k. If the conversion rate is 1%, the audience size will have to increase to 2.5 million.

These types of formulas seem scientific but they can facilitate how founders think about cost/revenues, digital marketing strategies, and retention/churn - all of which are important metrics.

Finally, a business with 25,000 active (and purchasing) customers must have a standard level of structure and organisation. It must have a system of operations that functions, with minimal active work from the founders and opportunities to optimise.

This phenomenon (the part about minimal active work from founders) is what Robert Kiyosaki described in his book "Cashflow Quadrant" as a definitive characteristic of big businesses - turns out he was right.

Admittedly, business success in general depends on several factors. Not many get enthralled with this response, but our world is so nuanced...how could it not be so?

If there's one thing the past has taught, it is that no one party (or investor) has a monopoly over identifying what ideas can become a mega-success. We have over the years, witnessed the conquest of underdogs and challenger brands, startups bootstrapping their way to unicorn valuation and the growing influence of crowdfunding platforms.

The popular saying 'impossible is nothing' exists for a time like this. Let's see what the next year brings.

Thanks for reading and happy holidays!