Staying Small Versus Scaling and Going Big

When one thinks about acquiring a business or running your own everyone is talking about scaling your company without having a clear definition of what "scaling" actually is.

To illustrate, I will describe in detail the famous story of the Mexican Fisherman & The American Investment Banker. While the exact source is a little murky, this is the parable of the story as described below:

An American investment banker ran into a mexican fisherman and complimented the quality of the catch the fisherman brought in. The banker asked the fisherman how long it took to catch the fish?

"Only a little while". The banker asked why he didn't stay out longer on his boat to catch more fish? The fisherman told the banker that he had more than enough to feed his family. "But what do you do with the rest of your day" said the banker?

The fisherman takes a siesta with his wife, plays with his children, goes into town to play the guitar with his friends, has a nice glass of wine and calls it a day.

But the banker is puzzled. Why didn't the fisherman buy a bigger boat, then sell the excess fish to a middleman, buy more boats, build a facility to process all the fish etc etc? He could become so wealthy from doing so! Or so thought the banker.

The fisherman, obviously intrigued asks how long this whole process would take? The banker says "15-20 years".

But what happens afterwards? The banker said "you can take your company public, make your millions, then retire in a small fishing village doing the things you enjoy and always wanted to do"!

The fisherman retorts "isn't that my life right now"?

What is the moral of that story? Many things.

If you want to go big, why? If you want to stay small, why?

Some people want a business because it provides a certain lifestyle that only that business can sustain compared to a regular job. Others buy a businesss, scale that business and then work towards achieving multi millionaire status.

Either way, if someone gave you a million dollars but didn't know what to do with it, it would have been a lot more valuable if you weren't given the money in the first place!

There is no shame in staying small. If anything, you can be way more profitable staying small than going big, scaling & having a giant enterprise which ends up being a 10 layer bureaucracy.

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