Little Bets Lead to Exponential Growth

→ by Tomasz Tungz < ttunguz >
at 11:01am Jun 30, 2011

This article is courtesy of Ex Post Facto.

An entrepreneur asked me a rhetorical question last week. “How much more could you achieve in a year if you had 10% fewer meetings? In particular if the value of that work grew like compound interest…”

I’ve been reading a book called Small Bets, penned by Peter Sims, former VC and entrepreneur. He chronicles the stories of the first HP calculator, Pixar’s animation studio and Amazon’s Kindle. These were initially all small bets, side projects, that eventually became company defining products.

Modern day startup stories parallel those from the earlier days of the valley. Odeo begat Twitter. Formstack, a web-based form builder, begat, a social network used by millions. Flikr, a virtual world for teens, begat a photo sharing phenomenon.

At Google, and in most places I’ve worked, managers evaluate a project by the expected value of the success. In Small Bets, Biggs argues to create disruptive ideas, we need to change that point of view. Instead, we should run lots of low-cost experiments. Startups have known this for a long time.

Humans are notoriously terrible at separating linear growth from exponential growth. Making small changes in our schedules or taking small bets in the short-term can result in disruptive opportunities.

About the Author: Tomasz Tungz

Tomasz Tunguz is an Associate with Redpoint Ventures where he focuses on consumer Internet, online marketing, digital media and software investments. Prior to joining Redpoint, Tomasz was the Product Manager for Google's Social Media monetization team, including the Google-MySpace partnership. In addition, he managed the launches of AdSense into six new markets in Europe and Asia. Before Google, Tomasz developed systems for the Department of Homeland Security at Appian Corporation, a provider of Business Process Management solutions. Tomasz also co-founded Perquimans Systems, a provider of bilingual, tri-currency automated time billing and document management systems for top tier law firms in Chile. Tomasz holds a B.A. in Mechanical Engineering, a B.E. in System Identification and Control Systems and Master of Engineering Management from Dartmouth College where he was a George Revitz Fellow.