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B. Why are startups expected to scale in the multiples of 10x
The role of technology in providing access to something to the more non-skilled common population
A startup is a technology business. The very goal of any technology(like automation, and machines) is to reduce human effort, thereby enabling higher productivity, and thereby enabling a business to serve a large number of consumers/customers.
For example, if a large corporation has to manage all its account books manually by the accountant, it has to higher those who are mathematically good with numbers. Say in a population of 1000, such individuals will be about 10. These ten will be very high in demand, as well as overloaded with work. However, by introducing a simple calculator, this bottleneck can easily be overcome. So when the corporation grows from 1000 to 10,000 employees in serving their customers, more average people can be hired as accountants, as they just have to know the accounting and need not be necessarily good at the numbers.
Now if the same company deploys accounting software, then it can hire individuals with basic skills, and wouldn’t even require anyone to enter accounting. This is because the core accounting activities will be taken care of by the software.
📙Calculator and Accounting Example in Technology
Now you can see that people who are not good with numbers, and people who are not good with accounting can do accounting and get benefitted from the accounting processes. Before the invention of accounting software, and calculators, because skilled accountants and mathematically better professionals would be limited in numbers, smaller businesses wouldn’t be able to afford them as the large corporations would pay more money to attract and keep the talents.
But the calculator first, and then the accounting software would enable small businesses, and thereafter even the individuals to take benefit of the accounting processes.
Because technology is an automated process machine, the machine can be produced as much as needed without significantly improving the production cost.
For instance, if the ten super-skilled accountants had to discover and train another ten super-skilled accountants from the population, one of the ten would have to dedicate a significant portion of life into trying to find those with superior mathematical skills, and then having that junior individual as an assistant and then train the assistant for over the years for the junior to become skilled enough to individually handling the accounting process. Therefore, the number of companies that could be opened in that era would be limited. The number of customers or verticals such companies served would be limited. Therefore the profit of the corporation would also be limited in the past.
However, with the innovation and introduction of technology, because commoners can use and quickly adapt to the technology, more customers can be served.
Because a startup is a technology business, of course, the fundamental measure of success would not be a number of adaptations like the conventional businesses, but the rate at which this adaptation increases, and the increase in the number of users.
