Every startup founder dreams of building a giant like Apple, Google, or Facebook. But what we learn in business and management courses, and at university, is mostly how to grow a business in fair weather, when everything is going smoothly. Interestingly, almost none of these giants used those traditional models; the real reason for their success is that they managed to grow exponentially and become one of the biggest players in their industry. In this article I will walk you through the four factors of rapid business growth that you need to pay close attention to when designing your business model, if you want exponential growth.
1. Market size
You need to know who your product is for, how many customers you can realistically reach, and what kind of revenue that creates. For example, if you build a local product for the Iranian market, your customer base practically cannot exceed a few million people. And if that product is bought once a year for a profit of about a thousand toman, then even with 10 million active customers your business will not make more than roughly 10 billion toman a year. So a business like that probably can never grow much beyond that.
The next point is whether you can expand your market. Apple, for instance, started with computers, then added phones, music players, and more, taking a share of other markets along the way.
2. Distribution
Most businesses have a limited budget; we cannot spend billions on advertising and distribution. And if our growth is slow, the product can be copied and a competitor can take our place and become the leader of the industry. Two things can help here:
The first is using existing networks to distribute your product. You have probably noticed that videos exported from mobile editing apps like CapCut, InShot, and KineMaster carry a watermark showing which app made them, and let you share the video to social media in one click. Those videos spreading on Instagram and YouTube get more people to discover and install the apps.
The second is making the product go viral, getting your current users to invite others. Think of the “invite friends” feature that rewards both sides when you invite someone. If you remember, Snapp used this early on and gave both parties a free ride. And if you do not remember that, someone has probably sent you an invite link for Hamster, Dogs, or some other Telegram bot.
3. A high gross margin
Gross margin is sales minus the cost of goods sold, and the higher it is, the faster your business can grow, because you keep more capital. For example, imagine you make a product like gum that costs 5,000 toman to produce and you sell it for 7,000; your gross margin is 2,000. Now imagine a special gum with a unique design or feature that still costs 5,000 to make but sells for 15,000; your margin is now 10,000, five times the previous case. The higher this number, the faster your business grows, and it is even more pronounced with service products. If building an online course costs 50 million toman and it sells for one million, then after the first 50 buyers there is no further cost and every additional buyer is a million toman of pure profit.
4. The network effect
This is one of the most important reasons behind today’s tech giants. Put simply, the network effect means that the more people use a product or service, the more valuable it becomes for everyone else. Most of us use Instagram, Telegram, and WhatsApp because the friends and people we know around the world use them, there is plenty of content on them, and there are many people whose posts we want to follow. That is exactly why no national social network can replace the international ones, and even international ones like Threads could not replace the old Twitter (now X); its users still stick with the same platform. Many products and services do not have this trait; an online course, for example, does not gain a network effect as its students grow, it might just gain a little credibility. But the number of drivers and passengers on a platform like Snapp or Tapsi creates a real network effect: the more drivers there are, the faster passengers find a ride and the cheaper it is; and the more passengers there are, the more trips drivers get and the more they earn. If one side runs short, the whole thing becomes ineffective and people stop using it, exactly like when you request a ride, no driver accepts, and you end up calling a traditional cab.
Wrapping up the factors of rapid growth
Now that you know the four factors, market size, distribution, a high gross margin, and the network effect, look at how you can apply one or more of them in your business model, or use them when designing a product or service you have in mind. If you would like a second opinion or some help with this, you can book a consultation.