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7 Figure vs 8 Figure vs 9 Figure Businesses?

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modernmonk

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Recently I was reading an article that showed the number of companies in different revenue ranges in the US. Here's the data:
$0 to $25M -- 5,640,800
$25M to $100M -- 62,968
$100M to $250M -- 211
$250M to 500M -- 572
$500M to $1B -- 1,069

It's interesting to see how in the 8 figure range there's almost 62k businesses, but in the 9 figure range there's barely 2k. So what's the difference between a business doing 7 figures in revenue, 8 figures in revenue and 9 figures in revenue?

Is it the founder's drive? Their business model? Or a combination of all? Would be interested to hear your thoughts on this, as well as what "type" of businesses you'd think are generally in the 7 figure vs 8 figure vs 9 figure.
 
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Antifragile

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Might it be the funding gap?

Building with your own capital (friends and family) to 8 figures is reasonable. Getting to 9 is 10x harder, if not worse.

But then raising $100M+ is easier from VC than asking for $50M. Big funds don’t want to invest small amounts, it’s same work for them.
 

Kung Fu Steve

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These numbers don't add up. At least in the "0-25 million" range.
  • There are 31.7 million small businesses in the U.S.
  • Approximately 200,000 "medium-sized" businesses...
  • and 21,139 Large businesses
86% of small businesses earn less than $100,000 per year.

But to answer your question... I think a lot has to do with timing and luck.

That probably sounds like a throwaway answer but I believe anybody can create a multimillion-dollar business out of just about any product or service.

When you start to get into the hundreds of millions (or billions), I think a lot of it has to do with being in the right place at the right time with the right product for where the world is at in that moment.

It's fascinating to study the Fortune 500's -- currently over half of them started in a time of crisis.

Examples:
  • Fortune magazine (90 days after the market crash of 1929)
  • FedEx (oil crisis of 1973)
  • UPS (panic of 1907)
  • Walt Disney company (after 11 months of smooth operation, the 12th was the market crash of 1929)
  • Hewlett Packard (Great Depression, 1935)
  • Charles Schwab (market crash of 1974 – 75)
  • Standard Oil (Rockefeller bought out his partners in what became Standard Oil and took over in February 1865, the final year of the civil war)
  • Coors (depression of 1873)
  • Costco (recession in the late 1970’s)
  • Revlon (Great Depression, 1932)
  • General Motors (panic of 1907)
  • Procter and gamble (panic of 1837)
  • United Airlines (1929)
  • Microsoft (recession in 1973 – 1975)
  • LinkedIn (2002, post dot-com bubble)
Even more recently Instagram, Whatsapp, and a few other tech companies were started during a crash, too.

Companies that survived these challenging times grew exponentially. If you read the book Good to Great by Jim Collins, he explains the different choices of 15 different similar companies. Fascinating read.

Many focused on profit. Efficiency. Distribution. Creating a smooth machine from start to end.
 

modernmonk

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But to answer your question... I think a lot has to do with timing and luck.

That probably sounds like a throwaway answer but I believe anybody can create a multimillion-dollar business out of just about any product or service.

When you start to get into the hundreds of millions (or billions), I think a lot of it has to do with being in the right place at the right time with the right product for where the world is at in that moment.

I would say that's a fair answer, especially the part about "being in the right place at the right time with the right product."

Because let's say I looked to the F500 companies and saw a lot of restaurant chains and decided to start on today, the chances of getting to that multi-billion level are slim because most of those companies were started during the franchising boom.

On the other hand if someone wanted to started a "traditional" tech company like those on the F500 today, the chances of making it big would be slim as well.

While I know it's generally hard to predict, what would you conjecture would be the "right place, right time" of today's world? From my research so far it seems like something in the web3 space, biotech space or somewhere in renewable energy.
 
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Kung Fu Steve

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I would say that's a fair answer, especially the part about "being in the right place at the right time with the right product."

Because let's say I looked to the F500 companies and saw a lot of restaurant chains and decided to start on today, the chances of getting to that multi-billion level are slim because most of those companies were started during the franchising boom.

On the other hand if someone wanted to started a "traditional" tech company like those on the F500 today, the chances of making it big would be slim as well.

While I know it's generally hard to predict, what would you conjecture would be the "right place, right time" of today's world? From my research so far it seems like something in the web3 space, biotech space or somewhere in renewable energy.

Competing against many of the Fortune 500s is challenging because they play by different rules. They operate by cronyism, not capitalism. Meaning, they have lobbyists to bribe government officials to make it difficult, if not impossible to compete.

Many of the smartest people I've met build companies that these companies would acquire.

I'd agree with those 3.

I'm not an expert in any of them. I hope to learn a lot more about the web3 space. The metaverse fascinates me. But I'm pretty far behind. I don't work at FB :rofl:
 

biophase

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Recently I was reading an article that showed the number of companies in different revenue ranges in the US. Here's the data:
$0 to $25M -- 5,640,800
$25M to $100M -- 62,968
$100M to $250M -- 211
$250M to 500M -- 572
$500M to $1B -- 1,069
I would bet that in the $25m to $100m range that 80% of the companies are closer to the bottom range and a handful are close to $90M.

It’s not like there’s 1000 companies at $90M-$99M and then only 211 above $100M.

My guess is that $100M plus companies grow much faster and eventually go public and become $1B companies.
 

modernmonk

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I'm not an expert in any of them. I hope to learn a lot more about the web3 space. The metaverse fascinates me. But I'm pretty far behind. I don't work at FB :rofl:

A channel I’ve found that helped me learn a lot about web3 is “Whiteboard Crypto.” Before that I couldn’t wrap my head around most of the concepts either LOL.

Seems like a lucrative space to be in, but the only problem I see so far with it is that it’s not “idiot-proof” for the lack of a better word, which is important for mass adoption. But hey, most people don’t know how google works but still use it - web3 will prolly just end up being another set of tools available to solve problems more efficiently with.
 
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