If you want exponential growth, forget linear thinking.

If you want exponential growth, forget linear thinking.
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We repeat it every day here at Matter: the success of any media startup depends on its ability to match top-down trends with a bottom-up user point of view. That formula — easier to say than to achieve — has burnt millions of entrepreneurial neurons throughout history. But digital technology has added a new level of complexity to it. Now, if you want to create a product or a service that will be really innovative and useful, you have to understand the exponential function.

Pascal Finette is an authority in this field and that’s why we invited him to talk to our Matter Six class. He’s a respected former entrepreneur and investor, and is currently the Entrepreneurship Chair of Singularity University, an institution where leaders learn how to “apply exponential technologies to address humanity’s grand challenges.”

Finette’s talk at Matter was titled The Field Guide to Exponential Thinking. “This is a sixty minute, free version of a week-long sold-out program at Singularity University, so brace yourself,” said Finette to the entrepreneurs before diving in. Here are five key takeaways that stood out to me from his informative and wide-ranging talk.

1. Be sure to break free from linear thinking.

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Courtesy of Pascal Finette

“Linear thinking is the path to doom for new ventures. We’re losing lots of opportunities in a world where linear thinking clashes with exponential trends,” says Finette.

His words echo those of the 20th century physicist Albert Allen Bartlett, who once regretfully said, “The greatest shortcoming of the human race is the inability to understand the exponential function.” He was living in a world that was rapidly transitioning from linear to exponential growth, but that did not seem to understand the implications of this change.

Finette quoted Peter Diamandis, co-founder of Singularity University, who explains how our minds aren’t trained to think on an exponential scale: “After 30 linear steps I’d end up 30 paces or 30 meters away and all of us could pretty much point to where 30 paces away would be. But if I said to you take 30 exponential steps, one, two, four, eight, sixteen, thirty-two and said where would you end up? Very few people would say a billion meters away, which is twenty-six times around the planet.”

When a technology becomes digital, its rate of growth no longer obeys a linear equation. It will look more like this:

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Flood the world with your idea.

Right now, exponential thinking is bread and butter for engineers and scientists, but it’s still not a popular mindset among other professionals. If we want to use technology to solve all kind of problems, then ‘exponential literacy’ should be a mandatory course in every school — and an essential element of any entrepreneur’s approach to building a business.

So, Finette urges, now is the time to start thinking exponentially. It’s the only way you will get ahead of trends in this information age.

2. An entrepreneur’s opportunity of a lifetime: from analog to digital.

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Courtesy of Pascal Finette

“The biggest opportunities in your lifetime are those where you transform an analog business into digital,” says Finette. When you make the transition from the physical world to the world of information, the growth of your venture has the potential to develop into a successful exponential curve.

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You know that tiny camera in your pocket? It started life like this…

An example of this, said Finette, is the story of the first digital camera, created by Steve Sasson while working for Kodak in 1975. At the beginning it was disappointing. Kodak executives weren’t excited about it because, according to Moore’s Law, it would take almost 20 years to have the adequate technology to make it good enough and cheap enough to become commercial. And besides that, they said, “who wants to watch photos on a screen?” They patented the idea anyway, and about three decades later it was worth billions because they’d created a technology that everyone was using. It followed an exponential curve.

3. People will say that your idea is worthless and nonsense when you’re starting.

The initial reaction of the Kodak executives, one of disbelief or at least suspicion, is a pattern that greeted many digital products and services at first, says Finette. But later the idea became democratized — the seed of a technology that went from “crazy” to “craze.”

Finette tells entrepreneurs not to be beaten down by naysayers and to see embrace their response as part of the exponential curve. At the beginning it may be disappointing, but it will get better if you find people that believe in what you’re doing, early adopters who’ll try out your tech, give feedback, and become evangelists for its usefulness. Finette mentioned this video as an example of an idea catching on. Watch it and get inspired.

4. Once you start pitching to investors, be sure you know how to answer the 10X question

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Courtesy: Pascal Finette

Let’s say you’ve got this great idea of how solve a problem, you understand the exponential tech trends, and you’ve found a good team to create a startup. You need money to scale so you pitch your idea to an investor (let’s call him Pascal Finette). After your pitch he will ask you: “If I give you ten times more than the money you’re asking me right now, what would you do with it?” Will you be ready for that?

“I can swear most early stage entrepreneurs have no idea or they never ever thought about it”, says Finette. “And it’s a huge red flag for me because it shows me that the entrepreneurs are not thinking about scale, and typically they babble something like, ‘Oh yeah. Hire a few more people to go into more countries,’ and so on, but that is never the answer.”

Be sure to show that you have a solid projection of your company’s growth in the months and years ahead, and a deep understanding of the problem you’re solving. If you really want to grow fast, you must have a clear answer to that question.

5. Your growth depends on how big the problem is

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Finette told our class that the first question he usually asks himself is: What does it take to make the problem go away? Not just to make it better, but to go away completely. Depending on how big the problem is, he knows how big a company can become. Check out this quote:

“I’m a pacifist, but in the first page of the handbook for the U.S. Navy SEALs there’s a formula that summarizes this: Your rate of growth equals the magnitude of the challenge multiplied by the intensity of the attack. So if you take that for real why wouldn’t you take the biggest problems –poverty, unemployment, global warming, malnutrition– and hit them as hard as you can: That will be your rate of growth. There’s no reason not to take the hardest problems, because all we care about as entrepreneurs is our growth.”

Get more of Pascal Finette.

1. He’s pretty active on Twitter.
2. Visit his website.
3. Make sure you subscribe yourself to The Heretic, a.k.a. ‘Daily Therapeutics for Entrepreneurs.’ It’s a useful community. He recently published a list of books that any entrepreneur should read before starting a venture. Have you heard of them?

Pascal Finette’s “Drunken Walk”

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Finette drawing his “drunken walk of the entrepreneur” at Matter SF.

Before getting to Singularity University, Finette’s career followed a ‘drunken walk’ — bouncing from node to node in a path that only really makes sense retrospectively.

He founded his first company right after college, and now calls it “the dumbest company on the planet.” Its name was Oil on Mars and it was for online greetings cards. Finette was living in his native Germany and copied the model from Blue Mountain, but he didn’t do enough research in his local market. He really hustled to get this thing off the ground, and raised $2.5m in seed funding as a solo founder with a 3 page business plan. It was different in those days, he says. He ended up selling it “for a very small amount of money”. That experience defined his journey as an entrepreneur in two ways. First, he says that it made him humble, and second, he discovered that he’s good at building stuff but he needs to hand it over to someone else when it’s built.

After Oil on Mars, Finette did many different things, including starting a venture capital fund, opening an art gallery with his wife. He worked at Mozilla, and at Google — famously, for 90 days. There he learned that he can’t work in the confines of a large company and that he prefers small groups. He’s the sort of entrepreneur that soaks up an experience fully but his attention span is short, so he needs to move from one thing to the next quickly to avoid boredom. He accepted the job at Singularity University because he believes it’s a great place to tackle the big problems of humanity using innovation, entrepreneurship and technology. He fundamentally believes that the problems we see in our world today need solving, not just to get “a little bit better”.

The Drunken Walk is a series of live fireside chats, blog posts, and podcasts (coming soon!) from Matter Ventures, the world’s only independent startup accelerator for media entrepreneurs. We dive into the personal stories of founders, experts, and innovators in media to uncover the moments in their careers that changed everything. Our goal is to inspire and empower the next generation of media entrepreneurs to get from A to B without a map.