Scale Amplifies Decision Risk

A discussion about how business decision-making needs to evolve as companies scale, particularly focusing on the counterintuitive notion that gut instincts become less reliable with growth, not more.

• Trust in Data Over Gut Feelings:

  • As companies scale, they have more data available
  • Not using available data would be "foolish"
  • Gut decisions become more dangerous at scale due to magnitude of consequences

• Impact of Scale on Decision Making:

  • Early stage: Can rely more on intuition with lower stakes
  • Growth stage: Must be more disciplined and data-driven
  • Mistakes become exponentially more costly at scale
    • Example: Wrong inventory decisions can cost $500,000+ vs minimal impact in early days

• Inventory Management Evolution:

  • Early mindset: "Rather have too much than too little"
  • Mature mindset: "Rather sell out than have excess"
  • Excess inventory becomes problematic on balance sheet at scale
  • Need to write down inventory costs (approximately 10% of gross margin)

• Product Portfolio Challenges:

  • Different products have different lifecycle stages
  • Managing multiple subscription lines (25-30) requires different approaches
  • Each product line has unique churn curves
  • Single growth metric doesn't work across diverse product portfolio

• Post-Acquisition Limitations:

  • Less independence in decision-making after P&G acquisition
  • Had to align with specific P&G division interests
  • Product expansion restricted by corporate structure
  • Gut instincts became less relevant due to organizational constraints