Use These 3 Principles To Unlock Your Company’s Growth
Adapted from my speech at Alpine Investors’ 2023 Growth Summit.
Let’s start with a game: I’ll share details on three companies, and you try to guess which ones I’m describing.
First, a discount retailer that opened in the 50s, bringing low prices to small towns and decimating Main Street. Between 1970 and 1985, $1 invested in this company grew to $6,000.
Second, a Southwestern U.S.-focused airline that started in the 1970s, and became known for its quick turnaround times and hospitality.
And third, a massive online retailer with low prices, free shipping on millions of items, and a record $125 million in sales in its first year.
If you guessed Ames Department Stores, Pacific Southwest Airlines (PSA Airlines), and Buy.com, congratulations — you’re three for three.
Ames, PSA, and Buy.com have several things in common. As evidenced by the success of their respective competitors, Walmart, Southwest Airlines, and Amazon, they all had the exact right strategy at the exact right time. But Ames, PSA, and Buy.com all went out of business, and they all failed because of the exact same behavior — a behavior that too many business leaders still replicate today.
Tenets of Becoming the Best
At Alpine’s Growth Summit in 2022, we talked about three tenets to help you become the best in the world: psychology, imagination, and timeframe. You change your psychology when you give yourself permission to become the best — and then define what “the best” means for you with a tangible, measurable metric. You unleash your imagination by envisioning a future that doesn’t yet exist — because if it did, you’d already be the best. And you lengthen your timeframe by actually scheduling time for that imagination — by planting the oak trees today that will yield shade tomorrow, and resisting the temptation to let the urgent crowd out the important.
“Plant the oak trees today that will yield shade tomorrow.”
That’s what becoming the best looks like at 100,000 feet. But how’s the view at 30,000 feet? How do we put those tenets into practice — specifically, when it comes to growing our businesses? Over more than two decades at Alpine, we’ve found that the three principles that yield organic growth can be summarized in just six words: Ideal Customer, Irresistible Offer, and Operation Crush.
Principle 1: Find Your Ideal Customer
The behavior that Ames, PSA, and Buy.com all had in common? Each of them expanded too quickly — because they failed to focus on their ideal customer. Ames had a four-year head start on Walmart, but like everyone else in business, they wanted a huge total addressable market — in their case, the entire United States. So they scaled across little towns and big cities, built small and large stores, and quickly spread themselves nationwide. Walmart, meanwhile, opened every one of its first 24 stores in the bustling metropolis of northwest Arkansas, and got to know its ideal customer extremely well. In duck hunting season, for example, they knew exactly what type of camouflage people wanted. Because of their geographic density, they were able to build distribution centers and lower the total cost of delivery. Because of the homogenous customer they served, they were able to buy products in bulk, at massive discounts, and sell them at lower prices than what their competitors paid at wholesale. Ames filed multiple bankruptcies before closing its last stores in 2002; Walmart became the world’s largest retailer, and in 2023, generated an incredible $611.3 billion in revenue — an estimated $76.41 for each person on the planet.
PSA Airlines’ story is similar. After success in California, it launched in every state in the U.S. and was eventually sold, while Southwest Airlines focused on Texas for its first 20 years, was the best-performing stock on the NASDAQ from 1972 to 2002, and is still one of the country’s top airlines. Likewise, Buy.com tried to sell everything from computers to socks, and was eventually acquired at a discount, while Amazon spent its first two years primarily as a bookseller, offering the widest selection of books on the planet, and once it established customer trust, added additional products. The packages arriving on our doorsteps weekly are a good reminder that they eventually went on to become the largest online retailer in the world.
We see this pattern again and again: When you channel your energy and resources into your ideal customer and deliver what really matters to them, you spend less, get more value for your marketing, and earn higher margins.It may feel counterintuitive. It may even feel scary. Am I really saying you should shrink your total addressable market? That’s exactly what I’m saying — because focus is a superpower. You become the best in the world by finding what’s working and doing more of that.
“Focus is a superpower. You become the best in the world by finding what’s working and doing more of that.”
As Bruce Lee famously said, “I fear not the person who has practiced 10,000 kicks once, but I fear the person who has practiced one kick 10,000 times.” Northwest Arkansas was Walmart’s “one kick,” and our job as business leaders is to find our own.
To find your ideal customer, narrow your market and play a winnable game. Dominate that market first. Then scale.
Principle 2: Make an Irresistible Offer
In 2008, Airbnb was close to going out of business. Their bank account was running low, and they were getting only a handful of bookings each day. So CEO Brian Chesky flew out to New York to meet with his customers, and to lead them through an exercise based on a five-star rating system, but with a twist.
“When you knock on the door of an Airbnb,” he asked, “what would a one-star experience look like?” Customers suggested that if no one was home and they had nowhere to stay, that would warrant a one-star review. Then, what would three stars look like? Maybe a 20-minute delay — you have to call the owner, but they come and let you in. Five stars? You get in right away, and the place actually looks like the listing photos.
But Brian didn’t care about five stars — because when all you get is what you were supposed to get, you’re not likely to remember the experience, let alone spread the word. So he asked his customers, “What would seven stars look like? Or nine?” By eleven stars, they were talking about being met at the airport, riding an elephant to their destination, and being welcomed by a giant parade in their honor.
Now, I’ve never rented an Airbnb that included an elephant greeting at the airport, but the point wasn’t to actually create that 11-star experience. Remember our tenets of becoming the best: This is about imagining a world that doesn’t yet exist. No customer or investor is going to ask you for more than five stars — but five stars is not going to get you where you want to go. Being the best in the world requires you to set your standards higher, and to demand more of yourself than anyone else ever would.
“Being the best in the world requires you to set your standards higher, and to demand more of yourself than anyone else ever would.”
Imagination is messy, and it requires creativity. You have to ask a lot of questions, just like Brian did. What do customers hate about our product or service? What are our competitors unwilling to do? What would need to be true for us to have a 100% close rate? What about a 100% retention rate? What would need to be true for every customer to tell 10 other people about our product or service?
Imagination also requires time. The Alpine team has gotten pretty good at this process over the years, and I can tell you, there’s no magic involved. You hold time on your calendar, you get the right people involved, you ask the right questions — and then you follow through. You put the priorities you come up with into your plan for the quarter. Your most underutilized asset is likely your team’s imagination. But when you prioritize and make space for imagination, it becomes a superpower — and an essential element for becoming the best in the world.
To make an irresistible offer, use your imagination to create something aspirational, remembering that the “best in the world” likely doesn’t exist yet. Then, schedule those activities. Plant the seeds of future oak trees today.
Principle 3: Operation Crush
You’ve obviously heard of Intel — they’re one of the largest semiconductor chip manufacturers in the world — but you might not know how their story began. In 1975, Intel was barely a blip on the industry’s radar and was getting beaten badly by Motorola, which had 10 times the revenue and a twice-as-powerful chip. To even call the two competitors is a bit like comparing my daughter Lilly to LeBron James. They both play basketball, but Lilly is a 5’1” point guard in her church league, and LeBron is … well, LeBron. (No offense, Lilly. Dad loves you!)
You might think the semiconductor industry would be won on technology — processing speed, memory, and features. But Intel realized that technology wasn’t a winnable game for them. Motorola had more assets, more engineers, and a massive head start. So Intel decided to play a different game — competing on sales and marketing rather than tech. They couldn’t stop Motorola from releasing a chip that was more powerful, but they could beat Motorola to market — and throw a massive amount of resources toward “Operation Crush.” It was an all-hands-on-deck effort by 1,000 of their top people — not just top sales people, but everyone from the CEO and CFO to the engineers. Everyone went after accounts. They gave themselves six months to earn 2,000 design wins, and in the end, they racked up 2,500 wins.
“Products and services initially aren’t bought — they’re sold. You have to beat a path to your customer’s door.”
Intel then invested all of the revenue from their new relationships into the next chip they built, and the rest is history. Motorola lost billions, split in two, and last year generated $9.65 billion of revenue, compared to Intel’s $63.1 billion. They learned the hard way that the old “Field of Dreams” tagline “if you build it, they will come” doesn’t apply to sales and marketing. Products and services initially aren’t bought — they’re sold. You have to beat a path to your customer’s door.
To succeed at Operation Crush, the Intel team needed to understand that all-hands-on-deck sales and marketing is a strategy, not just a function; that products and services are sold, not bought; and that A-plus talent is necessary to win.
Growth is About You and Your Team
To achieve best-in-the-world growth, you need to find your ideal customer (What is your northwest Arkansas?), make an irresistible offer (What does 11 stars look like for you?), and then execute Operation Crush (What is your all-out strategy to win?). Following these three steps won’t take you more time, or even more energy, but it will definitely require a mindset shift.
“Following these three steps won’t take you more time, or even more energy, but it will definitely require a mindset shift.”
Here’s the payoff for that shift: The 50% of the waking hours and emotional energy you spend working will be in pursuit of something magical. I’ve been running Alpine for 23 years — 26 if you count the first few in my dorm room — and I’m more excited than I’ve ever been, because I get to wake up every day trying to put our team in a position to do something no one else has ever done. We talk about growth in terms of your business, but maybe the most meaningful growth is the growth experienced by you and your team — how you grow along the way, and who you get to become during the journey.
The poet Mary Oliver famously asked, “What do you plan to do with your one wild and precious life?” For me, there has been no better answer than this: “My team and I will try to become the best in the world at what we do.”