Scale is size, or the ability to grow to a huge size. A frequent question in business today is: “can it scale?” Because technology has enabled previously unimaginable scale (and profits).
Reach for the sky.
Humans have always wanted scale. From the pyramids, to the giant heads at Easter Island, to mega-cities, bigger has always been better.
Why? Because scale creates the perception of invincibility and power. And it often generates huge profits, which in turn lead to even more power.
Take skyscrapers. From the minute the elevator and steel frame technology made skyscrapers possible, developers raced to build ever-taller buildings. Because scale meant bigger profits: you could charge more rent for a seventy story building than for a five story one, on the same piece of land.
Owning the tallest buildings also made you seem important, which gave you even more power. For the same reasons, lots of other things got bigger too – like jumbo jets and big-box stores – in the quest for greater profits and power.
The Internet broke the final (physical) barrier to scale. Pre-Internet, the largest companies (like Walmart) had millions of customers. Today, Google, Facebook and Apple have billions.
These massive, winner-take-all companies are thousands of times larger than traditional businesses. Which is why they’re the most valuable companies in the world. Their scale provides huge efficiencies. Their innovations get used by millions more people. So do their infrastructure investments (e.g. in security or speed) and content investments (e.g. in a library of music or movies). And they can afford to pay the most for the very best talent.
Scale makes it hard for competitors to have a chance. Which is why in business today, everyone wants scale.