Lesson 20, Topic 2
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Building an ExO

UPG Team March 17, 2023
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How to Create a Highly Scalable Business Leveraged by Information
Since the dawn of the internet, we’ve seen continuous and fundamental changes in how businesses are built and scaled. In particular, the earliest playbooks for building a hyper-growth company emerged during the dot-com boom of 1995 to 2001. Those narratives gained a new chapter in 2005 with the rise of social media. Then, in 2008, we saw yet another chapter thanks to the widespread availability of low-cost cloud computing and the launch of the iPhone.

Today, we are witnessing an accelerated transformation of the business world with the rise of the Exponential Organization (ExO). Driven by the convergence of exponential technologies, ExOs allow us to organize ourselves in new ways to tap into this information-enabled world.
One example of an ExO is Thrasio, a Boston-based startup founded by Carlos Cashman and Josh Silberstein. Cashman was running OrionCKB, an online marketing agency, when he and Silberstein noticed that e-commerce companies were being built by smaller and smaller teams of entrepreneurs building small e-commerce companies. When Cashman and Silberstein examined the e-commerce companies they were promoting, they realized that many of the companies, while solid business ideas, lacked the critical mass needed for success on the web. So, together they formulated the idea to systematically buy the companies they thought most promising, and then promote them on the Amazon Marketplace.

Along the way, they also discovered AI software that could analyze products listed on the Amazon Marketplace and predict their future sales. The team then saw an exponential trend: 35 such businesses were sold in 2017, and that number doubled a year later.
In mid-2018, Cashman and Silberstein bought their first company, raising “friends & family” money to do so. By the end of that year, they had acquired seven businesses and crossed $1m in pro-forma sales. In 2019, they acquired over 40 companies. At an Amazon Marketplace conference, they put up a sign reading “We buy $1M businesses” . . . and had people lined up around the block. In 2020 the company, Thrasio, quintupled its revenue run rate. By the end of 2021, Thrasio’s pro-forma revenues were more than $1 billion, with more than 200 brands and thousands of products.
How big is the opportunity Cashman and his team uncovered? On the Amazon Marketplace in 2021, third-party sellers sold $400 billion worth of products. More than 60 thousand were enjoying sales greater than $1 million per year.
Using this unique data-driven analytical approach, Thrasio crossed the one billion-dollar revenue run rate – less than three years after its launch. It is a 21st-century CPG company (Consumer Packaged Goods) like Unilever or P&G. Thrasio has created an entirely new industry, is completely data-driven, and thus extremely low-risk, at least on the market side. At startup events around the world, new startups are already saying “We are the Thrasio of X”.

With Thrasio pointing the way, it is now time to discuss how to build an Exponential Organization. One caveat, however: This is not meant to be an exhaustive startup manual—rather, we’ll discuss the elements relevant to building an ExO that is leveraged by information and is highly scalable, either as a pure startup or from within an existing enterprise.

A quick, but relevant, side note here: We strongly recommend, as an accompaniment to this chapter, reading The Lean Startup by Eric Ries. We’ll be referring to it frequently throughout this module, as it is a highly relevant and valuable resource for anyone interested in building a successful startup.
Moving on, let’s discuss some common challenges that startups face during the early stages of development. One of the biggest challenges that startups face is finding and retaining customers. As a startup, it’s important to have a deep understanding of your target audience and to be able to effectively market your product or service to them. This requires a significant amount of research and testing, as well as a willingness to adapt your approach as you learn more about your customers.
Another challenge that startups face is raising capital. Many startups require significant amounts of funding in order to get off the ground and start scaling. This can be difficult, as investors are often looking for a proven track record of success and may be hesitant to invest in an untested idea or team. However, there are many resources available to startups looking to raise capital, including crowdfunding platforms, angel investors, and venture capital firms.
In addition to these challenges, startups must also navigate the legal and regulatory landscape. Depending on the nature of your business, you may need to obtain permits, licenses, or certifications before you can begin operating. Additionally, you’ll need to comply with various laws and regulations related to things like taxes, data privacy, and intellectual property.
Finally, startups must also be able to build and maintain a strong team. This requires not only finding the right people with the right skills, but also creating a company culture that attracts and retains top talent. As a startup founder, you’ll need to be a strong leader and communicator, and be able to inspire your team to work towards a shared vision.

Overall, building a successful startup is a complex and challenging process that requires a combination of hard work, strategic thinking, and a willingness to learn and adapt along the way. However, with the right mindset and approach, it’s possible to overcome these challenges and build a thriving company that makes a real impact in the world.

Module is complete, keep up the great work change maker!

UPG Management are certified ExO Consultants, If you would like help building a Web3 Exponential Organization apply to receive consulting and be provided with a free strategy review session by CLICKING HERE.

Additionally, the Exponential Organization modules are powered by OpenExO, UPG’s partner platform for business and creative innovation. We credit OpenExO and the Exponential Organizations 2.0 book for the content provided within these modules. You can join their platform for free and interact with the GPT powered ExO Chatbot by CLICKING HERE

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