Scalability Thinking – Mental Models

SCALABILITY THINKING #2: I cracked the Code
After a year of struggling with how to take things forward – Collaboratively – suddenly I just knew how to transfer my excitement!

I think I was with another long time Mentor Sandeep Kothari (had met him first in 2010 Mumbai at his Fidelity office)> i had sought time from saying Hey Sandeep – why dont we just talk on how YOU THINK about Scalability – what are your best examples – what worked as assessed initially – and what didn’t/couldn’t?

And lo and behold! – as luck would have it – we were on the same page straightaway. We started talking about the Sweet Spot being 80-100 Cr Annual PAT Levels. That 100-200 Cr PAT transition/migration happens enough times and quite easily. 200-500 Cr transition is another beast though, but very few businesses actually cross 1000 or 2000 Cr PAT levels.

At the same time there is a TCS we know at 44K annual PAT levels, an Infosys at 20K PAt levels or a L&T Mindtree at 3.5K PAT levels. IT and Financials are in a different space. Whereas from my own examples I knew of only PI Industries that could scale beyond 1200 Cr progressively from ~100 Cr (2012). An Avanti Feeds is still struggling to cross 500 Cr (actually scaled down much) since first coming within touching distance of that in 2018 or an Ajanta Pharma struggling at 600-700 Cr annual profitability despite probably being among the fastest to shoot past 500 Cr within 3 years of crossing 200 Cr annualPAT levels. A common pattern within just the 3 – have/had delivered exemplary MarketCap multiples between 50-85x. There are many others – some more exemplary. and some lesser – but still very very spectacular.

If we spend a little time now on the above picture – it tells many a tale – that sets the Context for Scalability #3 post – do we/can we identify giveaway patterns??