This was just a little tip that Shervin let slip during a judging panel he was on at the Launch conference (stories). Later, Sky Dayton echoed the sentiment, talking about one of his early ventures running coffee shops in Santa Monica.
Sky watched Starbucks take off while he was running mom-and-pop cafes. He recognized that Starbucks chief Howard Schultz was probably not working much harder than he was, yet Starbucks was opening stores every day. Sky was not. Sky determined to make his next business "the Starbucks of" whatever it was he did. That next business: the ISP EarthLink.
You have to be careful, though. When an investor says this--and both Shervin and Sky were talking in the investor role at Launch--there's another agenda. They want their investments to generate big returns. So they're naturally going to encourage entrepreneurs to go big.
And while it may take just as much work to run a big business as a small one, it also takes more money. And money means there are more people looking over your shoulder. A small businesses can often be run without outside money or interference, which, depending on your personality, may make life more enjoyable. Or not. It depends what you want your life to be.
But, certainly, if you're working on a business and are thinking at all about taking outside money to get it off the ground, you are pretty much obliged to think big. Bigger.. If the angel investors and venture capitalists you are talking to wanted their money to make a steady, safe return, they'd put it in a CD, not you.
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Correction at 10 a.m. PT: The reference to the Starbucks executive has been fixed.