Many entrepreneurs are focused on the wrong "M" word. They talk about market share like it’s the ultimate scoreboard. They chase an outsized share of a broad market, believing that a bigger slice of the pie is the only way to scale from $20 million to $150 million and beyond.
But here is the reality that many learn too late: Chasing market share is a "Generalist’s Trap". It is how you end up with 150 employees, a decent top line, and a bottom line that looks like it has been through a paper shredder. You feel the exhaustion of complexity, constantly firefighting for customers who don't value your expertise the way they should.
The Scaling Up framework teaches a different discipline. We want you to stop fighting for crumbs in the mass market and start dominating a profit pool. To do that, you must master the 7-70 Rule.
The 7-70 Rule represents a fundamental shift in strategic decision-making. It is a concept that may seem counterintuitive to a growth-obsessed CEO: aim to capture a small share of the overall market, roughly 7% to 10%, while striving to dominate 70% of the profitability or mindshare within that specific niche.
When you try to own a large percentage of a broad market, you end up competing on too many variables, making it impossible to stand out as a trusted advisor and leading to commoditization. Specialization, on the other hand. leads to repetition. This repetition fosters efficiencies that reduce mistakes and allow you to deliver more value at a lower internal cost. The stronger your branding as the sole trusted partner, the greater your pricing power. As the saying goes, the riches are in the niches.
The 7-70 Rule was originally modeled after Apple. At the time of Steve Jobs' passing, Apple controlled 70% of global smartphone profits while holding just 7% of the market share. While competitors like Samsung focus on volume and units sold, Apple focuses on profit share.
Today, Apple still claims less than 25% of the total global market share. However, they claim 57% of the premium market and an astounding 78% of the ultra-premium market. The result? Apple controls approximately 80% of the industry's profits.
Apple identified their ideal customer, the Crazy Ones, and created a complete solution tailored specifically to them. The question for your leadership team is simple: Are you playing the Samsung game of volume, or the Apple game of profit?.
To capture 70% of the profit in your niche, you must stop selling systems and start selling results. When you sell a system; like equipment, services, or labor hours, clients view you as a cost center. You become a commodity to be managed, bid out, and negotiated down.
In contrast, when you sell a result, you are perceived as mission-critical. You become a provider of profit. When serving business customers, the more influence you have on a client’s income statement or balance sheet, the more valuable you become. This is the 100% solution. It means you stop selling the "how" and start selling the outcome.
In the new way, your value skyrockets because lives are on the line. The client is paying for never-fail reliability, not hardware. When your service helps a client sleep at night by minimizing risk, they stop haggling over price.
Back to Apple, they don’t care about owning 50% of the global handset market. They focus on a sliver of the market yet capture an outsized percentage of the industry's profits. They don't sell a device; they sell a seamless ecosystem. They own the mindshare, and therefore, they own the profit pool.
I have witnessed this transformation firsthand with Lone Star Communications. For years, they were talented “generalists” capable of handling nearly any integration project. However, the complexity of managing almost any project led to silos and complicated outcomes.
They made a strategic choice to narrow their focus to high-stakes, life-safety environments; specifically healthcare and education. They stopped being a general communications company and became the team that ensures the right person receives the right message at the right time.
By shifting from selling individual components to offering a comprehensive solution, they staked their claim in a smaller market segment. This focus allowed them to dominate the mindshare in Texas and beyond. Today, they are no longer competing on price; they are setting the standard for the entire market. Their profitability has improved, and their execution has become repeatable and scalable.
To dominate your pool, you must stop chasing RFPs and start hunting for your ideal customer. This is the sweet spot at the intersection of three critical lists:
Once you identify these 7 percenters, look for the commonalities in what they value. What high-stakes problems are you solving for them?. By identifying these traits, you can stop selling systems and start engineering a 100% solution that makes you a mission-critical partner.
Why does this matter for your exit? Investors, bankers, and buyers do not put a premium valuation on a company with high market share if it is built on low-margin, high-churn customers. That is a high-risk asset.
They place an outsized valuation on the "Apple" of your niche. They want to see:
When you master the 7-70 Rule, you aren't just making more money today; you are exponentially increasing your valuation for tomorrow.
If you are honest, you are likely selling the wrong products to the wrong customers because you are afraid to say "No". You are too focused on top-line growth, even though it is harming your cash flow and your enjoyment. It is time to stop playing the “generalist” game.
To reclaim your freedom and your profit, I challenge you to take these three steps with your leadership team in the next 48 hours:
Growth for the sake of growth is a vanity metric. Growth for the sake of freedom, legacy, and dominant margins is a strategy.
Are you ready to stop being a “generalist" and start owning your profit pool? Let’s talk about how to narrow your focus to expand your impact.
