Startup = Growth

#1

Post by moeffju » Sat, Sep 22, 2012, 1:58 AM UTC

Re: Startup = Growth

#2

Post by sandee » Sat, Sep 22, 2012, 2:08 AM UTC

"We usually advise startups to pick a growth rate they think they can hit, and then just try to hit it every week. The key word here is "just." If they decide to grow at 7% a week and they hit that number, they're successful for that week. There's nothing more they need to do. But if they don't hit it, they've failed in the only thing that mattered, and should be correspondingly alarmed."

This is the gem.

Re: Startup = Growth

#3

Post by paulsutter » Sat, Sep 22, 2012, 2:11 AM UTC

I gotta say, "a company designed to grow fast" is not only more concise, but broader and more on point than Steve Blanks' definition ("an organization formed to search for a repeatable and scalable business model"[1])

An epic essay with tremendous depth. Love the ending:

"A startup founder is in effect an economic research scientist. Most don't discover anything that remarkable, but some discover relativity."

[1] http://steveblank.com/2010/01/25/whats-a-startup-first-princ...

Re: Startup = Growth

#4

Post by kemiller » Sat, Sep 22, 2012, 2:14 AM UTC

I think seeing it put so clearly, it's convinced me that I don't even want to found a startup. I'd like to own a business, but that's different, and I should behave accordingly. That might make it the most useful thing I've read in years.

Re: Startup = Growth

#5

Post by smalter » Sat, Sep 22, 2012, 2:17 AM UTC

Question: w.r.t. weekly revenue growth, are we talking about growth rate of monthly revenue run rate (assuming billing happens monthly) or something else? For instance, something like this: new signup revenue in the current week x historical conversion to paid divided by revenue of paying customers + sum of estimated revenue of recent previous weeks who haven't yet hit the date of conversion? (if that makes sense)

I'd love to hear thoughts on how to calculate the referenced number.

Re: Startup = Growth

#6

Post by [deleted] » Sat, Sep 22, 2012, 2:19 AM UTC

[deleted]

Re: Startup = Growth

#7

Post by photon137 » Sat, Sep 22, 2012, 2:19 AM UTC

"For a company to grow really big, it must (a) make something lots of people want, and (b) reach and serve all those people"

Very valuable insight.

However, (b) in its own right, can serve as a fast growth business model - where the delivery or "clearing" of value between those who demand and those who supply is the value proposition itself - because everyone wants delivery (making it, by default, a big market).

Most banks work on this principle, in an abstract sense. A business like FedEx or UPS is a more physical example of this.

Online takeout-ordering services are examples of this - the customer wants the food and the "online ordering website" startup does not produce food - but what it produces is "clearing" ie matching demand to supply.

This - as an idea, in my experience, always scales and grows fast as well while falling into the category (b) that pg mentions.

Re: Startup = Growth

#8

Post by nreece » Sat, Sep 22, 2012, 2:23 AM UTC

If you write software to teach Tibetan to Hungarian speakers, you'll be able to reach most of the people who want it, but there won't be many of them.

It may not scale, but the chances of it making (any/more) money are much higher ("riches are in the niches") than a "fast startup" as it's very rare for a startup to grow fast and monetize quickly at the same time, because most people just won't buy immediately, sometimes even if it solves a problem for them.

For example, I've been using Evernote and Dropbox for years, but haven't had the need to buy a premium account. I believe there are many others like me who are happy with the free (or open source) software that does solve an itch. Are these "fast startups"? Is their business model (freemium) scalable?

Re: Startup = Growth

#9

Post by shimon » Sat, Sep 22, 2012, 2:24 AM UTC

smalter wrote: post #5

Question: w.r.t. weekly revenue growth, are we talking about growth rate of monthly revenue run rate (assuming billing happens monthly) or something else? For instance, something like this: new signup revenue in the current week x historical conversion to paid divided by revenue of paying customers + sum of estimated revenue of recent previous weeks who haven't yet hit the date of conversion? (if that makes sense) I'…

Ask yourself: what's the most important thing a user of this product can do? Pick one thing. It might be "sign up", or it might something way more specific like "run a report" or "receive a fax". Drive growth in that thing.

Re: Startup = Growth

#10

Post by lifeisstillgood » Sat, Sep 22, 2012, 2:27 AM UTC

So, is "b) reaching all the people in the Market" a function of converting a decentralised market to a centralised model?

Facebook is a successful startup because it took a decentralised model (talking to your friends) and centralised it.

Barbers are decentralised - but after I build a robo-barber for every home, then suddenly one company can cut everyones hair.

So is it possible that growing a startup fast is about increasing the slope between a decentralised (diffuse players, low margins) and a centralised model.

I suspect there are good counter examples but really startups that grow fast seem to optimise for one central point for doing what they do - dropbox, airbnb readthedocs