Indeed, this cogent essay has been a long time coming and should be a pre-requisite for anyone thinking of getting in the game. "A barbershop isn't designed to grow fast. Whereas a search engine, for example, is." Brilliant.
Startup = Growth
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Re: Startup = Growth
#12One of my favorite pg essays of all time. Loved this:
"Almost every company needs some amount of funding to get started. But startups often raise money even when they are or could be profitable. It might seem foolish to sell stock in a profitable company for less than you think it will later be worth, but it's no more foolish than buying insurance. Fundamentally that's how the most successful startups view fundraising. They could grow the company on its own revenues, but the extra money and help supplied by VCs will let them grow even faster."
Took me awhile to realize this as a founder.
Profitability is a great goal (and makes the business very "real" by cutting away vanity metrics), but self-funding growth from profitability pretty much guarantees you are locked into a relatively slow growth rate. pg's simple charts show why being locked into a lower growth rate could mean being blown away by your competitors.
Re: Startup = Growth
#13For a startup measuring users (not revenue), what's the right thing to measure to know your growth rate?
Is is DAUs, MAUs, daily sessions, length of session, total signups?
Re: Startup = Growth
#14I 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.
Makes me consider opening a barbershop.
Re: Startup = Growth
#15This essay highlighted something for me, you actually end up having a 2x2 matrix for "work for" vs "invest in" and "startup" vs "non-startup."
For example, a certain person may try increasing their wealth by investing in startups, but prefer working in a non-startup. Or another person may prefer investing in non-startups (safe, dividend paying stocks or bonds), but try increasing their wealth by working for startups.
For people with talent in creating products, best to focus their investing in safe, low maintenance non-startup investments and their wealth creation in working for startups. For people who have access to capital and a knack for choosing winners, they should work for non-startups (or philanthropy, or whatever, since they are probably already fairly wealthy) and invest in startups they think can win.
For the really talented, who both know a thing or two about building products, and also can pick winners, then you should work for a startup that invests in startups. See: pg.
Re: Startup = Growth
#16The part "and how to reach those people" should be written in bold.
It seems like the difference between lifestyle business and startup is sometimes (or in majority of cases?) just in figuring out scalable way to acquire new customers.
Re: Startup = Growth
#17[deleted]
Re: Startup = Growth
#18I think it's missing the idea of bootstrapping. I think it makes a much rougher environment for fledgling startups, but I think it should be considered more like a hot forge. The more the odds are stacked against you, the better you get. I guess people sometimes miss that when they are aiming for Twitter/Facebook level revenue accountability.
Re: Startup = Growth
#19Not a fan of praise for the sake of it either, but having said that, this is one of the most succinct and focused essays I've read on startups, in a long time, and hard to fault it's fundamental message.
As founders it's easy to do things other than push every day to get customers and/or active users. Some founders are so focused on other less stressful activities, that they outsource the entire function to a 'growth hacker'. Let someone else deal with it... Yikes!
Grow is core to the startup's success, and happy to be reminded of it.
Re: Startup = Growth
#20If this essay had an abstract, this would be it:
"If you want to understand startups, understand growth. Growth drives everything in this world. Growth is why startups usually work on technology—because ideas for fast growing companies are so rare that the best way to find new ones is to discover those recently made viable by change, and technology is the best source of rapid change. Growth is why it's a rational choice economically for so many founders to try starting a startup: growth makes the successful companies so valuable that the expected value is high even though the risk is too. Growth is why VCs want to invest in startups: not just because the returns are high but also because generating returns from capital gains is easier to manage than generating returns from dividends. Growth explains why the most successful startups take VC money even if they don't need to: it lets them choose their growth rate. And growth explains why successful startups almost invariably get acquisition offers. To acquirers a fast-growing company is not merely valuable but dangerous too."