Earlier quoted context omitted.
[deleted]
Does app.net have any significant traction? Or are you saying they are trying to grow organically (other than their Kickstarter fundraising)?
[deleted]
Startup = Growth
81–90 of 220 posts
Re: Startup = Growth
#82A good growth rate during YC is 5-7% a week. If you can hit 10% a week you're doing exceptionally well. If you can only manage 1%, it's a sign you haven't yet figured out what you're doing. This is, to me, the most interesting thing here: I've seen lots of people talk about "traction", but this is the first time I've seen someone in the startup world give hard numbers for what a "good growth rate" is. Another way to…
To me, the cautionary warning (echoing Andrew Chen's[1]) for consumer startups was key:
Beware too of the edge case where something spreads rapidly but the churn is high too, so that you have good net growth till you run through all the potential users, at which point it suddenly stops
Sean Ellis[2] has a similar test for product market fit (the 40% rule):
I ask existing users of a product how they would feel if they could no longer use the product. In my experience, achieving product/market fit requires at least 40% of users saying they would be “very disappointed” without your product.
[1] http://andrewchen.co/2012/06/20/quora-when-does-high-growth-...
Re: Startup = Growth
#83Earlier quoted context omitted.
just because something starts as a free photosharing app doesn't mean it stays that way. One of pg's main points is that entrepreneurs see a way in that is often undervalued by others for a variety of reasons. When MSFT came along people underestimated the value of the OS, for Apple it was the PC, in Intel's second coming (first being memory) it was the microprocessor which even Intel itself underestimated for a whil…
PG's essay makes it perfectly clear: it's not about creating technology, it's about user acquisition. Read my original reply again. The startup's goal is to acquire users fast. Why? To lure VCs. I don't want to be a part of that. I want to create a business, not a startup (in the sense defined by PG's essay).
No, PG states a preference for revenue growth... with user growth being an acceptable stand-in, contingent on the usual assumption that users will convert to revenues.
And the VCs in his model are not the end goal, but only a middle stage, to accelerate growth and thus dominate a market, creating an enterprise that will be valuable to others on some combination of traditional factors (such as discounted expected profits or synergistic/strategic value when combined with an existing business).
I think you're trying so hard to see what you already believe you're missing parts of the PG argument.
Re: Startup = Growth
#84pg makes his point clearly at the cost of oversimplifying his definition. Scalability is a continuum. There is a continuum between barbershop and search engine. VCs have every incentive to hit the far high end of the continuum. But a young, hungry entrepreneur probably gets higher expected value by not straying quite so far out.
There really isn't a continuum in most technology markets. Startups that constrain their growth tend to get pounded into the ground by startups that don't. Try being a small search engine competing with Google.
Duck duck go is doing just fine.
Re: Startup = Growth
#85Some community-oriented/UGC startups nowadays seem to prefer modest growth, at least for a while, to make sure the right standards/user-expectations can be maintained. (Hypergrowth can mean a change in community makeup faster than desireable norms can be maintained, which can spoil the dynamics in a way that's hard to un-spoil.)
Compare HN's own revealed preference for limiting certain surges of new users. (Corollary: HN is not a 'startup'.) In a way, even Facebook's initial campus limitations served this purpose, getting certain mechanics (and corporate practices right) before facing the challenges of a larger userbase.
I wonder: have YC companies had to face an explicit decision: grow faster or defend/consolidate the culture of the existing userbase, and if so what advice would PG and the other partners be likely to give?
Re: Startup = Growth
#86Earlier quoted context omitted.
self-funding growth from profitability pretty much guarantees you are locked into a relatively slow growth rate That's an unwarranted assumption. Part of designing a startup business model is organizing growth so that you are unconstrained, so that more input produces greater output, earlier -- whether it's capital, users, employees, or support. All it takes is for one component of your business to not scale and you…
> If your growth rate is already 7% with the pay-up-front model, that's better IMO than getting, say, an 8% growth rate with the pay-after model. That 1% difference per week makes a huge difference in a year. A startup growing at 7% a week it is 34x bigger at the end of the year, but at 8% it is 55x - or 62% bigger. And at 10% it is 142x - or over 4 times larger than the 7% growth rate. >> no company can catches up t…
[deleted]
Re: Startup = Growth
#87Re: Startup = Growth
#88[deleted]
Re: Startup = Growth
#89One 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 fundraisin…
This is a tough sell to young entrepreneurs. Its hard for them to understand that buy giving away some portion now will make their equity more valuable when they are able to scale to mass market.
It is, but I am being sold.
Until this past week or so I've been highly skeptical of VC funding and much more inclined towards bootstrapping. I love that DHH video someone else posted in this thread. I think it's silly to focus on users and vanity metrics if you don't have a clear business model (even if it's not implemented immediately).
But this essay makes an amazing case for why outside funding is helpful, even crucial. And it's encouraging that he's emphasizing revenues, not just users.
I'm also encouraged because I was at the YC event at MIT this Wednesday, and didn't hear anything (even when I asked directly) about investor drama.
Re: Startup = Growth
#90Based on required growth rates and measurement intervals (5-10% per week), there would seem to be a pretty heavy bias towards the consumer space. B2B or so-called Enterprise Companies, especially industry-specific new companies, would have a hard time qualifying on several fronts (market size, growth rate, growth interval). I am particularly interested in the B2B style of startup because I run an Enterprise Startu-er…
Selling expensive enterprise products does have a longer sales cycle than cheaper consumer products, and increments to your revenue come in more discrete blocks. But that doesn't invalidate pg's argument about growth: you just have to use other proxies to estimate your trajectory.
For example, instead of active users you track a number of leads and how interested they are. Even without a single closed deal, you can measure your sales pipeline. It is an imperfect proxy for potential revenue growth, but so is daily active users for consumer internet startups.
Thus, if you are planning to sell an enterprise solution costing $100000, and you think you are going to make these kind of deals a few times a year in the beginning, then you use your sales pipeline measurements to estimate your growth with a finer granularity than a big sale now and then.