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Startup = Growth

paulgraham.com

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Re: Startup = Growth

#181

Post by ryanwaggoner »

grellas wrote: post #179

A few thoughts: 1. This is a superb essay delineating the attributes of a fast-growth, all-or-nothing type of startup. No surprise here. Who besides pg has had the depth and breadth of quality first-hand experience with such ventures over such a sustained period and in such an explosive context as that of recent years? He has here given us a classic analysis of the prototypical, Google-style startup. 2. I think the i…

I strongly agree with your #2. PG's essay makes it sound like you're only a startup if nothing else matters but growth. But if all you care about is growth, does that make it acceptable to exploit your users Zynga-style? Obviously not to all startups, so even for many startups that are heavily growth-oriented, they are still constrained by other priorities.

So why would balancing lifestyle, minimizing dilution, and maximizing founder control not qualify as valid constraints for a "startup" on the principle of growth as a priority? After all, no startup, ever, has grown as fast as they could have if nothing else truly mattered.

EDIT: removed a reference to criminal activity deemed to be a strawman

Re: Startup = Growth

#182

Post by zachalexander »

ryanwaggoner wrote: post #181
grellas wrote: post #179

A few thoughts: 1. This is a superb essay delineating the attributes of a fast-growth, all-or-nothing type of startup. No surprise here. Who besides pg has had the depth and breadth of quality first-hand experience with such ventures over such a sustained period and in such an explosive context as that of recent years? He has here given us a classic analysis of the prototypical, Google-style startup. 2. I think the i…

I strongly agree with your #2. PG's essay makes it sound like you're only a startup if nothing else matters but growth. But if all you care about is growth, does that make it acceptable to exploit your users Zynga-style? Obviously not to all startups, so even for many startups that are heavily growth-oriented, they are still constrained by other priorities. So why would balancing lifestyle, minimizing dilution, and m…

Please don't spoil the parent comment's excellent arguments by introducing a strawman.

Most organizations have goals - be it growth, profit, advancing a nonprofit mission, or whatever - and in all cases, the rider "Oh, and of course we mean to pursue this end by legal means" is so obvious that, unless we're talking about a criminal organization, it doesn't even need to be stated.

Re: Startup = Growth

#183

Post by ryanwaggoner »

zachalexander wrote: post #182
ryanwaggoner wrote: post #181

Earlier quoted context omitted.

I strongly agree with your #2. PG's essay makes it sound like you're only a startup if nothing else matters but growth. But if all you care about is growth, does that make it acceptable to exploit your users Zynga-style? Obviously not to all startups, so even for many startups that are heavily growth-oriented, they are still constrained by other priorities. So why would balancing lifestyle, minimizing dilution, and m…

Please don't spoil the parent comment's excellent arguments by introducing a strawman. Most organizations have goals - be it growth, profit, advancing a nonprofit mission, or whatever - and in all cases, the rider "Oh, and of course we mean to pursue this end by legal means" is so obvious that, unless we're talking about a criminal organization, it doesn't even need to be stated.

Meh, perhaps my example was too over the top, but my point is that all startups, regardless of how growth-oriented they are, still consider other goals to be constraints on what they're willing to do in order to grow as quickly as possible. And it seems odd to exclude things like lifestyle and control from the list of valid things.

Re: Startup = Growth

#185

Post by [deleted] »

ChrisNorstrom wrote: post #94

- Venture Capital pouring millions into untried businesses. - The crazy valuations. - The recent complains of VCs that "Entrepreneurs aren't working on enough big ideas". It all actually makes sense now. It's all in the name of Big Risk = Big Reward style ventures. Especially after defining a "startup" as a company meant to grow rapidly and to massive proportions. Not necessarily a tech business. Not an online store…

[deleted]

Re: Startup = Growth

#186

Post by larrys »

grellas wrote: post #179

A few thoughts: 1. This is a superb essay delineating the attributes of a fast-growth, all-or-nothing type of startup. No surprise here. Who besides pg has had the depth and breadth of quality first-hand experience with such ventures over such a sustained period and in such an explosive context as that of recent years? He has here given us a classic analysis of the prototypical, Google-style startup. 2. I think the i…

"but who also place a huge premium on minimizing dilution and maximizing founder control. These are the independents. The ones who, by design, want to defer or even avoid VC funding so as to build their ventures on their own timing and on their own terms."

I find the entire discussion about "terms" and getting the best deal for startup founders laughable.

While there are certainly people who are truly unique and doing truly unique things (just like there are people in high school who are so "hot" they can choose which quarterback or cheerleader to date and still get dates no matter how they treat people or people who can go to Harvard, Yale, Princeton or Stanford with fully paid scholarships) I believe most likely the majority of people would be glad to just get funded and would take any reasonable terms to get an investment. By the way, if you, mr/ms founder, are such hot shit there is nothing to prevent you from renegotiating your value or terms later either (celebrities and sports stars do this when they are exceptional, right?)

Getting funded on any terms and having success of course will allow you to move to something else in the future because you will have made contacts and have your ticket punched. If you succeed as we often see even if you fail.

Participants on Shark Tank on TV exhibit this behavior as well. You have a chance to get an investment and advice of, for example, Mark Cuban for your crappy little company with a marginal "maybe" idea that you haven't been able to do by yourself. And you're going to kill a deal with him because you want to only give up 15% vs. the 20% he is asking.

It's interesting how the startup world is always complaining about how they get taken advantage of by VC's, angels etc. and trying not to get "screwed" and playing games. I think they actually are giving the funding sources a run for their money in many cases. Nobody wants to loose out on the next big thing and since they are expecting failure it's not as if they can easily corelate when they impulsively get manipulated and give founders to good of a deal.

Re: Startup = Growth

#187

Post by jusben1369 »

The problem is a barber shop can be a startup. It can have fierce local competition and global aspirations (Supercuts anyone?) It feels like a brave attempt to solve the question that regularly to torments these boards but I don't feel any closer.

Re: Startup = Growth

#188

Post by mattmanser »

chubot wrote: post #159
asknemo wrote: post #122

Earlier quoted context omitted.

I appreciate your response, and I fully understand the realistic angle that you have provided. But I have to clarify that I am not calling pg immoral. I am suggesting the essay could be. People outside the game industry may not get the Zynga problem, but you can also look at, say, Groupon's controversies. "Immoral" could indeed be too strong a word, but I believe few will disagree that aggressive growth strategies ha…

OK... well I think your point is that PG's essay is "amoral", which is true. It doesn't say anything about whether hyper-growth is a thing we should value (as human beings, not as money making machines). Actually ALL his essays are amoral. PG is very precise. He doesn't advocate specific things; he lays out a set of deductions. You will come to the same conclusions IF you have the values he supposes. IF you value thi…

You're reading too much of your own POV into another person.

Compare this essay with a random earlier one I selected (I just scrolled down and clicked a title that would seem ripe to disprove you)

http://paulgraham.com/opensource.html

Morality is rife within it, justice, monopolies, boss-employee relations.

He may have changed but all of his essays aren't amoral.

Re: Startup = Growth

#189

Post by adrianhoward »

paulsutter wrote: post #3

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] htt…

I gotta say, "a company designed to grow fast" is not only more concise, but broader and more on point than Steve Blanks' definition

I would prefer just to say that the definitions are "different" :-)

Blank's focus is on startups that are discovering their business model. PG's focus is on startups that are designed to grow fast. Those two groups of organisation overlap, but are not identical.

Re: Startup = Growth

#190

Post by sajithw »

photon137 wrote: post #180
tlb wrote: post #167

Earlier quoted context omitted.

Businesses that are good for society need to grow quickly to actually reach a large fraction of society. To get from 100 users to 100 million, you need to double 20 times. If you only double once a year, it'll take 20 years before you benefit a lot of people. If you can double 5 times a year, you benefit a lot of people after only 4 years. So no, rapid growth isn't just something investors like. If your product helps…

> "Businesses that are good for society need to grow quickly to actually reach a large fraction of society" That is not true (and is more relevant to manufacturing than to tech companies). Look at ARM, for example, it never needed to grow rapidly and it doesn't actually produce stuff - it just licenses intellectual property - but the existence of ARM benefits millions. Would this fledgling firm in the early 90s Cambr…

If ARM's business model is around licensing their IP, wouldn't getting distribution (via Apple, etc.) be considered growth? They hit profitability in a year.

"EDIT: Same goes for id, Valve and other game studios - you see sometimes it's better to have the best engineers and researchers take their time, let them develop and mature the technology they're working on and build something long-lasting that affects millions of people."

Game studios take time because game releases used to be all or nothing. There were no second chances.

I can't comment on id, but the entire reason Valve built Steam was to speed up distribution and release updates incrementally (the previous patching system sucked). It went from idea to inception in about a year. It was also buggy as hell when it was first released. Now developers can easily release additional content and make game play changes after a game is initially launched.

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