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O(n) vs. O(n^2) Startups

rohan.ga

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Re: O(n) vs. O(n^2) Startups

#11

Post by bee_rider »

Huh.

Not working in the field, I assumed startups went like sigmoids (everything is a sigmoid after all).

Exponential at first as word of mouth spreads, then linear as your users start bumping into each other and word of mouth stops working, and then you eventually start leveling off near carrying capacity (you’ve hit your addressable market).

I thought the game was to try to get bought by some massive company while you are in the linear phase (where you are big enough to be treated seriously but your growth rate still looks absurdly high).

Re: O(n) vs. O(n^2) Startups

#12

Post by sshine »

Since O(n^2) is used as a proxy for “something superlinear, but don’t get hung up on how much”, you might also choose O(n^(1+ε)), an upper bound characterised by some arbitrarily superlinear function.

Re: O(n) vs. O(n^2) Startups

#13

Post by kylecordes »

brudgers wrote: post #4
ocean_moist wrote: post #3

Earlier quoted context omitted.

I use business, startup, and company interchangeably. Generally I tried to use business for O(n), startup for O(n^2), but I guess I wasn't strict with my usage... Perhaps they are harder to start, but they are also vastly more likely to succeed to their O(n^2), and this is not only due to the increased barrier to entry. That's what I mean when I say, founders are more likely to succeed at O(n) companies.

Most businesses are playing pinball…success this month/year means you can play again next month/year. Very few have successful exits where the owner walks away with life changing money and no obligation.

Unfortunately, many businesses are arguably a bit worse than that: success this year means you put even more at risk next year.

(For example, you get successful enough that you need a bit of office space. Well, your little business is not going to persuade anyone with nice office space to lease to it alone... Landlords will instead demand the owners personally guarantee the lease, i.e. commit to paying it or go bankrupt trying, even if the business shrinks and no longer needs or can afford the space. So you thought, great, we had a couple years of strong growth. Now you get to commit personally to five years of a huge expense. Congratulations.)

Re: O(n) vs. O(n^2) Startups

#14

Post by Aurornis »

danjl wrote: post #7

> O(n) companies can’t afford to hire the absolute best talent. O(n) companies tend to have more experienced founders and engineers in my experience. This is partly why they have "nice deadlines, clear SoW" and "understand their customers" enough to have PMF. The strength of their talent, experience and job networks often greatly outweighs the cash incentives, allowing them to hire top candidates. They do not just hi…

In my experience the heavily VC funded companies have a lot of very talented and experienced people, too.

But they have so much money and pressure to hire that they start dipping deeper and deeper into their candidate pipeline. They start lowering their standards to keep the employee count growing. This results in a mix of talented people trying to get work done and a lot of people who are good at interviewing and stretching the truth about their experience.

Every time I’ve been at a company like this, they tell themselves they’ll hire fast and fire fast to compensate. Then they never fire fast or at all, because nobody wants their little empire to shrink.

Re: O(n) vs. O(n^2) Startups

#15

Post by withinboredom »

bee_rider wrote: post #11

Huh. Not working in the field, I assumed startups went like sigmoids (everything is a sigmoid after all). Exponential at first as word of mouth spreads, then linear as your users start bumping into each other and word of mouth stops working, and then you eventually start leveling off near carrying capacity (you’ve hit your addressable market). I thought the game was to try to get bought by some massive company while…

This is actually a better model and one that more closely reflects reality. You can see it on revenue as well, since even if growth is exponential, churn is a percentage of your total paying users. Thus, it produces a sigmoid curve unless you can get churn to 0% (pro-tip: you can’t).

But, these are the two basic levers for a SaaS: growth and churn.

Re: O(n) vs. O(n^2) Startups

#16

Post by Aurornis »

kylecordes wrote: post #13
brudgers wrote: post #4

Earlier quoted context omitted.

Most businesses are playing pinball…success this month/year means you can play again next month/year. Very few have successful exits where the owner walks away with life changing money and no obligation.

Unfortunately, many businesses are arguably a bit worse than that: success this year means you put even more at risk next year. (For example, you get successful enough that you need a bit of office space. Well, your little business is not going to persuade anyone with nice office space to lease to it alone... Landlords will instead demand the owners personally guarantee the lease, i.e. commit to paying it or go bankr…

Where are you seeing commercial office space require 5 year personal guarantees from the founders? Terms like that would have everyone laughing as they hung up the phone around here.

Re: O(n) vs. O(n^2) Startups

#18

Post by [deleted] »

kylecordes wrote: post #13
brudgers wrote: post #4

Earlier quoted context omitted.

Most businesses are playing pinball…success this month/year means you can play again next month/year. Very few have successful exits where the owner walks away with life changing money and no obligation.

Unfortunately, many businesses are arguably a bit worse than that: success this year means you put even more at risk next year. (For example, you get successful enough that you need a bit of office space. Well, your little business is not going to persuade anyone with nice office space to lease to it alone... Landlords will instead demand the owners personally guarantee the lease, i.e. commit to paying it or go bankr…

[deleted]

Re: O(n) vs. O(n^2) Startups

#19

Post by SoftTalker »

kylecordes wrote: post #13
brudgers wrote: post #4

Earlier quoted context omitted.

Most businesses are playing pinball…success this month/year means you can play again next month/year. Very few have successful exits where the owner walks away with life changing money and no obligation.

Unfortunately, many businesses are arguably a bit worse than that: success this year means you put even more at risk next year. (For example, you get successful enough that you need a bit of office space. Well, your little business is not going to persuade anyone with nice office space to lease to it alone... Landlords will instead demand the owners personally guarantee the lease, i.e. commit to paying it or go bankr…

You need to look for hungrier landlords.
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