When Growth is a Bad Thing

#1

Post by nicholas483 » Thu, Apr 25, 2013, 11:42 AM UTC

Why early stage VC is bad for a SaaS company

Re: When Growth is a Bad Thing

#2

Post by Articulate » Thu, Apr 25, 2013, 11:59 AM UTC

I think your article is spot on. What a company thinks they are when they start is almost always off-target. It is the time, the hundreds of conversations where you have to explain your value to people who were never going to hire you anyway, the dozens and dozens of times when you think about giving up but stick with it that makes a company well tempered and strong. I think your title is a touch misleading maybe you should add the world "rapid" it is that slow long journey to get clients that is valuable to happen slowly as opposed to the sprint pace where you do very little introspection along the way.

Re: When Growth is a Bad Thing

#3

Post by mbesto » Thu, Apr 25, 2013, 12:52 PM UTC

In both cases the OP presented, growth is still both "good". Anyway, sorry to be pedantic. The ultimate difference is your end-goal. Do you want to be rich or be a king? http://blog.asmartbear.com/rich-vs-king-sold-company.html

Just Bieber is rich and Phish are kings. Growth is necessary and needed for both.

Re: When Growth is a Bad Thing

#4

Post by btipling » Thu, Apr 25, 2013, 1:05 PM UTC

I like Help Scout, but I hope they are getting more than ten deals! I also am not a fan of bending over for customers with features as that leads to bad code, badly implemented features, and isn't scalable. If customers aren't liking your roadmap, or vision, sure, think of something else, but don't get into the trap of building new features to get or keep individual customers. I don't think growth is a bad thing in the case you describe, the lack of it is just something to overcome.

Re: When Growth is a Bad Thing

#5

Post by jordan_clark » Thu, Apr 25, 2013, 1:17 PM UTC

I think the title of the blog post should have been "Taking VC money too early is a bad thing". Because truly, at that point your focus has to switch from 'product' to 'profitability'. Overall though, I agree with the sentiments.

Re: When Growth is a Bad Thing

#6

Post by ryanbrunner » Thu, Apr 25, 2013, 1:22 PM UTC

jordan_clark wrote: post #5

I think the title of the blog post should have been "Taking VC money too early is a bad thing". Because truly, at that point your focus has to switch from 'product' to 'profitability'. Overall though, I agree with the sentiments.

I think it can be the reverse in a lot of ways. VCs generally aren't as concerned with profitability, only traction and revenue. When you're bootstrapped, profitability is a major concern, since you don't have the comfortable cushion of a runway, and have to "fund" your company using your revenues.

VCs will ensure that you focus on revenue (or at least traction) at the expense of product, though, so the point largely stands.

Re: When Growth is a Bad Thing

#7

Post by john61 » Thu, Apr 25, 2013, 2:10 PM UTC

In medicine excess growth is called cancer

Re: When Growth is a Bad Thing

#8

Post by beat » Thu, Apr 25, 2013, 2:47 PM UTC

jordan_clark wrote: post #5

I think the title of the blog post should have been "Taking VC money too early is a bad thing". Because truly, at that point your focus has to switch from 'product' to 'profitability'. Overall though, I agree with the sentiments.

VCs don't necessarily care about profitability either. They're looking for a liquidity event - either M&A or IPO. Profitability is only useful insofar as it helps achieve the desired liquidity event at maximum valuation. More to the point, large investors cause a short-term growth focus, because they're looking for 5-20x returns over the course of a few years. But as others have said, do you want to be rich, or do you want to be king? If you want to make a great product and are willing to take your time to do it, don't take investor money any more than you must, so you aren't beholden to their interests - because "make a great product" isn't their interest.

Re: When Growth is a Bad Thing

#9

Post by mattmaroon » Thu, Apr 25, 2013, 2:54 PM UTC

This is a pretty poorly crafted argument.

1. Phish is popular.

2. I think Phish wouldn't have succeeded if they grew fast but I have no evidence to support that.

3. Your startup is just like Phish.

Re: When Growth is a Bad Thing

#10

Post by hcarvalhoalves » Thu, Apr 25, 2013, 3:16 PM UTC

I guess it's the difference between making music then getting famous as opposed to making music because you want to be famous. Each lead to totally different approaches (working consistently and making a lot of gigs versus getting a big label to launch you early on). Building a business is the same thing.