Play your own playbook

By boris, October 26, 2015

Given the frequency of media stories focused on a handful of startups with billion dollar valuations and high profile rounds, it’s understandable that founders get impatient with their own company’s natural pace of growth.

This sense of urgency is intensified by the fact that growth is an elemental part of being a startup. Paul Graham summed it up: “a startup is a company designed to grow fast.” Growth is what separates a startup from a plumbing or barbershop business.

However, every company needs to grow at its own pace. Some business models simply don’t scale as quickly and need time to mature – and this isn’t necessarily a sign of failure or a bad business model.

For example, trying to grow an e-commerce site like you’re a tech company will not end well. Gross margin levels are typically not a big deal for a tech company, but can be the make-or-break area for an e-commerce company. In addition, e-commerce and tech companies deal with very different operational complexities: touching/shipping physical products vs. quickly fixing a bug for a SaaS product. And, these company types have very different acquisition strategies: an e-commerce site typically relies more on paid advertising where you can easily lose your shirt if you’re not careful as you scale.

There is a limit to how quickly an organization can scale. Be aware of the impact that high growth can have on your company’s culture, team, and execution ability. I have seen many startups get screwed up in all three dimensions because they grew too fast.

Yet having said this, there are times when fast growth is necessary. If you’re in a ‘winner takes all’ market, going slow and steady and then ending up second or third won’t help your cause.

The bottom line? Get inspired by your peers with hyper-growth and large fundraises, but don’t forget to think about what’s the right speed for your market, startup, and team.

  • Boris: your articles are always a breath of fresh air – they’re knowledgeable, inspiring and helpful. Thank you!

  • Oleg Campbell

    Thanks for the article! How to find out if you in a ‘winner takes all’ market or not?

  • bwertz

    Most markets that are driven by heavy network effects are winner takes (almost) all markets (social networking, auctions, ride sharing, etc.)

  • bwertz

    Thanks for the nice comment, Kate!

  • JamesHRH

    Boris – I have found your recent run of articles very engaging. This one, in particular, hits home for me. My product founders have stuck steadfastly to a mantra that “a strong foundation is not dug and poured quickly”. We see clearly now that the floors can go up quickly on our product, but the base for that growth requires patience and phases.

    Bill Gates’ statement that people regularly overestimate what is achievable in one year while underestimating what is achievable in a decade seems applicable.

  • Balu Chandrasekaran

    Spot on, Boris, thanks for writing this! I’ll take this as “Get inspired, but not distracted”.

  • bwertz

    Always loved that Bill Gates quote!

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  • TaiTai2

    For media publishing companies, like Buzzfeed.com, elitedaily.com and so forth, what kind of growth rate should such a company expect? How does one strategize accordingly to how fast they want/should grow?

  • bwertz

    Don’t have a great answer to that – Buzzfeed has certainly grown very quickly in an impressive fashion but not sure every media company can grow that fast (and Buzzfeed is rather a platform than a media company which might make it easier to grow)…

  • TaiTai2

    Interesting. Which elements of Buzzfeed would you say make it a platform rather than a media publishing company?

  • bwertz

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