When Growth is a Bad Thing

by nicholas483 • 13 years ago

45 16 13 years ago

Why early stage VC is bad for a SaaS company

Articulate• 13 years ago

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.

mbesto• 13 years ago

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.

btipling• 13 years ago

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.

nicholas483• 13 years ago

Yes we are getting more than 10 deals. That was a couple years ago. :-)

We've been very judicious about product decisions regarding customers, that's not really the kind of bending I'm referring to. It's more about the effort involved to get them to your site, onboarded, excited and pulling out their wallet.

jordan_clark• 13 years ago

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.

ryanbrunner• 13 years ago

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.

beat• 13 years ago

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.

cardine• 13 years ago

Very well put. I bootstrapped and provided all of the funding for my company. It was worth the slightly slower growth because it can follow my long term vision and not the short term vision of a VC who is looking for a quick return on their investment.

ArekDymalski• 13 years ago

The title is fine even if a little bit click-baity. However this digression about VC money blurred the core message imho. That's why Nick inspired me to write http://hr4startups.quora.com/When-growth-is-a-really-bad-thi... where I attempt to emphasize the most important stuff.

john61• 13 years ago

In medicine excess growth is called cancer

mattmaroon• 13 years ago

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.

ericb• 13 years ago

Article is best enjoyed as a zen koan:

Phish would not have grown large if they had grown large quickly.

johnrob• 13 years ago

Startup advice = limited world experience + over generalization. All arguments regarding startups have holes in them.

guylhem• 13 years ago

Agreed. The idea is not articulated.

But let's leave aside the way it's crafted, and look at the core proposal : the article seems to suggest that growing too fast reduce how well the company is perceived, or how efficient it may be.

But as you said, no evidence is provided. It could just be a survivor bias.

Also, considering how people keep talking about "the next big thing" and companies with double digits growth rate, there could even be counter evidence to this claim.

Is it necessary for posters to submit messages containing wild speculations not backed with evidence, or even with some counter evidence ?

I wish it was possible to downvote some articles to reclaim the (collectively) lost time - 10 seconds by thousands of people - or to avoid starting a reasoning on false premises.

I for one enjoy it when I'm told how and why some idea is wrong, and where deadends are. Too bad this can't be done yet on HN.

hcarvalhoalves• 13 years ago

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.

bbrunner• 13 years ago

Too much growth too early on can be bring up so many issues that aren't core to your business. It forces you to scale out systems that you might not actually need. It introduces tons of support issues. It forces you to recruit quickly to take up slack. These all can be managed, but often it's easier to build a stellar product when you're serving a small cadre of very high-caliber, quality users.

When Growth is a Bad Thing

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