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This mismatch between expectation and reality is why so many internet companies "die". It's not that their business model failed, necessarily, it's that manage
by jhayward 10y ago
This mismatch between expectation and reality is why so many internet companies "die". It's not that their business model failed, necessarily, it's that management, or the board, has set expectations for growth that defy reason. The company then has to embark on an ever-more-doomed set of initiatives to try to meet growth targets, which inevitably fail.
Many companies could still be thriving today (e.g., Yahoo), if not for this destructive aspect of capital in our markets.
- harryh 10y agoIf you push 10 companies for reason defying growth and 9 of them die but the 1 survivor grows enormously is it worth it? Maybe?
- eloisant 10y agoIt's probably worth it for a VC who has a diverse portfolio, but as a founder you really have to think about what you really want. Do you prefer a tiny chance of becoming the next Facebook, or a good chance of building a stable business? Do you prefer to fail 9 companies before finally founding the one that will have "reason defying growth" (or not) rather than build one solid business? I'd say it depends on your character, but it's important to know what you want rather than blindly following Paul Graham and other VC prophets.
- jhayward 10y agoIt may make sense at a certain maturity level of a company, e.g. VC investment in startups. I'm talking about large public companies with relatively mature business models. It's almost impossible to change a business model once it is operating at scale, but management tells capital it can happen all the time.