3 ms·

You don't need 20% monthly growth for 9 straight years, but for your first year and maybe the second after your Series A you do. Although I'd say 10-20% is more

by jboy55 8y ago

You don't need 20% monthly growth for 9 straight years, but for your first year and maybe the second after your Series A you do. Although I'd say 10-20% is more the range. The reason this is true is that your investors are giving you a lot of money. Think of it this way, I have a big idea, and I've turned that into a small product making say 10k a month. What I'm telling the investor is that I NEED these millions to turn this small product into the big idea, and that I'm ready to scale this out. At the point I'm asking you for money, I'm representing that I have the product that the market wants. I'm representing the marking is huge, and that I need this investment to take advantage of it. Its not unreasonable to say that with that kind of money I can take something that's making around 10k a month and turn that into 30-100k (10% to 20% MoM growth) a month in a year.

gav 8y ago
In your first few years your base is going to be low, is it a bad month if you went from 1000 to 1100 customers instead of 1200? The way I think about things is that there is some market with a size Y (or, size X now, but with the hope it will grow to Y). You need to service a certain percentage of that market to achieve economies of scale that make a business worthwhile, and capture enough that you have some sort of moat. In the presence of VC-money, that percentage has to be high enough that there's an upside to investors. Given that goal and the idea that you only have so much runway to get there, because you'll either run out of money, or risk a competitor capturing the market. As long as you are on the right trajectory things are good. The reason that I think monthly growth is a poor metric because it's looking at the delta and ignoring the goal. It doesn't matter if you hit 10-20% or more every month if you aren't going to capture the total market you need to succeed. Also number of customers is a poor proxy, because you can have a weak business model and lose money on most transactions as demonstrated by Pets.com.

by jboy55 8y ago

gav 8y ago

In your first few years your base is going to be low, is it a bad month if you went from 1000 to 1100 customers instead of 1200? The way I think about things is that there is some market with a size Y (or, size X now, but with the hope it will grow to Y). You need to service a certain percentage of that market to achieve economies of scale that make a business worthwhile, and capture enough that you have some sort of moat. In the presence of VC-money, that percentage has to be high enough that there's an upside to investors. Given that goal and the idea that you only have so much runway to get there, because you'll either run out of money, or risk a competitor capturing the market. As long as you are on the right trajectory things are good. The reason that I think monthly growth is a poor metric because it's looking at the delta and ignoring the goal. It doesn't matter if you hit 10-20% or more every month if you aren't going to capture the total market you need to succeed. Also number of customers is a poor proxy, because you can have a weak business model and lose money on most transactions as demonstrated by Pets.com.