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Every SV company: 1. Start a company that does a thing well 2. Hire enough people to do the thing well 3. For some reason, hire more and more people to do mo
by lxe 4y ago
Every SV company:
1. Start a company that does a thing well
2. Hire enough people to do the thing well
3. For some reason, hire more and more people to do more and more random things
4. Hire more managers who hire even more people
5. You are now a complicated mess and can't get anything done
6. Run out of money
7. Fire people and write a sad post. Continue to collect hefty CEO salary.
Why not just stop at 2?
- unity1001 4y ago> Why not just stop at 2? Because your investors will never allow that. And without their money, you cant even reach #2.
- jesuspiece 4y agoI've wondered this as well. Look at Uber, how are they not profitable? How many more engineers/general personnel do they possibly need to hire?
- Ekaros 4y agoBecause taxi business isn't actually that great business. You have to employ lot of relatively expensive drivers and they have to pay for costs of complex machine... And the users want to get it as cheap as possible and complain somewhat if prices ever go up.
- squeaky-clean 4y agoLooking at their app they do a lot more than just give rides nowadays. UberEats delivers from restaurants, but also apparently groceries now? They have a short-distance package delivery option. Rental cars. And some kind of tool to book a plane and hotel for travel? I don't know if it's the right business call, but Uber is like 10 different companies now.
- rmah 4y agoBecause if you stop at #2... 1) you won't attract any follow-on investment capital; 2) your original investor will be angry that you're sitting on a pile of money that is doing nothing; 3) you will likely grow slower than your other competitors. in some markets, this is death, in other markets, this is fine. Patreon had nearly 500 staff before layoffs. Now has about 400 staff. You may have a hard time understanding what all those people do, but I suspect they're all quite busy.
- Ekaros 4y agoShouldn't point 2) be start paying the pile of money back? Or allow investor to sell the whole thing to someone else who just want to live on dividends.
- LegitShady 4y agoThe investors don't want their pile of money back - that would just be a loan, they want your business to go to the moon so their equity becomes much more valuable than their investment. The investors will call for more investment and faster growth, so they can find a window to sell for big money.
- flavmartins 4y ago+1 That's just not how VCs work. Basically it's you HAVE to always show hockey stick growth. Steady 5-10% per year isn't good enough. It has to grow exponentially. So that's why you keep hiring and keep spreading out the service into a whole bunch of other areas.
- harerazer 4y agoI’m just going to point out that growing 10% per year is actually exponential growth
- phlipski 4y agoWhich is why every founder should always promise 11% growth. Because most companies only grow at 10% - if they're lucky...
- deleted 4y ago[deleted]
- noobermin 4y agoAnother arrow in my quiver called "VCs aren't a good model for funding companies."
- 4y ago
- didgetmaster 4y agoThere are plenty of companies that have been highly successful at growing way beyond their first product or service. If Apple had stopped with PCs, we wouldn't have iPods, iPhones, iPads, etc. The danger is when a startup seeks to grow just for growth sake. Hire way more people than we really need so we attract investors by showing rapid growth is their modus operandi. That approach has actually worked enough that many companies are willing to travel that risky road. But that road is also littered with casualties.
- adrr 4y agoBecause a startup isn’t about growing sustainable. It’s about build an expensive rocket ship and trying to grow at record speeds. Most companies will fail but a select few will have 10x+ gains. You don’t need VC cash to start a successful company but the time horizon is much longer.
- D-Coder 4y agoMany people do. They have a five-person company that does one thing and that you never hear of, either while it's running happily or when it goes out of business.
- pastor_bob 4y agoPatreon is/was clearly trying to become an all-in-one platform to justify their increasingly large cut (like 15% now). Stopping at 2 doesn't achieve that.
- lmarcos 4y agoPlease don't give away the secret sauce. Let those silly entrepreneurs and investors keep playing with fire.
- ransom1538 4y agoIf you take VC money you are on a different track. VC's place thousands of bets with a %99.9 failure rate. But the hits, are so huge, they cover all their bad bets. So they want you to take the money and swing for fences.