4 ms·

Because 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 m

by rmah 4y ago

Because 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 ago
Shouldn'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 ago
  The 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 ago
  I’m just going to point out that growing 10% per year is actually exponential growth
  - phlipski 4y ago
    Which 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 ago
  Another arrow in my quiver called "VCs aren't a good model for funding companies."
lxe 4y ago
> You may have a hard time understanding what all those people do, but I suspect they're all quite busy. I'm guessing 100 managers at least. Busy hiring more people to staff their perpetually understaffed teams, each doing some disjoint initiative.

by rmah 4y ago

Ekaros 4y ago

Shouldn'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 ago
The 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 ago
I’m just going to point out that growing 10% per year is actually exponential growth
- phlipski 4y ago
  Which 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 ago
Another arrow in my quiver called "VCs aren't a good model for funding companies."

lxe 4y ago

> You may have a hard time understanding what all those people do, but I suspect they're all quite busy. I'm guessing 100 managers at least. Busy hiring more people to staff their perpetually understaffed teams, each doing some disjoint initiative.