4 ms·

> This is not a company that’s on a trajectory of growth. They’re on a trajectory of death. Maybe Rackspace is on a trajectory of death, but this is a false di

• simonh 4y ago
  If you're in a growing industry but you're not growing, then you're becoming less and less relevant to your potential and actual customers. In a business like their scale is crucial. It's not a stable situation to be in. Having said that they have been growing, their revenue is up, but so are their losses. They've just not managed to stay competitive.
• peytoncasper 4y ago
  The phrase usually used is a "leaky bucket". Sure a company can operate in a neutral space, but it's unlikely that overtime their revenue growth will match their customer churn. At the same time, a lack of growth limits how much can be invested on staying relevant in terms of R&D which further separates them from competitors with a positive growth trajectory. Its also incredibly hard to kickstart a growth engine once it has slowed down. The net result is a flywheel but in the opposite direction. PE buys companies like this to slow that negative growth flywheel down attempting to stay neutral until the investment is paid off at which point profit can be made. The long tail is massive attrition as well, because few people want to work at a sinking ship or rather a ship unwilling to invest internally. Neutral isn't bad, but it's very hard to exist.
• abigail95 4y ago
  Are there any examples of companies with flat profits that continue to exist years later, where the non-growth isn't caused by mistake or incompetence?
  • thayne 4y ago
    I'm sure there are plenty of local businesses and businesses with niche customer bases in this category.