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The assumption that growing slow is less risky is not necessarily a good one. Different types of businesses need different growth rates to be successful. Peop
by wtvanhest 15y ago
The assumption that growing slow is less risky is not necessarily a good one.
Different types of businesses need different growth rates to be successful.
People taking VC money take it because they need to grow fast or it won't work.
Examples outside of tech:
Green Mountain Rosters: They make K-Cups. They have to get as many Americans to buy K-Cup machines as possible so that they don't buy a potential competitor's product. If they went slow a competitor would go fast and destroy them. So they sell the machines near cost or less and try to get market penetration. Once everyone has those machines they sell the K-cups which is where the money is.
That business would be ridiculously stupid to go slow in.
Same thing with something like Twitter. If that started catching on but they didn't put any money in it for marketing and growth some other Twitter replacement would have come along and taken their market by being aggressive.
If your goal is to have control over your world and not have a boss, don't take VC money. Build a slow growth business in a saturated market and deliver top quality products. You will be happy and that is OK.
But don't look at what other people are doing with disbelief and frustration that they are "shooting for the moon" and "ruining customer's lives" (not really your words) because they are trying to win in a hard to win place and trying to represent their investors as true fiduciaries.
- tptacek 15y agoThe country is chock full of successful independent coffee roasters. Some of them have in the past 5 years gone national in scope. Yes, it takes outside financing to replace real coffee with pasteurized process coffee cups. So, don't do that. And coffee is a good example. Because among those indies, there are coffee roasters that have taken outside funding and suffered as a result.
- deleted 15y ago[deleted]
- wtvanhest 15y agoGMCR isn't a coffee shop, it is a company which makes coffee machines and K-cups that go in those machines. # of coffee shops that went national with no financing = zero. You can argue about the type of financing, but any type Starbucks had after the first investors expected big growth. Even today their stock price is at a P/E of 30 which means the market thinks they will growth at double digits every year. I'm not saying going VC is good, or not going VC is good. Rather I am saying that each strategy has its own ups and downs depending on the type of business. Some businesses need VC funding to beat competitors, some can grow slow.
- ScottBurson 15y agoDifferent types of businesses need different growth rates to be successful. Yes!! This is the essential point, and I'm surprised pg didn't bring it up. It depends on the nature of the opportunity. If it's a large market that has recently opened up for some reason, you have to attack it aggressively or you will lose. Conversely, if the market has to be educated about the virtues of your product, you're better off going slow, because educating a market takes time. I'll agree with DHH to this extent, though: I wouldn't be surprised if there were a lot more bootstrap opportunities out there than fast-growth opportunities.