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One thing I've definitely learned is it's easier than you imagine to scale a good business into a bad business. To over-invest in something that can't or should
by toddmorey 3y ago
One thing I've definitely learned is it's easier than you imagine to scale a good business into a bad business. To over-invest in something that can't or shouldn't scale as quickly as the new investment pressures now dictate.
In business there's the subtle art of keeping expectations and results in healthy alignment. I think there's more pressure to avoid having too little investment than too much, but both can kill you. And it's SO brutal on morale when doubling revenue feels like a failure because 5x was the wildly-unrealistic demand of your pretend valuation.
- benjaminwootton 3y agoThis is true for a significant percentage of VC backed businesses. Many could be great small businesses, but they get inflated beyond what is practical by investors seeking a return. The founders $5m turnover business success is then relatively a failure at $30m and they are unceremoniously booted out.
- debacle 3y agoTwitter and reddit would be phenomenal companies if they never took VC funding.
- ProjectArcturis 3y agoThey would have been outscaled by other microblogging and link-sharing sites who did take VC money.
- anonzzzies 3y agoFor that reason I would never go b2c; in a bootstrapped b2b, if you make 10m-50m/y and some unicorn comes, you can still exist for a long time and this unicorn can buy you even. In an ad based b2c, there is no way.
- ido 3y agoThere are a lot of b2c business models aside from ads (e.g. actually selling/charging money from customers)
- anonzzzies 3y agoSure, but the example here was social media sites with millions of visitors and no monetisation plan besides ‘being the biggest’ & ‘something with ads … later’.
- jjeaff 3y agoI'd love to know what their marketing spend was/is like. because it seems that they were purely word of mouth.
- nitwit005 3y agoOnce you have users, it can be very hard for a competitor to dislodge them. There used to be a ton of social media startups, and large company efforts like Google+. They mostly just flopped.