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pg makes his point clearly at the cost of oversimplifying his definition. Scalability is a continuum. There is a continuum between barbershop and search engine.
by ef4 14y ago
pg makes his point clearly at the cost of oversimplifying his definition. Scalability is a continuum. There is a continuum between barbershop and search engine.
VCs have every incentive to hit the far high end of the continuum. But a young, hungry entrepreneur probably gets higher expected value by not straying quite so far out.
- oinksoft 14y agoThere is no continuum. The point is that the startup values growth over all else, really limitless growth if possible. A "barbershop" is some business comfortable plateauing at a certain point, or confining itself in other ways (these being business for which growth is not the foremost goal). A barbershop could be a small chain of barbershops in a metro area, the analogy holds.
- ef4 14y agoBut limitless growth is never possible. Eventually you bump up against the limits of your market. If a business is aggressively trying to grow in a $100 million market instead of a $100 billion market, they are "limiting themselves". But they're still functionally a startup. Keep taking it down a notch. At what market size do they stop being a startup? It's fuzzy. As your target market goes from "everyone" to "doctors" to "radiologists" to "radiologists at research hospitals", you may be intelligently trading off market size for lower competition, lower marketing costs, and better product/market fit. What if you had a brilliant idea for a piece of software that would help discover oil deposits? I contend that you have all the ingredients of a technology startup, but it will be impossible to measure your business in the simplistic way the essay describes. There may be only a dozen customers in the world who are positioned to pay you what you're worth, and your growth is likely to be an impulse function: until the moment you get bought by an oil major, there's no growth to measure. His ultimate distinction is fundamentally fuzzy. Eventually, every business stops growing explosively. It's only a question of at which size it happens. And that size is necessarily a continuum.
- pmarca 14y agoThere really isn't a continuum in most technology markets. Startups that constrain their growth tend to get pounded into the ground by startups that don't. Try being a small search engine competing with Google.
- drewrv 14y agoDuck duck go is doing just fine.
- staunch 14y agoJudged by growth rate it's not doing very well: https://duckduckgo.com/traffic.html https://duckduckgo.com/traffic.html
- nostrademons 14y agoIsn't that circular reasoning: "Startups that constrain their growth..." If it's cited as an example of a startup that constrains its growth, of course its growth rate is going to be low. The real question is whether it stays in business and is a worthwhile investment for its founder.
- staunch 14y agoAnd they took VC actually so it's a muddy example.
- ef4 14y agoThat's a poor example, because "search engine" is the kind of business that is necessarily out on the far end of the scale. If we start travelling down the continuum, next you'd hit something like "an app that makes lawyers more effective", then further than that "an app that makes patent lawyers more effective", etc. At each increment, you trade off market size and ultimate growth potential for less competition and lower marketing costs. Each of these niches can still be extremely lucrative (from the perspective of the entrepreneur, possibly less from the perspective of a VC who wants to make 100x). What's more, individual businesses leap up the continuum all the time. The first McDonalds was a barbershop-like business.