I like to read. I like reading about companies / businesses, how to build them, success stories and things that lead to their detriment. I like reading blogs from Jason Fried and David Heinemeier Hansson. I also enjoy reading essays from Paul Graham and Sam Altman’s blog (among many, many others). If you’re unfamiliar with any of these, I would certainly recommend all of them.
Given that Jason & DHH work side-by-side at 37Signals and Paul & Sam work(ed) together building YCombinator, I’ll group them accordingly (my perception is that Jason & DHH share many ideals, as do Paul & Sam, which could partially explain their collaborative success). One interesting difference between these 2 groups is the way they perceive growth in building businesses. Sam says that growth solves nearly all problems and Paul says that the only essential thing (that makes a company a startup) is growth. So, they both are pretty open about expressing that growth is core to building a successful startup. On the other hand, Jason opens speaks about slow, intentional growth and contrasts profit to growth in 37Signals’ catalog of ideas when he says that the tech industry is especially good at losing money. Growth is electric, but profits are elusive. We take an old school, economics 101 approach: Make more than you spend.. DHH also expresses his dissatisfaction with the notion of “growth for growth’s sake” when he says No, what we need is a new crop of companies that are institutionally comfortable with leaving money on the table. Leaving growth on the table. and provides good anti-growth arguments in this article as well. Paul Jarvis, author of Company of One, contrasts growth as a goal from growth as a direct result of profit from sales of a valuable product and states “letting growth as a goal guide your company’s decisions can be shortsighted or result in high churn. Whereas if your decisions are guided by growth resulting from profit, you stay focused on how you can continue to make things better for your customers”.
These 2 opposing viewpoints seem to directly contradict one another. However, this isn’t truly an apples-to-apples comparison. These 2 distinct approaches are actually targeting different types of entrepreneurs. According to Paul Graham, growth is the only essential thing defining a startup. He also mentions that not every newly founded company is a startup. A technology business can survive and thrive without being a “startup”, and Jason, DHH & Paul all proved this.
So… which path is right? my thought: it’s really up to the team/woman/man driving the mission. What is your goal with building the business? What is your philosophy?
I personally think growth for the sake of growth feels unnecessary and wasteful, and my ideals align more with those of Jason, DHH & Paul. I think growth is not the most important factor in building a successful business and I believe that more and more examples of this are evident today.