I've always been a fan of Tim O'Reilly's view about the importance of 'creating more value than you capture'. It was good to be reminded of it reading Chad Dickerson's (Etsy CEO) post last week talking about the future of his company and how it forms the basis for how they work. I think this mantra becomes particularly powerful with companies that grow rapidly through network effects, like Etsy has. The business has of-course seen some pretty phenomenal (but also sustainable) growth, as Fred Wilson of Union Square Ventures (who are long-term investors in Etsy and whose 'investment thesis' is: "large networks of engaged users, differentiated through user experience, and defensible through network effects") reminds us.
Fred links to Paul Graham's excellent latest essay on the subject of startups and growth. Graham's essay is rich with insight (go read it all). He describes how growth is the single most defining characteristic of a startup, and how the rate of growth is often what distinguishes a 'startup' from any other new business. For a startup, growth often provides a compass by which to base all decisions ("focusing on hitting a growth rate reduces the otherwise bewilderingly multifarious problem of starting a startup to a single problem"). But what's also really interesting is how Graham frames this. This is not simply growth for growth's sake, but growth as a forceful evolutionary pressure:
"Most fairly good ideas are adjacent to even better ones...If you start out with some initial plan and modify it as necessary to keep hitting, say, 10% weekly growth, you may end up with a quite different company than you meant to start. But anything that grows consistently at 10% a week is almost certainly a better idea than you started with."
Nicely put.
You start with Tim O'Reilly's "Work on Stuff That Matters" which I found very compelling but for the most part antithetical to Graham's essay. I found Mark Suster's rebuttal more insightful (see http://www.bothsidesofthetable.com/2012/09/22/is-going-for-rapid-growth-always-good-arent-startups-so-much-more/ )
I also suggested three reasons why focusing on innovation and impact were beter compass bearing than growth in http://www.skmurphy.com/blog/2012/10/02/startups-focus-on-impact-and-innovation-before-growth/
1. Small wins can accumulate into large ones.
2. Focus on the adjacent possible to make a contribution
3. New Technologies take a long time to mature, if you want to move down the learning curve you have to get involved early when it's not yet in the breakout part of the S-curve.
Posted by: Sean Murphy | October 02, 2012 at 05:45 PM