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Growth for Growth’s Sake is a Road to Nowhere

 

A few days ago a long time customer and CEO of a new security start-up came to see me. Ironically, given the way our conversation turned, he was in town to raise an angel round. We talked about how easyDNS will turn 20 years old this year and has never done a funding round or raised money. He promised to send me an article on Medium which talked about “Bootstrapping”, how tech companies have bucked the trend of serial funding rounds and build organically grown, sustainable businesses.

This morning he sent over “How to build a start-up Empire without Selling Your Freedom”, I highly recommend you read it.

Following on this theme it seems worthwhile to repost an article I penned on the easyDNS blog a few years back which anticipated “the bootstrapping” trend and this blog.

(Originally posted May 26, 2014)

The other day I had lunch with a colleague and he brought up Matthew Woodward’s epic rant against WPEngine  and he also mentioned Jason Cohen’s rebuttal post “Growth is Hard”  and that set us off on a long discussion around today’s tech biz climate (which is almost synonymous with the “start-up” culture, because these days everybody expects to sell their companies before they ever “grow up”)

While this post isn’t intended to single out WPengine as typical of what I’m talking about, Cohen’s rebuttal, while earnest, did seem to me to miss a point.

That point is if your growth rate is a big factor impacting your customer experience, then possibly (strictly heretically speaking), you’re growing too fast. (Jim Collins wrote a dynamite series of books, Built to Last, Good To Great, and How the Mighty Fall and Great By Choice in which he found an inverse correlation between overclocked growth-for-the-sake-of-growth rates and what he termed “10X companies” – companies that grew organically and then outperformed their industry index by 10X over a significant window of time).

It’s not that growth is bad per se. I’ve always identified more with value investing than “serial entrepreneurship” and value investors have a phrase called “GARP”, which means “Growth at a Reasonable Price”. To me the words “reasonable price” mean more than just the money.