The hockey stick growth slide is broken (here's a better one)

January 14, 2020

Without question, the most popular slide in a startup pitch deck is the one showing hockey stick growth.

When you find product/market fit and start seeing rapid customer acquisition, the theory goes, your basic X/Y axis of time and revenue will show exponential jumps. Your monthly revenue goes from $7,000 > $70,000 > $700,000, hence the hockey stick graphic.

Obviously, this is an extremely attractive slide to put in your pitch deck or financials. And while it’s clearly oriented toward venture capital investors, over the last decade hockey stick growth thinking has made its way into private equity and the broader marketplace as others learned from and emulated the growth of Facebook, Google, etc.

The slide does have value, but investors, companies, and founders still frequently mistake the hockey stick as a model for growth, rather than the consequence of it.

What comes next

September 30, 2018

Yesterday, the world changed.

In the midst of our continuously chaotic news cycle, word arrived that world wide web inventor and engineer Tim Berners-Lee had officially launched Solid (an open source project) and Inrupt (his new company w/co founder John Bruce).

Part of what makes the announcement significant is how intensely data privacy has been churning the internet and mobile web over the last year.

Google and Apple are reacting to newly enacted GDPR standards, Facebook is radically reshaping their developer ecosystem/platform due to a series of major data breaches, Twitter continues to struggle with bots, trolls, and doxxing, and LinkedIn has quietly been growing and likely hoping no one notices it was built on the same ground as its competitors.

Those changes are happening in a series of interconnected ecosystems collectively worth hundreds of billions of dollars…and the how, when, and where of data use underpins all of it.

But to understand why something like Solid is important, you have to first understand a picture that’s much bigger than the walled off gardens of each tech giant.

For over a decade, Berners-Lee has talked about the promise of the early web, and how our current set of technologies failed in executing that vision. Instead of a “one-way pipeline” where people are consumers, the intention is for Solid to foster a “read-write web where users can interact and innovate, collaborate and share.”

Telling one story a day about the people who use what you create

April 21, 2015

Building a company from scratch is exhausting.

Entrepreneurs need various kinds of support to stay afloat —understanding friends and family, tough advisers / mentors, a good reading list to encourage contemplation, these are all important.

But the best source of support is the people actually using what you build. Their stories are the ones that open up your world when you’re thinking too narrowly, and provide inspiration to keep going. While solving a problem for one person typically doesn’t justify a stable small business or a rapidly growing startup, it’s the starting point for everything else.

How I think about balance as an entrepreneur

March 15, 2015

There are a lot of ways to break a startup.

An incomplete list of things that can (and often do) destroy them includes:

Inability to balance long term growth of a company / product / culture against day to day choices
Uncertainty around what’s worth measuring and what’s extra noise
Failing to minimize the biggest risk(s)
Accounting for the needs and anxieties of your investors and key partners vs. what’s important to your users and/or customers

In a recent episode of the Reboot Podcast, Fred Wilson reflected on the early days of founding a venture capital firm, and talked with his then co-founder Jerry Colonna about the heart wrenching process of being on the board of Star Media, which at one point had a $2 billion market cap before eventually going bankrupt. In particular, he talked about support he received as well as times when he wishes he’d provided more direct support to the companies he invested in.

“…when you watch a company of 500 or 1000 people go bankrupt, it was like we did not live up to our duty and obligation as a board…we knew the founders were in over their heads, and we knew they weren't really running the company properly. And we should have stepped in and done something about it and we didn’t until it was too late.”

Things look a bit different for entrepreneurs now compared to when Fred and Jerry started Flatiron Partners in 1996. If you start a company in 2015 you can find almost any information you need via a combination of YouTube, blogs, and simply punching some phrases into a search engine. Paperwork to incorporate, advice on dividing equity, and other basic structures are all easily accessible on the web.

If it’s easy to find information, why do so many startups fail?

Entrepreneurs and investors often point to growth as the number one characteristic of the health of a startup. Paul Graham’s essay on startup growth is frequently cited in blog posts, and has been rehashed by a range of people across the startup ecosystem.

But how many companies that went through rapid growth and led to an IPO or acquisition are still around 10–15 years on? Making significant revenue? Continuing to add value and/or meaning to their customers’ lives?

I don’t know the answer to these questions. But I do know growth alone isn’t enough. It must have purpose, and that purpose must be long term. Andy Baio’s painfully honest description of the fall of Upcoming.org is a too common story for startups, especially those where community is a critical building block.

In the early stages of a startup there’s no clear path, and it takes guts, grit, and heart to build something quickly. You have to get used to pulling in as much information as possible, and still not knowing if you’re making the right decision. In that environment, balance becomes critical — both for the health of the company, and of the founders and first employees.

Here are a few things I think about regularly when it comes to balance…