When was the last time you saw a TechCrunch, Business Insider or HackerNews article highlighting great examples around basic fundamentals of business growth? On the hustle of leadership and the rank and file employees building sound companies?
I’ve written before about how venture capital is broken and I’m more and more certain that not everyone always wins when a startup exits or IPOs. The capitalization tables and preference stacks are so skewed and favoring the investor and not entrepreneurs or employees, that it leads to such a mismatch in wealth creation. It also leads to loads of consternation along the way. The game must change.
From these business, technology or startup rags, you won’t hear a thing about product releases, customer wins, revenue growth, margin expansion, or customer case studies that provide technology and economic value to many. These things don’t get clicks and drive ad revenue.
Imagine hearing about a profitable company funding itself to scale with customer revenue? What about a business making a comfortable profit at $10M of annual revenue? Those things are boring, mundane and simply not sexy. That is why you don’t read about them and they are so rare when they pop on the radar: see Mailchimp, Atlassian, Basecamp, and even our old company Dyn. These stories make the market scratch their head, but not necessarily try and emulate. But why?
At Dyn, we bootstrapped and scaled to $30M ARR without a dollar of funding. When we did our Series A round, which was 90% secondary capital for founders, it was the very first time that the tech celebrity pubs had anything to say about us. But our users and customers LOVED us and that carried the day! We only put $5M of primary capital on the balance sheet in that 2012 round to keep scaling the business.
What you will always read about is private valuations, surprising enterprise company hires or board additions, fundraising rounds, faux enterprise alliances. You’ll certainly always hear about when companies mess up. That’s sinister and exciting and the media love that (clicks, clicks, clicks). Let’s kick them while they’re down.
The unicorn is an outlier too but everyone chases that. The chase to be the next unicorn seems to be the only thing, healthy or not, that our startup industry drools over and the entire system is built around it.
The vanity metrics all startups seem to chase are ones in which many times can be engineered and manufactured, especially if massive venture capital and private equity think you’re interesting.
Sure, to make those things happen, you need to execute but to what costs is a question that needs to be asked more frequently.
I also wonder for these entrepreneurs, executives and teams leading these companies — is it actually fun and rewarding? When I see Uber’s burn rate, or WeWork’s loss per desk, or Palantir’s annual loss, or a path to profitability at IPO years away or inevitably never, I wonder where we went so wrong. Sure, people make money, mostly investors make money, but it’s so non-fundamentally and rationally done. When did startups become all about top line and win at all costs and away from the principles of good business with staying power? Long before I got in the game.
At York IE, we’re committed to helping our portfolio of companies achieve scalable and sustainable growth. Some may bootstrap, some may raise big, some may sell for $25M and others for $500M while some may inevitably reach the fabled $1B+ territory or be the next $FSLY. We plan on celebrating them all on their path and to these hopeful outcomes and hopefully making their journey a little less tumultuous. Success is relative and it’s the grit and grind, the not ever covered by the press activities that we love. As entrepreneurs AND investors we know how hard it is to build a good company. Let’s do it together and strike the balance of growth and monetization we all crave!