The answer to that question is “yes,” but that’s why it’s the wrong question.
Large companies don’t acquire small companies for their financials, because small company revenues won’t mathematically affect the growth or value of the acquirer. Rather, small companies are acquired for strategic reasons, and understanding how that works is the key to understanding how small companies are sold.
“You must be so proud of what you created” — the reflexive conclusion delivered by visitors to our building at WP Engine, struck by a beautiful place teeming with energy and activity, coming upon the little office of the founder.
“What we created,” I always respond. It’s not false humility. I didn’t create this. There are over four hundred people creating it even as we speak. I haven’t even been the CEO for three and a half years.
If you write your code in a public github repo, others will judge your code, with a broad definition of “quality” that includes everything from file and class organization, documentation, tests, avoiding placing API keys in code, eliminating your reliance on “security by obscurity,” and even that artful quality which like the proverbial US Supreme Court definition of pornography is impossible to define but “you know it when you see it.” In this sense, building in public forces you to create quality, artful code.
The force at work is as simple as it is universal: Ego — your desire to impress others.
Can you redirect the same force to create even more valuable outcomes?
We all see patterns, even when there’s only noise. And we like a good story. If the story makes sense, and the pattern isn’t complete nonsense, we see the story as truth, and the pattern as verified.
Maybe that’s the case with the idea that things in startups come in 10x increments.
But I think it’s actually true, or true enough that it’s an excellent rule of thumb that should be assumed until proven false. Here’s a bunch of examples to guide you.
“Worry” causes the very thing you’re worried about, to actually happen.
“Worry” breaks everything, even things which aren’t broken. It doesn’t lead constructively to solutions, it just creates problems.
The opposite of “Worry” isn’t “Apathy.” The opposite is “Planning” and “Preparation.”
Businesses of all sizes face complex decisions for which there is no one, correct answer, and yet a strong and often permanent decision has to be made.
Sometimes this is due to fundamental uncertainty inherent in the decision, e.g. not knowing how the market will evolve, what competitors are secretly investing in, whether new marketing campaigns will be successful, or how an important new hire will perform.
But I’ve seen little startups, mid-sized companies like WP Engine, and large companies struggle to deal with complexity in decisions even in conditions of little uncertainty, but in conditions of high complexity, and this is something we can improve.
With the second major IoT-based DDoS attack having passed through the news cycle, everyone wants to know what can be done to stop it. With the quantity of internet-enabled devices increasing at an accelerated rate for the foreseeable future, we know it the answer to that question has to be answered as quickly as possible.
What if Twitter will never 10x its user-base but remains a critical world-wide communication, sharing, and news system for the next decade?
In the tech industry we’re constantly repudiated that growth is the prime value of business. If your growth dips below the level of “rivets rattling themselves out of the plane,” revenue multiples plummet, and you’re written off by the press as a has-been ripe for disruption by startups 1/1000th your size but “growing exponentially.”
“How do we 10x” is a great question when a startup is young. Does it always remain the right question?
Focussing on just one thing is indeed valuable, especially when a company is young and there isn’t enough time to cut into multiple goals. Larger companies like WP Engine can have maybe three or four, but still not many.
Your job is to figure out what’s most important right now, what’s on fire, what’s most important for getting the company to its next milestone, lean into what’s working well, and then simplify and clarify the few goals and metrics that your entire company should align on.
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Friends of the Show
- Rich vs. King in the Real World: Why I sold my company
- Fermi estimation for startup business models
- 10 things I’ve never heard a successful startup founder say
- Why I feel like a fraud
- No wait, of course THAT is the single most important SaaS metric
- How to simplify complex decisions by cleaving the facts
- Easy statistics for AdWords A/B testing, and hamsters
- In its emptiness, there is the function of a startup
- Pricing determines your business
- Color Wheels are wrong? How color vision actually works
- Put down the compiler until you learn why they’re not buying
- Sandy Visions
- Scaling by “delegation” isn’t good enough
- Solving the “marketplace” business model
- Startup identity & the sadness of a successful exit
- Telling the 800-lb Gorilla to Shove it up his Ass
- The “Convergent” theory of finding truth in darkness
- The Lindy Effect on startup potential
- The rise of the “successful” unsustainable company
- The unfortunate math behind consulting companies
- The wrongness of relativism
- What a startup does to you. Or: A celebration of new life
- What did they do before you came along?
- Why it’s nice to compete against a large, profitable company
- Your non-linear problem of 90% utilization