I’ve been lucky to have been part of building, advising, or investing in 40+ tech companies in the past 10 years. Some $100M+ wins. Some, complete losses. Most end up in the middle.
One of my main observations is that there are certain companies where growth seems to come easily, like guiding a boulder down hill. These companies grow despite having organizational chaos, not executing the “best” growth practices, and missing low hanging fruit. I refer to these companies as Smooth Sailers – a little effort for lots of speed.
In other companies, growth feels much harder. It feels like pushing a boulder up hill. Despite executing the best growth practices, picking the low hanging fruit, and having a great team, they struggle to grow. I refer to these companies as Tugboats – a lot of effort for little speed.
What is the difference between these two types of companies? This is a question I’ve pondered for a long time and have pieced together a framework to explain the difference. The framework has many implications for how you seek out growth and build a company.
Before I explain the high level framework, we need to start with what the difference between these two types of companies isn’t…
It’s Not Just Great Product
The “go-to” answer for almost every question in startups, is “build a great product.” Every time I hear that answer it feels completely unsatisfied. Building a great product is a piece of the puzzle, but it’s far from the full picture.
There are great products that never reach $100M+.
There are also terrible products by many people’s definition that reach far greater than $100M+. If you’ve ever used Workday, you know what I’m talking about. (At the time of this writing, Workday is worth $20 billion.)
“Build a great product” can’t be the answer to most growth questions, if the above two statements are true. It is certainly a starting point, but not the answer.
The problem with the answer of “build a great product” is that it leads to something that Andrew Chen and I talk about extensively in the Reforge Growth Series called the Product Death Cycle. The Product Death Cycle was originally coined by David Bland of Precoil.