Anand Rajaraman says that any startup that’s not growing is dying, and that if a startup isn’t going to succeed, it may as well die quickly. It’s outstanding tonic for the Sequoia RIP: Good Times presentation that seems to have been absorbed by everyone in the Internet business. I would guess that in five years, very few of the startups that decided to hunker down and wait for better times will be around.
I’ve experienced exactly the situation described in your ‘die quickly’ link. I’ve worked in two startups that were in zombie mode; one of them lasted for several years before the VCs finally had to close it down, the other was finally sold in a fire sale. It’s crazy.
Of course, zombie mode is an effect, not a cause. Anand hits on the real problem here:
Let me state at the very outset that this article applies only to venture-backed startups, which are a small minority of businesses in the economy. The sole purpose of most businesses is to create a steady income stream for their owners and operators. Venture-backed startups, on the other hand, are created with the sole purpose of leading to a meaningful exit for founders, investors, and employees. Such an exit might be either an IPO or an acquisition.
I really don’t want to work at any more VC-funded companies for this reason. Such short-sighted management is just crazy.
The not growing/dying idiom is not new; I had a CTO say that to me (verbatim) in 1995. He was arguably wrong then; massive overgrowth definitely contributed to the company’s three rounds of layoffs a year later.
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