Jan
15
2009

Patient for Growth, Impatient for Profits

I love great quotes, yes I do. Another great quote that really applies to a business owner in today’s economy is:

…the best money during the nascent years of a business is patient for growth but impatient for profit.

It’s from Clayton Christensen’s book The Innovator’s Solution: Creating and Sustaining Successful Growth. What he is basically saying is your business model better be making money, fast!

In the dot-com heyday, growth was everything. Number of users, number of sign-ups, number of registrations. “If we build it, they will come” was the mantra. It was all anyone talked about. Lacking from the conversation – or mentioned as an afterthought – was profitability.

In short, the companies were impatient for growth, but patient for profits.

This isn’t going to work anymore. In this economy, it’s profitability of puff – gone in a cloud of smoke. Ryan Janssen from GigaOM agrees:

Many startups focus on acquiring as many new users as possible, only figuring out later how to convert those users into revenue. There is no time for such a strategy in this market. You will run out of money before you get there.

And Stephan Schmidt from Code Monkeyism has a great article about why his VC-funded startup failed. It’s a great case study with a salient reminder to focus on sales – and profitability. Read it when you have a chance and learn from his mistakes.

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