A few weeks ago, Gabe Rivera from Techmeme tweeted this picture. It hit me. It explained super simply something I witnessed a lot in the Belgian and the Philippine Startup Ecosystems. Before I make my point, let me bring some context.
Around 2010, Steve Blank, inspired by the work of Alex Osterwalder on the Business Model Canvas, came with a definition for a startup. It was the right moment to do so. The Lean Startup movement was getting traction and a Renaissance of startup ecosystems was expected. His definition is the following: “A startup is a temporary organization designed to search for a repeatable and scalable business model”.
Of course, every word is important, but the one that a lot of people don’t really pay attention to is “scalable”. Indeed, a startup is supposed to grow a lot and fast. That’s why the technological dimension is key and why the digital revolution is the main enabler of the startup movement. Even the way startups are valorized contains this super-growth dimension. Unlike existing organizations who’s value is estimated mainly on assets, a startup is evaluated on its potential. The downside is that such growth rates can lead to crazy valuations.
To illustrate this super-growth that represents actually the startup reaching exponential growth in the beginning of its S Curve, we usually use the term of Hockey Stick. Indeed, this kind of growth looks like a hockey stick on a graph. See below this example from Airbnb.
So let’s come back to the tweet of Gabe Rivera. If you look at your hockey stick not the way it is intended, highlighting an exponential growth, but the way Gabe put it in his tweet, you see a company that grows well in the beginning but then reaches a plateau. This is very common in the world of entrepreneurs. After having found a few clients, secured some revenues and reached profitability, many entrepreneurs can’t find ways to break this flat growth. This is usually due to the fact that they don’t use scalable mechanics. Growth is usually a factor of the amount of sales people you have on the road…
The true purpose of (tech) startups is then to reach this scalability regular corporations can’t find. It should be an obsession to any startup entrepreneur. At least, as we teach them at Pollenizer, after having validated their Product/Market Fit!