Expanding Fast vs. Dialing in the Model
The investing criteria of growth investors determines the balance
Blitzfail
In PayPal’s Early Days, We Lost Money on Every Transaction
The dot-com crash forced PayPal to charge a fee
In the early days of PayPal, we lost money on every transaction. The product was free, and we lost about 2.5% of the transaction to fraud and credit card fees. More
Get the Operation Working at a Small Scale
Know your unit costs, focus on pricing and prioritize zero-to-one problems
If you’re running a tech-enabled startup—a business that combines software and meaningful physical world components—I recommend a few things. More
‘Tech-Enabled’ Often Means Thin Margins
The economics of tech-enabled businesses look like the businesses they're replacing
The problem with this new generation of tech-enabled businesses is that their economics and business models look similar to the companies they’re replacing. More
Startups Didn’t Need Great Accounting Until Software Ate the World
Pure software businesses never had to be cost-conscious
The unit economics problem has grown in recent years precisely because startups are eating the world. More
You Can’t Optimize Profits If There Are No Profits to Optimize
Scaling with negative unit economics leaves no profit to optimize
Every startup needs to develop the muscle of attributing costs and calculating unit economics. It’s often under-developed because most founders believe profitability is something they can optimize down the road. More
Negative Unit Economics Create the Illusion of Success
This leads to a brutal restructuring at massive scale
People are already familiar with core metrics like unit economics. The question is: Why does negative unit economics catch startups by surprise? The answer is that, in a lot of cases, unit economics are hard to measure. More
Startups Are Susceptible to ‘Happy Talk’
The burden of proof should be the same for good and bad news
A lot of founders are susceptible to “happy talk.” They only want to hear good news; they want to believe. More
Mature Your Culture as You Grow
What works at the early stage won’t work at scale
Just as founders should balance their own psychology, they should also balance the psychology of the “hive mind,” the corporate mind. More
Nobody Wants to Give a Founder Tough Love
Smart founders ask people what they really think
VCs now compete to see who can be the most pro-founder. They don’t want to tell founders they’re doing something wrong or give them any tough love.
Founders of fast-growing companies get to pick their board members. More