The Need for Speed

16. 08. 2013 § 3 Comments

Earlier this year – on or about March 1st – I was reading an article on one of the tech blogs about how Andrew Mason, founder and CEO of Groupon, got fired. The article began something like „Four years ago, when Groupon was founded …“

I stopped reading the article and started thinking about this. Four years! It had seemed to me that Groupon had been around forever. There was, and still is, a ton of controversy around Groupon and around the whole daily deal industry. Let’s forget about all of that for a moment. What struck me was the timeframe and how much had happened in those four short years.

A company – Groupon – was founded and achieved amazing growth in that time span. It went from zero to thousands of employees, went public and spawned an entire industry of competitors, copycats and clones.

How about startups in Europe and, closer to home, in my native region of Southeast Europe? Well… some of them have made amazing progress in the past couple of years. Others… not so much. Here’s a typical dialogue with some startup founders I’ve had a few times recently:

„Hey! Haven’t seen you in a while, how’s it going? How are things at your XYZ startup?“

„Not so bad, in fact. We’re finally at break-even!“

„Thinking about funding?“

„Well… we’re always open to investment, of course, but we’re not actively fundraising. Like I said, we’re breaking even so we don’t think funding is so critical right now.“

Discussions about fundraising at conferences and other networking events, as well as online, sooner or later drift towards the utopian ideal of bootstrapping. „Take VC money only if you really have to!“ is a piece of advice I sometimes hear. „Look at this horrible example or this one where startup XYZ took VC funding and then crashed and burned because of pressure from the investors!“

Well, bootstrapping is „Nice Work if You Can Get It“, as Fred Astaire used to sing. By „it“ I mean not just breaking even but growing like crazy. We’ve seen a couple of great examples of successful bootsrapped startups in our region, Nordeus probably being the most spectacular among them.

Well, I have news for you, dear startup founders: It’s not going to happen! Let me rephrase that: It’s very, very, very unlikely that you will be able to grow quickly based purely on customer revenues plus (maybe) a little seed money. Therefore, you need to actively fundraise if you want to turn that WWI biplane into a rocket ship.

Some of you may be reading this and thinking „Well… hellooo!“ Yeah, I know. I wish it was as obvious to all the dynamic, talented entrepreneurs whom I meet and talk to on the ground. It’s not, and one of the reasons it’s not is that there simply isn’t enough pressure around them. Not enough pressure from their peers, from their investors, from the community.

So… all of us who are working with startups as mentors, writing about the high tech ecosystem as jounalists, building the startup communities in our cities and regions – we all need to turn up the heat. We’ve seen great things happening in the European startup world in the past few years. Now we need to see those wonderful things happening much, much faster. These founders really need to feel the need for speed!


§ 3 Responses to The Need for Speed

  • RatkoM says:

    Well, I have to agree and disagree a little bit with the post. Agree part: yep, if you have a chance, go for a fast growth. Disagree: there is nothing wrong about growing organically. I know a number of companies that did not have a chance to take ANY funds, and yet, they grow year by year by year and they are grat and respectfull companies.

    I think, when mentoring startups, someone should tell them that even if they dont receive any funding, they can be succesfull and great company. They can have 100 people in 10 years, and still have a great time.

    And this is one of things missing today in number of countries I think – we are all chasing this fast track called startup and forgeting that there is great opportunity in serving local or regional markets. Growing steady, getting customers… etc.

    Bottom line: I just dont see “quick growth” as an imperative. Good option, maybe, but nothing that relevant or important.

  • ispigel says:

    Thanks for the comment, Ratko. Of *course* there’s nothing wrong with having a nice, small, profitable company. “Small Giants” is actually one of my favourite business books.

    However…Some (not all) startups coming from our region have the *potential* to be globally succesful. They may or may not do that, and in part that depends on the prevailing attitude within their (our) ecosystem. If this attitude is overly relaxed – which I think it is – then they have less pressure to fullfil their true potential. My point is that all of us within the ecosystem need to turn up the heat and push up the pressure.

    Remember the “gastarbeiter” workers from the 60s and 70s? In ex-YU, they were “lazy and incompetent”. Then they moved to Germany and, lo and behold, those same “lazy” workers became super skilled craftsmen and professionals, contributing a great deal to the “German miracle”. I believe we should all push the entrepreneurs to shoot for the moon.

  • RatkoM says:

    Yep, I agree that we should all shoot for the moon. The only problem is that we will celebrate the winners, and I hope all others (like 98 out of 100) 🙂 will find the way to be, as you say “small giants”

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