
The ‘Oh, Shit’ Moment When Growth Stops - Rifu
http://a16z.com/2015/09/30/what-to-do-if-growth-stops/
======
kylebrown
> _But if the startup gods aren’t smiling, and you can’t either figure out the
> cause and /or figure out how to correct it, it’s time to start working on a
> Plan B for the business. Plan B often includes kicking off a strategic
> process that ends up in the sale of the company before it becomes as obvious
> to others as it is to you that you’ve got a dying shark on your hands._

That sounds not entirely ethical / honest..

~~~
guessbest
Dead sharks are worth a lot of money in the art world:
[http://www.amazon.com/The-Million-Stuffed-Shark-
Contemporary...](http://www.amazon.com/The-Million-Stuffed-Shark-
Contemporary/dp/0230620590)

~~~
TheOtherHobbes
Perhaps a dead unicorn would have been even more noteworthy.

The original shark fell apart and had to be replaced, which added an amusing
patina of involuntary performance art to that famously iconic work.

It's not known if the piece now includes an ongoing shark-replacement
maintenance contract.

~~~
justinator
Yeah, he made one of those, too[0]

[0] [http://www.damienhirst.com/the-dream](http://www.damienhirst.com/the-
dream)

------
werqqr23
If a business is not growing, but you're paying all the bills and still making
money, why is that such a terrifying situation?

There are two reasons I can see for this fear. First, investors who are afraid
to lose a lot of money that they put into the company. Second, leaders who are
afraid to have to lay off a whole bunch of people because that's very painful.
Are there other reasons that I'm missing?

Seems if you're bootstrapped and hire slowly, it's easier to keep balance in
this situation.

~~~
adevine
Because, unless you're something like a utility that just keeps on chugging at
a steady state, most large businesses _don 't_ just "steady state" \- they
either grow or die, largely because some other competitor will grow faster and
eat their lunch. Think of Yahoo - when they stopped growing it was largely
because companies like Google and Facebook did a better job of attracting
users.

~~~
werqqr23
To me your Yahoo example seems to prove the opposite of your point - growth
stalled and yet it didn't die. It not only employs thousands of people but
also earns billions in profit.

~~~
jacques_chester
It doesn't get much press, so in the metric that counts (VC availability
bias), Yahoo died.

Microsoft's corpse has similarly been squirting billions of dollars of profit
through its several layers of tombstones for decades now.

~~~
scrollaway
Confusion arises because who gets to say that's the metric that counts? What
are your criteria for a business to be considered alive and healthy? Why are
those your criteria?

Growth is not inherently positive, it depends on context. For example, if I
tell you my cancer has grown 500% this year, it wouldn't be good news. And
before you say this is a stretched analogy, it's not necessarily positive in
tech either - if you're growing while bleeding money, all you're doing is
bleeding more money. So how do you reach your conclusions?

~~~
dvanduzer
Confusion arises for a lot of reasons, but cancer definitely isn't a useful
analogy to discuss a blog post that starts "Most high-growth businesses..."

It's definitely the metric that counts for the kinds of businesses Andreessen
Horowitz cares about.

Microsoft and Yahoo are particularly confusing examples, because they are both
very large companies who enjoyed a lot of first mover advantage, but were
started almost 20 years apart. And then ended up as very direct competition,
before settling down as symbiotic partners. If you really want to use an
example from biology, you should look at gut bacteria.

------
7Figures2Commas
> So, when growth slows or stops, feel free to freak out.

Or you could just save yourself the mental angst and build a profitable,
sustainable business that doesn't require perpetual growth to keep the wheels
from falling off.

~~~
jsprogrammer
If you exit as a $10 billion unicorn, does it matter if the wheels fall off
immediately after?

~~~
danieltillett
Aren’t these called decacorns these days :)

It only matters if you have any morality since selling a company to investors
for $10 billion when you know the wheels are about to fall off is not exactly
the right thing to do.

~~~
jsprogrammer
I don't assume that you know the wheels are about to fall off, only that it
doesn't matter to any decisions made prior to the exit.

Assuming a voluntary transaction, it is incumbent upon the investors to
perform any due diligence they feel they are entitled to.

~~~
danieltillett
I would hope as a CEO you would know of something major like the wheels
falling off immediately after you exit. If the event was truly unknowable
before you exited then you are morally fine, but to knowing exit when you know
there are serious issues is not fine.

~~~
jsprogrammer
One would hope.

As long as everything is fully disclosed, an investor may purchase without
recourse.

For example, M. Cuban achieved a $1 billion valuation of a company on $3.1
million in revenue and $2.7 million in net losses. This was transformed into a
$5.7 billion exit months later. Yahoo's market cap was then chopped down by
about 80% over the next few years.

~~~
danieltillett
There is still a moral duty of care towards non-sophisticated investors. You
can make an argument that an investor that buys a company knowing all the
risks and who is able to rationally evaluate the risk is responsible for their
actions, but many investors are not able to determine the risks involved.

~~~
jsprogrammer
An investor who cannot determine risks is not really an investor. More of a
cash supply.

------
danieltillett
Dang, shouldn't this be pointed towards the original source?

[http://recode.net/2015/09/29/the-oh-shit-moment-when-
growth-...](http://recode.net/2015/09/29/the-oh-shit-moment-when-growth-
stops/)

Edit. It is interesting that market saturation is not raised as a possible
cause.

------
peterburkimsher
"Freak out", "Drop everything else", "Involve all the /key/ people", "Search
maniacally for underlying causes" (scapegoat), "Assume the situation is self-
inflicted", "search ... systematic[ally]", "Divide and conquer", "Consider a
Plan B"

To my ears, all those phrases sound like "lay people off".

~~~
polakallen
Getting rid of people would (or should) be the last thing on their minds.
Reducing cost does not mean increasing growth. If anything, it further damages
any chance to recover.

Now firing someone clearly and directly responsible for the reduced growth on
the other hand...

