Pivot: How Top Entrepreneurs Adapt and Change Course to Find Ultimate Success

Chapter 15

Preparing for Growth

In 1999, the dot-com bubble was filling up with one startup after the other. One of these startups, which I will refer to as ScaleNow.com, was experiencing tremendous growth. It was consistently ranked in the top 20 Internet sites for traffic. It was a content portal with die-hard members. The content was considered second to none in its niche and it had some seasoned publishing executives on board. It had begun acquiring companies left and right, and it was ruthless to the acquired executives. On the other hand, ScaleNow.com treated its own executives quite well. It bought its executives the most expensive chairs, threw them lavish parties, and even loaned them money to purchase real estate. It was scaling its operations on all levels and increasing the number of products it offered (scope). Within 12 months, however, it would be free-falling and selling off assets. Its executives managed to do well, but the rank and file had to scramble. It is a sad tale of mismanaged growth that I unfortunately had to see firsthand.

Assuming that the startup successfully executed the first two phases, Plant and Pivot, the next and equally demanding phase for the startup is Propel. Figure 15.1 depicts common startup growth curves. The dashed line is the classic hockey stick curve that every startup dreams of and every investor is skeptical of. It shows the startup losing money early on and then growing exponentially. The solid line is the technology S-curve, which ...