“But [Company X] just raised $100 million dollars!” – says everyone else in Startup World
It’s every business owner’s nightmare to see the competition pull in millions of dollars in funding seemingly overnight. All of a sudden, you know you’re going to be facing an onslaught of ads, content, and marketing designed to steal your customers.
Yet the business world (and especially startups) loves to glorify the kind of never-ending growth this level of investment promises. If you’re not bringing in more each month—more customers, more revenue, more funding—the logic goes, then you’re doing it wrong.
But the honest truth is that non-stop growth isn’t sustainable. And progress for progress’s sake will only end in disaster. We need more post-growth orintated entrepreneurs, start-ups and businesses.
Despite what every hustle hard, weekends-are-for-the-weak entrepreneur tells you, the only thing in this world that grows constantly is a cancer cell (and we all know what happens to those).
As a founder, it’s up to you to set your company’s vision and culture. Are you building this business to grow and grow in the hopes that you’re the 0.00001%? Or do you want to build a sustainable company that supports you and your team for the long-term?
When we started Planio 10 years ago, the goal was never to be a billion or even $100 million company. Instead, our focus was on building a product and a company culture that was sustainable for us and our customers.
In this article, I want to share my thoughts as to why I think it’s the better path for most companies and how you can shift your thinking to start building a company for the long-term, today.
Bootstrapping vs. Funded Ventures: Which is right for you?
In the startup world, the two most common ways to build a company is to either bootstrap (i.e. self-fund until you become profitable) or go out and raise money from investors (i.e. get a boatload of cash to speed up growth).
While this sounds like it’s just about money, it’s more about the interplay of opportunity and control. The more money you take from investors the less control you have over your vision, path, and product.
While you might have access to more growth resources, you’re also opening yourself up to potential conflicts and misunderstandings with your shareholders. Or, in the words of The Notorious B.I.G.:
“Mo Money Mo Problems.”
On the other hand, bootstrapping your startup forces you to think in a lean way. You don’t have millions of dollars in the bank to test theories or throw at paid advertising. Instead, every dollar you make goes into supporting and hopefully growing your customer base.
The more money you take from investors the less control you have over your vision, path, and product.
This isn’t to say that being a VC-backed start-up is always wrong. The problem is when people begin to think it’s the only way to build a successful business.
In many cases, how you choose to fund your company will depend on the type of product you’re building. Can you quickly put together an MVP and get a few paying customers? Or do you need months or even years to build both a product and a critical mass of free users before you can “monetize”?
For example, Planio started as a side project from our dev and design firm Launch. As we took on more and more complex projects, we found that we needed a tool to keep track of tasks, measure progress, and share results with our clients. Instead of buying a project management tool and passing that cost onto our clients, we built our own. And they loved it!
At this point, we had a viable product, real-world proof that people wanted to use it, and even a few paying customers. In other words, we were in the perfect position to go out and raise a ton of money to compete with the project management monsters already out there dominating the market.
But we didn’t.
Instead, we chose a completely different path—one that I believe more companies should consider.
A “sustainable” business isn’t just about funding. It’s an entirely different approach to growth.
Why would anyone choose to not grow their company as big as possible? Isn’t that the point of this whole entrepreneurship thing?
If you listen to the popular beliefs around building a business, it’s all about growth. Your success is measured in percent increases, more revenue, bigger investments.
But what if this is the wrong way to look at growing a company?
What if we’re all being blinded by the vanity metrics that companies love to share to show off?
In his book, Company of One, entrepreneur Paul Jarvis explains that most businesses expand simply because it’s easier to throw “more” at a problem than try to solve the root cause.
- Want more customers? Hire more employees.
- Want more revenue? Spend more on ads and marketing.
- Need help supporting all those new, non-ideal users? Hire a larger support team.
This is the path that so many businesses take. And they’re celebrated for it. We celebrate large funding rounds and hiring milestones without ever realizing that this might not be the right path. When you take a step back, growth really becomes a bandaid for problems that could be solved in a better way.
Instead of hiring more employees, what if you looked for ways to run your company more efficiently?
Instead of spending more on paid ads and marketing campaigns, what if you looked for organic ways to reach your ideal customer?
What if you dealt with your ballooning support requests with more on-demand resources, education material, and better user onboarding?
Building a business on sustainable and repeatable success, not unchecked growth, will set you up for the long-term.
The problem is that all of these paths take more than just time and money. They take a purposefulness that too many people give up in favor of short-term thinking. However, if done properly, the end result is a stronger, more resilient business.
“Growth, in the typical business sense, isn’t always a smart strategy if it’s followed blindly… It can leave you with an unmaintainable number of employees, unsustainable costs, and more work than hours in a day. It can force you to lay off employees, sell your company at a less than optimal price, or, even worse, close up shop completely.” - Paul Jarvis, Company of One.
What we’re talking about here is understanding what growth means to you, staying sustainable, maximizing your productivity and profitability without burning you and your team out, and growing ‘enough’.
At Planio, we’re pretty much all engineers, which means we get excited when we can complete a task once and for all, rather than doing it over and over again. That’s why instead of doing more, we’ve focused on automation and efficiency, creating automated workflows for everything from setting up servers and Planio accounts to invoicing, billing, accounting, all of our software testing, deployments, etc...
By reframing how you think about building a business from unchecked growth to sustainable (and repeatable) success, you’re setting yourself up for the long-term. Companies that understand the underlying levers that contribute to user and revenue acquisition are naturally better suited to weather economic crises and maintain consistent growth over time.
However, if sustainability, stability, and profitability aren’t enough to get you thinking about growth differently, here are a few other factors to consider.
1. A sustainable business is more creative and innovative
Access to funding can make it harder to focus on what’s truly important. Instead of laser-focusing in on tasks and projects, you get hit with analysis paralysis. It’s the paradox of choice—too many options and you end up doing nothing.
It’s a common misconception that you need more resources to be innovative. You don't need to spend more time and money on market research. Nor hire more people to come up with ideas or devote months to exploring every idea possible.
The truth is that innovation and creativity flourish with limitations.
While researching his book, Frugal Innovation: How To Do more With Less, Navi Radjou met with and studied hundreds of entrepreneurs in emerging markets. What he discovered was that a lack of external resources, such as energy, infrastructure, and capital, led even major companies to focus on more inventive solutions.
For example, the population of senior citizens in China is expected to hit half a billion by 2050. But instead of building large-scale hospitals, Neusoft—the country’s largest IT company—developed a simple set of tools that could be operated by non-doctors in remote areas to diagnose and treat patients.
The creative process relies on periods of focus, but it also depends on time off to “incubate” ideas. This is where you’re not actively thinking about solutions, but letting the subconscious aspects of your brain connect the dots.
Sustainable businesses are more likely to promote work-life balance over drowning their team in tasks. And it’s this downtime and space that is the catalyst for so much innovation. As Radjou explains:
When external resources are scarce, you have to go inside yourself to tap the most abundant resource: Human ingenuity.
In the past, downtime has led to everything from the invention of the Post-it note to the GoreTex company launching a new line of best-selling guitar strings. All these companies needed to create innovative new products was to take a few smart people out of the rat race and give them space to explore.
2. A sustainable business creates a happier workplace (which has all sorts of knock-on benefits)
As Dean Burnett writes in Happy Brain: Where Happiness Comes From, and Why, the number one factor for workplace happiness is a sense of control. But when your company is always running at an all-out sprint, it’s impossible for your team to feel like they have any sort of stability.
Non-stop growth companies are stressful.
And while a little bit of stress is understandable, too much can have negative impacts on your company and your team. Stressed-out employees have a harder time staying focused, are less motivated, and more likely to take time off or even leave.
On the other hand, happier workers are more efficient, confident in their skills, and more likely to build better relationships with users and co-workers. Positive emotions like this are even contagious. The happier your workers are, the happier everyone around them will be as well.
3. A sustainable business is more focused
When you work in a sustainable way, it simply means you’re clearer about what matters. You know your purpose, who your user is, and can build a company to serve them (and you!)
That level of hyper-focus is one of the most important factors in success and growth. As Steve Jobs famously said:
“People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully.
I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things.”
4. Customers want to buy from sustainable and transparent companies
Lastly, your customers and users want you to be a sustainable company, have a clear purpose beyond growth, and be transparent about your purpose. A massive study put out by Nielsen found that 66% of global consumers around the globe are willing to pay more for sustainable goods.
While this manifests itself mostly in consumer goods like fashion, food, and cosmetics, the sentiment works for businesses of all types. Customers want to buy products from companies that make them feel good. And they’re willing to pay more to do so.
One way that we’ve taken this to heart is by always being completely transparent about how we store our customer’s data. Unlike most businesses today that use public clouds like Amazon AWS or Google, we’ve always owned or rented the actual server hardware infrastructure that Planio is built on.
We did this for the following reasons:
We chose sustainable and secure growth over the chance of going “viral”. The main selling point of a public cloud is that you can quickly scale up servers when you go viral overnight. But how many companies has this ever happened to?
We believe that data security is more important than growth-for-growth’s sake. Go fast and break things shouldn’t apply to your customer’s data. By owning our own servers, we know exactly where and how your data is stored and you can trust that it is protected no matter what.
(You can even see photos of our data facility here!)
How to build a post-growth business
At this point, you might be asking what makes a post-growth business different than others?
While there are a ton of factors, I like this simple definition from Andy Johns (a partner at Unusual Ventures):
The lesson is clear: do less, do it well, and be consistent.
This is easier said than done. It’s the curse of the entrepreneur to always be looking for something bigger or some new opportunity to explore. Producing with consistent quality comes from knowing yourself and your company on a deeper level.
Instead of always looking outward for the latest trend or growth ‘hack’, post-growth businesses look inward and understand that their purpose is their greatest strength.
That’s a whole lot of lofty and vague quotes. So what does building a post-growth business look like in practice?
Uncover your purpose using the “Why? How? What?” method
Post-growth businesses don’t just focus on what they build. They focus on why they’re building it in the first place and tell people that through their messaging, advertising, and actions.
Here’s an example. If you strip back the purpose and the message of a company like Apple, their ads might sound something like this:
“We make great computers. They're beautifully designed, simple to use and user-friendly. Want to buy one?”
Boring, right? Instead, Apple’s leaders understand that it’s not just what they make that people want, it’s why they make it. People want to buy products from a company that shares their beliefs and values. They want to know that they’re supporting people who understand them.
So instead, Apple’s message is:
“Everything we do, we believe in challenging the status quo. We believe in thinking differently. The way we challenge the status quo is by making our products beautifully designed, simple to use and user-friendly. We just happen to make great computers. Want to buy one?”
This starts with why. It gets at the core belief of the business before explaining what it is. To explain this process, author and speaker Simon Sinek developed what he calls the “Golden Circle”—a visualization of how your business message moves from purpose to facts.
Why? At the core of the Circle is the core belief of your business. It’s Apple’s “think differently.”
How? Next, is how you’re going to fulfill that core belief. It’s Apple’s design philosophy and focus on UX.
What? Lastly, you have what you actually make. In Apple’s case its computers, software, MP3 players, and any other electronic device that they can make by “thinking differently.”
Non-sustainable companies start with their what. They decide what they want to make and then try to attach a flimsy why to it after the fact. But your users can see through that. In order to build the kind of business that people are loyal to and continue to purchase from, you need to start with your why.
Know exactly who your ideal user is (and isn’t!)
Not only do post growth businesses understand why they’re building their product, they know exactly who it’s for.
In our case at Planio, we knew who our ideal users were because we were already working with them! We got first-hand experience with our ideal user through doing design and development work for them. And when they loved our tool, we knew we’d found something important.
But this is a bit of a unique case. Most business books will tell you that to get this kind of insight, you’ll need to do a SWOT analysis or create some complex user persona. But I think it’s easier than that. Instead, just ask yourself two questions:
Who is the user that you truly understand better than anyone else?
Who is the user you truly care about?
Your ideal user is someone you understand deeply. You know their struggles and the solutions they’re looking for.
That’s why so many successful entrepreneurs say you should create the kinds of products and features you want to see in the world and would actually use. If you’re excited about what you’re making, people like you will be as well.
But it’s not enough just to understand these users. You also need to care about them. This means being invested in the tools you’re building and caring that you’re creating the best possible solution for your people.
However, an often overlooked part of this process is also knowing who you don’t want as a user.
Hyper-growth companies will take pretty much anyone. A post-growth business is happy to serve only the right customers.
When you’re a small team with a tight focus, the wrong customers will spread your attention and focus too thin. They’ll introduce noise that takes away from the people who will truly benefit from your product. And as hard as it is to turn money away, post-growth businesses understand that you need to avoid the wrong short-term gains in order for long-term success.
Create a community around your company, product, and culture
One of the huge benefits we’ve seen from building a sustainable business is that it’s helped create a natural community around our product. Instead of constantly having to market new features and throw out fancy paid ads, the people who love our product do it for us.
This community is what Wired magazine founder Kevin Kelly calls your 1,000 True Fans. In order to develop this group of people, you need to interact with them from the start and give them a voice:
Connect with them from the start: How you onboard users can make all the difference in building a solid community. Along with teaching them how to use your product, get to know them and their needs. Ask questions, share success stories, and build that connection as soon as they sign up.
Be vocal about your purpose and vision: Community develops from shared emotions and vision. Be clear about your brand promise, purpose, and positioning quickly and consistently. One of the ways that we do this at Planio is by contributing to the Redmine open source community.
Share more about what you’re working on: Talk (and listen) to your users about future updates, features, thoughts, and ideas.
Reach out to your power users: Nothing builds a community faster than engaging with your power users. Give them the tools they need to spread your word and bring in new people. The more personal you can make the connection the better.
Give it time: Communities don’t develop overnight. But if you put in the work to be authentic and open, it will do wonders.
The same things that help you build an external community can also help foster your relationship with your team. You want everyone to feel invested, connected to your purpose, and that their ideas are heard and taken seriously.
But maybe even more than that, you want your team to feel like you’re all in this together. And there’s no easier way to do this than by celebrating more and more often.
Post-growth isn’t anti-growth. It’s a different approach to growing.
When you're focusing on being more productive, producing better work, and motivating your team, it's easy to forget to celebrate successes along the way. The small wins, in particular, tend to go unnoticed unless we make a conscious effort to savor them.
Keep a tight balance between scale and support
Post-growth businesses still care about growth. They just don’t care about growth for growth’s sake.
The challenge is growing without giving up what got you here in the first place. When you see opportunities that are outside of your company vision or cater to your non-ideal user, what do you do?
How do you keep your core beliefs firmly in the front row while still growing your company?
The truth is that sustainable companies all manage to keep their ideal user front and center during all decisions. As serial entrepreneur Faisal Hoque explains, this comes down to following a similar pattern of steps as you scale:
Listen to users, support, and the front lines of your team.
Understand who your ideal user is and what they need.
Organize your team around this goal.
Create a safe space to try new ideas.
Experiment and learn from failure or from real feedback on prototypes.
Listen again to what your users are telling you.
Design a product or feature that appeals to your ideal user.
Implement your final version of this release.
You can see this in practice with the Agile development process. In Agile, teams work in ‘sprints’ to design, develop, and release usable software to users with the ultimate goal of learning from their release and adjusting their course.
Each iteration of the product is built from the learnings and feedback your ideal users give you. In this way, it’s much harder to get too far off course when the people that matter most (your users) are constantly steering you back.
Remember, post-growth isn’t anti-growth. It’s a different approach to growing.
Put work-life balance first
Finally, it’s impossible for any company or team to be creative, innovative, and in-tune with their customer’s needs if they’re running on empty.
Prioritizing work-life balance isn’t just about giving your team time off. It’s about creating a company culture that understands that rest and ‘life’ are active parts of what makes your company great.
As Alex Soojung-Kim Pang, author of Rest: Why You Get More Done When You Work Less explains:
“Work and rest are actually partners. They are like different parts of a wave. You can’t have the high without the low. The better you are at resting, the better you will be at working.”
A post growth business puts work-life balance first so that their team is at their best when they’re working, and resting when they’re not. So how do you make sure this is a priority?
Let your team fully disconnect when they’re not at work. In our always-on culture, most people never really get away from work. They check emails in the evening, schedule their week on Sunday, and take calls pretty much whenever. And while long-days are inevitable some of the time, it’s essential that your team is able to disconnect when they need to. There’s no easier way to do this than to simply set clear boundaries and expectations, especially around communications.
Experiment with shorter workdays or weeks. If you’ve hired smart, dedicated people, there’s no reason to hold them hostage for 8–10 hours a day. In fact, most people work better, faster, and more creatively when they have fewer work hours each week. Try letting everyone go earlier in the day, working only 4 days a week, or even allowing people to work remotely and be in control of their own schedules.
Practice what you preach. At Planio, we have a company manifesto that specifically says no work will happen on Fridays, Saturdays, or Sundays (yes, we follow the 4-day work week!). This means no emails, IMs, updates, meetings, or calls.
While not always easy, we make sure we’re doing more than just talking about work-life balance and actively living it. And our team is better off for it!
Are you building your company for a year from now or a decade?
The best companies in the world, whether built from bootstrapping or venture-funding, are all sustainable. They’ve ignored the appeal of short-term thinking and built something to last. And so can you!
While it’s easy to get sucked in by entrepreneur porn and stories of all-or-nothing hustle, the truth, I believe, is that it’s more important to build a company you believe will be around for the long run.
Be sustainable. Don’t chase growth for growth’s sake. If you keep your eyes on the long-term your company will be more likely there to see it.