Slow Business: The Case Against Fast Growth
Part of the reason entrepreneurship has developed such a sexy reputation in the past few years is its sheer speed.
In contrast to the sluggish world of big-business bureacracy, young companies that become media darlings--think Facebook and Instagram--are celebrated for the breakneck pace of their growth. Personal feats of superhuman dedication are reported with wide-eyed amazement (here's Marissa Mayer on her 130-hour weeks at a young Google).
Clearly, this approach works for some businesses and some entrepreneur personality types, but not every company subscribes to this ethos of a headlong race for success. McDonald's and its fast food kin have been wildly successful in their way, but in their shadow has grown up an alternate approach to eating--local produce, seasonal ingredients, artisanal care. You've probably heard of this "slow food" movement.
Now meet "slow business."
Recently, a handful of entrepreneurs have explained publically why they take a slower, more deliberate approach to building their businesses, prizing long-term stability over quick gains. Here's Jason Fried, founder of 37signals, for example, telling a Fast Company reporter (yes, it's a little bit ironic) why he's grown his highly successful company at a slower pace than its maximum potential:
We're about being in business for the long haul and keeping the team together over the long haul. I would never trade a short-term burst for a long-term decline in morale. That happens a lot in the tech business: They burn people out and get someone else. I like the people who work here too much. I don't want them to burn out. Lots of startups burn people out with 60, 70, 80 hours of work per week. They know that both the people or the company will flame out or be bought or whatever, and they don't care, they just burn their resources. It's like drilling for as much oil as you possibly can. You can look at people the same way.
So you think there's a slash-and-burn mentality in the tech world?
For sure. I think there's a lot of lottery-playing going on right now. Companies staffing up, raising a bunch of money, hiring a bunch of people, and burning them out in the hopes that they'll hit the lottery.
Our magazine is called Fast Company, but it sounds like you want to build a slow company.
I'm a fan of growing slowly, carefully, methodically, of not getting big just for the sake of getting big. I think that rapid growth is typically of symptom of... there's a sickness there. There's a great quote by a guy named Ricardo Semler, author of the book Maverick. He said that only two things grow for the sake of growth: businesses and tumors. We have 35 employees at 37signals. We could have hundreds of employees if we wanted to--our revenues and profits support that--but I think we'd be worse off.
Fried has many more interesting things to say in the interview, including why his cleaning lady is his business model, but he's not the only one coming out in favor of a slower pace of entrepreneurship. Forbes also recently profiled a daily deals site called Steals.com, giving the piece a telling title: "The Tortoise Is Still Right: Slow and Steady Can Win the Race." Rather than growth big fast like Groupon, Steals.com has taken a steadier approach, according to Forbes, and it appears to be working:
Instead of bombarding potential customers with lots of deals every day, each site only offers two deals a day, products are in stock with same-day shipping, and products are highlighted in a way that showcases their boutique-quality.
Importantly Steals.com has built a community of people who come to the site on a regular basis. Merchants who sell their products via Steals.com have become real fans of this approach. Oh, yeah, Steals.com was also profitable very early on.
Of course, with only 74 employees, Steals.com is a much smaller company than the 10,000-employee Groupon. Steals.com started with a mere $5,000 investment from Francis while Groupon got nearly a billion in just one round of financing… Hindsight is 20/20. It looks like the planned slower-growth model of Steals.com versus the hyper-growth model of Groupon and others may be the right model.
Building fast for both these companies seems to equate with constructing a shaky, less attractive structure, and one that takes an unacceptable toll on the humans doing the building. Sacrificing some speed for a healthier outlook long-term makes sense for them.
Might also make sense for you and your business?