For David Fast, the issue is quality of growth. Fast is the founder and president of Perennial Software Services Group, in Santa Clara, Calif., a leading software service firm, and he has seen many of his friends follow the same route -- raising large amounts of venture capital, growing rapidly, then flaring out in a blaze of red ink. "There are lots of smart people doing things that are dumb," he says.
Many of the problems, he believes, stem from having too much money, which leads entrepreneurs to ignore many of the fundamentals of sound business management. "I really believe that people cannot learn fast enough to grow 200% -- something like 50% is all I think most can handle," says Fast, whose company estimates 1984 sales of $4 million. "A lot of companies, like Atari or Victor, hurt themselves that way. When you grow that fast, you don't take time to choose your people or markets carefully. The pressure is more, not better. You end up making third or fourth choices instead of the first. You end up doing things because you have money to do them, not because they are the right things to do."
At Perennial, Fast and his 60-member staff try to live within their cash flow, which comes steadily from such clients as Apple Computer, Atari, Intel, and VisiCorp. Instead of driving for high profits and hyper-growth, Fast keeps his profits low -- about 5% of sales -- and uses his capital to upgrade the quality of service, putting employees through intensive training programms and hiring top-flight software engineers. Using this method, fast expects Perennial to reach $15 million in annual sales by 1987 without compromising its obligations to its customers -- which he sees as more important than meteoric growth.