Startup general interest

The power of weekly growth rates

By July 16, 2013 One Comment

Paul Graham has just published another essay which expands on a theme he has touched on before: Do things that don’t scale. It’s great advice. Most all startups have to hack their way to first base and then build scalable systems afterwards.

Entrepreneurs often resist doing things that don’t scale, and Graham lists the reasons why, but one of them is that it seems pointless doing things that don’t scale to get small number of customers. Graham’s response is to remind us that with compound growth effects small numbers quickly become large:

The other reason founders ignore this path is that the absolute numbers seem so small at first. This can’t be how the big, famous startups got started, they think. The mistake they make is to underestimate the power of compound growth. We encourage every startup to measure their progress by weekly growth rate. If you have 100 users, you need to get 10 more next week to grow 10% a week. And while 110 may not seem much better than 100, if you keep growing at 10% a week you’ll be surprised how big the numbers get. After a year you’ll have 14,000 users, and after 2 years you’ll have 2 million.

There’s a second message here. Besides doing things that don’t scale measuring weekly growth rates keeps a constant pressure on the business to keep moving forward. Much that is good follows momentum.