The Three Ways to Grow

I like to dramatically oversimplify important concepts. It helps when processing totally new situations and businesses.

When it comes to growth, I bucket businesses into one of three models: virality, paid, or headcount

First and the best is virality. This is where you get companies that are growing 1000% off of a base that is already in the tens of millions. And, you can at least post years of 100% growth off of a base in the hundreds of millions. Think about ripping growth like a social network on the way to $1B.

Second is paid. Your growth is a function of the amount of capital you can deploy. It’s a self serve or consumer product. You’re like a Kayak and can raise $70M to deploy it tomorrow.

Third is headcount. You need people, like salespeople, in seats to add more revenue. You’re probably selling to people in seats too. So, people in seats probably occupies a key line in your model. Keeping up 100% growth for two years is a big deal in this model. LinkedIn grew as a function of headcount. If you don’t have a defensible product, you’re probably going to end up with a fragmented market in a headcount-driven growth model.

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