paul_graham

How Y Combinator Thinks About Growth

[quote align="center" color="#999999"]“A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of ‘exit.’ The only essential thing is growth.” – Paul Graham, Co-founder of Y Combinator[/quote]

In his most recent essay, Startup = Growth, Paul Graham talks about growth as an optimization problem. Specifically, he’s talking about the growth rate of revenue, or growth rate of active users if you’re not charging initially.

A good growth rate at YC is 5-7% a week. 10% is really good, 1% means you haven’t figured out what you’re doing yet.

What they do is advise startups to pick a growth rate to hit every week and then just focus on hitting it.

This effectively puts growth front and center within the company. It’s an incredibly powerful technique because instead of having to deal with an insane number of problems, you can use your target growth rate to make your decisions for you. Anything that gets you growth is the right thing to do (cheating aside).

Should you go to a conference? Should you hire another developer? Should you spend more time on marketing? Should you try to court that big customer? Should you add another feature? The answer is whatever gets you to your target growth rate.

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