According to what is widely considered the most accurate report on startup growth, 92% of startup businesses fail within their first three years, 74% due to premature scaling.
And yet still the argument of profit vs growth is being waged.
Why? Why are companies willing to embrace a mindset in which losing money is just part of the process of building a successful company?
Currently, the average speed at which a ‘unicorn‘ (startups that make over $1 billion) hits the milestone is six years. That’s six+ years in a process to be counted amongst the best, something we all believe ourselves capable of. How do these founders expect to last long enough to see that kind of success with everything stacked against them?
This sentiment was shared by Under Armour CEO Kevin Plank – the man who founded the company 20 years ago and guided it to revenues of over $4 billion in 2015 – when he delivered his SXSW Interactive keynote address yesterday.
“Losing money is cultural,” he stated. “It’s a habit. If you get used to losing money, it’s really hard to stop.”
He recalled at a recent conference that panellists were joking about running in the red, and the audience was laughing along with them.
It’s insane, it’s ignorant, but it’s not uncommon. Too many founders are focused on scale, and not the quality of the product. They don’t value what product they have, and they certainly don’t innovate in order to make it better and more enticing.
They are doomed to fail.
So what about those of us who know better?
Get out there and make some money!
“Let someone else lose,” says Plank.
Let their dead corpse of a company become as a stepping stone to your success.
Learn from their mistakes. Do not let them become your own.
If you have something to offer, your company will grow.
Become dauntless in the face of adversity, and make no excuses.
Get out there, and make some money.
“If I had advice for an entrepreneur today it would be go out and find out if your product could sell. Get out of hypothesis mode and see if someone is willing to exchange cold, hard cash for your product.”