Startup = Growth

Key ideas

Graham argues a startup is defined by being designed to grow fast, and that growth explains its ideas, metrics, failure rate, funding, and acquisitions.

1. 1

   A startup is a company built to grow

   Graham argues that newness, technology, or venture money don't make a startup; the essential trait is being designed for fast growth. That requires something many people want plus a way to reach and serve them all.

2. 2

   Big ideas sit in blind spots

   Because ideas for large markets are so valuable, Graham says the obvious ones are taken. Successful founders tend to notice problems others can't yet see, often exposed by technological change.

3. 3

   Know your growth rate, as a ratio

   Graham says every founder should know their growth rate, measured as new customers relative to existing ones, ideally on revenue or else active users. He gives YC benchmarks for a good weekly rate.

4. 4

   Use a growth target as a compass

   He suggests picking a weekly growth target and treating whatever hits it as the right decision. This narrows a sprawling problem into one optimization and can even steer the company toward a better idea.

5. 5

   Growth explains investors and acquirers

   Graham argues that compounding growth makes winners so valuable that high failure rates are rational, that VCs prefer capital gains because they're easy to oversee, and that acquirers buy fast growers because they're both valuable and dangerous.

In Paul’s words

Connected in lessons

• Where good startup ideas come fromCited in: Look where others won't
• Your first users, then growthCited in: Steer by weekly growth

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