Yes, You Can Grow Too Fast
Entrepreneur|January - February 2022
As a venture capitalist, I’ve seen how “blitzscaling” damages companies, people, and the planet. Now my money is on “responsible growth.”
By Hemant Taneja. Illustration by Viktor Koen

How fast should you grow?

From the dawn of the dot-com boom in 1995, all the way up through 2020, Silicon Valley had an answer that inspired many others: hyper-growth. That’s what made headlines, hypnotized investors, and drove a winner-take-all mentality. You want to be Uber, not Lyft; Google, not Bing. Reid Hoffman, a founder of LinkedIn, wrote a popular book titled, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies.

But over the years, it’s become clear that “blitzscalling” can lead to irresponsible behaviors. A lot of founders believe they should scale first and then worry about fixing the damage they cause. But by then, their business model is baked and it’s too hard to change. All they can do is tinker at the fringes and hope they don’t wind up bankrupt (or defend themselves in front of Congress or prosecutors). As a venture capitalist, I now believe “responsible growth” is the path to the best returns.

The way founders think about growth can be examined through a tale of two companies. Both provide businesses with cloud-based software for payroll, benefits, and human resource management. Gusto was cofounded in 2011 by founder and CEO Joshua Reeves, and my firm became an investor. Zenefits was cofounded in 2013 by Parker Conrad, and investors included several high-profile venture firms.

By 2015, Zenefits was getting all the attention. That spring, its valuation jumped to $4.5 billion, up from $500 million the previous year. Between 2014 to 2015, its annual recurring revenue grew from $1 million to $20 million. The company set a goal of hitting $100 million in revenue in 2016. It signed up about 10,000 small businesses as customers and hired like crazy to keep up with demand. The press gave it breathless write-ups. “Zenefits was already the hottest startup of 2014. Now it’s making a case to grab the same title in 2015,” said Forbes.

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