[jondubois]

The last article I read on HN abput this subject, the author was complaining about only achieving 20% growth per month and that it was a failure.

This seems like an extremely unnatural growth rate. It cannot possibly be sustainable in the long run. I dont know what tricks they are expected to use to achieve the ROIs but definitely, it's some kind of magic trick because this is not natural. How can someone predictably and consistently grow by 20% per month. Not possible. Why is it that the growth rate is almost always correlated with the size of the investment. This is software, production cost approaches 0 at scale, it makes no sense.

[elbasti]

The logic is roughly as follows, for a consumer product with a short sales cycle:

- Iff your market is very large, and

- Iff you have well-known customer acquisition channels that are deep, with well known customer acquisition costs

- THEN you should be able to grow 20% MoM simply by spending 20% more on customer acquisition every month.

To grow 20% MoM means you're grow 9x over the course of a year...and when you think about things things this way it makes sense why a seed round of VC is ~$1MM and a series A is ~$10MM.

So why limit oneself to 20% monthly growth? Well, because it takes time to learn how to deal with the scale.

More realistically, what (should) happen is that you have SOME known channel that will grow you say, 5x, if you spend 20% more on acquisition every month. So the next five months are spent doing two things in parallel: learning how to deal with the new scale, and desperately looking for a new channel. Fail at either and you die. Succeed at both and you've maybe built a very valuable business.

[EpicEng]

I saw the same and just assumed the author meant monthly growth targets to reach 20% growth per year. Did they really mean 20% month over month? That's insane.

[wmf]

Yes, the target growth rate taught by Y Combinator is 5-7% per week or 20-30% per month (at such high rates it's better to track weekly because otherwise you could fall too far behind before realizing it). http://www.paulgraham.com/growth.html

[EpicEng]

Wow, well... maybe it's just my ignorance, these people do this for a living. Just seems like a crazy number to me. I'm sure there's a lot of detail and reasoning behind that number.

[wmf]

Running a successful startup is crazy and unnatural; that's why it's so rare and that's also why there's backlash against that becoming the default mode of thinking.

Based on a quick calculation, to get from zero to one (billion) users takes just under six years at 7%/week growth.

[BoiledCabbage]

The crazy part is people conflating starting up a business with trying to build a billion dollar business.

Thinking anything not a grand slam is a strikeout is idotic and perverse incentives.

[ikeboy]

Starting from 0 it takes infinity years regardless of growth rate.

[ecksponential]

It basically means doubling at least every five months, each five months, right?

So, each year, doubling your previous year, more than twice. But comparing the fractions to values pegged onto the first of each and every month, it’s expecting more than octuple values in less than 15 months, by January first of that calendar year.

To put those goals into explicit, concrete terms of absolute units:

Zero Month, January 1: First 100 subscriber accounts.

February 1: 120 paying subscriber accounts.

March 1: 144 paying subscriber accounts.

April 1: 173 paying subscriber accounts.

May 1: 208 paying subscriber accounts.

June 1: 250 paying subscriber accounts.

July 1: 300 paying subscriber accounts.

August 1: 360 paying subscriber accounts.

September 1: 432 paying subscriber accounts.

October 1: 518 paying subscriber accounts.

November 1: 622 paying subscriber accounts.

December 1: 746 paying paying subscriber accounts.

January 1: 895 paying subscriber accounts.

... taken to month 15:

13: 1,074 customers

14: 1,289 customers

15: 1,547 customers

But there’s a cold calculus to this way of thinking: Why should a multi-millionaire take money out of proven investments with 10% or 15% returns, since they’ll double in ten years or less?