It takes time to build great companies
March 29, 2010
At OpenView Venture Partners, we focus on finding great expansion stage software companies and on building them into great profitable companies in the long run. As investors, we take the extremely long view and are committed to seeing the companies through as many stages of their evolution as is possible.
Many people think that startup companies have to grow extremely fast and extremely quickly and even more so after taking on venture capital funding, but the reality is that as a company grows, it gets increasingly harder to to maintain the same rapid pace of growth that has helped them attract venture capital in the first place. Growing a company from prerevenue to the first 1 million is very hard, doubling it in a year to 2 mil is an incredible achievement, but then making it to 4 mil is even more laudable, as that require steadier leadership, better management and willingness to take calculated risks.
As to illustrate our points, I just want to include a chart created by the Wall Street Journalusing the Tableau Data Visualization Software:
As you can see, most companies take years to reach the milestone of $50mil in revenue. For example, Oracle took 10 years to grow into that size, and Microsoft, for all of its legendary growth, took 8 years to reach that magic number. Very few companies actually achieved the milestone within 8 years – we can single out Salesforce.com or Adobe as leading examples of those with extremely fast growth. At the same time, there are equally successful companies that just take longer to grow – such as Quest Software, or WindRiver.
So to grow a company successfully, it does not always require breakneck speeds – that is the exception rather than the rule. Sometimes, prudence pays in big ways in the long run.