Slow Growth Shows Doubt

Kevin Ryan shares his philosophy on growth and investment, particularly emphasizing aggressive expansion when you have conviction in your business model. His perspective comes from successfully building multiple billion-dollar companies including MongoDB, Business Insider, and Gilt.

Key Points:

• Investment Philosophy:

  • If you're not hiring fast enough and losing money (investing), you either:
    • Haven't figured out your business model
    • Don't believe your idea is good enough
  • The goal is to build a "machine that turns $1 into $2"
    • Once you have this, get as much money as possible to feed into it

• Growth Strategy:

  • Don't grow fast just to grow fast
  • Growth makes sense when:
    • A salesperson costs $150k but generates $500k in sales
    • Additional engineers can build valuable products
  • Building a billion-dollar company typically requires:
    • Eventually hiring 1000+ people
    • Significant upfront investment before profitability
    • Example: MongoDB lost $1B before first profitable quarter

• Investment Timing:

  • Sometimes it doesn't make sense to invest more when:
    • Not getting proper returns
    • Market share is maxed out
    • Market isn't as big as thought
  • Must be willing to cut back when needed
    • Example: Some of his companies cut 30% of staff in last year

• Time Consideration:

  • Time is never on your side
  • Any good idea will have competitors within 6 months
  • People understand the risk of doing something
  • They underestimate the risk of not doing something

• Capital Raising Strategy:

  • When raising money (e.g., $2M at $20M valuation):
    • Ask if investment will make company worth more than dilution cost
    • Don't raise too much in early rounds if expecting significant future value
    • Time is critical - need to move quickly despite risks