Joel Spolsky, one of the founders of Stack Exchange and Fog Creek Software as well as the popular blogger writing Joel on Software, gave a very interesting presentation at Startup School. In it, he talked about two startup options, grow big fast or organic growth, and broke down the two. This has been done before but I’m including his list of differences here:
The interesting part is the part at the end. In short, Joel said the worst thing you can do for your business is fail to decide which category you are in.
He’s done both. Fog Creek Software is a grow slow business. It built itself from customers and consulting and is now a 40+ person company spitting out cash. Stack Exchange, on the other hand, is a grow fast company. It needs network effects to lock in its customers.
What really struck me as interesting is that Joel recognized very early that Stack Exchange was a get big fast business but waited two years before raising venture capital funding. He proved there was a customer base there first, proved that it could indeed grow fast, and then raised money from a few VCs that he specifically targeted. His round, he said, was done in two weeks. That history is repeating itself with Trello, a project management service from Fog Creek Software. This time, though, instead of raising VC money, the project is being funded by Fog Creek profits.
So which is it? Grow big fast or organic growth? While the former takes all the headlines, it’s the latter that makes the country go.