McKinsey report that software companies need to grow fast to survive. The conclusion:
If a software company grows at 20% annually, it has a 92 percent chance of ceasing to exist within a few years.
“The McKinsey study breaks down rapid growth into two parts. In part one, the authors identify five key factors of success in the early stages. Large market; logical revenue model; rapid-adoption; stealth/secrecy; proper compensation of the leadership team.”
(I agree though with Tomasz Tunguz that “for most bottoms-up businesses, stealth isn’t a competitive advantage, but awareness is.“)
In part 2, “The defining characteristic of enduring software businesses is they ‘master the transition from one act to the next.’ Fast-growth startups must metamorphose constantly because the market demands it of them.”
According to Tomasz, the bottom line is that startups need to sustain annual growth rates of over 20% to survive. But also, the faster the company grows the greater the onus to anticipate, prepare for and manage the stages of growth, and the more valuable the business will become.
“Sales and marketing is the main lever used by most businesses to grow revenue, and so understanding how much internet companies spend on it is important.“ Mahesh Vellanki looks at how much consumer internet companies spend on marketing as a % of revenue in the years running up to an IPO. Fascinating stuff.
Product Design Matters
Airbnb’s VP of Design, Alex Schleifer, explains why and how product design contributes to growth and how to make it work at your startup.
Instagram for Business
Instagram has grown up and they’ve just launched a new set of marketing tools. Kara Burney explains why this matters: 1) It’s now easier to track ROI, 2) Instagram is more co-dependent on Facebook than ever, 3) The tools imply your audience use mobile devices. Take note if your target audience can benefit from visual content.
The Ultimate Pitch
Maurizio Lacava reverse engineers the common elements of a successful pitch deck from some of the best pitch decks he could get his hands on. The six must-have sections are: 1) Problem / Solution, 2) Market Size, 3) Competition, 4) Business model, 5) Team, 6) Fund raising request (depending on the audience). There are some add-ons and he offers a downloadable template.
Why Well-funded Startups Fail
” Too damn right.
Anatomy of a Unicorn
McKinsey discuss what makes a unicorn and why they’re are choosing to stay private for longer.
The Exponential Mindset
Back in the industrial age (last century) the focus was all about efficiency and incremental growth. To succeed in today’s connected economy we need a new approach. And that requires a new mindset argues Mark Bonchek. An exponential mindset. Brilliant.
The C-Suite Are Not Ready!
A new survey of 2,700 business and IT decision-makers reveals that the C-Suite are utterly unprepared for their impending disruption. In particular, “nearly nine in 10 respondents admit their organization would perform better if their current C-Suite were more tech-savvy.” Could I be less surprised!
AI Invades Fintech
Deals and dollars continue to flow into Fintech startups applying Artificial Intelligence, especially in machine learning, natural language processing and in the form of personal finance bots. CB Insights feature 41 companies worth watching.
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Image: Edward Musiak