I remember at a board meeting, in 2017 I think, when I - in my very old school Power Point slide deck - introduced our main challenge as “escape velocity”. I’m not sure my explanation stood crystal clear for everyone, but the conclusion was at least acknowledged.
Basically, what I was trying to outline was, that if we wanted to get our (SaaS) business of the ground, we had to move faster than everyone else in our category. And as I – on a weekend a couple of weeks before the board meeting – was analyzing how to increase our growth, I stumbled on the term, escape velocity.
The basic definition of escape velocity is something in the line of “…escape velocity is the speed required for a rocket to theoretically escape the gravitational pull of an object such as a planet or a moon, assuming it does not produce its own thrust”.
Roughly translated to a tech startup context, once escape velocity is achieved, no further impulse is needed for it to continue in its escape = traction is achieved, thus your competitors will not be able to catch & kill you. So you are trying to discourage your competitors to keep pursuing you by getting as quickly ahead as possible. Maybe in the beginning you have competitors, but once you hit escape velocity, they will (in theory) reduce in numbers or get annihilated.
Escape velocity, so what?
Now, acknowledging escape velocity of course doesn’t mean anything in itself. But introducing the idea of escape velocity early on to the business, and maybe even integrate the thinking around it in your business strategy, will (not only) influence your burn rate (!), but also the metrics you focus on, and thus also maybe even end up changing the business strategy. For instance, think about how many times you have heard a startup or fast growing company being critized for not being profitable for years, or maybe even decades. Think of companies like Amazon, PayPal or Facebook. They weren’t that focused on profitability in the early years, as they were rather focused on getting to scale and then finding / or then adjusting the business model. And this aspect is very often missed, especially around people who don’t know that much about startups and how focusing on profitability may look good on a spreadsheet, but will kill you as your competitors focus on escape velocity.
For some entrepreneurs the idea of escape velocity can actually be put in to an equation. I haven’t done it myself, at least not yet. I think you have to hit a certain size or compound growth before it makes sense. But I expect I will look into it later (this year) when we grow into other markets. But of course it all comes down to users, user activity, time and acquisition cost etc. An insane compound growth on a daily, weekly or monthly basis will probably make all discussion on profitability irrelevant, at least for the first couple of years (depending on your investors).
What is the tactical translation to an escape velocity “approach”? For a SaaS-business it can be planting flags, for instance in a new country before your competitors. This is something I have been extremely aware of, and also remembering that everything doesn’t have to be perfect before you move on, or you don’t have to solve all the little problems in the world, before you move on to the next market. Of course, I completely acknowledge that you have to control your costs (and it of course always depends on which specific product & market you want to conquer) as well as have an idea of product market fit, but generalizing a bit here (and remember I am referring to SaaS businesses), I think the potential in getting first to market is tremendous as you get the attention, you become the benchmark and the category is compared to your business. You have to at least try to be aggressive by default, or else your competitors will (try to) kill you, and getting almost all the attention in a market maybe precisely be what you need to get the business to another market.
There are some pretty interesting articles/talks around this subject, e.g.: