The Myth of Overnight Success
There are times as a first-time entrepreneur that you begin to question whether your company has “it.” This is less about the merit of your problem statement, or whether your product feels valuable. The “it” I’m referring to is the ability to become an overnight success.
In a startup market saturated with unicorns, you tend to hear a lot of people talking about overnight success:
“These companies will not only change the world, but they will do it in record time.”
You hear about how companies like Slack grew to a billion dollar company within two years, or how companies like Facebook skyrocketed to the cosmos of success in the blink of an eye. This narrative becomes the measuring stick that potential investors and peers use as the true indicator of success.
The problem is, many key details are glossed over in these epic tales: you don’t hear as often about how Slack was spun out from a failed gaming company in 2012 after $18M in funding.
You also don’t hear about the fact that Facebook’s growth rate was relatively flat until an influx of $240M in 2007 spiked its growth and popularity.
I decided to do a detailed analysis of other companies in the collaboration space because I wondered: Is my company on the right path? It’s important to note I had to omit Basecamp from the visualization, but it had raised an undisclosed amount from Bezos Expeditions in 2006 and it has also been around the longest (founded in 1999).
I wanted to see if I could get any info on how this translated to value created. I was only able to find solid information for three companies:
It’s eye opening to realize how much capital and time went behind each of these companies. Only two companies, Basecamp (formerly 37signals) and Atlassian (famous for products like JIRA and Confluence) had achieved significant notoriety without institutional investment. However, both Atlassian and Basecamp have been around the longest, and took a slow but steady approach to growth.
What’s apparent is that there is no player in the market who has achieved success without sufficient time attacking a problem. Large capital infusion at the opportune time is really a secondary ingredient to the ultimate success of the company. You have to solve problems before you can scale, and solving problems take time. We’ve seen many examples of companies that take on a ton of capital prematurely, only to flounder and fail to deliver on their lofty promises (see: Theranos and Zenefits). The point is, it takes time, it takes money, and it takes a whole lot of other things to make your company successful.
It would be especially interesting to chart out these timelines against user traction, but a lot of the data is not readily available. Nevertheless, I hope to share this with other founders of early stage startups. The only common denominator I see across these companies is a passion for the problem they are solving, and that passion cannot be short-lived. Success doesn’t happen overnight, despite what you may have heard.
Additional sources:
