247 - "Revenue?! Why would you go after revenue?" - Growth

A startup paradox

Startups are businesses that are designed to grow very fast. At a certain point that must mean very fast growth in revenue, otherwise the business will not be viable. In Q4 of 2023, our unifying theme at Mayday was “show we can grow”. We grew our monthly recurring revenues 2.7x in the quarter, an 8.5% compound weekly growth rate. I’m writing about my key learnings from that experience.

“What? Revenue? No, no, no, no, no. Why would you go after revenue? If you show revenue, people will ask "How much?" And it will never be enough. The company that was the 100xer, the 1,000xer, becomes the 2x dog. But if you have no revenue, you can say you're pre-revenue. You're a potential pure play.

It's not about how much you earn, it's about what you're worth. And who's worth the most? Companies that lose money. Pinterest, Snapchat... No revenue. Amazon has lost money every f*cking quarter for the last 20 f*cking years and that Bezos motherf*cker is the king.

There's no revenue. No one wants to see revenue.”

This outburst from Russ Hanneman in the TV series Silicon Valley has aged well. It is a parody, but it highlights a startup truth. Having no revenue can sometimes be more advantageous for a startup than having revenue. This is pertinent for fundraising and also M&A. 

Revenue history provides a track record, a trajectory. It is data to extrapolate from into what the startup can become. No revenue provides a blank canvas. An unfettered opportunity to present the revenue opportunity that the startup will eventually become. It’s what Eric Ries calls the “audacity of zero” in the Lean Startup. 

It is counterintuitive, but the same expansive vision can appear more believable without early modest revenues to anchor it.