Why You Should Beware the Fake-Growth Trap

Last year, a venture capitalist who had expressed an interest in my startup, Iodine, passed on making an investment. Generously, and unlike too many VCs, he actually bothered to explain why we wouldn’t get his money. He was concerned, he said, that our growth at that time was a false positive–that we’d tapped into what looked like a great market but would see our growth max out relatively soon.

He was mistaken, as it turned out, at least in the short term. The metric he was pointing to–our web traffic–actually continued to grow over the next several months, increasing fourfold. I took some pride in knowing he had been dead wrong. But as time passed, this guy’s words continued to echo in my brain. Could we keep growing? What would we do if our traffic, and our success in other areas, began to ebb? What would we do if we hit a plateau?

Hitting a plateau is a common fear among entrepreneurs, and for good reason. Whether your metric is consumer traction or customer contracts, whatever success you have today will be judged against what happens tomorrow, and if your curve begins to morph from hockey stick to stairstep, then you’ll be just one more false positive in startup land.

This concern took on real urgency over the summer, when our online traffic did, in fact, get a little wobbly. Suddenly, our steady week-on-week growth began to slacken. To be sure, other metrics we track continued to move in the preferred, northeasterly direction. But clearly, something wasn’t working as it once had.

This is the prosaic truth of startups. They’re like pinball machines, pulsing with the dynamic energy of new markets, new partners, and new investments as the scoreboard lights up. But inertia always looms; all at once, that ball can drop down the drain. What’s more, a constant frenzy isn’t necessarily good for your company. Your efforts need to be applied to the right sort of activity; your growth needs to reflect the right sort of progress. And sometimes you need to take a deep breath and see what’s working and what’s not.

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