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Just because you can grow very quickly, doesn’t necessarily mean you should. That’s the argument that Rob Bier, managing partner of Trellis Partners and 6:30 Partners, makes against the concept of “blitzscaling”, the hypergrowth philosophy popularised by Reid Hoffman.
In his new book, called Smooth Scaling, as well as in a recent op-ed for Global Corporate Venturing, Bier argues that growing at all costs may work for a few startups, but for the majority, following the move fast and break things with loads of money in your pocket approach can have deeply detrimental effects.
VCs who insist on hypergrowth may be doing so out of a misalignment of incentives that don’t necessarily have the startup’s best interests at heart, and have had startup founders on what Bier calls the “crack cocaine cycle” of dangling massive pots of capital in front of them in return for hypergrowth so that they can get to the next massive fundraise.
The answer is healthy, sustainable growth, but the problem there is that metrics to measure it are lacking, making it much harder to manage. The downturn in the venture market, and the normalised interest rate environment have slowed down the prevalence of blitzscaling, but as markets improve, it could well come back into vogue.
Here, says Bier, is where corporate VCs, whose mandate also includes strategic objectives, can differentiate themselves by not putting too onerous terms to startups, and being more patient.