VC:VC That was great! Do it again!

This is a VC:VC posting (of which a complete list can always be found by clicking on the VC:VC label). This series compares venture cycling with venture capital - this is the 26th in the series I believe - so I stand by my assertion that they have much to learn from each other (or at least tell each other).

A very small sub-section of my readers will know Becca Rausch, a local Boston icon of Israeli folkdance. Having had the privilege of dancing in a couple of her troupes, I can report that during rehearsals she is often heard to shout out "That was great! Do it again!"

Yesterday I went out for a bike ride with Guy Sapirstein and we more or less repeated last week's 30 mile route. It was a great ride, and my average speed was 13.6 mph - a tad better than last week's 13.5 mph.

Given that the Hazon charity ride I am doing with Hannah later in the summer is a two day ride, I know I need to be able to say to myself after day 1 "that was great; do it again!" So, this morning, I took myself out onto the Comm Ave Carriage Lane. Ouch! I went slower, puffed harder and enjoyed myself less, and I only rode 11 miles. Certainly riding alone is not half as much fun as riding with someone else, and I was not completely flattened by the hills - my legs do seem to be getting stronger. Nonetheless, doing it again was no easy thing, even if it was less than half of yesterday's ride length. The reasons are obvious(ish): yesterday I was fresh from a couple of days without riding and my muscles weren't tired. Just the "stress" of the fluid and energy usage or throughput means my body is less responsive to my desire to use my muscles today than it was yesterday (my Garmin Training Center software tells me yesterday's ride used 2200 calories).

This, of course, is just like the venture capital startup world.

Venture capital start-ups, all share the same goal of growing fast (both investors and entrepreneurs would not be working together if this was not a primary goal). After one of our startup companies gets something right, we tell them "That was great; Do it again!" Of course, what we mean is "That was great; do it again bigger!" You sold $3m of software this year? Great, now sell $6m next year! You serviced 450,000 consumers this year? Great, now service 1.5m next year!

Another mini-digression: the law of large numbers in business talks about the problem of growth for very large companies. It is extremely difficult for a company that has grown revenue by 100% from $5 billion to $10 billion grow again by 100% to $20 billion. The first time round was hard enough: 100% = $5b ... now 100% = $10b ... eek!

A startup starts with a small baseline: sell $1m this year - easy to sell $2m next year. However, even startups have a problem with growth numbers as they try to scale capacity along with revenue. And so, after a really tough year of working hard, pushing every sales person to work with every possible prospect to squeeze as much as possible from each sales opportunity, the company achieves a great revenue number. People are exhausted, there are no sales prospects left because we have sold something to all the prospects we knew about, the software has stagnated because we used engineers' time to help new customers install the software we sold them, and the VCs tell the company "That was great! Do it again bigger!"

The successful ones do. It is not easy, but they do it.

Just like venture cyclists.

We work out how to extend ourselves on day one, and be prepared to do it again (bigger) on day two. We plan ahead; we train; we think of what shape we need to be in; we have the right food on hand; we pace ourselves; we raise money; we find mentors; we get out there and do it.