Zero to One_ Notes on Startups, or How to Build the Future ( PDFDrive )

The overwhelming importance of future profits is counterintuitive even in
Silicon Valley. For a company to be valuable it must grow and endure, but many
entrepreneurs focus only on short-term growth. They have an excuse: growth is
easy to measure, but durability isn’t. Those who succumb to measurement mania
obsess about weekly active user statistics, monthly revenue targets, and quarterly
earnings reports. However, you can hit those numbers and still overlook deeper,
harder-to-measure problems that threaten the durability of your business.
For example, rapid short-term growth at both Zynga and Groupon distracted
managers and investors from long-term challenges. Zynga scored early wins
with games like Farmville and claimed to have a “psychometric engine” to
rigorously gauge the appeal of new releases. But they ended up with the same
problem as every Hollywood studio: how can you reliably produce a constant
stream of popular entertainment for a fickle audience? (Nobody knows.)
Groupon posted fast growth as hundreds of thousands of local businesses tried
their product. But persuading those businesses to become repeat customers was
harder than they thought.
If you focus on near-term growth above all else, you miss the most important
question you should be asking: will this business still be around a decade from
now? Numbers alone won’t tell you the answer; instead you must think critically
about the qualitative characteristics of your business.