Editor’s Note: Nicholas Haralambous was the co-founder of mobile social network builder Motribe, which was recently acquired by Mxit for an undisclosed sum. The company was started two years ago with Vincent Maher and was invested in by local venture capital company 4Di Capital. He also recently started an environmentally friendly online sock shop.
This is the third post in the series: “things I learned building a mobile startup in Africa“.
In the era of tech startups, raising a billion dollars and being bought for triple that after a few months, it is increasingly becoming uncool to build an organically grown and profitable business.
The irony of this is that profitable, sustainable and proven business models tend to raise more money more often.
For some strange reason the cool factor of raising money has overtaken the cool factor of profit. This is a strange place to be, the world seems to be on it’s head with this logic. The other odd thing that comes with the glory of raising funding is the perception that businesses become successful overnight. Unfortunately companies like Instagram perpetuate this bullshit myth. It takes years and years to create either a massively viral and fast-growing platform or a profitable, scalable and sustainable business.
The thing that most people forget is that it’s easy to build a business firstly with someone else’s money and secondly with a small team. Scaling growth and maintaining profitability are entirely different things.
Let me put it like this: When you are paying the salary of two people, profit depends entirely on overcoming those two salaries. When you are paying the salaries of a team of 300 you need to overcome those salaries before you can even begin to consider the other expenses that come with that staff faction. A business that has organically grown to 300 people and can still maintain profitability is much more impressive to me than a business that is spending someone else’s money to employ 300 people for two years in the hope of finding a revenue model that sticks.
There are very few tech companies that are angling at long-term, sustainable and scalable growth. One of those on my list of must-haves right now is Evernote. I can’t live without their app. It is so embedded in long-term growth that its sales cycle is two years long (you use the app and two years later you upgrade to a paying customer). It is building a 100-year-old company starting today, everyday.
Don’t be ashamed of organic growth. Apple took 30 years to get to where it is today. Ferrari is over 80 years old. These are companies that have proven themselves, their product and their model over time. Maybe it’s time we start thinking this way and begin building business for the future.