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Hockey Sticks are for Hockey, Not Business

October 17, 2014 - Marketing - , ,
By: Chris Riley

So far, you’ve built your business right, and now you’re looking for investors. You invested some of your own money, and you have a good track record. You avoided a lavish budget, and your ask is reasonable for your field. It’s the critical point in every investor presentation that can make or break a startup’s future: how do you project the growth of your business?

Many times companies think the magic bullet to convincing an investor is through growth projections that follow the “hockey stick” model —a period of level growth followed by a sharp upturn that (hopefully!) continues forever. Obviously, the best case scenario of exponential, continual growth is what investors ideally want to see as a return. At the same time, though, it’s actually far more important to use growth projections to convey your deep understanding of your business, target market and goals rather than this now obligatory model.

With this in mind, the first question you have to ask yourself is, “Does that model really apply to my business?” and “Do I have realistic expectations of my growth timetable?” The truth is that with deliberate work and strong community relationship building, exponential growth is possible. But, as any tech evangelist will tell you, nurturing the peer-to-peer recommendations and user network that is an integral part of the hockey stick equation is an effort that could span years. Your marketing team will need to use long-term strategies to build that network and, until you reach a tipping point, linear growth is to be expected.

Of course, without a product the market wants, an amazing trial period and a practical team that is actually using your product, you won’t ever reach that tipping point. And until there are people using and loving your product in the field, you can’t know if it’s going to take off. When presenting, sell the investor on your product rather than the expected windfall. The type of investor you want to work with will invest because they believe in the long-term viability of the company and understand that their investment may hold steady or even decrease in the short-term as you build momentum.

So before you include that hockey stick graph in your presentation, consider this question: Is this what you are really anticipating or it is just what you think your investors want to hear? Because if it’s the latter, chances are they’ve heard it before, and they won’t be impressed.


Chris Riley (@HoardingInfo) is a technologist who has spent 12 years helping organizations transition from traditional development practices to a modern set of culture, processes and tooling. In addition to being a research analyst, he is an O’Reilly author, regular speaker, and subject matter expert in the areas of DevOps strategy and culture. Chris believes the biggest challenges faced in the tech market are not tools, but rather people and planning.

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