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Comment by robbyking | Hacker News Reader

> Linear growth can be worse than no growth.

This one is huge. I had a manger once who confused linear growth with vertical growth, and as a result our entire engineering staff was spread thin trying to make progress on a large variety of mediocre products.

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Can you explain this in more detail? Why is linear growth worse than no growth?

Because it has a tendency to lull you into wasting time on a product that's not going to make any real money.

You get fooled into thinking you're on to something, when in reality it's a zombie. Which can be a great lifestyle business, but your (potential) VC backer may be less enthusiastic.

Sounds like the company I currently work for, sadly. We have .NET, Python, PHP, Java, Node, and front end developers. Most of them are entry and mid level. Owners are constantly trying to get anything and everything through the door. It makes for a frustrating work environment and usually unhappy clients. Sure, we are growing ... just not in the right direction.

Still don't get it. Let's say a linear YoY revenue growth of 1, 2, 3, 4, 5 million. Or the same for net profits. Why is that worse than no growth?

I think the key phrase is "can be worse than no growth". Linear growth of 5% a year on small base sucks and can be worse than no growth because it provides an illusion of progress. A team could be working on something with a much greater return instead. If a team saw no growth they may have abandoned the project entirely instead of pushing onwards through mediocre or lackluster growth (relatively speaking) for a longer period of time.

5% a year isn't linear growth. It's exponential growth, but with small factor. $1,000,000 a year or 1000 customers a month are linear growth. I'm not sure what exactly OP meant but I've definitely seen cases where there was definitely a non-compounding ROI for marketing efforts, e.g. if the company spent $100K on ads they might get $200K of sales (or $50K :(), but as soon as they stopped the advertising there was no lasting boost to growth. This can lead to really unhealthy investment cycles where money is poured into the company, it's spent on promotion and generates corresponding growth, but as soon as the money is used up growth trails off and another round of investment is needed.

It would be exponential if it was compounding, I stated "Linear growth of 5% a year on small base". As in, a 5% growth on a $100 base each year which would be $105, $110, $115. Contrasted with 5% compounded growth on $100 of $105, $110.25, $115.76.

Apologies, tricky wording.

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