Chapter 6

Growth

Staying put is a great way to start going backwards. You don’t need to grow like crazy, but you also don’t want to grow stagnant.

So what comes after you’re profitable and have an organically growing customer base? For some of you, figuring out the answer to this question will be relevant right now, but even if you’re not there yet, don’t skip over this part. It will save you a lot of heartbreak if you can start thinking now about how to grow sustainably while avoiding some of the most common mistakes founders make.

Illustration with gravestone engraved with "Profit = Revenue minus costs""

You may be earning a nice living for yourself and your family, and in theory, your journey and the journey of your company could be coming to a close. But for many, including me, the point was not to create a lifestyle business, retire on a beach somewhere, and be done with it. The reasons to grow are different for every founder. Even though I got comfortable with the non-unicorn outcome for Gumroad in 2019, I’ve continued to invest in its growth. For one, it’s fun and satisfying to work on a continuously improving project. Two, it feels good to find new ways to create value for our creators.

And frankly, staying put doesn’t work. The world is constantly changing, and we and our businesses have to change with it. Staying put is a great way to start going backwards. You don’t need to grow like crazy, but you also don’t want to grow stagnant.

I’ve seen this play out at many companies. They solve the problem, get complacent, and over the years their customers churn and the people they hire are no longer fired up. But being a minimalist entrepreneur isn’t just about owning a business that doesn’t own you; it’s also about owning a business that you want to work on, even if you don’t have to work on it anymore.

At this stage, the real question is: How can I grow with intent, without jeopardizing the impact I make for my customers or damaging the life I’ve built? On the surface, it might seem straightforward to stay the course when you start to see results, but slow, sustained growth is its own kind of challenge that requires deliberate, conscious decision making.

When businesses fail, it’s unlikely that a tornado of unforeseeable misfortunes is the cause. Instead, it’s usually one or more of the same handful of mistakes: overspending on inventory and office space, hiring too quickly, cofounder infighting. I’ll talk about how to avoid those mistakes, but also about how to deal with them, because it’s likely that some of them will happen to you, even if you try to avoid them.

There are two categories of self-inflicted mistakes, or “unforced errors,” to watch out for. The first set relates to running out of money, and the second set to running out of energy. These are the rules that I follow:

  • Don’t spend money you don’t have
  • Stay focused on what your customers want
  • Raise money from your community (if you need to raise money at all)
  • Build profitable confidence
  • Maintain your energy and sanity

To be clear, this isn’t about scaling back your ambitions in order to make your business work. It’s about aligning the ambitions you have for yourself and your company with the ambitions your customers have for themselves. Because I’m not trying to build a billion-dollar business at all costs, my focus now is on creating more creators and business owners.

And frankly, you often can’t grow faster if you try. I’ve worked sixty hours a week for years on end, and I’ve worked four hours a week. For better or worse, Gumroad grew at its own pace, and the number of hours I worked didn’t seem to have much of a correlation. I think you’ll find the same is true for you: Your company will grow as quickly as your customers determine it will grow. For us, that was 15 percent in 2017, 25 percent in 2018, 40 percent in 2019, and 87 percent year-over-year in 2020.

It taught me to be wary of thinking I always needed to do more, earn more, or grow more than I needed to. Once I came to terms with the reality that I couldn’t control everything, it got a lot easier to move forward. Instead of pretending to be a product visionary and trying to build a billion-dollar company, as if it were within my control, I could focus on making Gumroad better for our existing creators.


Key Takeaways

  1. Seek “profitable confidence”: Infinite runway will maximize your creativity, clarity, and control. This is simple (spend less than you make), but not easy.
  2. How to spend less: Do less. Don’t move too fast, don’t move to Silicon Valley, don’t get an office, don’t get too big. Grow as fast as your customers want you to—and are paying you to.
  3. If you raise money, think about raising it from your community and turning your customers into owners.
  4. Ultimately most founders run out of energy before they run out of money. Maintain your energy and sanity, and that of your cofounders and coworkers by realigning early and often on what really matters.

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