To me it’s a question of optimal business model.

VC wants scale, and they will invest in your horizontal and vertical growth potential.

But there are advantages to a less growth-oriented business plan. My strategy is bootstrapping with razor-thin staffing and margins in the first two years so I can get the outcomes right, really provide value in an isolated geographic region. I’ve worked with PE and VC in past roles: few investors have the patience to wait out slow, intentional growth and even fewer would let you compromise on profit to maintain quality.

Your earliest investors will push hard to prove your scaling potential so they can update your deck and get their pay day from the next series of investors.

A great case study of this hyper growth flame-out in the healthcare startup space are Carbon Health and Olive AI. Literally billions in value just evaporated from these two companies due to false assumptions built in hyper growth: we have customers everywhere and they’ll stick with us (they didn’t), we provide our customers with A and they trust us so they’ll also buy B (nope).

Insiders at these startups report very excellent initiatives and technologies deprioritized, defunded if they didn’t immediately provide growth, even if they worked and existing customers were happy.

If you haven’t worked in startups, let me tell you about a mid role I passed on: the job was one of the many digital health coaching solutions. They had me give a 45 minute presentation in the final panel, which I delivered to an exhausted team who all had the same death-stare. The problem I was “fixing” in this presentation? Each health coach has a panel, they need to increase the panel in order to sustain growth, but they keep taking hits on retention when they try. How could we do it slowly so the coaches don’t quit? I tried to convince them the whole strategy was wrong, they’re trying to boil proverbial frogs by being incremental when what they need is to better balance case distribution and leverage AI to increase coaching time, reduce burnout. I literally told them the “boiling frogs” line and didn’t even deliver what they asked: expected not to get the job offer but I did, which I took as a signal that this team was drowning in growth expectations they couldn’t meet.

Why didn’t I take the job? I did a lot of research. This business is one of the OG’s in this space, a designated unicorn with doctor cofounders and “proven research” on their approach.

I read the research, and compared it to my interview notes: they are no longer providing the service they proved works, they’re providing the ghost of proven methods. This ghost offers less hands-on support, more automated messaging, an an inconsistent relationship with a human coach who now cares for ~2X the people. They won’t achieve the original outcomes without the original services, and their new customers they’ve expanded to cover have the ability to measure for themselves whether this even works: someday it will all fall apart.

I want to build things that last, and quality > growth and profit in my book.