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“Is there a bubble?” is a question that seems to be asked every day. But it’s the wrong question - in fact, it’s an unimportant question. Maybe there is a bubble. Maybe there isn’t. Instead of asking the question, let’s just presume we are in a bubble.

Then, the far more important debate surfaces: given the bubble, how should a team manage a startup differently? If I were to survey entrepreneurs and board members, I presume I would hear something like this list:

In the Innovator’s Dilemma for SaaS Startups, I outlined the path of many software companies, which disrupt incumbents by first serving the small-to-medium business and then move up-market by transitioning to serve larger enterprises with outbound sales teams. I argued this transition is largely due to the more attractive characteristics of larger customers, namely higher sales efficiency and reduced churn rates. This is the “traditional” way of disrupting. But, as Kenny van Zant of Asana and Mike Cannon-Brookes of Atlassian told me, there’s another way, a novel way of building companies that still isn’t very well understood: the Flywheel SaaS Company.

Sales cycles, the time from acquiring a lead to closing an account, vary quite a bit by industry, product type, and price point. But universally speaking for startups, shorter sales cycles are better. Maintaining a short sales cycle is a competitive advantage for several important reasons.

First, faster sales cycles accelerate the discovery of a repeatable sales process. Different sales approaches must be tested: which role to sell to? which pitch (cost or value)? how to handle particular objections? A 45 day sales cycle will find those answers twice as fast as a 90 day sales cycle. Faster and more frequent sales cycles enable quicker experimentation and ultimately a more rapid discovery process to the right initial sales process.

How many companies sell each year for $1B or more? In the last ten years, on average, 2.5 US venture backed IT companies are acquired for $1B+. In the last ten years, a total of 20 companies have sold themselves for greater than $1B. Over the past 20 years, that trend has been relatively constant, with the exception of the euphoria in 1999 and 2000.

Performance reviews tax organizations, managers and employees to such an extent that some companies have abolished them outright. Reviews are emotionally complex conversations. Positive and negative feedback are intertwined with conversations about career progression, raises and equity grants. These meetings are emotional powder kegs; and it’s no wonder they stress us.

In Work Rules, Google’s Chief People Officer Laszlo Bock, argues for a different type of performance review: a split review. At Google, “annual reviews happen in November, and pay discussions happen a month later.”

In a post earlier this week, Josh Kopelman coined the term Private IPO to describe patterns in the runaway late stage financing market. In addition to the points Josh makes about the dangers of stale valuations, there is another important and related implication for founders.

When entrepreneurs pursue a Private IPO as the ultimate round before they go public, they make an implicit bet about the growth rate of their businesses: company revenues will more than double before a public IPO. If the bet doesn’t pan out, then the IPO is a down round - a fund raise at a lower share price than the last private round.

See also: Innovator’s Solution for SaaS Startups

There’s a familiar path now to SaaS companies that start in the SMB (small-to-medium business) part of the market. Over time, they seem to inevitably begin serving larger customers. Box, Hubspot, Zendesk and among many others have exhibited this pattern. Why does this happen?

I believe we’re seeing Clay Christensen’s Innovator’s Dilemma at play. In short, new startups leverage a distribution advantage to acquire SMB customers at scale. These distribution advantages take many forms: a simpler product (Box vs Sharepoint); mobile app store distribution (Expensify vs Concur); content marketing (Zendesk vs Oracle/Peoplesoft). Early on, the SMB customers finance a startup’s growth and enable the startup to build a broader product over time that eventually becomes more attractive to enterprises. Because of the nature of SMBs, the startup must battle the higher churn rates of smaller customers which slow growth, creating the S curve above. At some point, the startup pursues the enterprise market to continue to achieve high growth rates with decreased customer churn.

In the Runaway Train of Late Stage Fundraising, I analyzed the growing disparity of the public and private markets. Ten years ago, we saw 2-10x as many IPOs as $40M+ rounds. Today, we see 16x as many $40M+ growth rounds as IPOs. There’s no question that companies are waiting longer to go public, fueled by late stage private investment. I was wondering if as a consequence, we might see bigger IPOs.

In 2013 with 40 employees, Stripe adopted email transparency, a policy that makes most emails public to everyone in the company. They posted an update in late 2014 about the success of email transparency with 164 employees. At first blush, it may seem radical to funnel emails of 164 other people to everyone’s already overflowing inbox. But it works brilliantly because it creates a policy around Institutional Memory, something very few companies do well.

Every morning, it seems like a startup raises a massive growth round. In fact, the data proves the point. In 2014, there were 251 working days and 211 $40M+ growth rounds - just about one per day.

In contrast to the frenetic private market, there were 15 US IT venture-backed IPOs with offerings greater than $40M last year, slightly more one IPO per month in 2014. Private market rounds were 14x as common as IPOs in 2014, compared to the 2004-2007 era, when IPOs were about as equally common as large private financings. As Bill Gurley wrote, “These large, high-priced private financings are the defining characteristic of this particular technology cycle.”