Venture Capitalist at Theory

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1 minute read / Aug 14, 2012 /

The Path to Exponential Growth

For years, a product can grow linearly before suddenly seeing compounding growth. Facebook is a great example. From 2004 to 2007, the company grew at a fairly linear rate. And then, the magic happened! The network effects kicked in and exponential growth ensued.

Linear growth always precedes exponential growth. For market places, in social networks or in advertising exchanges, the story is always the same. Linear, linear, linear. BOOM, exponential. One day, the magic happens.


I saw this first hand at Branchout. If you ask Rick Marini, Stan Chudnovsky and the Branchout team how they grew from 1M to 25M users in a matter of weeks, and I did at a Redpoint portfolio company event focused on viral growth, they won’t offer you any defined roadmap. Instead, they will point to a series of small, linear, consistent improvements leading to an avalanche. This is the story behind every exponential growth story.

Because humans are exceptionally terrible at distinguishing the difference between linear growth and early exponential growth, we cannot predict the avalanche. We can only continue to trudge through the snow, all the time making our products a little bit better at a time.

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