Large Durable Business

People often ask me in interviews where I see our company going in the coming years (which is more of a meta question asking about the exit strategy). I always say the same thing: the plan is to build a large durable business because if you do that, every option is available to you.

Building a large durable business is exceedingly difficult. To be “large” you need go after a big enough market or one that’s growing quickly. To be durable you need to build something that is defensible (a moat or a lasting competitive advantage) and diversified (resistant to headwinds). Finally, there needs to be a business in there (which is surprisingly overlooked) that generates revenue for less than the cost it takes to deliver value.

If you happen to build one of those rare, large durable businesses, you can sustain the business without investors (the small version of this is “ramen profitable”), pay dividends, raise more capital, IPO, or sell it. Not all of these options are available if you fail to build a large durable business.

(Note that a “sustainable business” is not the benchmark. There are many kinds of sustainable businesses that could run forever, but not necessarily large ones which is rather the point of startups.)

I borrowed some of this from my time working at Stripe where this concept was talked about somewhat regularly.