We heard about big VC funding and sky-high stock prices in 2021.
Now we’re hearing about layoffs at most of these companies in 2023.
Go fast and spend big while you can. Cut back and slow down when you can’t. That’s not the only way to play the software growth game.
Crazy swings may work for the biggest tech companies, but they often cripple or kill early-stage startups.
There’s another way to create software companies with lasting value.
- Don’t raise big outside funding.
- Be frugal and keep cash in the bank as a cushion
- Grow steadily and avoid layoffs altogether
Like founder Scott McCausland described on the Practical Founders Podcast this week:
“It was just slow and steady growth for us. I always made sure that we had a couple of million bucks sitting in the bank. If things go sideways on us, I’m not going to have to lay anybody off.”
Scott was the founder and CEO of MVP Systems Software which made workload automation and scheduling software that helped big IT departments save time and money.
For Scott, his loyal team of 70 employees was not just about the money.
“You’re in the office with these people from seven o’clock in the morning until six o’clock at night. You realize they’re leaning on you and you’re leaning on them. This is a relationship that you don’t want to screw up.”
Practical founders like Scott intentionally manage their businesses more conservatively so their valuable employees aren’t at risk when things don’t go as planned.
He took care of his employees and his cofounder when he successfully sold the company in 2018.
I have a lot of respect for Scott and other practical founders like him that manage their growth and cash responsibly to avoid punishing employees when downturns happen.
Growing steadily to avoid brutal layoffs is a common theme with the successful software company founders.
Listen to this week’s podcast interview with Scott McCausland on the Practical Founders Podcast.
#practicalfounders.
