In The Minimalist Entrepreneur, Sahil Lavignia, the founder of Gumroad, presents his view on entrepreneurship, which I find very refreshing and resilient in the world of growth at all costs attitude. I will focus on the financial aspects of his perspective but there is much more when it comes to sustainable, value based relations with customers, community building, product development process and organic growth in his book.
“Minimalist entrepreneurs focus on getting profitable at all costs instead of growing at all costs, because profit is oxygen for businesses.”
The quote above bought my heart. I could not agree more. Minimalist entrepreneur aims to be profitable from day one and finance his business through real profits. Sustainable businesses prioritize profitability over blind expansion. Profit fuels growth and ensures business longevity. So why this commonsense attitude is not that common those days?
Lavignia claims that search for unicorns, which became modus operandi of venture capitalists is forcing entrepreneurs to focus on fast growth rather than building sustainable, profitable companies, which do grow but not fast enough. Profitability means sustainability but it comes at the cost of speed and scale. If the numbers claiming the fail rate of start-ups in the range of 70-90% are true, the remaining businesses must grow much faster to cover the losses. Chasing unicorns incentivizes rapid, unsustainable growth over profitability and this pressure forces entrepreneurs to prioritize growth metrics over building a solid foundation, leading to a high failure rate.
“Minimalist businesses do one thing and do it well.”
Profitability perspective requires a company to focus on critical things and choose what it invests in. It builds as little as possible and automates or outsources everything else. This attitude results in focus and flexibility, which in turn creates resilience and longevity.
Practical questions
Should you invest based on the future forecasts or rather follow the development of the business and scale in-line with growth?
Do you know what is your one thing, or you try to do everything yourself?
Resources
Lavingia S. (2021). The Minimalist Entrepreneur: How Great Founders Do More with Less.
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