Why Do Companies Need To Grow?

I have asked this question to several people in different contexts and companies. I've yet to hear a satisfactory answer. Reckon its mostly because people project their own desired outcomes coming off of the results of company growth.

Most common is that early team members or leadership compensation is tied to their shares (so either stock price needs to grow, IPO or raise more rounds). I think thats a poor reason to grow and blurs the vision of why you really need to grow - lets ignore this lot for this post.

Everything everyone does in an organisation is usually connected to achieving growth. So understanding why you need to grow is quite critical.

If you're a startup, you need to grow to raise money - or else you die. If you're a large enterprise, you need to grow to keep making investments in new markets, opportunities and technologies or you'll get disrupted or beaten by a competitor.

Why do startup investors need you to grow in order to invest? Why is disruption/competition such a big deal even though large enterprises have billions in revenue?


Growth is a proxy compound metric. Proxy for a lot of things: execution, product-market fit, customer satisfaction, market size, future revenue potential, more money to invest in more/better products etc.

Lack of growth: weak product / team / strategy, stronger competitors, small market, poor future earning potential etc.

Growth signals lesser risk - for investors, employees, partners and customers - to invest, contribute and buy from.

Companies need growth to mitigate risk of dying. Everything else i.e achieving purpose, profits, better products etc - are all consequential. Growth is causal.

If you have any thoughts to share on this subject, I would love to talk to you. You can write to me here.

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