When it comes to business, growth is important. But so are a whole bunch of other things. Like your employees, for example.
Being a profitable company has never really been popular in the collective imagination. In the 90s, when I started my first business, corporate profit was directly associated with the exploitation of workers. A profitable business was a business that made money off the backs of its employees to feed the shareholders. All the businesses were kind of lumped together. Bosses and shareholders on one side, employees on the other.
Today, the image of the entrepreneur has changed radically. Yet starting a profitable business is still not popular. The hyper-growth model has become the standard benchmark. What matters is not to be profitable, but to grow as quickly as possible; to raise as much money as possible. Profit is not a priority, that will be the problem of future buyers or small holders, assuming the company goes public. And it’s ultimately a very convenient model because of that fact.
Following this model, you don’t make money off the backs of employees, because you don’t make money period. Quite the contrary. Everyone benefits by offering stock options, or free shares. The influx of cash makes life comfortable (at least in appearance). Foosball and free food is so “2000s”; now it’s unlimited vacations, multiple perks, and a patronizing tone toward traditional businesses that “would do well to get moving.” Provided, of course, that the sacrosanct growth is part of the game. Because when the market turns, like it did in 2001, the story will be very different for those who didn’t have time to pass the hot potato on to others. In fact, they’ll get burned.
A Unique Way of Thinking
Let’s face it: entrepreneurs who don’t necessarily dream of having unicorn status are pretty tired of seeing a system with which they do not identify. This popular model does have some virtues, but it’s simply not what all entrepreneurs want. Hyper-growth financed at a loss can be destructive. It’s often toxic for the ecosystem because it knowingly promotes unhealthy habits: dumping and ultra-aggressive commercial practices, shameless debauchery of resources, large-scale head-hunting, etc. Its hidden goal is to wipe out or disrupt the competition by smothering it under the weight of all the cash raised. Reid Hoffman never hid this fact in “Blitzscaling,” the bible on this subject. It’s right in the open.
Sociabble, the business I created 7 years ago with my associates, is profitable. Like all the companies I have created before. Yes, it may limit growth (20% to 30% per year for us). But that didn’t prevent us from building a global company present in Europe, APAC, and the US. That didn’t stop us from beating our hyper-growth competitors on global deals. Above all, it allows us to work with calm precision, to make choices that are not dictated by the urgency of a growth rate that must be maintained at all costs. It allows us to respect our ecosystem. It allows us to hire at a reasonable pace, maintain our culture and values, while giving people the opportunity to grow at a sustainable rate. It allows me to think that even if a crisis does occur, we will be able to cope and preserve current jobs better, just as we did during the COVID crisis. When I hear podcasts where they ask hyper-funded entrepreneurs how they had the “courage” to lay workers off, I have to wonder.
A Well-Orchestrated Communication
In 27 years of entrepreneurship, I haven’t once paid a dividend. Maybe one day it will happen—it’s nothing to be ashamed of. For the moment, however, with my associates, we prefer to reinvest everything to develop the business. This year, at Sociabble, while we were still well below legal obligations, we decided to donate 50% of our 2020 profits before taxes to our employees, in the form of an identical bonus for all. A way to reward their efforts during these difficult times, but also as a message to tell them: Here, we will not be sacrificing everything on the altar of growth. They matter.
Also, perhaps, it serves as a more external message, to tell entrepreneurs: Don’t give in to the sirens of all this well-orchestrated communication, convincing you to spin a little faster in your hamster wheel. Growth at any cost? What for? To what end? And we’re not the only ones who feel this way. They are legion, these entrepreneurs, often too busy to make themselves heard, but who have built a profitable, responsible company that respects its employees. And investors who understand this model exist, too. Ardian, which has invested in my companies for over 20 years, is just one example.
The word “profit” comes from the Latin profectus. It is synonymous with progress, advancement, and success. Be proud of that.