How Our Small Business Doubled in Size Over 18 Months

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When I joined Capterra at the end of 2014, I was the fourth writer and about the thirtieth employee. Now, I’m on a team of eight in a company of over 60. It took Capterra 15 years to work our way up to 30 employees. In the 18 months since I was hired, we’ve doubled.

Now, I don’t want to say the whole thing was my fault, but the numbers speak for themselves.

hockey stick growth

It’s also possible that we’ve grown because we’ve taken an incredibly focused approach to providing 1) a solid product, 2) incredible service, 3) consistent innovation, and 4) a fantastic work environment. Occam’s razor still points to me, though.

The simple trick to incredible, explosive growth

Companies don’t win the lottery. Founders – even those of businesses that have incredible growth – don’t win by doing nothing. Nothing happens overnight because everything takes time. The secret to 18 months of huge growth, doubling our company, and our fantastic success is simple – hard work.

Fifteen years of hard work, to be exact. Here’s a chart of non-founder employees in the company over the last decade.

hockey stick growth

Pay special attention to the first nine years. In those years, we averaged around four additional employees per year. That’s not explosive, it’s conservative. Capterra is a business that requires a critical mass of vendors, buyers, reviews, and traffic to work. It’s a business that relies on a virtuous cycle, as we’ll discuss later. In short, we couldn’t exist without a viable product.

Some companies are able to cruise through on a product that consumers immediate love. They can go years and years and years without turning a profit. I’m not talking about the Amazons of the world, burying any excess back in the business to extend its growth. I’m talking about the Twitters of the world.

There are businesses that exist on a sense of optimism. We want Twitter to succeed because we enjoy it and because it does good things. As it turns out, the business model has yet to turn into something worth writing home about – Twitter has yet to turn a profit, generating a $521 million loss last year, for instance.

Capterra couldn’t rest on consumer laurels because the whole point of the site is to generate value for vendors, buyers, and the company. If no one was winning, there was no company to be had.

We also took the classic funding route. Mike Ortner, our president and founder, sunk hundreds of thousands of dollars from his own credit cards into the business to get it off the ground. We didn’t sign-up with venture capital, opting for the slow grow method.

How we hockey-sticked

The real secret to our growth has been out in the open for years. In 2010, David Cummings laid out the basic idea in an article on hockey stick growth. It’s called hockey stick because it looks like the graph above – a long straight handle attached to a sharply curving end.

Here’s a summary of his three points for hockey stick growth companies.

1)      Long linear growth while the market is determined.

2)      Network effect businesses often present hockey stick growth.

3)      Growth will level off.

Behind the scenes, here’s what’s happening at these businesses, including Capterra. First, we introduced a new idea into the market. For us, it was connecting vendors with buyers through a system underpinned by actual buyer reviews.

As it turns out, no one was initially in love with the idea. The traditional sales model for business software was doing fine, thank you very much. At this point, we were in the middle of the first digital heyday and you could sell anything to anyone.

Then, the market fell apart in 2000. For a few years, people tried to do the same things they’d always done, but the results were unimpressive. Around 2005, companies started to realize that maybe selling software with vetted reviews wasn’t such a bad idea after all.

After they saw our conversion rates, they decided that it was, in fact, a very good idea. The second point – the value of a network effect – then kicked in. That led software companies to list more options on Capterra, which meant more traffic to the site, which meant more reviews, which meant more sales, which drove more listings.

It’s a classic virtuous cycle.

Again, not an overnight explosion

You don’t double the size of your business over 18 months by just waking up and lucking into it. The only reason I and the other thirty people hired after me have these jobs is that the thirty people hired before me worked like crazy.

It’s like being on a roller coaster. That clicky-click you hear as you’re dragged up the first hill is the all the work being put in so that you can crest the top and fly like a madman.

Roller coasters are also a nice way to think about the future of our business. Roller coasters don’t go 100 miles an hour forever. Eventually, they slow down and need another boost up the hill. We’ll get there. We’ll do the work again and have the slower growth and punch through the next set of obstacles. In ten years, I’ll be writing a piece on how we doubled in size again.

The bottom line

If you want to experience incredible growth in your business, you have to work. Fifteen years of Capterra’s life was spent sweating it out at every turn. We still have to fight for every inch, but we’ve hit a comfortable stride.

To find your stride, think about what real success for your business looks like. What’s required for you to hit the sharp curve in your growth chart? Drop me a line in the comments below and let me know how long you’ve been at it. Is the big swing in sight or is there more work to do? Good luck out there.

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About the Author

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Andrew Marder

Andrew Marder is a former Capterra analyst.

Comments

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Hi Andrew,

Very well written article and it touched me. I can very well relate to that after spending last 5 years of my life following a dream, to introduce my own Cloud Based business application.

We are a bit far away from the Big Swing yet but we are counting Very Small Wins every day….

I wish Capterra Best of Luck 🙂

With regards,
Jawad

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