{"id":39471,"date":"2015-09-03T13:33:37","date_gmt":"2015-09-03T20:33:37","guid":{"rendered":"https:\/\/www.backblaze.com\/blog\/?p=39471"},"modified":"2025-12-12T14:20:31","modified_gmt":"2025-12-12T22:20:31","slug":"dont-build-a-billion-dollar-business-really","status":"publish","type":"post","link":"https:\/\/www.backblaze.com\/blog\/dont-build-a-billion-dollar-business-really\/","title":{"rendered":"Don’t Build a Billion-Dollar Business. Really."},"content":{"rendered":"

\"Stack<\/p>\n

The better goal? Keep your head down, make a great product, and build a successful business.<\/p>\n

Silicon Valley prays at the altar of the billion-dollar business. And for good reason: These companies define industries, give the founders so-called \u201cF-you money,\u201d and provide VCs with a return that can counterbalance a dozen lousy investments. I don\u2019t take issue with any of this.<\/p>\n

What I do take issue with is the fact that Silicon Valley derides almost any other kind of business. So, million-dollar businesses are referred to as \u201clifestyle\u201d companies and even sizeable exits are called \u201cacquihires.\u201d<\/p>\n

Here\u2019s the reality: Almost none of the start-ups currently working away in Silicon Valley will become billion-dollar businesses. And the dirty secret? Most of the founders know this.<\/p>\n

The Numbers<\/h2>\n

According to one New York Times report, there are 25 to 40 private tech companies worth over $1 billion<\/a>. Sounds like a shockingly high number, right?<\/p>\n

Well, consider the fact that these businesses were started over a period of five to 10 years. And consider that more than 50,000 companies get funded<\/a> each year by some combination of angels and VCs. Thus, in rough numbers, the chance that a funded company goes on to become a billion-dollar business is 0.005% to 0.016%. Rounding to any significant digits, that\u2019s basically zero.<\/p>\n

Do You Buy Lottery Tickets?<\/h2>\n

So what happens to the other 99.995% of funded start-ups? At least half shut down within a couple years.<\/p>\n

The successes? Those are the ones that develop great products, attract adoring customers, generate real revenues, and employ a significant portion of the economy.<\/p>\n

They\u2019re companies building profitable businesses, such as social sharing simplifier Buffer<\/a>, and online project management service Wrike<\/a>. Or companies such as online photo site SmugMug<\/a>, small business collaboration service 37signals<\/a>, and website builder Jimdo<\/a>, all of which have eschewed funding altogether and bootstrapped their businesses to success.<\/p>\n

These companies generate $5 million, $10 million, even $50 million in revenue. They are not Facebook, Dropbox, or Pinterest, but they are successful on every metric.<\/p>\n

What\u2019s the Downside of Trying?<\/h2>\n

You may ask, \u201cWhy not try to build a billion-dollar business?\u201d Because there are big downsides to the process:<\/p>\n