The Problem with Growth: From OnePlus to 1Password

The Problem with Growth: From OnePlus to 1Password

The first thing any company needs is a good product. Then it needs users. Then it wants more. On the App Store and the web, there are more incredible products than we have time to use; the good ones have ample devoted user bases. But what happens when that is not enough?

We are in a cycle of small companies wanting too much and losing their good product to acquisition or private equity.

There are naïve examples, take Mailbox, the best third-party mail client ever to grace the iPhone, bought by Dropbox, and killed shortly after. There’s the team behind 1Password who took VC funding for their widely popular password manager, only to disappoint core customers by killing off native apps and chasing a web based, team based, growth-based future. I adore 1Password and happily pay a subscription, but I feel less valued as a customer as they chase extra zeros on their valuation.

And I am fearful for companies like Backblaze who recently IPO’d. They are an underdog rival to S3 or GCP Storage, dramatically undercutting Amazon and Google’s prices and offering an unbelievably cheap consumer cloud backup service. But when you have investors to please, when you have growth to chase, unbelievably cheap doesn’t cut it any more.

It is not only acquisitions and VC funding that cause companies to lose their spark. Great products with low prices rapidly fail to satisfy the leaders of companies like OnePlus. This Chinese phone manufacturer boldly proclaimed in its first years that its devices were flagship killers. They were carefully compromised smartphones sold at the lowest price but with industry-leading features intact.

In 2014, Marques Brownlee was calling the $299 OnePlus One “impressive”. TechRadar couldn’t see a “better - or cheaper - alternative” to this “top end phone.” They even started upgrading features within months of each other, just to squeeze out the best hardware they could for the price instead of following the yearly cycles of Samsung and Apple.

But as the years went on, they became one of the companies they set out to kill, expensive phones with hardware that was just okay. Hardware that was compromised by accident, not intention. It’s now cancelling phones that cost the same as an iPhone, and it shed its cult following. It even lost its co-founder, rumour has it because the company left behind a product focus to simply rebrand partner OEM’s devices. “What happened to OnePlus?” asked Brownlee six years later — they outgrew their original intentions and became “the villain.”

There are cases where great development teams were eaten up by a giant, only to get more resources to make their core product so much more powerful, like Workflow, bought by Apple, turned into Shortcuts. We can hope this happens again, but it’s a rare dream.

Most good products already have a clear growth path, their own target for what they want to be. Every small team and small company has a mission and their first iterations will never — if they have prioritised correctly — be able to meet their ambitions. If an investment round can help a team improve their product, of course they will take it. The danger is when they lose control.

Basecamp CEO Jason Fried, who famously has never taken funding for his design focussed B2B software firm, claimed “lots of businesses could be great $10 million, $20 million businesses, but they’re not allowed to be.” He cited companies losing the ability to control their own destiny, you’re “working for somebody else” when you’ve “got to be $200 million or $500 million or a billion.”

It is not true that taking any funding is bad. VCs work to get ideas off the ground. But growth should never hamper the quality of an existing product. If you didn’t set out to make a billion, don’t sacrifice what you’ve built to feed an investor.

Grow if it makes your product better, not to make your investors richer.

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