Unrealistic Startup Growth Figures

Check out the following graph that has been found here on LinkedIn, and see what you think it means.

As an Engineer, I could write a book on the issues I have with this drawing. One of the challenges that I have is knowing where to start.

Let’s have a look at the weekly expenses. This diagram suggests that it is possible to create a wildly successful business bringing in $100m/yr revenue with expenses of only $1600 per week. Where do I sign up?

The growth rate is suggested at 2.5%. The thing is, it took me some time to work out what this 2.5% means. The results say that the $100m/year revenue come at 7.7 years. Assuming that the 2.5% is the weekly growth, this means it takes about 400 weeks to grow this big. 1.025^400 = 19478. That is, at week 400, the revenue is 19478 times that of week 0. You will be bringing in $1,947,800 in revenue a week, with expenses of $1,600 per week. Again, where do I sign up?

Doing rough numbers, multiplying this weekly number by 52 weeks gives $101m revenue. But here is the thing – during the previous year, revenue has been significant, but a lot less than the $100m added over the preceding 52 weeks. Sure, the next 52 weeks will be even higher, but there is no certainty that these growth figures are sustainable.

I would argue that compounding growth like this is not sustainable. Expenses grow. Marketing costs grow. Support costs grow, the market gets saturated. Competitors start up. As an idea showing how a business can go, the diagram is useful. As an expectation in a business plan, it is not as suitable.
Except for Redshift Wireless. For us, I am hoping for 3%…