Tuesday, November 11, 2008

Scaling up without selling your soul - Part 5


While this may sound like sacrilege and we all know how growing businesses are starved for cash, consider how many have lost the edge of their good qualities after suddenly becoming flush with cash. I’ll be honest that I haven’t figured out how all this looks yet in a capitalistic society, but I know the danger of huge cash infusions.

At Polyface, we’ve been starved for cash more years than not. And yet that is exactly what makes us innovative—we’re hungry. And when we’re hungry, we’re much more creative. When we need some capital, we appeal to our patrons to give us short-term no interest loans and they love to invest in something noble. It’s more satisfying than just writing a check to Nature Conservancy. We helped our little Amish feed mill get up and going with a two-year no-interest loan several years ago. Best investment we ever made. You can’t ask someone else to do something you’re not willing to do yourself, so this established a precedent of caring investment rather than just interest-return investment.

If your product or service is good enough and your mission noble enough and your cause life-changing enough, you can find other ways to raise capital besides an IPO. This slower, more relationally oriented, pay-as-you-go growth is inherently more organic. Growing from the inside out rather than the outside in follows the natural pattern. Plants and animals can’t grow beyond their ecological resource base. When we violate that principle in nature, we get lots of growth and no quality. Chemical-fertilized hybrid corn contains way less protein and 7 fewer enzymes than open pollinated, compost-fertilized varieties. You just get more bushels of junk.

Being satisfied with organic growth keeps us real. If this one principle were used across America’s business landscape, we would probably have fewer corporate scandals. Meteoric rises usually result in meteoric falls, so beware fast cash and the imbalance it usually creates. My dad had a saying for it: “Overrunning your headlights.” He also said to beware of people “born with a big auger.”

To be continued...

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