2 builders who never spoke to each other

Cap the downside of the bet in writing

Give a risky project a written budget before it starts, two people for three weeks then stop and look, so the loss is bounded while the upside stays open, and prefer many small bets since a wrong small one costs a month and a wrong big one costs the company. Derive the growth you can fund from your own profit so anything beyond it is a deliberate loss, and when you model five times the growth do not assume five times the cost, because support and complaints grow faster than that.

The method

1. 01

   Give a risky bet a written budget before you start, such as two engineers for three weeks then stop and look, so the downside is capped and the upside can stay large.

2. 02

   Derive the growth rate you can fund from your own profit, so that any spend beyond it is a known, deliberate loss rather than a hope.

3. 03

   Growth on its own does not tell you the company works, so ask separately whether the growth can be sustained.

4. 04

   When you project five times the growth, do not project five times the cost: handling complaints, social media replies and human support grows faster than that and cannot be automated away.

5. 05

   Make lots of small bets and refuse the big ones. A wrong small bet costs a month, a wrong big one costs the company.

What it returned

• 12%

  His worked case: steady-state profit of 12% with each dollar of new recurring revenue costing four dollars supports 3% monthly growth self-funded, and choosing 8% monthly growth instead means running 20% unprofitable.

• He notes software projects tend to drift from an estimate of two weeks, to two months, to being too far in to abandon.

• He contrasts companies that grew and collapsed with HubSpot's predictable revenue curve and focus on satisfaction and retention, and notes the difference is not whether they were bootstrapped or funded.

Sources

• Lost confidenceJason Cohen · longform.asmartbear.com · Asymmetric bets · 2026-06-21
• Rare things become common at scaleJason Cohen · longform.asmartbear.com · Rare things become common at scale · 2014-01-28
• SSEBITDA—A steady-state profit metric for SaaS companiesJason Cohen · longform.asmartbear.com · Corollary: Profitable Growth Rate · 2025-04-20
• The rise of the “successful” unsustainable companyJason Cohen · longform.asmartbear.com · The rise of the “successful” unsustainable company · 2012-10-23
• Making $100k/Mo Designing and Building an Active ChairTurner Osler · failory.com · What were the biggest obstacles you overcame? What were your worst mistakes? · undated