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Startup growth metrics for Silicon Valley

Last December, I was in an interesting meeting where the Bureau of Labor Statistics (BLS) presented a bunch of interesting stats several days before they were due to be released.

The most interesting statistic, however, was one that was generated specifically for this particular meeting and is not part of the regular dataset.  It was statistics about company growth in Silicon Valley, and it revealed the lack of companies growing to significant size.   For me, it just reinforced my gut feeling that the VC model was broken and that the real target should be lower exits, not monster hits.

First some definitions, in BLS terms:

  • Small company – less than 50 employees
  • Medium company – 50 to 250 employees
  • Large company – 250+ employees

I would note that the BLS looks at payroll to determine employees, so contractors don’t count.

The BLS had put together data about companies growing from small to medium to large over the 8 year period from 2000-2008, it was summarized in the following table:
[table id=1 /]
What’s surprising about this is that only 8 companies became ‘large companies’ in 8 years. That’s one a year, and if you think of company size as a proxy for revenue, then it’s pretty stunning.

P.S. Sorry for the crappy table, turns out tables in WP are a huge pain in the ass….  The vertical numbers represent the state of affairs in 2000, whereas the horizontal numbers represent the state in 2008, so reading from left to right gives you the changes from 2000 to 2008…