Size vs Growth vs Acceleration

You can tell a lot about a company by how they report their results:

Some companies focus on the actual values (size):

“We made a net profit of $15 million.”

Some companies focus on the first derivative (growth):

“Revenues increased by 9%.”

Some companies focus on the second derivative (acceleration):

“We added 100,000 new customers in the last year, 70,000 of these in the last two months.”

There is a time and a place for each. But you can often take your pick, depending on the spin you want.

For example … Skype

This graph from GigaOm showing quarterly revenues:

http://gigaom.files.wordpress.com/2009/01/skyperevenues.gif

The headline in this case was: “Skype’s growth starts to slow” (acceleration, or in this case deceleration).

It could just have easily been “Skype reports record revenue of $145m” (size) or “Skype increases revenue by 26% compared to the same period last year” (growth).

To get the full picture you probably want to know all three.

4 comments on “Size vs Growth vs Acceleration

  1. […] Size vs Growth vs Acceleration (Rowan Simpson) — you can tell how well a company is doing by the basis on which they report their progress. […]

  2. babyreflux says:

    Some smart observations Rowan. It is always interesting to note how organisations avoid reporting profit, which apart form having a comfortable cash-flow, is the most important number.

  3. […] Size vs Growth vs Acceleration (Rowan Simpson) — you can tell how well a company is doing by the basis on which they report their progress. […]

  4. […] the first derivative is the explanation in this […]

Comments are closed.