Stages of Business Growth

Churchill Model

Stages of business growth

The Churchill model: Pinterest

One of the most recent successful internet companies of note is Pinterest. The company began two years ago. However, it spent a relatively brief time period in the 'existence' stage in which it was struggling to stay alive. The new website "recently laid claim to being the fastest Web site in history to break the 10-million-visitors-a-month threshold" and has attained a kind of relevance that other content-sharing models such as Reddit lack (Pogue 2012). Additionally, Pinterest's business model is relatively low-risk, in terms of operational costs. It is a purely virtual business, which might make some shy away from it, given the notoriously poor showing of so many Internet companies during the dot.com bubble. Yet unlike these organizations, Pinterest has a comprehensible function: "Pinterest is a pinboard for online photos. Multiple pinboards, actually, each an individual page in your Pinterest account" (Pogue 2012). It is an online version of what many people used to do in real life, pre-Internet -- clipping articles of interest.

The 'survival' sage is when the company demonstrates it is a workable business entity and can make a profit, not simply generate interest. On the surface, Pinterest seems to have a bright future, based upon impressive traffic. However, many failed Internet companies have generated a great deal of buzz but failed to realize their promise. It is not enough to be interesting; one's business model must be profitable. Some say that Pinterest's profitability remains in doubt. Some have found a way. "The company doesn't say it's still figuring out ways to make money from this thing...[but] when one of your Pinterest photos links to a product for sale online, Pinterest quietly modifies the link to insert its own affiliate code, so that Pinterest gets the referral fee" (Pogue 2012). Some bloggers who had posted their own blog links as 'pins' for users to click were upset by this, given that it meant that they lost the referral fees they would have garnered, had the original link stayed the same. However, while "the revelation did raise some eyebrows...you can change the link back, if you want" (Pogue 2012). Internet companies like Pinterest to some degree question the validity of the Churchill model of small business development, given that it is possible for a company to be popular and talked-about yet still in the financial 'survival' stage.

The third stage 'success' means that the owners of the business are able to "exploit the company's accomplishments," keep it stable and profitable with a reasonable amount of security, and use this as a platform for other actions (Churchill 1983: 4). Google, to use a contrasting Internet company, is clearly in the success stage, as it has been able to use its dominance of the search engine market to make ventures into a variety of other technology-related venues, such as the Android phone. Few Internet companies, however, are in the 'success-disengagement' stage of the model in which the company is highly profitable and the owners are simply 'staying the course' and trying to ensure there is no cash drain of vital resources but otherwise not fundamentally changing the business model. Even profitable companies such as Facebook are endlessly 'tweaking' their models -- Facebook is going 'public' soon and is expanding into the fields of email and even movies. The volatility of technology suggests that a 'disengaged' approach, even for the most successful companies, may be a thing of the past, especially in the online market.