Growth Curve

Categories: Metrics, Investing

When you graph the speed at which something is growing, it's usually not a straight line. It happens in bits 'n' blots all over the place, and you can fit a line (a curve, usually) to visually represent that growth.

Some growth curves aren't really curves; they're arithmetic lines that plunk along. You'd say that those companies "don't scale" if they were, say, adding $100 million in expenses and grew revenues at the same rate, i.e. not at a faster rate. A geometric growth curve would be...good, if you're having one.

Think about the growth curve of early GOOG. Indexed, it went from 1 to 3 to 8 to 25 to 100 to 450...for a while, until The Law of Large Numbers slowed rates...but yeah, those were heady days as the world climbed on the back of their search algorithm to search for, um, art films...on the internet.

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