You raised your first seed round. Formed a kickass team of 5 people. And now you’re ready to build the best company out there.
But here comes the big challenge. You have to build a great product that people love (aka Product/Market Fit) as fast as possible, and at the same time grow like crazy. Because this is what startups are all about, right?
You need to grow around 30% MoM to prove that you have something and be able to sell your sexy growth curve. Because as The Hustle puts it, this might not be the predictor for success, but it’s definitely an indicator.
The first time you’re building a new company, it’s not easy to know what it takes to grow it fast enough. And maybe you’re not so lucky — or don’t have the budget — to hire a ready-to-nail-it growth marketer.
In the beginning, as a founder, you’re in charge of growth and your medium-level growth marketer helps you execute. Hopefully, the time to lead the way will come soon enough.
But you have an advantage that startups didn’t have a few years ago. A bunch of knowledge and great resources are available on the web. Just go to Google and you’ll find:
- Growth hacking communities like Growth Hackers
- Email digests like Hiten’s Shah SaaS weekly email
- Growth marketing conferences
- Books with actionable tips like Sujan’s Patel 100 Days of Growth and Vin Clancy’s Secret Sauce
- Growth Hacking Courses
- Academies like GrowthX Academy or Growth Tribe
So, what is the problem?
But there is something you can do about it…
Build a strong foundation for startup growth
Brian Balfour wrote an in-depth article about the core principles of growth. He mentions that if you want to be a growth marketer, you need to build a strong foundation first. Then you should build up your skills on specific marketing channels and tactics, like SEO and referral marketing.
If you want to start mastering these principles you need to:
- Read, read, read
- Practice, practice, practice
Quantitative Modeling Resources
Data Analysis Resources
User Psychology Resources
Put a process in place and make it a habit
The key to growing a product is to follow a specific process of how you run your experiments. Growth tactics are not enough.
But don’t worry about it. You don’t need to reinvent the wheel. Steal like an artist and follow these two frameworks:
- high-tempo testing so you can execute as many experiments as possible every week. This way you increase the chances of succeeding. Even if you fail, you’ll learn a ton of lessons for running educated marketing experiments.
- a growth framework for generating ideas, prioritization and automation.
But, the most important aspect is execution. You should commit to your company’s growth. No excuses.
Early stage companies should prioritize their experiments and execute aggressively.
We just talked for 2 of the 3 main obstacles an early stage company faces with their growth efforts. The next one is the hardest one. Lack of experience.
This doesn’t mean that you’re in your twenties and you just started your first company. You may come from another industry or environment. For example, you may be a consultant who decided to run his own SaaS company.
Unfortunately, there aren’t any courses or books that can teach you that. The only way is to make your own mistakes.
Onboard advisors who ran a similar company successfully in the past. Read other people’s lessons learned. Reach out to great growth marketers and ask for advice. Execute as fast as you can and try not to fail.
5 growth levers that move the needle
1. Every team member should focus on your top-level KPI
Monthly Recurring Revenue, Activation Rate, Conversion Rate, MRR Expansion, Retention, Churn, Engagement, Usage Metrics, Traffic, Uniques, Active Users. There are a ton of metrics you should measure and improve.
The problem is that if you try to work on all these at once, you won’t have the impact you need. You’re a small team and everyone should work on what matters now. What will actually move the needle.
In Viral Loops, we had a major issue with conversion rate from trial to paid. In the beginning, our team was working all over the place. And even we’re just 6 people, we didn’t focus on the one meaningful thing at that time.
But a startup doesn’t have the time to be ineffective. So we set the conversion rate as our top-level KPI and put a 30-day target. Then everyone started working towards that.
Our engineers started improving our integration and make it easier for the users. Our Product Lead redesigned our onboarding. I and our growth marketer were spending most of our time talking to our users, hosting demos, webinars and publishing case studies.
We held a brainstorming session, prioritized and executed experiments around our top-level KPI.
This approach helped us increase our conversion rate from 1% to 8% in 30 days. We now shoot for 15%. Not a bad start.
Of course, you shouldn’t stick to the same KPI forever.
AdEspresso uses a simple framework to help them decide what matters most.
First, they ask if this contributes to hitting their Month-over-Month growth goal. If the answer is yes to several things, they then ask themselves which one which one requires the lowest effort and the shortest time to generate the biggest impact with the highest chance of success.
2. Talk to every single user that signs up
This is so important. When you’re just starting out you don’t need a sophisticated email onboarding flow. Just talk to every single user that signs up. This approach has two great gains.
1. You will start understanding your customers early on. Listen to them and then talk. But please first listen.
2. People will connect your product with a person. Because you had a chat with them. Most probably your competitors don’t do that.
Even if you spend your time to non-qualified users, you will get great insights. For example, you will see the quality of your user acquisition channels.
We do that by integrating Intercom with Slack. This way we get a notification immediately when a new user signs up.
Then we try to email or call him in the next 2 hours. We stole this tactic from Aircall.
After that, you can segment your users and email list and scale through marketing automation.
3. Don’t shoot for a growth rate. Build your growth bottom up instead
A startup prepares a business plan assuming a growth rate, say 25–30% MoM. Then the team executes the marketing and sales plan to try to reach it.
But this is vanity. In Andrew Chen’s words:
We’re lucky enough that Theo, my co-founder, is an ex-corporate animal and runs sales for the last 20 years. So even before we set up our CRM, a simple spreadsheet helped us built up our growth bottom up.
For each prospect, we assign a probability of closing. If you multiply this with the expected MRR, you have a weighted revenue goal that you can reach. If the total is good enough to reach your growth rate, then:
1. Do whatever it takes to close these potential customers.
2. Boost your customer acquisition efforts if needed to generate more qualified leads.
4. Always have the sense of urgency
Time flies! You think that you have time and it’s fine to postpone a demo or call a prospect tomorrow. No! You should do it today. Tomorrow something else will happen and you won’t do it again.
Set your deadlines and deliver. Focus and screw things that just make you feel better. It’s fine if your home page is not perfect. What it’s not fine, is when you want to launch your new campaign on Thursday but it goes for next week. You just lose money and growth.
This is hard. I know it.
If you think you have the sense of urgency just look at your numbers. If you get most of your growth during the third or fourth week of each month, chances are that you don’t push things early on.
As Apostolos from Venture Friends mentions, success comes when the whole team, and not just the founders, feels the urgency and works hard to reach the company goals.
5. Build your company’s growth inside your product
This is what everyone tells you. And they’re right. If you don’t have an exceptional product, your company will never skyrocket. Even if you have a top-notch and experienced growth and sales team with a huge budget.
Some signs that will help you confirm this is when people stuck to your product and pay for it even before it’s ready. If they tell you that they would pay for it only if you had that one feature, then you should worry.
There are more reasons why an early stage company can fail to grow. And more things you can do about it. What is the one tactic or approach you believe is crucial? Post it in the comments or Tweet me your answer.