Growth is essential for startups since a startup without growth will lead to failure. How and when to grow is often misunderstood. Here are our seven guidelines to growth.
1. Launch Early Surely, you’ve heard this one before. This is one of the fundamental rules of startups yet, you’d be surprised how many founders don’t follow through. The best way to understand if customers actually want or need your product is to get their input. Even if all you have is a mediocre product, it's better to launch, talk to potential customers, then iterate based on their feedback. The worst option is to spend outrageous amounts of money and time building a “perfect” product, only to find out customers are not engaging with it. You don't want to spend all your capital and resources building something nobody wants.
2. No Growth Hacks Once launched, stay away from growth hacks and Do Things That Don’t Scale. If you have yet to confirm you’ve made something customers truly want, even if it's just a few customers, it makes little sense to grow. Focusing on growth prior to validating product is guaranteed to lead to poor retention. Many startup “advisors,” particularly service providers, persuade startups to scale way too early. This strategy often leads to an expensive failure. Instead, focus on securing early-adopters and first time customers organically. We realize going door-door, managing small focus groups and one on one sessions is not scalable, but it's critical in the early days as you try to find what needs to be built.
“If you make customers unhappy in the physical world, they might each tell six friends. If you make customers unhappy on the Internet, they can each tell 6,000 friends.” - Jeff Bezos
3. Avoid Distractions As you begin to grow you’ll find there are a lot of distractions - conferences, meet ups, dinners, meeting requests from people that claim they can help you but are only trying to sell you services, etc. Distractions are the one thing you can least afford in a startup. Don’t lose sight of the most important tasks for an early stage company: develop the product, improve the product, talk to users, repeat. Great companies never grow out of this cycle. Everything else is a distraction, even investor meetings. If you need capital to execute, have a clear fundraising strategy and set timeline before you engage with investors. Another big distraction can actually come from certain types of customers. Identify your ideal customer and don’t spend time winning people that don’t fit the description. You can always explore more verticals as you scale and have the capital to do so. A small group of customers who love your company is better than a large group who sort of like you. Finally, it’s okay to fire customers. If a group of customers is costing you more money than they provide revenue or learning, it's time to let go.
4. Key Performance Metrics (KPIs) One of the hardest things about operating a startup is choosing what to do from the infinite list of things that could be done. This is why it is vital that you choose 1- 3 key metrics to measure the company’s success. Focus on what really matters, not vanity metrics. Then, focus only on the activities or tasks that will impact those metrics. Remember, focus is the new I.Q.
Typical distractions in this stage: The minimum viable product isn’t working so Founders start building new features instead of talking to the customer to solve the most acute problem. Another distraction we see is the temptation to chase deals with large companies as a way to validate their product. Deals between large companies and tiny startups take too long, cost too much and seldom end well for the startup. Don't make the mistake of thinking big partners will bring in all of your customers.
5. Ignore the Competition More startups die of suicide as opposed to murder. It's difficult not to obsess about competition, actual or potential. There will come a time when competitive dynamics are intensely important to the success or failure of your company, but it is highly unlikely that this is true in the early days of your startup.
6. Fundraising We could write a whole book on this topic. In the interest of space and time check out our posts on When Should You Start Fundraising, Managing Fundraising Expectations, and The Fun in Fundraising. If you must raise funds, have a set strategy and timeline, raise as quickly as possible and get back to work.
7. Personal Burn Most companies fail fast because founders burn out. Success is 80% psychology and 20% mechanics. It is critical that you stay sane during this process. Take breaks, spend time with friends and family, get enough sleep, meditate and exercise. Don't forget to check in on your co-founders and maintain open and honest communications with them.
Launch early, talk to customers directly, iterate the product based on feedback, love your first customers and build a small army of raving fans – then scale.
- the Crew