Read on Twitter
Early-stage startup journeys are about growth. In most competitive markets, Series A to C is a sprint – it is about getting to and retaining market leadership. While this journey is intense, it is also complex to say the least. Couple of thoughts below to demystify the process:
1/n: I didn’t want to start here because this point is well understood. But it needs to be said anyway: Wait till you find a segment of users that loves your product and is engaged. Most of the growth journey will focus on finding more of these users.
2/n: Know what metric you are optimizing – is it users or is it GMV for example? If it’s GMV, it can be improved by either acquiring high GMV users or just by acquiring more users. Pick one at a time. Don’t try to chase every output metric at the same time.
3/n: Split your growth teams in three: acquisition, activation and monetization (if relevant). Focusing on one and ignoring others is generally a pitfall. Activation is a critical piece in the growth journey and will make a meaningful difference in optimizing spends
4/n: Figure out what growth strategy is appropriate for your product and double down on it. I’ve often seen that folks simply start performance marketing - when there may be other ways to grow that may be cheaper and more appropriate for your product
5/n: For OkCredit, many users were suppliers who onboarded retailers they supplied to.Many retailers onboarded other retailers they provided services to. Viral growth was their strategy. If they had started with perf marketing first, they would never have discovered this virality
6/n: Similarly, some platforms lend themselves to content marketing especially if users on your platform already generate a ton of content. Net net, find the best approach and double down on it instead of launching straight into performance marketing
7/n: Bcoz perf mktng comes at a price.The more you spend on paid marketing, the higher the bar on monetization. Roughly:
Rs 10/install = Rs.100/activated user(if 1/10th activate)
Rs.100/activated = Rs.200/retained(if 50% retain)
Rs.200/retained = Rs.2000/paying user(1/10th pay)
Rs 10/install = Rs.100/activated user(if 1/10th activate)
Rs.100/activated = Rs.200/retained(if 50% retain)
Rs.200/retained = Rs.2000/paying user(1/10th pay)
7/n: For you to have free cash flow and to keep scaling, you need to generate a lot more per paying user. If you are building a paid product, by all means go ahead with paid marketing but keep LTV/CaC in mind. If not, invest the time to discover more efficient ways to scale
8/n: Figuring out a growth strategy and doubling down on it involves running a bunch of experiments. This is where a focused growth team comes into play. For startups, it is generally, well, everybody on the team!
9/n: When conducting experiments, target large cohorts. Experiments designed for micro-segments will only have micro impact on your growth. This is why optimizing D1 is better than optimizing D30
10/n: Think in step jumps; Prioritize experiments that can lead to a large uptick even if they seem audacious over those that will deliver small increments. At the very least, you will learn more
11/n: Measure success often – some of the best growth teams I know track movement on a weekly basis. I used to track (but not react) on a daily basis – I’m the obsessive kind ;)
12/n: Product journeys without a target are unlikely to be efficient. Use other similar products to identify targets or just be audacious and set an ambitious goal – 10X everything. Or more. But have a target. Luv this talk by @ankurnagpal https://tinyurl.com/nm2p63cr
13/n: Eventually every growth strategy will start to plateau. Acq cost will rise and pace of growth will slow down. This is when one needs to shift gears – can you go into a new geography, can you open up a new segment, should you launch a new product/business line?
14/n: What are some common mistakes people make when going after growth? Share from your experience...
