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Growth Is Dangerous

The growth of a startup is the goal each startup aspires towards. It’s team dreams about the hockey-stick shaped graph, growing exponentially and becoming successful startup founders/employees. Which is why it isn’t surprising that growth immediately becomes the KEY goal for every startup. They almost always set growth targets/milestones pre-launch.

Growth targets at early stage startups are arbitrary, farcical and even dangerous.

Firstly, they are a vanity metric.

Secondly, they have a dangerous effect of demoralising the entire team when they “fail to grow” — because they are almost always going to fail to grow.

Here’s the likely scenario for a typical startup launch :

  • Startup sets a date for launch and gears all its efforts toward meeting it.
  • Launch day arrives and the team gets all their friends to share on Facebook, Twitter, Instagram etc.
  • The team starts seeing some signups and gets excited & pumped up.
  • This picks up steam as the network effort spreads and more and more friend/family sends traffic & signups to the startup to “support” the team.
  • Some early adopters that are genuinely interested in the product hear about it through this effect or some rudimentary marketing efforts and sign up.
  • The startup is meeting its growth forecasts and goals so far — everyone in the team feels good.
  • This effect starts to wear off and the startup looks for more boosters — PR & CPC for example — two quick ways to get traffic.
  • If the startup is even remotely interesting and the team puts in some effort, eventually TechCrunch will cover them at some point.
  • This sets traffic soaring, signups increase as the startup gets more early adopters.
  • The team is riding on a high and they meet growth goals again, posting strong numbers. Again, everyone on the team is motivated and happy.
  • Eventually they become yesterday’s news and the novelty wears off. The startup may not be ROI positive in their CPC efforts.
  • Traffic numbers start to drop and “growth” flattens out.
  • The startup tries various marketing channels trying to replicate their explosive start out of the gate to no avail.
  • Eventually the team becomes demoralised as they miss growth targets consistently, growth stagnates and the team officially runs out of marketing ideas on how to “sell” the startup. They fall into the trough of sorrow.

Vanity Metrics

Growth is a vanity metric because growth doesn’t matter at the early stage.

At launch, the startup believes that a group of users are suffering from a certain problem. It has an offering that it thinks solves a problem for them. It also thinks that these users are willing to pay a price for this product. BUT these are just hypotheses and must be tested. Only after these hypotheses are validated does growth matter.

A startup’s focus should be on validating product/market fit as soon as possible through customer development. Growth numbers at this point is just noise.

The Trough Of Sorrow

The trough of sorrow is a tough place to be. I’ve been there with a startup I was working with — feeling completely tapped out of ideas and no way to get things moving. Coming into work was depressing and everyday left us in the team feeling unfulfilled with the work we’d done. We sailed along for a bit with some ups and downs. Mostly downs. We finally did reach the promised land.

We got there by running one experiment that proved a hypothesis. It resulted in a customer segment pivot and a minor product pivot. This process took 9 months. That’s a lot of runway to burn for an early stage startup. I believe that we could have gotten to that stage in 3 months.

The trough of sorrow is extremely demoralising on the team and has an adverse effect on company culture overall. It and excessive burnt runway can be avoided by avoiding the initiation and by abolishing growth goals.

Ideal Launch Plan

An ideal launch plan involves removing as much noise as possible from the process of validating our hypotheses and proving product/market fit.

This means avoiding the friends & family support injection which IS NOT going to be the boost you need to jumpstart your growth to 1m users. It is a false spike of numbers that has no added value to the startup’s mission.

The startup should focus on getting its product in front of relevant target customers, obtaining customer feedback and validating their hypotheses. Iterations may occur or even pivots- but the team will not feel demoralised as they know that they are making progress learning about their users/market/product. They are meeting their goals of learning.

Once product/market fit is achieved, PR and friends & families may be welcome boosts of traffic, converting at a higher rate. With a post PMF product, word of mouth may automatically become a marketing channel as well.

As we learnt early on in life with the story of the Tortoise and the Hare - slow and steady wins the race.

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