Startup Growth

When we launched http://www.armaterranova.org , we wanted to get an insight into the world of the fastest growing start-ups. We wanted to know: How did these startups manage to grow so quickly? So we got to work and researched companies like Uber, Snapchat, Yelp, LinkedIn, Hubspot and Evernote.

We searched the Internet for information such as interviews, videos or profiles and were soon able to filter out dozens of sources for each study. Based on our research, we were able to determine what makes these companies so successful – and reconstruct their individual growth engines. Of course, we didn’t do everything one hundred percent right, but we received incredibly positive feedback: These studies are some of the most detailed profiles ever produced on the growth engines of these companies. Here I present ten (plus one) lessons I learned from these companies in the course of my research:

Lesson 1: Growth is not possible without the right product

You have certainly heard a lot about the so-called “Product/Market Fit” – and for good reason. Each of the ten companies surveyed has unique growth engines, but they all have something in common: a must-have product that creates loyal and happy customers who form the basis for their success and the fuel for the growth engine.

While some companies, like Linkedin, had to grow to become such a must-have, other companies, like Evernote, were such a product from the beginning. Each of these companies fills a critical gap that previously existed for their customers.

Marc Andreessen is often quoted as follows: “Companies fail for two main reasons: They grow when they shouldn’t, or they don’t dare when they should.

Lesson 2: Growth is never ‘finished

All these companies have a tireless focus on growth, not just pretending it’s important. Staff, resources and all expenses flow into the growth of these companies. Linkedin is perhaps the most fruitful company of all: For more than a decade, its focus has been on continuous growth. Ten years later, Linkedin is still reinventing its growth engine. It’s true that it’s been a bit of a slip-up, but the passion to find more and more levers for growth is inspiring. All these companies have taught me that growth is never over.

Lesson 3: Growth is not marketing.

And marketing is not growth
One of the most important features: None of these companies had a traditional marketing strategy. You won’t read anything about how they mastered email marketing or paid search. While many of them have added these skills over time, they were not the key factors in their transformational and sustainable growth in the beginning.

Instead, these companies had other specific plans to grow. Many included marketing, but more often than not, the product was the key to their biggest growth spurts.

The levers for these growth spurts – the products – such as the White Square Card Reader, which stands in stark contrast to the black iPhones, or Evernote’s product redesign for a new Appstore launch, are not tangible for traditional marketing teams. They don’t have the same impact with their marketing methods.

It takes real growth teams in technology, product and marketing units to design growth programs that really make a difference. In stark contrast to this are the huge paid ad budgets of companies like Groupon, which were ultimately unsustainable.

Lesson 4: Doing what everyone else does is the wrong strategy.

None of these pioneering companies did the same as traditional incumbents before them. They all chose their own ways – and many people wondered what they were thinking. Yelp, for example, didn’t care about paid reviews or recruiting restaurant critics. Instead, the company focused 100 percent on its community. At a time when Citysearch and other giants preferred to address businesses and spend money on reviews, it seemed to be an almost foolish orientation.

Lesson 5: Don’t make it too complicated

In his article “Startups Always Have a Chasm to Cross,” Andy Rachleff, co-founder of Wealthfront, explains how important it is for a company’s growth to focus on a niche early on. All the companies I’ve studied have more or less done that: Snapchat focuses on college and college.

Lesson 6: “Growth Hacks” are not short-term

The term “growth hacking” has been trite because journalists and others have misinterpreted it and applied it to almost every known digital marketing strategy. While people are still obsessed with AirBnB and Craigslist, each of these companies has found a unique approach to growing.

Their unique approach allowed them to grow without investing tons of money in traditional marketing. Hubspot, for example, was one of the first companies to realize that free tools can trigger huge inbound demand – much bigger than traditional social and content strategies ever could. Uber and Belly have both created growth strategies that localize network effects to serve fast-growing markets.

Lesson 7: Do things that don’t scale; build things that do

Paul Graham’s advice to startups, “Do things that don’t scale”, is aimed at gaining ground right from the start. This means, for example: Acquiring new customers or taking the time to visit users and talk to them. In each of these companies, Graham’s advice was more or less followed.

Evernote realized that Appstore launches were great opportunities for businesses and worked hard to make sure they were featured on stage or at every launch with new features. Certainly not scalable, but very effective for distribution.

At the same time, these companies built systems and processes that could be scaled. For example, Uber has a strategic “Playbook” that is used for every new city launch. And we’re not talking about a boring PR plan here. Uber has planning and seeding teams for potential drivers and customers. It has developed strategies that have proven themselves in previous test markets, and uses the most effective practices to develop a repeatable strategy to launch Uber successfully in new cities over and over again.

Lesson 8: There are analyses. And there are insights

A lot of people follow analytics. Many numbers, and yet hardly any real insight. All these successful companies I’ve studied have gained real insight into what’s going on – and have made growth possible.

Upworthy has explored virality with her now famous “25-title exercise” and a relentless focus on testing. Almost all of these companies have a similar analytics methodology. They don’t just look at the figures, but look for growth opportunities through the insights created with the figures.

Lesson 9: Connecting Multiple Growth Engines Can Lead to Faster Growth

Companies such as Github have shown that the combination of several growth engines achieves outstanding results. Github is a social network, a marketplace for code, a publishing platform and aims to improve a major pain point in the workflow. All of these things work together for strong adaptation and growth. Yelp has a community network and the reviews. And Linkedin looks similar.

Lesson 10: There is no simple solution

None of these companies has a single, simple solution ready. The millions of customers and downloads didn’t just fall out of the sky. Even behind the products that we think have magically grown are meticulous growth strategies.

In retrospect, it may look as if the companies grew by word of mouth. But if you take a closer look: They were all focused on growth. Growth is not left to chance. The companies may have achieved something brilliant, but it was often only possible because they were well prepared and worked hard to align the company accordingly. Finding a simple solution is unproductive and can also lead to incredible costs.

Lesson 11: Growth is a Team Sport

Another bonus lesson: The best companies are growth organizations from the ground up. It’s in their genes. For everyone in the company, growth is the imperative. There are no lone warriors – everyone in the companies with the best growth rates has their own task to drive growth: From the in-house lawyer who creates contracts that are easier to implement to the technician who improves the search engine optimization code, growth is a priority for everyone. In these companies, sales and marketing are not separated from the product. Nor does technology feed marketing tasks as unimportant. All teams work together.

Share