It's a story as old as time: a startup founder raises a lot of venture capital money. Next, he must look for product-market fit. Easy, right? Just throw all that money into sales and marketing and they'll get to work. Not so fast. If you spend enough money on advertising, anyone can make the growth chart go up and to the right. But the thing is, you need to find the right way to achieve growth, and that is much more difficult.
Matt Lerner spent 11 years running marketing at PayPal, followed by four years at 500 startups, so he's seen companies of all sizes trying to find customers. In his new book, “Growth Levers and How to Find Them”, defends the need to find the right way to sell su product.
For PayPal, the first product-market fit turned out to be eBay, but it discovered it more or less by accident: by keeping a close eye on how people used the product.
"One day, someone noticed that 54 of the sellers wrote on their eBay listings, 'please pay me with Paypal,'" he said. He brought this to the attention of the executive team at the time.
The reaction of the executive team at first was to remove those people from the system, since that was not the goal.
"Fortunately, David Sacks came back the next day and said, 'I think we've found our market,'" Lerner said. “In fact, let's create tools for these sellers instead of forcing them to write on their listing, pay me with PayPal. Why don't we have an HTML button they can insert? And that really worked. So he thought, why should we have it inserted every time? Why don't we insert it automatically? So that became the success of PayPal.”
What worked for PayPal is a good example of how another startup can also start looking for the best routes to market.
When it comes to business growth, are you looking for a “broker or playbook writer”? Lerner said. For some companies, that can work. However, for startups and other market disruptors, they can get a lot more bang for their buck by thinking outside the box.
Do you need a VP of Growth? The main question is not whether your company needs this crucial role. (Spoiler alert: Yes, it is.) The right question is what type of candidate will best fit your needs? If his primary requirement is to discover new ways to grow, Lerner suggests hiring a generalist with strong critical thinking skills, an analytical mind, and a willingness to study data and customer behavior.
The optimal candidate doesn't even need marketing experience. Rather, they should be people with a reduced ego who can generate innovative ideas. Conversely, if your company needs a specialist who can take an existing strategy and optimize it, subject matter experts would be ideal candidates. In such circumstances, these people should have a nuanced understanding of their domains and be able to handle gray areas like attribution and the changing SEO landscape with agility.
Most startups need a strategy writer, and that's usually the founder. The process does not involve short-term sales increases, but instead focuses on increasing knowledge and creating ideas that can lead to sustainable growth. It is a slow process that involves experimenting with different methods, considering that most will fail. Leave room for fracaso It encourages trial and error, which is crucial for any business in its early stages.
It all starts with setting the right goals. It may be tempting to simply say “sell more,” but that could be a push in the wrong direction. Instead, Lerner advises setting goals around ideas that could be transformative.
“Selling more is like the last step; the first step is learning,” Lerner said. “The next step is to test things and validate them. At the beginning, come up with some ideas that could be important if they worked and validate them.”
The point is to take what you've learned and try different things, even if you fail (and fail a lot!) at first.
If the goal is to devise a viable strategy, the measure of success is not the immediate returns but the level of learning achieved. It's also about understanding which business aspects work and which don't. As a business leader, you'll need to ensure your team focuses on tasks that align with company goals and avoid practices that can derail growth.
Steps toward sustainable growth bring to light the search for those difficult growth levers for your business. Lerner states in his book that 90% of your business growth will come from 10% of the processes. As a business leader, it is essential to identify and focus on these efficient strategies to significantly boost your growth journey.
Lerner's approach to business growth takes a boundary-breaking stance: encouraging unconventional thinking, creating ample space for data-backed experimentation, and prioritizing learning over immediate results. As we enter another year of uncertainty, these could be the anchors your business needs to grow sustainably.
The amount of venture capital will eventually dry up and the company will have to be able to stay afloat.
