I recently stumbled upon this great read by Sam Altman, the co-founder of Loopt, and number 10 caught my eye:
“ Growth solves (nearly) all problems.”
My startup reached product market fit, meaning that customers love our product and we are actually producing value for them. Although achieving product market fit is extremely tough and takes time and a lot of iterations I found that the next phase, transition to growth, is even tougher.
As you will read, my company Yotpo is experiencing accelerated growth but the problems are here and very much alive.
I have been doing a lot of research on the typical growth problems and how startups solve them but I couldn’t find anything in detail so I decided to write up this post and share it with you all.
First, some stats on our past few months before we begin (stick with me, it is important and not for self-promotion):
My startup is comprised of 13 people. 8 are in R&D, 1 product, 1 customer support, 1 biz dev, 1 marketing and 1 administrative.
So far we have raised $2.3M from early stage investors (not VC’s yet) and our investors want to put in more money before going to our next big round.
My startup is a B2B platform, we feel that we are the best in the world in creating social reviews and pushing the user-generated content to social media, emails and search engines to drive more sales and leads to the website.
Currently we are based in Israel and we are making steps in establishing our US based HQ.
We’ve spent $0 on outbound marketing.
In the last few months we’ve been seeing great growth in 3 key metrics:
The number of websites signing up and using the system
The number of reviews Yotpo is generating
The amount of consumers that are reading reviews and taking action.
Our growth curve is moving in the right direction and on average we are seeing 50%-70% month to month growth. Although this is a good problem to have (investors are getting addicted to the numbers and everybody is happy) it is a very much a real and complicated problem.
Here are the problems we are facing in our day-to-day activities:
Focus became more difficult
We all know how important focus is but when you are experiencing this type of growth focus becomes much tougher. The two main issues that have caused this dilemma are:
The graphs are everything: Now that growth started nobody wants to see those graphs going down right? But the product should evolve as well, improve the value and so on. So if last month was a good month how can we make sure that this month will be better and the one after that will be better than both while improving the product? Growth is good and important but it also puts a lot of pressure on the company’s shoulders, it is all a question of focusing the efforts.
More customers means more requests: The more customers we get the more requests for features, customization and so on. Some of the requests are from bigger customers that typically want more customization and control, some request new and very cool features. Again, prioritizing has become more complicated with added pressures which affects the overall focus.
A system performance for 5M users is very different from 55M users
Don’t get me wrong, we invested a lot in our system’s architecture, and thank God Omri, my co-founder is probably the smartest person I know, but accelerated growth puts pressure on any system and this creates additional and unexpected challenges.
It is very important for us that our system have the highest standards, but at the same time we don’t want to pay Amazon more than what we need. This is a constant balancing act.
What I learned is that growth inevitably affects your system and although you can prepare yourself for growth and make an “easy to scale” system, you will always have problems. These problems create tasks which means that people need to work on these tasks, which results in less resources to work on growth and value. Unexpected shifts in priority works against the main aim: staying focused.
Here is a graph of the load we have on our API and you can see the peaks in minutes:
The company got bigger
I am a big believer in organic growth of a company and not jumping from 8 people to 50 in 3 months. That being said organic growth is also a challenge and I find myself doing different things than I used to.
In the company’s current stage, my aims are to keep our vision going forward, maintaining everyone’s focus, close deals with important (A level) partners and to think how we can better prepare ourselves for our next financial round.
6 months ago I was still doing a lot of product, customer support, business development and content marketing. Now the company has better people for every task and I need to manage more and focus more.
Our growth/product guy is the most analytic, straight to the point kind of guy. His impact on the company is huge and in the last few months we have been arguing a lot.
The reason for that is we cannot set proper goals looking forward. It is very tough to work without setting goals but what do you do when every month you exceed the expectations you set just 2 months before? Do you allow yourself to have a “bad month”? Do you set new goals every month? Do you work without goals?
I found that setting clear goals is one of the most challenging tasks for a growing company. This is combined together with focusing and setting the right goals for the long and short term.
Not everything is measurable
Every decision should be derived from a data standpoint. If it is not a data-driven decision the odds are (unless you are Steve Jobs) you are wrong.
But, and this is a capital but, because we have not started PPC, retargeting and so on it is hard to measure everything. We are big believers in inbound marketing and content marketing so it’s tough to measure everything.
How is a guest blog helping 30 days after it was published? How do you measure a scenario that a customer saw you on a competitor website/FB/Twitter and after 10 days decided to install you? How can you measure the word of mouth effect? These are all areas of potentially huge growth, yet measuring them is almost impossible.
So to summarize, growth is fantastic and we worked hard to get here. After that being said, even with the start of accelerated growth, you have real problems that need to be addressed. The set of skills required from founders change and we have to adopt quickly.
This is what I learned that helped us:
Just be better in focusing, if something does not help your growth/value, don’t do it.
Adopt faster, understand the needed set of skills and surround yourself with smart people that have done it before (advisory board is my preferred option).
Measure everything in a fanatical way.
Have a clear vision for going forward.
The team is everything, bet on people and not on experience.
You need to compromise on some things, decide which things you are not willing to compromise on.
Build an API, scaling without it would be impossible.
I would love to hear your take on growth and what do you think we can do to overcome these problems.