With more venture funding flowing into the startup ecosystem than ever before, there’s never been a better time to be a growth expert.
At TechCrunch Early Stage: Marketing and Fundraising earlier this month, Greylock Partners’ Mike Duboe dug into a number of lessons and pieces of wisdom he’s picked up leading growth at a number of high-growth startups, including StitchFix. His advice spanned hiring, structure and analysis, with plenty of recommendations for where growth teams should be focusing their attention and resources.
How to define growth
Before Duboe’s presentation kicked off, he spent some time zeroing in on a definition of growth, which he cautioned can mean many different things at many different companies. Being so context-dependent means that “being good at growth” is more dependent on honing capabilities rather than following a list of best practices.
Growth is something that’s blatantly obvious and poorly defined in the startup world, so I do think it’s important to give a preamble to all of this stuff. First and foremost, growth is very context dependent; some teams treat it as a product function, others marketing, some sales or “other.” Some companies will do growth with a dedicated growth team; others have abandoned the team but still do it equally well. Some companies will goal growth teams purely on acquisition, others will deploy them against retention or other metrics. So, taking a step back from that, I define growth as a function that accelerates a company’s pace of learning.
Growth is everyone’s job; if a bunch of people in the company are working on one problem, and it’s just someone off in the corner working on growth, you probably failed at setting up the org correctly. (Timestamp: 1:11)
While growth is good, growing something that is unsustainable is an intense waste of time and money. Head of growth is often an early role that founders aim to fill, but Duboe cautioned early-stage entrepreneurs from focusing too heavily on growth before nailing the fundamentals.
I’ve seen many companies make the mistake of working on growth prior to nailing product-market fit. I think this mistake becomes even more common in an environment where there’s rampant VC funding, so while some of the discipline here is useful early on, I’d really encourage founders to be laser-focused on finding that fit before iterating on growth. (Timestamp: 2:29)
Where to focus growth energy
The bulk of Duboe’s presentation focused on laying out 10 of the “most poignant and generalizable” lessons in growth that he’s learned over the years, with lessons on focus, optimization and reflection.
Lesson 1: Distill your growth model (“business equation”)
Growth modeling and metric design — I view as the most fundamental part of growth. This does not require a growth team so any good head of growth should require some basic growth model to prioritize what to work on. (Timestamp: 3:09)
The first point Duboe touched on was one on how to visualize your growth opportunities using models, using an example from his past role leading growth at Tilt, where his team used user state models to determine where to direct resources and look for growth opportunities.
Lesson 2: Retention before acquisition
The second lesson is to prioritize retention before driving acquisition, a very obvious or intuitive lesson, but it’s also easy to forget given it’s typically less straightforward to figure out how to retain users versus acquiring new ones. (Timestamp: 4:19)
Retention is typically cheaper than acquiring wholly new users, Duboe noted, also highlighting how a startup focusing on retention can help them understand more about who their power users are and who exactly they should be building for.
Lesson 3: Embrace ideas from all corners, but triage
Bringing on new ideas is obviously a positive, but often ideas need guidelines to be helpful, and setting the right templates early on can help team members filter down their ideas while ensuring they meet the need of the organization.
One advantage of building a cross-functional growth pod is that you do have a cross-disciplinary set of ideas working toward a common goal, at the same time, sometimes having a fire hose of ideas can be really distracting, and so the role of a VP of growth is to strike the right level of process here. Not too much so that it slows you down, but you need a bit so it’s not a free-for-all and you’re actually experimenting methodically. (Timestamp: 5:35)
Lesson 4: Design org to minimize dependencies
The fourth point is around org design and it’s one of the most common things I’m asked as pertained to growth. How do you build a growth team? Who should I hire first? What should the structure look like? (Timestamp: 6:53)
Duboe shared how the type of product can impact what the structure of a growth team should look like, and while an e-commerce company’s growth team might be best organized around a single-function team, cross-functional teams might be better for something like a consumer social company, though he notes that every ideal solution is incredibly context-dependent.
Lesson 5: Loops > funnels; seek compounding growth
Ideas around growth are evolving and the humble funnel is going out of style.
The traditional concept of a marketing funnel is inherently linear; most of the compelling growth stories that we’ve seen and talked about have some compounding. … Businesses should not view bottom of the funnel as the end success metric and instead conceptualize how recurring usage can drive some input back into the top of the funnel. (Timestamp: 8:40)
Lesson 6: Avoid analytics debt, the silent killer
Duboe’s presentation often focused on how getting the fundamentals set in place early on can save effort down the road. One of his stronger opinions was on the need for companies to prioritize analytics and logging early on.
I’m often asked who the first hire on a growth team should be. In my experience, bringing on analytics before it’s a burning need can be a huge point of leverage and also could reduce the need for subsequent hires.
One concept I’ve kind of harped on with companies I’ve worked with is that tech debt is a widely understood concept here, but analytics debt is less commonly talked about. Many assume that just buying Looker or Amplitude is the answer to analytics problems, and while these are great tools, the problem is typically more fundamental. (Timestamp: 10:00)
Lesson 7: Understand incrementally (in paid marketing)
Measuring the impact of paid marketing can be tough to crack, but Duboe details that in a quest for easy answers, plenty of companies are losing the context by using last-click measurement methods when they should be looking at how marketing efforts provide demand above “native” levels.
I think the most important point to emphasize once you start spending at scale is to be extra mindful of measurement methods. (Timestamp: 11:23)
Lesson 8: Payback versus LTV:CAC
Measuring growth in a dynamic environment can often mean making plenty of future assumptions, but some are more honest than others, Duboe says.
Another point on paid marketing is many companies, especially now that I’m on the investor side, what I see is that companies will present some LTV:CAC ratio, which has some embedded assumption of lifetime. So I think “payback period” is a much more intellectually honest concept. … I think where this concept becomes really interesting is it’s important to get to a level of granularity looking at payback by channel and potentially even by audience or keyword, for instance, so some channels might be lower CAC but the quality of the user might offset the lower cost. (Timestamp: 14:26)
Lesson 9: Treat referral as its own product team
One of the more generalizable points Duboe hit during his presentation was how much more aggressive teams could be getting in terms of referral programs and evolving their offerings.
I think referral programs are widely understood right now as a key part of a growth mix; many companies that launch a referral program will treat it as one and done. I think in so many cases I’ve seen there [is] more juice left to squeeze than teams realize and referral could really be the gift that keeps giving. (Timestamp: 16:01)
Lesson 10: Hiring for growth
For founders and teams who decide to hire for growth folks, either PMs, marketers or others, there’s a set of attributes that I’ve seen be predictive of both success and failure. The tl;dr here is — again in my experience of making good and not-so-good hires — I think successful growth folks tend to be voracious learners; they’re resourceful and have that sort of get-shit-done mindset; they’re ultimately simplifiers and actually generalists. (Timestamp: 17:16)
Closing out his list of 10 key lessons, Duboe gave some of the qualities of ideal hires he’s made in the past while noting some red flags, including potential hires that are all left-brain, perfectionists or those who have a tough time explaining concepts simply.
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