The “health” of a startup growth can be a good predictor of how big and how valuable it can become. The most valuable startups of our generation have all maintained a high rate of user / revenue growth over a long period of time. As such, founders, employees, and investors are all trying to determine if their startup can achieve sustainable growth to build a large and sustainable business over time.
Just looking at revenue growth tells you relatively little. Two startups that are currently increasing their users or revenue by 300% each year may each have different long-term prospects. It’s almost like looking at two people of the same age, height and weight, and projecting the same quality of life and longevity for both – there are many more factors that can help you make the difference. best predictions. Startups are similar, and it’s important to deepen the health of a startup’s initial growth and work to build the right foundation from the start.
Paid marketing can be a useful tool in your toolbox to speed up an already buzzing flywheel. Don’t let him be the only one.
Prior to becoming VC at Defy, I founded two companies and was Vice President of Growth for Eventbrite for over six years from startup to IPO. Working through all stages from inception to public enterprise, and advising many other startups along the way, I discovered five critical factors for healthy, sustained growth that can make the difference between business failure. a startup, a modest exit or the building of a valuable and sustainable billion dollar business.
Healthy engagement and retention are essential
Basically, any successful product or service delivers more value to the user / customer than it costs to use (money or time). To see if your product offers real value, ask if it gets strong user engagement and customer loyalty. My friend and growth guru Casey Winters got it right: “Product-to-market fit is retention that enables sustained growth. “
Mainstream startups can gauge this through a cohort-based retention analysis of how often customers use the service and how long they are retained. SaaS companies should often speak with customers to gauge their satisfaction while looking at logo retention as well as gross and net revenue retention. grows over time, even after accounting for disaggregated clients.
Many people mistakenly think of “startup growth = customer acquisition”. In fact, retention is the most fundamental aspect of sustainable growth.
Customer obsession creates market “pull”
Customer obsession, as well as organic market pull, are indicators of the product’s early fit for the market and signals of future growth potential.
Here are some ways to measure this:
See if a healthy percentage of the business grows without paid expenses, usually through word of mouth or some other form of virality. If your business is growing organically over 50% at a rapid rate (200% to 300% + year over year), you are solving people’s needs enough that they are now sharing them with others. and create a positive viral effect.