Welcome to this edition of The Operators, a recurring Extra Crunch column, podcast, and YouTube show that brings you insights and information from inside top tech companies. Our guests are execs with operational experience at fast-rising startups, like Brex, Calm, DocSend, and Zeus Living, and more established companies, like AirBnB, Facebook, Google, and Uber. Here, they share strategies and tactics for building your first company and charting your career in tech.
In this episode, we’re talking about growth. Growth means different things inside different organizations, but correctly identifying avenues for sustainable and scalable growth is a priority for almost all companies. We’ll cover:
- Defining growth and being good at it
- Managing growth without losing sight of the big picture
- How companies should approach growth
To learn more, we spoke with two experts:
Isaac Silverman began his career as an entrepreneur before joining Zynga to work on growth development. At Zynga, he focused on some of the most cutting-edge approaches to growth and development. He then moved to Postmates, where he focused on growth product and is now the head of rider growth at Uber.
Matias Honorato is a senior manager on the growth team at Tally, a growth-stage tech company, and also brings his own entrepreneurial roots and experience at companies like Earnest and Tradecraft.
Below is a summary of our conversation; check out The Operators for the full episode.
Defining growth and being good at it
Growth as a concept and discipline originates from the term “growth hacking.” It can be hard to grasp as distinct from functions and goals that usually sit with the marketing team or product development team and may be best thought of as a combination of both. We think of it as the domain responsible for designing, implementing, and measuring approaches to acquiring and retaining customers. It’s a mix of marketing and product, but also sales and data analytics, and sometimes even operations.
Great growth professionals can be successful with a wide variety of work or educational backgrounds, and are most often curious, persistent, and adept at thinking holistically, creatively, quantitatively, and interdisciplinarily.
“There’s definitely a lot of deep analysis and how all the pieces fit together and there’s a lot of product work, and there’s a lot of marketing work,” said Silverman. “I think part of what I find so deeply interesting and engaging about it is it brings together everything. It’s really the exercise we go through, and I don’t want to overstate our role, but the exercise we go through is, ‘let’s imagine that we’re the CEO and what are the things that we think are really important. Let’s see the whole picture and then figure out what are the areas that we should ultimately focus on within it.’ So that is ultimately deeply, deeply, stimulating and dynamic and changes on a day to day basis. And sometimes it’s more product manager-y, sometimes it’s more something else.”
Honorato said that to be a great growth professional, “you have to have a really good understanding of your business, what are your goals, how the product works, how their financial side of the business works.”
The responsibilities of growth teams range from simple tasks like split-testing marketing copy and landing pages to more complex strategies like enabling the integration of a file storage and management solution into workflow applications and then subsequently partnering with those workflow applications to acquire users and become a default solution. Being cross-functional in nature, growth initiatives often require resources and contributions from other teams like marketing, design, and engineering. This can create conflict due to resource constraints and company politics, regardless of how small or large a company is. These are meaningful challenges before even evaluating the effectiveness of growth initiatives! Great growth teams must know how to navigate these types of issues as well, making effective growth teams hard to build, but very valuable if you can build an effective one.
“I tend to believe teams exist on spectrum,” said Silverman. “You got that sort of optimizer or specific functionality or specific parts of the funnel or whatever growth themes and then in the spectrum you have, the entire purpose of the company after you’ve achieved product market fit is to grow. I tend to believe that a lot of companies think they need the former and actually need the latter… One thing that I want to make sure is absolutely clear, the growth at Uber is the product of a very high number of very, very competent people, very diligently thinking about their part of the business, and [growth is] a portion of that much, much larger equation.”
Managing growth without losing sight of the big picture
In order to focus on both the big picture and the low-level optimizations, sharp clarity on each is important. The big picture can often be fuzzy, but when distilled, it often means maximizing shareholder value. This is the one place where investors, founders, and employees are all aligned. Although often maligned, it truly is the most unified mission of the parties behind any given business. Constraints or considerations of other stakeholders are also important and often necessary in order to be sustainable in the increase of shareholder value. Isaac notes that, “you’re trying to grow shareholder value, obviously in a principled way, in a way that respects the needs of riders and users and respects the needs of drivers.”
From there, low level optimizations can be considered. Comprehensive views of all the various inputs and outputs that drive shareholder value should driver conversations around whether optimizations should focus on a specific part of an acquisition funnel, on retention, or perhaps on unit economics. Hypothesizing and modeling potential returns from investment and optimization help drive decision-making here.
Honorato says that at Tally, they focus on quickly getting the user to the product: “We work with different teams to not only worry about how are we acquiring customers, but also making sure that the value prop of Tally gets to the customer’s hands as fast as possible. I think that’s key and that’s something where we have spent a lot of time as a growth team with the product team, with the design team and with the data team, analyzing the interactions of the users going through our product and trying to understand how we can move up that value prop to get them on the hands of the user as soon as they enter into the Tally experience.”
A shared framework for decision-making brings structure to otherwise subjective and speculative analyses and predictions. Hypotheses and experiments can be benchmarked. For example, with a company like Uber, a company can evaluate more readily whether to focus on growing number of users or drivers, what regions to focus on, which of its products to focus on, and whether to optimize for speed or cost or retention when thinking about acquisition channels. These are otherwise impossibly difficult issues to resolve and prioritize.
A decomposition of the big picture into low-level optimizations is necessary, but losing sight of the big picture can easily introduce risk or mistakes. There are two types of these that we most commonly see.
The first are short-term initiatives that are good in the short term, i.e. they generate some form of growth that increases value or the perception of value, but long-term are expenses and not investments. A relatable example of this are hidden or ambiguous fees charged to customers or not paying vendors in full. There may be little to no chance of a challenge from the other party, but their willingness to be repeat players decreases, and the likelihood of the company harming its reputation increases.
The second category captures efforts that are too marginal to matter. Fortunately, this is less of a problem at most startups, given that most company performance is fairly marginal to start with, even miniscule changes can be a big deal. Unfortunately, unless the company’s product is itself impactful, marginal efforts for customers will make it difficult to stand out against the noise.
How companies should approach growth
Both guests agreed that growth is far from a mature field, meaning while there’s much to learn, there’s also much to be discovered. Having an experimental mindset increases the likelihood of taking enough risk and not being discouraged by failures. According to Honorato, “you are gonna see failures, you are gonna be out of your comfort zone a lot of times and you need to embrace that. So you need to have that self driven approach to be able to work around those struggles.”
Building the right mindset is part and parcel of building the right team, as the combination of those with the actions that are frowned upon or rewarded end up being the team’s culture. Spreading out from just growth as a team, having buy-in from the entire company on a cross-functional approach, where everyone is responsible for the company’s performance, can be very valuable. As Silverman points out, “one thing that I want to make sure is absolutely clear, the growth at Uber is the product of a very high number of very, very competent people, very diligently thinking about their part of the business, and we are a portion of that much, much larger equation.”
Whether in the earliest days of a company or a company the size of Uber, whether the company has one individual who is tasked with thinking about growth or an entire division, growth needs to be something that everyone is thinking about. And that comes from leadership. Honorato echoes his belief, saying, “I don’t believe that there is the right stage for you to think about growth. I think at every stage you must be thinking about growth. Early on that’s the job of the founders and the CEO to lead that.”
Once the right organization and guiding star are in place, the last piece is figuring out how to balance persistence, extracting the full value of an effective strategy and continuing to drive change. Lower level goals must be regularly refreshed, as channels will become saturated and the results from strategies reach diminishing returns or plateau. The market will change and so goals must change. As Herclitus famously said, “the only constant is change.” A commitment to constantly evolving how the company approaches growth and its products will increase the chances of if keeping up with these changes.
If you’ve enjoyed this summary, check out the full episode at The Operators.