It’s a story as old as time: Startup founder raises giant sack of that sweet, sweet VC money. Next they have to search for product-market fit. Easy, right? Just pour all of that money into sales and marketing, and they’re off to the races. Not so fast. If you throw enough money at advertising, anyone can get the growth chart to go up and to the right. But the thing is, you need to find the right way to do growth, and that’s a lot harder.
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,” he makes a case for finding the right way to sell your product.
For PayPal, that first product-market fit turned out to be eBay, but it discovered that more or less by accident: by keeping a close eye on how people were using the product.
“One day, someone noticed that 54 of the sellers actually wrote into their eBay listings, ‘please pay me with PayPal,’” he told TechCrunch+. He brought this to the attention of the executive team at the time.
The executive team’s reaction at first was to get those people out of the system, as that wasn’t the focus.
“Fortunately, David Sacks came back the next day and said, ‘I think we found our market,’” Lerner said. “Let’s actually build tools for these power sellers instead of forcing them to write into their listing, pay me with PayPal. Why don’t we just have an HTML button that they can just insert? And that actually worked. Then he thought, why should we have them insert it each time? Why don’t we just automatically insert it for them? So that became the success for PayPal.”
What worked for PayPal is a good example of how your startup can start looking for its best routes to market, too.
When it comes to business growth, are you looking for a “playbook runner or a playbook writer”? Lerner said. For some businesses, that can work. For startups and other market disruptors, however, you can get a lot more bang for your buck by thinking outside the box.
Do you need a VP of growth? The primary question isn’t whether your business needs this crucial role. (Spoiler alert: Yes, you do.) The right question is what type of candidate will serve your needs best? If your primary requirement is discovering new ways of growth, Lerner suggests hiring a generalist with strong critical thinking skills, an analytical mind, and the willingness to study data and customer behavior.
The optimal candidate doesn’t even need marketing experience. Instead, they need to be low-ego individuals who can generate innovative ideas. On the contrary, if your business needs a specialist who can take an existing strategy and optimize it, subject matter experts would be the ideal candidates. Under such circumstances, these individuals should have a nuanced understanding of their domains and be able to handle gray areas such as attribution and the evolving SEO landscape with agility.
Most startups need a playbook writer, and that’s often the founder. The process does not entail short-term sales increases but focuses on increasing knowledge and creating ideas that can lead to sustainable growth. It’s a slow process that involves experimenting with different methods, considering that most will fail. Allowing room for failure encourages trial and error, crucial for any business in its early stages.
It all starts with setting the right goals. It might be tempting to just say “sell more,” but that might be a nudge in the wrong direction. Instead, Lerner advises setting targets around ideas that could be transformational.
“Selling more is like the last step; the first step is learning,” Lerner said. “The next step is trying stuff and validating it. In the very beginning, come up with some ideas that could be big if they worked, and validate them.”
The point is to take your learnings and try different things, even if you fail (and fail lots!) at first.
If the goal is to figure out a viable strategy, the measure of success is not 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 that your team focuses on tasks that align with the company’s goals and avoid practices that could derail growth.
The steps to sustainable growth bring to light finding those elusive growth levers for your business. In his book, Lerner claims that 90% of your business’s growth will stem from 10% of the processes. It’s crucial as a business leader to identify and focus on these efficient strategies to significantly propel your growth journey.
Lerner’s approach to business growth posits a boundary-breaking stance: encouraging unconventional thinking, creating ample space for data-backed experimentation and prioritizing learning over immediate results. As we venture into another year of uncertainty, these could be the anchors your business needs to grow sustainably.
The VC dollars will eventually run out, and the company has to be able to keep itself afloat.