Four ultimate hacks of Startup Growth | #DailyBlink93
Startup growth is something every entrepreneur is willing to learn more and more. Be it any strategy, the result is the only way to measure the effectiveness of any growth hacks. Nobody can actually predict the right growth strategy for a startup. It depends on several factors like the idea, geographical location, team, market size, user/customer behaviors.
Here’s how Paul Graham explains about startups:
Growth drives everything in this world.
Growth is why startups usually work on technology — because ideas for fast-growing companies are so rare that the best way to find new ones is to discover those recently made viable by change, and technology is the best source of rapid change.
Growth is why it’s a rational choice economically for so many founders to try starting a startup: growth makes the successful companies so valuable that the expected value is high even though the risk is too.
Growth is why VCs want to invest in startups: not just because the returns are high but also because generating returns from capital gains is easier to manage than generating returns from dividends.
Growth explains why the most successful startups take VC money even if they don’t need to: it lets them choose their growth rate. And growth explains why successful startups almost invariably get acquisition offers.
Recently I came across the four different ways how your users drive growth for your startup from the very popular book “The Lean Startup” by Eric Ries.
1. Word of mouth
Embedded in most products is a natural level of growth that is caused by satisfied customers’ enthusiasm for the product. For example, when I bought my first TiVo DVR, I couldn’t stop telling my friends and family about it. Pretty soon, my entire family was using one.
2. As a side effect of product usage
Fashion or status, such as luxury goods products, drive awareness of themselves whenever they are used. When you see someone dressed in the latest clothes or driving a certain car, you may be influenced to buy that product. This is also true of so-called viral products such as Facebook and PayPal. When a customer sends money to a friend using PayPal, the friend is exposed automatically to the PayPal product.
3. Through funded advertising
Most businesses employ advertising to entice new customers to use their products. For this to be a source of sustainable growth, the advertising must be paid for out of revenue, not one-time sources such as investment capital. As long as the cost of acquiring a new customer (the so-called marginal cost) is less than the revenue that the customer generates (the marginal revenue), the excess (the marginal profit) can be used to acquire more customers. The more marginal profit, the faster the growth.
4. Through repeat purchase or use.
Some products are designed to be purchased repeatedly either through a subscription plan (a cable company) or through voluntary repurchases (groceries or lightbulbs). By contrast, many products and services are intentionally designed as one-time events, such as wedding planning. These sources of sustainable growth power feedback loops that I have termed engines of growth. Each is like a combustion engine, turning over and over. The faster the loop turns, the faster the company will grow. Each engine has an intrinsic set of metrics that determine how fast a company can grow when using it.
To further understand growth, you can read this essay full of value on Startup Growth.
