š Customer-Led growth FTW; Breaking a billion; Solving product problemsā¦
It seems like every year, thereās a debate on if Silicon Valley is the best place to launch your startup. In 2020, this conversation picked up even more steam because, well, we donāt need to get back into those details. We recently stumbled across this LinkedIn thread that gives some great arguments for both sides of the table. Weāve always been partial to building new tech ecosystems outside the Valley, but would love to hear what you think.Ā
Alright, now for this weekās Playbook!
š„¼ We donāt want to be the guys who suck all the fun out of the room, but weād caution any founder against releasing their latest technical invention without extensive thought. Startup success is determined by how well you can create and iterate products that solve your customersā needs. When you begin to validate your product, you should create a hypothesis rooted in your marketās past behaviors. More than showing where the big wins are, using a scientific approach to product iteration and validation helps you identify points of failure before they become a time and money suck.Ā
š Most of the time, when we think about scaling, we prioritize marketing, sales, and customer success. Equally as important is your product's technical side - network bandwidth, features, and security are all important pieces of your product that need to evolve as you scale. Intercom recently broke down some of their best advice for scaling. There are a few obvious ādonāts,ā like avoiding technical debt and not over-optimizing. Given some of the recent headlines and as more companies rely on SaaS products, thereās a strong case to be made for building security from the start. For one, itās easier to be proactive than reactive. Secondly, as you scale, you could be looking at moving into new customer segments - and if those segments include enterprise customers, youāll need to provide proof of your security safeguards.Ā
š Weāve seen several companies move away from the lead funnel acquisitions framework to a more customer-centric flywheel. Embracing this mindset shift means that your customer goals (not company) should be at the core of your growth engine. Hereās where customer-led growth (CLG) comes into play; as the name suggests, the strategy entails taking a deep dive into customer experiences and actions to see where your growth levers are. In other words, your customers tell you their needs, and you interpret their feedback into the product. While slightly different from the product-led growth theory, if they are combined the two strategies can be very powerful.Ā One word of caution - be selective about the feedback you incorporate; segmentation is vital here.Ā
š§āāļø We are always down for a good case study on how companies were built. So itās no surprise that this write-up on how Outreach was able to break billion-dollar status caught our attention. There are a plethora of unconventional strategies to put in your playbook, but spoiler alert- none of them center on marketing or sales wizardry. Instead, they set a rather unusual B2B North Star Metric, and prioritized monthly active users above all other metrics. The team became razor-focused on making their users daily users and created a job role with the specific goal of getting 70% of new licenses to daily uses. Driving home the product's value and specifically focusing on adoption versus customer success. The effort was wildly successful- the company boasts a 140% annual net revenue retention rate.Ā
š£ Weāre about to drop a truth bomb on you: the disconnect between your product and your customer is a problem you will never really solve. There is some good news though, this disconnect provides huge growth opportunities. Solving Product, by Etienne Garbugli, offers advice on identifying the service gaps between your product and your audience. The book aims to help product managers proactively identify gaps between the products they create and what customers are actually looking for. We were pretty impressed with how actionable the book is, providing a different perspective of how product people can decode customer feedback and hone-in on what they are actually asking for.Ā