All too often Founders focus on scaling too early. This comes out of a real driver to bring money into the company quickly.
Either they have a small amount of personal investment or need the company to be paying them, and are concerned about finances running out. Or possibly, they have sought early funding and their investors are wanting to see traction.
An early focus on achieving scale takes away from the initial priorities of discovery and validation – achieving product / market fit and then subsequently problem / solution fit. If a company scales without nailing operational efficiencies then they can lose control over customer acquisition costs and operational costs. The more customers you have, then the harder it can be to actually identify the need for and perform necessary pivots.
What I am about to discuss may be taken as being a bit contrarian. There is a small quiet intuitive voice inside me that is questioning some of the hype around Growth Hacking. For the most part, the original idea of growing your user base through applying lean methodologies of build-measure-learn to marketing makes a lot of sense to me. It’s the idea of gaming growth through building things into the product that makes me uncomfortable. I see the point of this only if the game truly brings value to the customer. The real definition of obtaining network effects is that the service value to the customer grows as the network of users grows. If you are just building virality in without value then you aren’t achieving true network effects.
For me, Lean philosophy was partly based on the need to bridge the gap between internal engineering development teams and external client requirements. An answer to the problem of an often experienced industry practice that technical experts built things they thought the market needed, and then sales and marketing teams were mandated to sell it.
For me this gaming concept in growth hacking is in some ways an engineering response to the old-thinking problem of how do we get the market to adopt what we think they need. Focusing more on building things into the product to convince the market, than actually responding to what the market needs. For me if it is used as a way of “gaming” the market it just doesn’t sit very well.
I spent my early-career in engineering development roles and my mid-career in customer facing delivery roles that included feeding requirements back into engineering. So my understanding comes from firsthand experience, not from looking from the outside in.
The main concern for me in focusing on growth hacks above a focus on first providing value is that although you may be able to acquire customers you may not be able to retain them. Which is the final proof that the game didn’t really work.
I’ve quoted the Genome report on more than one occasion, because I find it full of all sorts of gems. One of which is that a high percentage of founders believe they have achieved product/market fit when they haven’t. Which is why it’s critical that you always question whether you have, and listen to the answer from the market.
Focusing too much on trying to hack growth can lead founders to fixing the wrong problem – they try to fix the growth hack, rather than fix the product.
So what should a founder do instead?
They should focus on making sure that you deliver value to your target market. Build feedback loops into the product as well as tracking usage statistics. Build in processes for being able to collect proper validation information.
They should work on the customer acquisition process. Know the process that your customer takes in buying your product. If you want to build growth hacks into the product, then understand the process first and build hacks to support it.
They should focus on identifying features that people really want to see in the product and that brings in increasing value.
When you have these things nailed, then by all means shift your focus to growth.