FOUR FITS FOR $100M+ GROWTH
I’ve been lucky to have been part of building, advising, or investing in 40+ tech companies in the past 10 years. Some $100M+ wins. Some, complete losses. Most end up in the middle.
One of my main observations is that there are certain companies where growth seems to come easily, like guiding a boulder down hill. These companies grow despite having organizational chaos, not executing the “best” growth practices, and missing low hanging fruit. I refer to these companies as Smooth Sailers - a little effort for lots of speed.
In other companies, growth feels much harder. It feels like pushing a boulder up hill. Despite executing the best growth practices, picking the low hanging fruit, and having a great team, they struggle to grow. I refer to these companies as Tugboats - a lot of effort for little speed.
What is the difference between these two types of companies? This is a question I’ve pondered for a long time and have pieced together a framework to explain the difference. The framework has many implications for how you seek out growth and build a company. I hope it helps.
Four Fits FOR $100M+ GROWTH Video
FOUR FITS FOR $100M+ GROWTH SEVEN PART SERIES
How do you grow? The “go-to” answer for almost every question in startups, is “build a great product” or you need "product market fit." Every time I hear that answer it feels completely unsatisfied. Building a great product is a piece of the puzzle, but it’s far from the full picture. There are terrible products that have reached $1B+ and amazing products that never make it anywhere. Why is that?
When people focus on product market fit they always focus on the product first. But thats putting the cart before the horse. You are thinking about the solution before properly understanding the problem and audience that has that problem. In this first part of the framework I talk about the wrong and the right way to search for Market Product Fit, what the search for market product fit looks like in reality, and the qualitative, quantitative, and intuitive signals of Market Product Fit.
Heard this statement before? "We are focused on product market fit right now. Once we have that we'll test a bunch of different channels." The first issue with that statement is that it is saying that channels will mold to the product you are building and as a result you think about product and channel separately in silos. But if you think about your product and channels in silos, then you will end up trying to fit a square peg through a round hole. Why? Because…Products are built to fit with channels. Channels do not mold to products.
Channel Model Fit is simple, yet most don't pay attention to it. Your channels are determined by your model and vice versa. We can create the ARPU <--> CAC spectrum and plot almost all $100M companies on it perfectly. Take a look .
Model Market Fit is the concept that your market (and # of customers within your market) influence your model. Your Model Market Fit hypothesis revolves around some simple math: ARPU x Total Customers In Market x % You Think You Can Capture >= $100M. Yet when you do this for a lot of early stage startups the simple math tells you that you don't have a $100M company. Here is how to use the Model Market Fit Threshold.
In this post I show evidence of how the four fits works together in almost any market segment. More importantly there are three key lessons we can learn. One, you need all four Fits to grow to $100M+. Two, you can't think about the four Fits in isolation because together they form an ecosystem for growth. Three, you need to constantly revisit the fits because they are continuously changing.
In this final post in the series I take the four fits and walk through it step by step and how I applied it to HubSpot Sales product while I was VP Growth. There were many twists and turns but the framework guided the way and made sure we stayed on path.
ABOUT BRIAN BALFOUR
Hey I'm Brian. Just a little about me. I recently founded Reforge where we help experienced professionals fulfill their potential. I was previously the VP of Growth @ HubSpot where I built the growth team from the ground up to work on new product initiatives such as HubSpot Sales and HubSpot CRM. Prior to HubSpot I was an EIR @ Trinity Ventures, Founder @ Boundless Learning (acq by Valore), and Founder @ Viximo (acq by Tapjoy). I'm an investor and advisor to companies such as Blue Bottle Coffee, Gametime, Help Scout, Lumoid, and many more.
I've spent my career at the intersection of product, engineering, and marketing scaling user bases from nothing to millions of daily active users. I've systemized a lot of what I learned into this ever evolving guide. Enjoy.