The Traction To Growth Canyon

I've previously written about the Universal Growth Loop:

1. The product grows.

2. That growth attracts/retains talent and capital.

3. That talent and capital enable you to solve more problems in the business.

4. This leads to more product growth.

In other words, momentum is everything in startups. Loops compound, which means losing momentum doesn't make things incrementally harder, it makes them exponentially harder. Maintaining momentum requires anticipating future problems, and making sure you are planting the right seeds today.

The Momentum Canyon: Traction To Growth

Roughly between Seed and Series B, a canyon exists that kills startup momentum. Many startups find product-market fit yet still fail to grow into large, sustainable, iconic companies. They start to face rising acquisition costs, declining retention, increased competition, and lower ROI on their efforts. Companies often stumble, early momentum is lost, and the Universal Growth Loop spins in reverse. I wrote about this in detail on Reforge - The Momentum Canyon: From Traction to Growth.

There are three points I make:

1. What Got You To Traction, Doesn't Get You To Growth - This Is The Canyon

   There are three things that are hard for founders to anticipate:

   • Linear → Compounding Growth: The tactics you use to create traction do not create a compounding growth engine. This transition is full of land mines.

   • Adjacent Users: You start to hit adjacent users. The impact is a decline in acquisition, retention and monetization metrics. It takes more effort and more work just to maintain your growth metrics and momentum as a result.

   • Talent You Need Is Different: To transition successfully, you typically need people that can both set the strategy, and execute some of the tactics. If the person is too tactical, it leads to never transitioning to a growth engine. If the person is all strategy, you don't execute on anything. Finding these people feel like unicorn hunting.

2. The Canyon Is Getting Wider

   The canyon is getting a lot wider for startups for a few reasons:

   • More capital is flooding into the ecosystem. This means more well funded competition.

   • Scalable channels haven't increased at the same rate as capital.

   • The privacy movement is making it harder to target customers efficiently and effectively.

   • The bottoms-up low hanging fruit of SaaS is gone.

   Essentially you have more capital flooding into fewer places and those places are becoming less effective...all at once.

3. This Is A Founder's Problem To Own, Not Something You Hire For

   Many founders try to "outsource" the problem of growth to someone else at this stage by either hiring someone internal or external to own it. But here is the issue - Growth strategy IS company strategy at this point in a company's life. Your growth strategy informs the metrics for your business, the goals you set, how you organize your team, how you think about competitors, how much money to raise and when, and a lot more.

If you are interested in going deeper on this, join us for Growth for Founders program.

Related Links: Crossing the Canyon: From Product Manager to Product Leader, Crossing the Canyon: From Marketing Manager to Marketing Leader