Hypergrowth is the Holy Grail of the tech startups’ land. Every founder out there wants to have that hockey-stick growth curve. Very few actually get to see it. And there are very good reasons why. Real hypergrowth is the true unicorn that even some of the acclaimed tech unicorns don’t get to discover.
So what’s the fuss about hypergrowth?
As all the hyper, mega, uber-extraordinary hyped words that we tend to use in the tech world, hypergrowth is nothing more than exponential growth: you’re adding more customers today than you did yesterday. It’s highly sought-after by both entrepreneurs and investors because it’s a sign that the company has managed to solve a real problem for its target customers and it’s now shooting for the moon (aka going mainstream, for people less familiar with the startup slang).
However, getting to real hypergrowth is not easy. I emphasised the world “real” because you can temporarily fake hypergrowth by throwing money out the window. There are startups out there that reach the fake hypergrowth by recklessly spending investor money to acquire customers. Those customers’ lifetime value will never get even remotely close to their customer acquisition costs. And that’s simply dead-wrong. The most straightforward way to differentiate between genuine and fake hypergrowth is to make sure the hockey-stick growth curve stays consistent when you look at MAU (monthly active users) growth, or, even better, revenue growth.
Prerequisites to reaching hypergrowth
First, you need to have a really good product that solves a pressing need for a specific target audience. So ask yourself: is your product a pain killer or a vitamin? If it’s the latter, the hard truth is that it will never achieve consistent hypergrowth. People will use it infrequently and you will struggle with conversion and retention.
Your product has the capacity to generate network effects. While one might argue that products without network effects can reach hypergrowth, I cannot name one single example. Network effects mean that the more people are using your product, the more valuable the product gets for every single individual user. This not only fuels hypergrowth, but gives your company a competitive moat, creating a high barrier to entry for your competitors.
Not all companies that meet the prerequisites for hypergrowth actually end up achieving it. What makes the difference is consistent execution. And, while there’s no playbook to achieve hypergrowth, getting there is more scientific than one might be tempted to think.
Product-Driven vs. Marketing-Driven Growth
This continuous debate in the marketing world should not really exist, at least not in the tech industry. First, the relationship between the two is not either, or. It’s AND. Product-driven growth AND marketing-driven growth. Secondly, this is not a “chicken-or-the-egg” type of dilemma. Product-driven growth always comes first and builds a solid foundation for future growth.
Step 1: Product-Driven Growth
Product-Driven Growth means that you are using your product as your main growth lever. The new users you acquire, as well as improvements all-along the funnel (conversion optimization, engagement) are driven by consistent product optimisations and new feature launches. In the product-driven growth stage, successful tech companies create an effective feedback loop between product – product marketing – customers. If you don’t see any type of product-driven growth in the early stages, it means you have a deeper problem. Don’t jump forward to marketing, just get back to your product and make sure it actually solves a real problem for a real customer segment.
Product-driven growth is mostly organic growth. This means that you should make use of your owned channels to communicate directly with your customers. This is the time to do things that don’t scale, like talking with your customers 1 on 1. Do not throw money out the window at this stage! I see time and again startups whose growth strategy is performance-driven from moment zero. Doing this will not bring you any closer to hypergrowth.
So, when do you know when your business is ready for the next growth phase? Before moving on, there are a couple of things you should check:
- Your number of users is growing – this means they see the value that your product brings
- An increasing percentage of new users comes from unincentivised referrals
- Your product’s stickiness is high (you have a low churn rate)
- Users actually pay to use your product
- Users have high engagement (they’re open to giving feedback, request new functionalities, flag bugs)
Once you check all these, it means you now have product-market fit (read more about this in an excellent article by Marc Andreessen) and you’re ready to move on to the next growth stage. This doesn’t mean you should stop doing product-driven growth. Quite on the contrary, you should keep pursuing product-driven growth opportunities, leveraging the feedback loop created, to consistently improve your product. You should always start with product-driven growth and never stop doing product-driven growth.
Step 2: Community-Driven Growth
Contrary to popular belief, it’s not marketing-driven growth that comes next. Instead, it’s time to put the customers back where they belong: at the front and center of your growth strategy. Often disregarded, community-driven growth is an essential stage in a tech company’s growth strategy. In my opinion, this is the true catalyst, enabling the company to reach their real growth potential, which might be (but isn’t necessarily) hypergrowth.
During community-driven growth, marketers should focus on building a strong community around their product and turn their early users into product evangelists. And you cannot fake it: paying people to become “brand ambassadors” will never work. Your product evangelists are those people that genuinely love your product – they’re either authentic and genuine. People see fake and you’ll lose credibility if you go this route.
You don’t need to invest a lot of money at this stage either – instead, focus on owned and earned channels. At this stage, you start investing money in your growth strategy. Always start small to test & learn, iterate quickly, scale what works and kill what doesn’t. This is the time to invest time and resources into community events, communications, thought leadership, content, social media, speaking opportunities or partnerships. Once the foundation is built, you can start testing and experimenting with incentivised referrals.
Step 3: Marketing-Driven Growth
Only when you’ve got that strong community around your product, you should move forward to marketing-driven growth. Marketing-driven growth comes in handy when your product is increasingly used by the early majority and it’s becoming mainstream. Key opinion leaders endorsements and performance marketing can work wonders at this stage. Now’s the time to double down your paid user acquisition efforts (and budgets, for that matter).
As you head to acquiring more conservative audiences, traditional cross-channel marketing campaigns help in building the trust and awareness required for them to convert. It’s here when you might consider 360 ATL campaigns, offering you exposure on mainstream channels such as TV, radio, OOH & more.
The Hypergrowth Equation
I crafted the hypergrowth equation below based on what I’ve seen time and again in the tech world. However, it goes beyond math, laying at the intersection of art and science:
Besides the different growth stages, hypergrowth is also a function of your people and processes. Without the right people, processes and enabling workflows, a company simply can’t realise its full potential.
Most startups never reach the real hypergrowth stage. And, while there are some things outside of your control, you can maximise your chances to get there. Focus on consistent execution, do things in the right order, bring the right people onboard, enable them through lean workflows and, above all else, be patient. You can’t cut corners into hypergrowth. It’s a long iterative process, but it’s the only way to realise your true growth potential and supercharge your growth.