Growth Is Optional: 10 Reasons Why Companies Fail At Growth

Written By Brian Balfour

The other day I was watching Alex Schultz, the VP Growth at Facebook, give a lecture on Growth for the CS183B class.  He made a lot of great points, but the last 60 seconds I thought were the best:

“Mark [Zuckerberg] has said he thinks we won because we wanted it more, and I really believe that. We just worked really hard. It’s not like we’re crazy smart, or we’ve all done these crazy things before. We just worked really really hard, and we executed fast. I strongly encourage you to do that. Growth is optional.“  

I bolded the words, “growth is optional”, for a reason.  I think this summarizes things so well. It might sound crazy because I’ve never met a company that says they don't want to grow.  But many don’t do the thingsrequired to grow.  It reminds me a lot of people who want to lose weight, stop smoking, or make some other major change in their life.   They have the desire, but not the will to do the hard things.   

The wrong mantras have been pushed.  Product is everything.  You growth hack your way to success.  The way to find growth is to try every channel possible.  Paid acquisition is for companies with bad products.  

They are all simply wrong.  

The concepts behind growth are much simpler than most people think.  As with most things, it is executing that is the tough part.  Here are 10 things I’ve seen companies fail at executing that prevent them from growing.  

1.  They don’t focus on retention first.  

Retention is probably the toughest piece of the funnel to optimize, but it is required for anyone to grow.   Many avoid taking a brutally honest look at their retention or don’t have the patience required to truly measure it.  As a result they trick themselves into thinking they have product-market fit when they really don’t.  You can hide retention problems for awhile by increasing acquisition at the top of the funnel.  But with poor retention, the end is inevitable.  

2.  They subscribe to “product is everything” mantra.

The "product is everything" mantra leads teams to build more product, rather than work on growth problems which is often about refinement.  In most cases, building more product does not lead to faster growth.  Builders like to build.  Growth problems can seem boring to teams that love to build new stuff which is why you need to make sure you have people on the team that are at least partially motivated by outcomes.   

3.  They search for the silver bullet. 

Some teams think there is one hack, one secret, one trick, one tactic that will solve their growth problems.  As a result they don’t put in the hard work to find all the little things that add up to growth.  You will always have experiments or features that are outliers.  But most of the time those outliers are the result of a ton of learnings that have built up over time.  Don’t focus on finding your silver bullet, focus on establishing a growth process that provides data driven focus on experimentation and learning.   

4.  They don’t focus. 

A lot of teams take a shotgun approach to growth by trying a little bit of everything, but never a lot of one thing.  It is harder to focus than it is to try everything.  As a result they end up just scratching the surface rather than digging a layer deeper to find what really works.   There are two things to remember.  One, most successful companies get the majority of their scale from a single channel.  The “Power Law” as Peter Thiel describes it.  Two, there are only a few ways to scale.  If you can’t decide, here is a framework to help you prioritize acquisition channels. 

5.  They don’t invest enough in data and analytics. 

Focusing on data and analytics involves going far beyond instrumenting a few events in Mixpanel.  It is a significant time investment.  You need to have a commitment to data.  Working on analytics doesn't feel like you are making progress on product.  As a result, it often gets de-prioritized in the face of building new features.  You can't view time spent on data as subtracting from building things.  You have to view it as time that will help you build the right things. 

6.  They don’t run experiments...a lot of experiments.

Solving growth problems requires running a rigorous experiment process.  Not just one or two, but a lot of experiments.  The Sidekick growth team has run 1015 experiments since June 2014 and our experiment throughput is accelerating.  Each experiment produces learnings.  Those learnings stack on top of each other over time building your knowledge base about your user, product, and channels.  The deeper your knowledge on these three things, the higher the probability you run a successful experiment that leads to growth. 

7.  They don’t dig in and learn.  

If teams do run experiments, a lot don’t dig in to figure out why something happened.   When an experiment fails it is easier and more exciting to move on to the next idea on the list.  The only way to learn is to figure out the “why” regardless if an experiment succeeded or failed.     

8.  They don’t double down. 

I see teams who are having success with a specific channel, tactic, or growth experiment and then they decide to try something completely different.  I feel like I’m taking cRaZy pills when I see this.  If something is working, DO MORE OF IT before moving on to something else.  When Noah Kagan succeeded with an experiment running a contest to acquire emails for AppSumo, he didn’t try something else.  He ran contest after contest until he found the ceiling for that tactic.  When Zynga found that holiday virtual goods were huge revenue and viral drivers in one of their games, they immediately implemented across every game for every holiday you could imagine.  Yes, repetition can be boring.  But if you want to grow, look at whats working and figure out if you can do more of it before moving on.  Your job as a growth team is to drive usage and outcomes. 

9.  They don’t dedicate the right resources towards growth.  

I see a lot of teams (especially older, larger companies) get intrigued by growth.  So they take one person and say “go do this growth hacking thing.”  That one person has to go around to beg and borrow from a bunch of departments to get the resources they need to accomplish even a few experiments.  This is a setup for failure.  Solving growth problems requires focus, dedication, and mixture of engineering, design, data, and marketing skills.  You have to make sure all those skills are represented in a focused team that has the autonomy and authority to implement experiments and make efficient progress.

10.  They don’t change and adapt.

Companies generally go through three stages.  Traction, transition, growth.  What makes you successful at the traction phase, is not what makes you successful at the growth phase.  The people, processes, metrics, mentality, and more need to adapt as your product and company flow through these stages.  The trap is trying to use what previously made you successful, to drive future success.  

Once again, growth is optional.