Startup diary: We hit target with strategy switch - now exponential growth is a must
In this startup diary I report on the good and bad things that happen to the business as it grows. I messed up the choice of name, and we're working on a new name. Lesson: you need to validate the sound of your name when it is spoken. Word of mouth is pretty important.
But we do have good news going into 2018. I had a goal of 500 subscribers for our newsletter by the end of the year. The newsletter delivered last week went out to 513 subscribers High fives! We hit this goal by changing our promotion strategy when it became clear that the weekly sign-up rate was not sufficient to reach the goal. The history of that decision is recorded in earlier editions of this weekly diary, linked backed to the website of this newspaper via metsitaba.com/diary.
We were not going to hit our goal with the newsletter. We had to decide if that meant it was an execution and quality failure and should be shut down as a waste of precious resources, or worse, was an indicator that our target market and community of conference speakers was too small.
The problem here is to avoid throwing good money after bad. To explore new options would require spending money. You need some evidence that that is a good idea.
We also wanted the market intelligence that success or failure of the newsletter would give - this was also worth paying for. So we changed promotion strategy, got in an expert, and it worked. We have the first real, very small, validation that this startup might be onto something. So what now?
Here is a truth about growing a company: it only gets harder. Success does not make your life easier, because now you have the next, much taller, mountain to climb. We hit 500 subscribers because we carefully worked out the numbers based on the weekly growth rate. We need to do the same for 2018. But what goal makes sense?
The initial growth rate was about 10 subscribers a week. This seems to be the organic rate. We would expect this rate to increase as the number of subscribers grows. People will recommend the newsletter to friends. Because this was not enough, we increased the rate to about 80 a week. This was done with focused LinkedIn activity. So if we continue as we are now, we can get about 300 subscribers a month, allowing for churn. That gives us about 4,000 subscribers by year end using organic growth and a proven LinkedIn strategy.
When you think about growth in startups, your next goal should always be measured in orders of magnitude, not percentages.
Why? Because while 10pc growth in the revenue of an established company is a fabulous result, for a startup it is death. I have 500 subscribers. Having 550 subscribers is no use to me at all. If I know I'll get 4,000 subscribers anyway by the end of the year, then setting a 'stretch' goal of 5000, say, is also useless. Startups need exponential growth, otherwise you are wasting investor money.
My order of magnitude goal therefore must be 40,000 subscribers by December 31, 2018. Today I have 4,000 (projected to year end). I have no idea how to do this. But this goal will force me to change yet again. Startups grow or die, and you have to embrace that reality.
The other main activity for 2018 will be the construction of our Minimum Viable Product (MVP). I discussed some the tactical thinking behind this last week. Let's start talking about practicalities. Many startup founders find themselves managing a team of internal and external people, service providers and other inputs to make an MVP happen. It's tricky and you can lose a lot money quickly. The trick is to use strict weekly iterations. Each week the team must deliver a new working version of the system that can go live. A weekly demo meeting makes this happen.
This gets everybody together in the same room, (or video conference call). The developers and creatives then walk everyone through the previous week's work. This must be completed work that can go live. You don't demo stuff that is not done. Everyone is forced to break up their work into bite-size pieces.
Why do this? Because you massively reduce your delivery risk. Small pieces of work are easy to get right, easy to estimate, easy to review, and easy to deploy to live servers. The state of play is out in the open. You know exactly how everyone is doing. There are very few surprises. I'll repeat the key point again. The work must be production grade. Many teams do use a weekly iteration approach, but then only deploy every few months. That's nice, but it does not have the same energising effect. If you see your work put in front of customers each week, you know it has purpose, and real consequences. This is massively motivating, and helps you get through the tough times.
Monday afternoons are the best time for the demo meeting. The team has Monday morning free to tidy things up. You do not want people working at the weekend - that's another startup myth that is counterproductive in the long run. Using Monday afternoon also means that Tuesday afternoon can be 'deploy time'. If anything goes wrong, then everyone is in the office to fix it. Never ever deploy on a Friday - you can kiss your weekend goodbye.
Another rule for the demo meeting: everybody has to stick to facts. It is not a strategy meeting. It is not the time or place for opinions. You expect minor mistakes to appear. The team fixes them on Tuesday morning. If something can't be fixed, then you pull it. It just does not go live.
Richard Rodger is the founder of Metsitaba, a Waterford-based startup. He is a former co-founder of tech consultancy Nearform