August 3, 2021

For Founders: How to Sync Strategy, Execution and Growth – Part 3b (working with growth)

My previous post was about growth working against us. Now we’re here to approach growth in a different vein with the goal of working with it.

Cutting through the noise

I didn’t cut my professional teeth in tech, though I’ve now spent the bulk of my career in and around it.

I came from a world with more tangibility to it. One of companies with physical products, EBITDA, and carefully constructed ownership. These were companies built over several years, meant to be sold at some point.

When I left that world and jumped into early-stage software startups, I encountered a paradigm shift.

I had moved from the Tour de France to the Formula 1 of business!

Things moved a lot faster in white knuckle fashion, which I found (and still find) really exciting.

I quickly learned that it was a different game with its own “rules” and “norms” encompassing things that would never fly in other industries.

It was all about speed and iteration to growth funded by regularly raising and burning capital to get and stay ahead. EBITDA and rationale around valuation had, for the most part, gone bye-bye.

These norms were driven by the market “culture” and absorbed into the standard mode of operating at the company level.

As a new entrant, I was eager to absorb whatever I could to learn about my new domain. 

To this day (11 years later), I regularly engage with content that may bring value, and I encourage our team and folks we interact with to do the same.

“Along the way, I’ve also realized that there is a TON of noise that pervades the market, which I believe generally has a negative impact on the folks operating in it to build successful companies.”

So while I like to encourage learning, I likewise encourage us all to avoid the pervasive noise and push back on the standard narratives thrown at us over and over again. 

Juxtapose Techcrunch funding announcements and celebratory Twitter thread pile-ons with Ben Horowitz’s The Hard Thing about Hard Things or valuable pieces from Jason Lemkin, Tom Tunguz, David Cummings, and others, and I hope you’ll get my point.

To hammer it home, it’s noise vs. value.

Consider asking yourself “What value am I getting out of this? How is it making me feel? How much of my brain space am I allowing it to occupy?”

I’m thankful for the broader industry experience I was able to get at the beginning of my career. I know it’s helped me apply context to and question what may be considered gospel by some.

Ultimately, we have the choice to avoid the noise. So, cut through the propaganda and get to the value!

Contextualizing growth

I believe that by engaging with the noise, we open ourselves up to viewing things in absolute terms, which can be a recipe for misunderstanding and misstepping.

When we regularly read and hear the same things over and over again, we begin to internalize those views. 

For example, why has it become the acceptable norm and expectation for early-stage companies that may or may not have raised outside capital to persistently burn cash?

I’d argue that it’s because VCs who, to a very large degree, influence those operating in tech, have repeatedly said and shown (with their investment dollars) that it is not only acceptable but preferred.

Sure, it’s preferred for them because their success ultimately depends on their ability to identify and fund the potential ultimate high fliers meant to operate in this mode in service of hypergrowth. That’s what the venture asset class is meant to deliver, which is totally fine.

It’s important to understand that successful VC investments are extreme outliers, even though we hear these stories all the time. Uber, Airbnb, and Stripe (and the ever-growing cadre of unicorns) are not the norm. They are extreme outliers, which is what venture capital is all about.

I understand why VCs approach and speak to the market the way they do. They’re in the hypergrowth business. It’s what excites, drives, and potentially rewards them. So, like all of us, they bring their own biases. All good so long as we recognize it.

What I’m not ok with is the ripple effect this seems to have on the broader market of tech companies and the folks running them. Hypergrowth and constant funding rounds are what it’s all about for VCs but should not be the end-all-be-all for ALL operators.

The tail ends up aggressively wagging the dog with many thinking they need to operate in this format in order to be successful.

I even think there’s an unconscious component to this. The barrage builds bias within us that drives our actions. We start to perceive success in a certain way that may not really be in service of us.

This is why it’s important to put some context around what may seem like absolutes. So perception does not turn into an unfortunate reality that may end up being a painful one.

Corralling growth

Growth is exciting, and we like to chase it. I’m not saying we shouldn’t.

I know I want our team identifying and working on things that can help our business grow. 

That said we’re not about pursuing growth for its own sake at maximum speed at all times

It’s important to approach growth with a level head to align around why, where, and how we want to grow.

We must question our growth objectives, initiatives and even results to determine if they are actually building value and leading us to where we want to be going.

So, what if we’re successful in our chase and actually find some growth? Now what?

Then we have to learn how to make it consistent and repeatable. We have to manage through the vacillations, which inevitably occur. We have to realize it may go away and not put all of our eggs (efforts/resources) into one growth basket.

This should keep us honest and focused and put us in a better position to lead our growth rather than simply following it wherever we may be able to find it.

Timing growth

You can grow many things in a business – customer base, product capabilities, capital resources, team, channels, brand, partner ecosystem, revenue, burn…

That’s a lot to potentially grow. You should not think in terms of growth of all of these things at all times.

At times, some things should grow and others should not.

It’s not always the right time to grow. Sometimes you and your stakeholders need to be ok with not growing certain areas of the business.

You’re not just sitting idle of course. You’re working on your company to build foundational elements, put processes in place, learn and prepare for future growth in certain areas.

This may sound boring or wasteful, but I firmly believe it’s the proper way to go about not getting crushed by any future growth you may achieve.

We have to avoid getting caught up in the frenzy of growth. We apply an approach that blends rational and ruthlessness with the belief that, by doing so, we give ourselves the best shot at making growth work for us.