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About Customer Acquistion And Growth

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Building a Growth Framework Towards a $100 Million Product

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When I joined HubSpot in January 2014 the mission was clear. One, help build the foundation for a new $100M line of business. Two, do it with a freemium and touchless model. The journey was one with many twists, turns, and lessons which I've boiled down into the Four Fits Framework that I went through in the past five posts.

In this post, I will walk you through how we laid the foundation for the HubSpot Sales product and set it on course towards that $100M goal.

Why Most Companies Fail At Moving Up or Down Market

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This is part five in a series about 4 Frameworks To Grow To $100M+. Subscribe to get the rest of the series.

In the introduction I explained there are two types of companies:

Tugboats, where growth feels like you have to put a ton of fuel in to get only a little speed out.
Smooth sailors, where growth feels like wind is at your back.
The difference between these two are not the common mantras of build a great product, product market fit is the only thing that matters, or growth hacking. 

In part two, I talked about why we should think about Product Market Fit as Market Product Fit, how to lay out your Market and Product hypotheses, and how understanding whether you have Market Product Fit comes down to Qualitative, Quantitative, and Intuitive indicators.

In part three, I covered Product Channel Fit - the concept that products are built to fit with channels, channels are not built to fit with products.  

In part four I covered Channel Model Fit - that channels are determined by your model.  I went through the ARPU ↔ CAC spectrum and how your product and product tiers need to align on this spectrum. 

In part five I covered Model Market Fit - your model influences the target market and vice versa.  

Through out the series I've tried to highlight three key points:

1. You need all four Fits to grow to $100M+.
2. You can't think about the four Fits in isolation because together they form an ecosystem for growth.
3. You need to constantly revisit the fits because they are continuously changing, or breaking down.

Let's walk through each of them individually in more detail. 

Get Out of the ARPU-CAC Danger Zone with Channel Model Fit

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Channel Model Fit is simple - channels are determined by your model.  

First, what do I mean by “Model?”  The two most important elements of your model are:

  1. How Your Charge - For example, free (monetized with ads), freemium, transactional, free trial, one year up front, etc. 
  2. Average Annual Revenue Per User - What the average $$ you make from a customer/user per year.  

Product Channel Fit Will Make or Break Your Growth Strategy

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Earlier, I discussed our common obsession with Product Market Fit that has led to false beliefs such as “Product Market Fit is the only thing that matters.” A byproduct of that false belief are statements such as:

“We are focused on product-market fit right now. Once we have that we’ll test a bunch of different channels.”
There are two major issues with this statement. I’ll break them down separately. 

The Road to a $100M Company Doesn’t Start with Product

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While Product Market Fit isn't the only thing that matters, it is important, so it makes sense that there are no shortage of blog posts explaining Product Market Fit, and how to get it. 

Instead of echoing the many great Product Market Fit explainer posts out there, I'm going to focus on the 5 elements of Product Market Fit that I believe are most misunderstood and overlooked:

Why Product Market Fit Isn't Enough

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I’ve been lucky to have been part of building, advising, or investing in 40+ tech companies in the past 10 years. Some $100M+ wins. Some, complete losses. Most end up in the middle. 

One of my main observations is that there are certain companies where growth seems to come easily, like guiding a boulder down hill. These companies grow despite having organizational chaos, not executing the “best” growth practices, and missing low hanging fruit. I refer to these companies as Smooth Sailers - a little effort for lots of speed.

In other companies, growth feels much harder. It feels like pushing a boulder up hill. Despite executing the best growth practices, picking the low hanging fruit, and having a great team, they struggle to grow. I refer to these companies as Tugboats - a lot of effort for little speed.

Inside the 6 Hypotheses that Doubled Patreon’s Activation Success

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I rarely accept guest posts on this blog, but this opportunity was too good to pass up.  A couple months ago Tal Raviv (Growth PM @ Patreon) sent me a short email - "Brian, the results are in.  We doubled (yeah, doubled) new creators in our onboarding." 

My immediate response, holy f*ing YES!!!! My second response, lets write about this.  I've spoken/written about the importance of onboarding a lot before. The number of solid cases/examples out there is few and far between.  So Susan Su, Head of Marketing at Reforge, dug in with the Patreon team to produce this amazing piece.  It covers:

  • How Patreon decided and defined a leading indicator activation metric.
  • The challenges they faced with that metric.
  • The six hypotheses they tested, where the hypotheses came from, what worked and what didn't. 

Building a Growth Team from Zero to Fifty

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Growth is still an emerging discipline, and not everyone has a structured growth team within their org. But, let’s say you get to start from scratch and build the ideal growth team. What people and roles would you start with?

Andrew Chen and I recently sat down to look at a few configurations to consider as you're scaling up a team around growth. We've broken up the conversation into three videos, with notes below each video. 

Videos

1. The Minimum Viable Growth Team -- 1 to 3 people
2. The 10-20 Person Growth Team -- The 1-5-10 Ratio and Growth Specialization
3. 50-Person Growth Team and Beyond -- Where Growth Drives Product

How You Battle the "Data Wheel of Death" in Growth

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Data Isn’t Constantly Maintained -> Data Becomes Irrelevant / Flawed -> People Lose Trust -> They Use Data Less

If the above looks familiar, you’re not alone. I estimate that greater than ⅔ of data efforts at companies fail.

This is trouble because data plays a key horizontal role in the growth process and mindset. Without good data, it’s not possible to run a legitimate experimentation cycle.

Today, I’ll take a look at 4 reasons why well-meaning data efforts fail so often, and what you can do about it.