Segment 2 of the $5 to $50 million growth ultra marathon. 7 rules that will help drive success!
Segment 2, know your roll. Ok sorry bad @TheRock reference, know your goal is the real segment 2. Is your goal to win, finish top 10%, or just pass as many people as possible? Without properly identifying your goals, near term and long term, it’s impossible to establish an effective plan.
Entrepreneurship is an ultra marathon. It’s not like a 5k where you can sprint it or even a 1/2 marathon where you can fast walk and finish before Christmas. You have to train with a team of professionals and have a plan before you even start an ultra marathon even though as entrepreneurs many of us just start the race and figure it out along the way…. exactly why I jumped to segment 2. You already put on your running shoes and started so segment 1 is in your rear view. You’re now 5 miles in and the fact that you now have 98 miles to go just smacked you in the face. My team is growing, I need a bigger office, I need to hire middle management (UH OH), my culture is changing, my margins are changing (if I even had any previously), I am becoming disconnected from the day to day of so many areas of my business, we have to spend how much on a new office and staff in the next 3 months?
Not only can it be overwhelming, it can be crippling. Let’s jump into a tangible example so you don’t collapse at mile marker 10 or start looking up my address to send me a big bag of flaming…
Let’s say your a growing publisher. You just hit $3 million in annual revenue. You’re finally over break even with a growing team, a little bit of profit each month for growth / innovation and you now have investors ready to throw money at you. It’s an exciting time. Cheap champagne is purchased and celebratory dinners bring the team closer as everyone feels like they’re on the verge of achieving something really great.
You sit down with your senior team and start to brainstorm about the potential. “What should we do on mobile? We’ve been thinking about trying some new user experiences that would be great native applications and really differentiate us.” Others chime in… “What about new content categories? If we expanded our content categories we could grow our audience, top-line revenue and have some extra working capital each month. With a larger audience and more revenue we would be more attractive to potential investors.” “We should get into commerce. We have a descent size audience now and commerce would help us diversify revenues and open the door to other opportunities.”
Lots of great ideas all founded in some combination of intuitive experience and data, but what’s the mechanism for identifying the right decisions for the next 90, 180 and 360 days?
There are a few simple rules that will help in decision making. If you don’t have decision making guidelines based upon data the process will be all about opinion and with 3 to 7 strong and smart opinions in the room it can often be difficult to get anything accomplished… there’s this saying about opinions but I don’t really remember what it was.
Rule # 1. Define your core competency
This is not about what you think you’re good at. Ask the question “what do we do better than everyone else”. Is it customer acquisition, conversion? This has to be quantifiable. If you’re not meaningfully better (put a # on it like 20%) than the competition in an area it’s not your core competency. Understanding what you’re best at is critical to creating the right road map. We all want to be good at everything but really have one area where we excel. Leave the ego out of it and make this decision based upon data.
Rule #2. Plan within your available resources
How much free capital and manpower can you allocate without impacting current operations? That last part is critical, WITHOUT impacting current operations. Don’t start pulling people off of what drives revenue today for prospective opportunities. Also don’t invest like you just got drafted and received a nice signing bonus. Don’t make assumptions about free cash flow. Model out a plan that allows you to invest in new opportunities without impacting what’s needed for current operations.
Rule #3. Pay Attention to the market and what your audience is telling you.
Where are they consuming content? What experiences or platforms have they shifted away from? What are they currently spending money on, whether it’s premium content or physical goods? Constantly monitoring your target audience, on and off canvas, is critical to near and long term planning.
Rule #4. Know what you expect the 3rd and 4th step to be if all goes well, just ok, and not well at all.
Steps 3 and 4 are your 1 to 2 year plan (or 9 to 12 month plan if you or the market are moving very quickly). Having an understanding of where you’d like to be is important as the next decisions should allow you to get there but not make that your only path. It’s also important to know what the alternatives are if things don’t go as planned. Let me give a tangible explanation here. You want to grow your audience by 300% in the next 18 months. To do that you’ll need to invest in paid acquisition. Assuming each click costs you $.05 you’ll need to model out the # of page views and page level CPMs you need to make this achievable with the available resources (profit or funding). What could happen in the market that would impact the math? Well let’s look at what’s actually happened over the last 12 months in digital publishing. Mobile over desktop reach has reached highs in the 70% range, viewability of display advertising has been under scrutiny, Facebook has taken over as the destination of choice for content. All of these factors impact the ability to achieve page level CPMs with limited ads per page, less real estate for recirculation, and the impact of mobile on page refreshing slideshows. If the page level CPM drops significantly the plan must be adjusted as the economics will no longer work. So short message here, understand what’s going on around you and where the rug may be pulled out. Conversely, also look at these as a positive to understand how you may position yourselves properly for the evolution of content consumption. Are there alternative ways to monetize the same content in 6 to 12 months that fit within the direction the market is heading?
Rule #5. Focus on the next step
Thinking ahead is critical, thinking too far ahead is the path to falling off the cliff. Focus on the next 90, 180 and 360 days but understand which path this sends you down. The careful balance of near term planning and short term execution will determine the success and longevity of your business. The most important thing to look for in balancing Rules #3 and 4 is identifying 1) where you are in your growth curve and 2) where you are in terms of the current market demand and shift. This is a balance and not an either or. If you are early in your growth curve for mobile but the market is shifting to consuming content in social then you’re next steps must address the challenge of the market moving away from O&O and how this will impact your brand. Is your content unique enough to maintain an O&O? Do you need to start looking at your content as a means of driving a transaction so where the impression occurs is less important than the impression occurring? Sometimes the next step is easy, most often at this stage the next step requires a balance of next week and next 90–180 days investment planning.
Rule #6. Know the time constraints you are under
Are there any market or monetary pressures you face? Speed is often what kills companies. If you’re not paying attention to the market and moving quickly the market will pass you by and your original idea will be obsolete or in progress from one of your major competitors. At this point it’s not about whether you can succeed it’s about whether investors will give you the additional capital to do so, capital which will now need to be 3 to 10 times greater than what you would have needed 12 months ago.
Rule #7. Learn from the billions of dollars others have spent
There’s a balance between confidence and arrogance. There’s nothing wrong with trying to find ways to hack success and growth, to do things differently. BUT, if you are going to go against the grain you must do so with KPIs in place to measure success and scalability. If you can’t repeat a process you can’t grow based upon that process. My general rule / question = “can I do this 100 times?” Others have spent billions figuring out what works at scale, learn from them. Take meetings with the middle management of competitors. Learn for free and then spend your money based upon tried and true methods for growth.
There are other pieces, critical pieces that can only be solved by having the right team around you. I will get into this next topic in a future post called “Title Inflation”.