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If you’ve been following the world of consumer tech for the last ten years, you know it’s become increasingly difficult for consumer internet startups to find scalable and cost-effective growth channels. As an investor in consumer internet companies, I’ve found this question — does a company have a scalable growth engine? — to be one of the most significant determinants of success or failure.

This post illustrates several traps to avoid and highlights three core strategies to help consumer Internet companies grow sustainably and generate value that lasts.

The Big Four Conundrum

First, let’s talk about the root issue. Over the past decade, Google and Facebook have grown their audience reach massively and collectively own a dozen different billion-user apps (Google: Search, Maps, Mail, Android, Chrome, YouTube, Google Play Store, Drive; Facebook: Facebook, Messenger, Instagram, WhatsApp). They’ve leveraged their dominant positions as aggregators of consumer attention to increase monetization, making it far more expensive (although still highly effective) for brands to reach consumer audiences on their platforms. …

Startups that serve small businesses can become massive successes. Shopify, MINDBODY, GoDaddy, Trulia, Zillow, and Yelp are just a few now-public companies that discovered and built multi-year relationships with hundreds of thousands or even millions of small business customers, which were were the foundation on which they scaled. And at Sapphire Ventures, we’ve backed some extremely successful SMB-facing companies such as Square and DocuSign.

Yet despite these success stories, many VCs still shy away from companies that serve small businesses. Instead, investors gravitate towards teams that sell top-down into large enterprises at big-ticket prices — and fear that working with SMBs automatically means high customer acquisition costs, lower contract values, high churn, and lower profits.

While selling small business buyers comes with unique risks, with the right tactics, you can quickly gain momentum. I am a firm believer that there is big opportunity in small business. …

Over the years — as an operating executive, angel investor, board member, and now a VC at Sapphire Ventures — I’ve enjoyed being a sounding board and advisor to dozens of amazing startup CEOs. A common topic that CEOs want to discuss is how to level up their organizations when they’re experiencing hyper growth. Often, that means figuring out whether they should hire a COO, and if so, making sure they find the right fit.

As a former COO who joined Trulia as an outside hire, I know first-hand that this is an important and nuanced topic. In the right situation, adding a COO can give a CEO a powerful partner in transforming and scaling her company. But hiring a COO at the wrong time, or hiring the wrong person, can be a costly — or even fatal — mistake.

In this post, I’ll help CEOs think through five critical parts to hiring an outstanding COO to level up their organizations. …

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I’m excited to announce that I’ve joined Sapphire Ventures to invest in transformational consumer technology companies and partner with CEOs to navigate hyper-growth.

Over the past two decades, I’ve been fortunate to be a part of some amazing consumer tech companies. I got my start in the Valley as a product and marketing manager at E*TRADE, later led a business unit at Yahoo!, and most recently, was Trulia’s President and COO from our Series C, to IPO, to our eventual $3 billion merger and integration into Zillow Group.

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At Trulia, we grew the business from a start-up with 100 employees and $20 million in revenue into a stand-alone public company, eventually merging with Zillow to create a 3,000-person company that generates more than $1 billion in revenue. Together with fantastic founders and an amazingly talented team, we navigated the mobile platform shift, iterated our way to a strong and diverse revenue model, and built one of the strongest cultures the Valley has seen. At Yahoo! and E*TRADE, I led teams with a similar focus of connecting consumers to the online products and resources that help them better accomplish things that mattered in their lives. …


Paul Levine

Partner @SapphireVC. Fmr President/COO of @Trulia and @ZillowGroup. Product/business builder, org scaler, startup helper, family man

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