What is Hypergrowth and How Do You Achieve it?

An Introduction to Hypergrowth

Hypergrowth has become a huge buzzword in the business world and is coming up more and more in conversation with start-ups and scale-ups. Lately, I have seen huge amounts of investment happening in the Berlin tech start-up scene, and I expect to see an explosion of digital transformation and business growth for many of these businesses over the next few months and years. All striving for hypergrowth. Businesses want to achieve hypergrowth, candidates want to join companies in hypergrowth, but what does it really mean and how can businesses reach it?

This article defines hypergrowth, provides valuable advice, and shares exciting case studies from global businesses who have experienced hypergrowth!

What is Hypergrowth?

Simply put, hypergrowth is a period of extreme growth within businesses. But there is much more to it than that.

The term “hypergrowth” appeared for the first time in a 2008 issue of the Harvard Business Review and was defined as “the steep part of the S-curve that most young markets and industries experience”. The S-curve represents growth over time — starting out slowly, picking up speed during rapid growth, then tapering off as growth slows.

The steepest part of that curve can be known as the “hypergrowth curve”. During the hypergrowth phase of start-up expansion, a company is maintaining a compound annual growth rate (CAGR) of at least 40% for more than one year. ‘Rapid growth’ companies have a CAGR of between 20% and 40%, and ‘normal growth’ companies have a CAGR of less than 20%.

The Three Stages of Hypergrowth

Stage 1 of Hypergrowth: The Edison Stage

This stage is about identifying your product and market fit, and the focus at this point is on project management, product development, and manifesting the business vision.

At this point, you need to question if it is possible to build the desired product and provide a solution to your target audience’s problems or pain points.

Stage 2 of Hypergrowth: The Model T Stage

This is where founders will be focused on scaling, which requires closely monitoring efficiency and productivity which is rooted in process innovation. Process innovation is key at this stage, and without effective processes your scaleup plans will quickly stall. Internal teams will focus on cross-team communication and product improvement releases.

Ideally, the business should be spending X on customer acquisition and be receiving three times as much in return. In the Edison Stage, you’re finding early adopters, in the Model T Stage, you’re taking your tribe to mass market.

Stage 3 of Hypergrowth: The P&G Stage

This stage isn’t about stopping and celebrating, this is the time to focus on innovating and scaling your product, which requires your teams to have clearly defined roadmaps which introduce new products, whilst still supporting existing ones. This third phase requires lots of investment to maintain innovation and to pay for new staffing needs. You will now have considerably more competition, and it becomes crucial that you excel and differentiate. You can do this in 2 ways: become a top contender and the industry-standard or create a micro-niche and dominate it.

How do I Achieve Hypergrowth?

There is no silver bullet for success. It will vary significantly between different businesses; however, we can identify and explore some commonalities, which evolve around scalability, technology, and talent.

Hypergrowth and Scaling

Premature scaling is one of the biggest reasons start-ups fail. But when is the right time to scale?

• The start-up is attaining consistent profitability and understands where the revenue is coming from
• The start-up has a tangible company ethos that all teams and stakeholders are aligned with
• The start-up has a documented expansion plan, outlining goals, KPIs, employee onboarding, and training
• The start-up has a clear vision and understanding of the required technology and essential costs
• The start-up is confident in their core team

Technology for Hypergrowth

Technology is key to hypergrowth. Technology can be used to differentiate a product or service, or lower costs or stress on employees. What do you need to consider?

• Cloud technology can be useful for fast-growing start-ups looking for agility, speed, security, and scalability
• PHP, Node.js, Ruby on Rails, and Python run on flexible frameworks, provide rich library support, and are popular choices for the backend
• On the Frontend, JavaScript is the most popular language, and React and AngularJS are popular libraries for quick development
• AI can manage high amounts of data, which is crucial because fast-growing start-ups are often highly data-driven

Hypergrowth and Talent

Increasing team sizes and hiring new talent is inevitable during hypergrowth. You need dedicated staff who are passionate, skilled and have a growth mindset that will support and drive your business forwards. At different stages, you will require new skills and expertise, which is when collaborating with a trusted talent partner, like Maxwell Bond, can enable fast and cost-effective hiring, with on-demand access to the top talent on the market.

Hypergrowth Case Studies: Businesses who have achieved Hypergrowth

Below are three of the most impressive business case studies on hypergrowth: Monzo, Snowflake, and Zoom.

Hypergrowth at Monzo

Monzo, an online bank based in East London, was one of the earliest app-based challenger banks in the UK and was founded in 2015 and experienced “the quickest crowdfunding campaign in history”. Monzo found a pain point within a target audience: the inconvenience of getting to a bank branch for Millennials. The fintech built an app that replaced the need for branch services and offered mobile banking, online community events, and new services such as pay by phone services and bill-splitting. They focused on their customers, found their niche, and dominated the market. As of 2020, Monzo was experiencing 40,000 new customer subscriptions per week.

Hypergrowth at Snowflake

Snowflake, a cloud computing-based data warehousing company which was founded in 2012 and publicly launched in 2014, experienced the biggest software IPO in history. When it debuted on the New York Stock Exchange in September 2020, its shares more than doubled on their first day of trading, opening at $120 and closing at approximately $245 after selling 28 million shares and peaking at $300. The company is now valued at approximately $70million. Snowflake found success by reviving the data warehouse industry by building a cloud-based data platform, which at the time was an untapped opportunity. They then focused on customer needs and priced their service based on utilisation rather than the usual SaaS subscription model. They then ensured all teams were aligned around the same goals to accelerate revenue, and then made strategic management changes to go public with Frank Slootman. Slootman then lead the company to that historic IPO.

Hypergrowth at Zoom

We all witnessed Zoom become synonymous with its function and a household name in 2020 due to the pandemic, but even before COVID-19, Zoom was already on its way to triple-digit growth and hypergrowth. In 2013, 3 million people participated in a Zoom meeting, which grew to 30 million people in 2014, and then 100 million people in 2015. In 2020, Zoom reported more than 200 million meeting participants every single day. Zoom found success by being customer-driven from the very beginning, by offering an alternative to dissatisfying outdated products. Zoom also sells itself and isn’t afraid to splurge when it comes to building its brand. Their well-positioned brand has helped the company attract and retain users over time.

Do you notice a theme?

All of these successful companies have thrived by being customer-driven. By observing user’s behaviour and pain points, businesses can monetise customer satisfaction through the delivery of exceptional products and services, leading to rapid user attraction, resulting in… hypergrowth.

Prepare for Hypergrowth

In the upcoming months I will be starting and hosting a series of roundtables for Senior Marketing Experts, Specialists, and Leaders, based in Germany, to discuss current trends, challenges, and solutions within the Digital Marketing space. Hypergrowth is something that has come up repeatedly in recent conversations, and many people are really eager to discuss this in more depth.

If hypergrowth is something you’re interested in discussing with other Digital Marketing Leaders, or if you have other hot topics you’d like to explore, please get in touch to register your interest in attending an upcoming Trusted Tech Talks roundtable.

Contact me on LinkedIn or via email at dan.flood@maxwellbond.de.