Why Your Company Sucks At Growth.
The reason most companies suck at growth is founder fear of failure. But before we unpack that, let’s lay some groundwork.
We are finally getting freed from the ‘hack attack’.
It’s an exciting time to work in Growth Marketing. It’s no longer a black box of wizardry and virality. The snake oil salespeople with empty promises of tips and tricks that lead to startup exits are being replaced by real practitioners who write and share regularly.
The drumbeat of ‘hacks’ and ‘hacktics’ is being supplanted by ‘scaleable processes’, ‘retention’, ‘hypothesis-driven experimentation’ and ‘metrics that matter’.
The path to growth enlightenment is being paved before our eyes. And yet your company still sucks at growth.
Why is that?
First, let’s look at an oversimplified example:
You clicked on the link to this article.
You read this entire article.
You internalised it.
You believe me to be a source of truth.
You will read my future content.
You will hire me to help you grow.
That’s how this works right?
Of course not.
A click ≠ a read ≠ appreciation ≠ follow ≠ revenue.
Or simplified:
click ≠ revenue.
But you already knew that, because you know that vanity metrics don’t equal success.
Yet, vanity metrics plague the early stage tech business.
This isn’t because of the intellectual and technical challenge of identifying and tracking meaningful metrics. It’s because vanity metrics tell a positive story. They provide hope.
Frequently, and detrimentally, vanity metrics also get disguised as meaningful. Some are obvious, like pageviews; others can be trickier to expose.
Let’s take a look at a handful of metrics that may appear strong, but can fall into the vanity category.
Total signups/downloads — This says nothing about usage and value. Growth is predicated on great retention more than anything else.
MAU — This depends on the definition of ‘Active’. If the action is an investment in your product or service, great. But opening an app for 10 seconds to dismiss a notification? Not so much.
LTV — Unless you’re using a strong methodology, or accurate historical data to calculate this, it can easily be faked.
Time onsite/in app — Just because people are using your service or product for long stretches, doesn’t mean value is accruing to your company.
Vanity metrics aren’t used exclusively by super early stage companies.
At Multiple, we work with companies across a broad spectrum of stage and size.
We see a strong correlation between scaleable traction and a willingness to measure metrics that matter, independent of company maturity.
Unsurprisingly, companies with great and meaningful numbers are the ones doing the work to instrument their products and funnels. They spend time analysing their data, choose metrics that are true indicators of progress, and have established processes to systematically work to improve those metrics.
On the other side of the coin are the businesses where the path to success is not so clear. This is where we encounter the most reliance on vanity metrics. It can be a choice of disclosure, but it’s often because their infrastructure doesn’t allow them to go deeper to answer questions that only great data insight can provide.
One conclusion might be that founders who prioritise authentic growth build the best companies. That may be true but it is a second-order characteristic. The companies that measure poorly, do so because they are scared to face the reality of exposing numbers.
Because vanity metrics assuage fear.
They hide behind the ‘best’ numbers available because the reality is that they are default dead. When it’s your responsibility as a founder and leader to project confidence, even in the face of likely death, you build cognitive dissonance (confidence in success when failure is most likely) on top of cognitive dissonance (confidence in your numbers, when they really show struggle). You may be the world’s’ greatest compartmentaliser, but your house of cards of cognitive dissonance is likely to fall, and your dreams of scaling with it.
If everyone fears failure, why do some companies and founders break through? The reason is simple — they confront the fear of failure with a proactive approach, providing a blueprint to work from default dead to (pick your favourite aggression metaphor… I’ll go with) smashing it.
Let’s unpack this further.
We all know the aphorism “you manage what you measure” but that only scratches the surface. If done well, growth fundamentals will give you guidance on how to reach your growth destination. It will also give you the map, the directions, and the GPS tracking along the way. All you have to do is choose the right form of transportation. Or more accurately, prioritise all the forms of transportation you might take, and systematically test them to find the fastest and cheapest.
Leaving tortured metaphors behind, the combination of connected data infrastructure, solid reporting, and a repeatable growth process, are the tools you need to confront your fears, and to devise a plan to conquer them.
So what to do about it?
It’s a good reminder that pretty much every tech company in the world started with terrible metrics and were default dead. Their founders were certainly scared. They all had the option of being paralysed by that fear and relying on comfortable vanity metrics. But at some point, every great company confronts their possible failure, putting the processes and mindset in place to combat it in a controllable way.
Success is never guaranteed, but failure is assured if you’re unable to confront the scary reality of the metrics that matter most. So if your company sucks at growth, the first step is to admit your fear and put a plan in place to track, understand, and improve your key metrics. Make sure you have:
- Data infrastructure to track your key metrics.
- Reporting to visualise and understand how your metrics change over time.
- A hypothesis-driven repeatable process that identifies, executes and learns from experiments to improve the metrics.
Don’t rely on that next great feature or marketing hack, because, even if successful, neither will sustain you. Remember that Airbnb hacking Craigslist was an essential step in solving their ‘chicken and egg’ problem, but it was a very small part on their journey to scale. Airbnb runs 700 experiments every week, and it’s their willingness to commit to this process that has sustained them from the early days of messing with Craigslist, to the industry transformer they are now.
The great news is that you can get started today.
Every successful company has a point in time when they eliminate vanity metrics and focus on what matters most. If your company has not yet taken this step, why not start now? After all…
