How to build Growth team in your startup
Before Product-Market Fit
Only after the value that a startup is supposed to deliver to the market is found, it can even begin to think about distributing it. And so, a growth function, or marketing function — whichever label one chooses for the value distribution function — has no place in a startup before product-market fit is found.
Founder-CEO is the person taking the product (or product specs) to the first few prospective customers, trying to understand qualitatively if they find the product valuable or not. And, if not, what is the value available to be captured, and which product can be built to do that. Or, if the value is applicable but to some other customer segment.
Everything at this stage is negotiable: the product to be built, the market to be served. And, they need to be decided based on the value.
Since these are the fundamental decisions to be made for a budding business, they cannot be made based on inputs by a hire.
However, to quantify the product-market fit data, measurement and reporting is required and one engineer and one analyst will be required to set them up in case of technology products once the cohorts are sizeable and they are flowing in regularly. If founders have these skill sets, growth team can wait.
After finding Product-Market fit
Hiring Head of Growth
The raising of Series A round means that the investors are confident that the founders have found an unmet need in the market. However, it does not necessarily mean that the founders have validated a repeatable, scalable, profitable growth engine.
At this point, either one of the co-founders needs to step in full-time into the Head of Growth role, or they need to hire one. But what if they have never hired one before?
Well, they can think about the jobs to be done at that stage, skills needed to do those jobs, and then assess for those skills during the selection rounds.
The core functions at this stage, as we discussed previously, are three-fold:
- Understanding the product, the market, and the value
- Building the value proposition and picking the first channel of distribution
- Setting up infrastructure for experiment-measurement-feedback loop
#1 need skills in collecting qualitative and quantitative data from the customer segment and their product usage. #2 needs creativity in being able to formulate these data points into product positioning. In case of consumer tech, #2 also needs some experience in digital channels so that judgement can be applied in choosing of channel and medium of distribution. #3 needs some experience in knowing which components of instrumentation are absolutely necessary; which are the right metrics to look at; so some analytical and product skills.
Depending on the nature of the product, some skills can be prioritized more than others (e.g. SaaS product v. social product v. b2c marketplace v. d2c brand) and individual contributors can be hired for the skill gaps.
Hiring growth team
Scenarios where entire growth organization is put together immediately after the first institutional round are rare, as, in most cases, startups are still fighting a battle of survival and teams need to be as big as they absolutely need to be, and no bigger.
Again, Head of Growth can look at jobs to be done at that stage and see which skill sets are required to do them.
- Setting up data feedback loop: Analytics skills and Engineering skills
- Understand user behavior; design and run experiment cycles: Product Management skills and Engineering skills
- Experiment with delivery of product position: Marketing skills & Creative skills: Copy-writing and visual design
At this stage, individual contributors can be hired in these sub-functions (Analytics, Product, Marketing, Creative), and managerial positions can be hired after some scale is achieved.
Operating At Scale:
Right people doing the right job at the right time
Senior people in the industry often say: leaders should be using more than half of their time to hire. This shocks you when you first hear it, and sounds like exaggeration, but is true in that a leader should be doing the work with the highest leverage at that stage.
For example, before PMF, finding the value to be delivered is the highest leverage work that the founder-CEO can do (thereby creating potentially billions of dollars of value out of nothing), and so, that’s what they should be doing, not trying to hire a Head of Growth to delegate it. But once PMF is achieved, setting up data infrastructure, for example, is not the best use of CEO’s time leverage-wise, and so they need to hire someone.
Understanding the product, the market, and the value from customers and their product usage, as well as understanding the vision from the founders, to build the right go-to-market model, is the highest leverage work an incoming Head of Growth has to do (thereby completing the second half of value-growth hypothesis foundation of startup), and she has to be very hands-on with that task since that’s the highest leverage work at that stage.
Similarly, once product-market-channel fit is achieved and one of the power channels is delivering at scale, and growth rounds have been raised, the highest leverage work that the Head of Growth can do is to hire functional specialists in all the growth sub-functions, rather than run all of them sub-optimally. (I have borrowed this formulation from Paras Chopra: CEO’s reportees to be generalists, their reportees to be specialists.)
Building Organization: the Employee funnel
However, I’d add to the hiring-half-the-time rule and say: even at scale, leaders should be using more than half of their time to build organization, not necessarily hiring. I will expand on this.
As the business scales and new people join in, they get access to data to understand the product and the market, but what they do not often get access to is the context and the vision: how the value came to be discovered, and what more value has to be delivered and captured.
To operate with the spirit of a startup at all times, it is essential that every new person gets the context and the vision. This is one of the most important jobs a manager has to deliver on — start with why, that is.
Similar to the typical user funnel — where your raise interest in your product in a prospect, convert them, retain them, and so on — it is important that hiring is not considered as a high-leverage activity in isolation. Meeting new hires and explaining the context and the vision to them; or meeting the entire team regularly and explaining the context of decisions, short-term and long-term qualitative vision and quantitative goals: all these activities are as important as hiring, not just in a philosophical way but in terms of economic leverage.
You won’t fix a product with broken retention with more acquisition; same goes for a team.
Don’t Complicate: fantastic beasts and where to find them
This article completes the ‘On Growth’ series that I set out to write in the beginning of October. I have thoroughly enjoyed the process of writing an essay a week with deadline.
Most of the concepts in these essays are borrowed from others, and, to be honest, conviction in a lot of things I have said here became clearer only after doing things in the wrong way in the first place. And so, writing it didn’t completely feel right at times. What kept me going with the project was to think of it as a note to future self to fall back on.
On that note, if I had to remind myself in future about just one thing about all things growth, it would be: let’s not complicate things; the core job of Growth function is very simple: figure out who the fantastic beasts are (market/customer segment) and where to find them (channel).
