Solving your Growth Problem

The best founders and marketers I know are deep thinkers.

Not because they read Nietzsche and listen to jazz.

Because they think through second-level consequences.

Most founders are great at first-level thinking.

Not so many second-level.

First-level thinking is the initial reaction, the first thing that comes to mind. It's straightforward and focused on immediate outcomes.

Second-level thinking is deeper. It considers the long-term impact and underlying effects.

By applying second-level thinking, you can make better strategic decisions about your business.

In this post, I’m going to share a simple framework to help you make better decisions - especially in the context of growth.

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When making a decision, you must start with the problem.

We’re going to pick a common issue founders and marketers struggle with:

Problem: Your startup is struggling to grow.

First, you need to think through some ways to solve the problem.

Usually, founders solve this problem in a few ways:

1. Focus on customer acquisition and top-line growth

2. Focus on retention and more efficiency

3. Hire a full-time head of marketing

4. Hire a marketing agency

First-Level Thinking

Here are how founders think through the immediate outcomes of these options:

Customer Acquisition and top-line growth: Focusing on this could mean more spending on paid marketing. This would mean less money to spend on other channels and staff.

Retention and Efficiency: Focusing on this could mean more time optimising the product and less focus on topline growth. There would be fewer new customers but more engaged ones. Possibly a new designer required.

Full-time Head of Marketing: Hiring a Head of Marketing could mean someone focusing on these types of decisions full-time. This would mean allocating budget to making the hire which may mean less money to spend on marketing and product.

Marketing agency: Hiring a marketing agency could mean immediate growth. But it would come at a cost and would likely be focused on paid marketing to get ROI.

But this is only first-level thinking. We need to get deeper to come to a better outcome. We need to ask “And then what”?

In his book, Clear Thinking - which inspired this post, Shane Parrish outlined the Bad Outcome Principle.

When making decisions, we need to think about not if things go well, but if things go poorly also.

So you want to go through all the options and consider:

1. If it goes well

2. If it goes badly

Let’s apply this to our problem:

1) Focus on Customer Acquisition

If it goes well:

• Better top-line numbers of new signups, visits and customers.

• Clear validation and strong positioning in the market

• Investors will be impressed and we will be able to get to the next round of funding.

• Greater brand exposure as more people learn about the brand

If it goes poorly:

• Lower conversion rates because the site isn’t yet optimised

• More users churn because the product isn’t good enough

• There will be an unhealthy reliance on paid ads to keep the growth up

• Savvy investors ask about the unit economics and not just the top-line growth. They question whether it’s a good investment.

After going through this, you may need more information to decide whether to focus on customer acquisition. That’s a good sign - there’s usually more to think about.

So you have a third thing to think about: Any more information required.

Here are some of the questions you may ask to make the best decision.

More information required:

• What are the chances of succeeding on these paid channels?

• Is there a way to run ads sustainably?

• Can you focus on improving churn at the same time?

So thinking through an option, write down:

1. If it goes well

2. If it goes badly

3. More information needed

Do this for each option. We’re going to do this now.

2) Focus on retention and more efficiency

If it goes well:

• A sticky product with an engaged userbase and high lifetime value

• Customers spread the word about the product through their networks, leading to viral growth

• Lower customer acquisition costs and more predictive revenue over time

• Investors see strong sustainable growth and investment potential

If it goes badly:

• Growth is much slower as the focus is on engagement and not growth

• Word-of-mouth growth doesn’t happen as fast as desired

• Takes longer to run experiments and get meaningful data

• Increased resources to invest in product improvement and user experience

More information needed:

• How much slower would growth be if focusing on retention?

• How much data is needed to run experiments?

• What resources would be needed to improve the product?

3) Hire a full-time head of marketing

If it goes well:

• They get the company growing quickly

• They’re hands-on and provide strong leadership

• They help define the strategy and find the right channel to focus on

• Can quickly execute and get results

If it goes badly:

• There’s a large financial commitment which is hard to get out of.

• Their skillset only matches a particular channel so they focus on this vs the one most suitable for the company.

• They’re poor at execution and require further hires to execute for you

More information needed:

• How long will it take to hire a head of marketing?

• What skill sets are available in the market right now?

• What channels do I need a head of marketing to focus on?

• Who else would I need to support my marketing leader?

4) Hire a marketing agency

If it goes well:

• They succeed at growing a channel and the company gets a positive return on investment

• They work as an extension of the team and provide strategic guidance

• They work closely with a senior leader who helps with strategy

If it goes badly:

• They don’t deliver and the results aren’t as good as advertised

• They focus only on one channel and don’t provide any strategic help

• They hand you off to a junior team member to manage your growth

• They don’t build any systems so you become reliant on them.

More information needed:

• Who will be managing my account?

• What steps will be taken to hold them accountable?

• Do they provide strategic help or will the be account passed to junior staff?

• Do they have expertise in more than one area?

There is a less spoken-about 5th option that more experienced founders take.

Usually, it’s because they’ve seen the consequences of making bad decisions and so leverage others to prevent them from making them again.

These founders will nearly always have an advisor or a coach to help them talk through their key decisions.

I might be slightly biased, but I see this as the best option for startups yet to fully build their growth engine:

5) Hire a growth advisor

Immediate outcomes: Hiring a growth advisor could mean working with an experienced leader who helps you to make better decisions. They help you think through your “blindspots” and avoid common mistakes.

If it goes well:

• Sustainable long-term growth as they help you make the right strategic decisions around areas of focus and channels.

• Cost-savings vs hiring a full-time hire or expensive agency can be allocated to marketing or product

• They empower the team and leverage their network to help make the right hire around the execution

• Build foundational systems around growth so the team executes fast and effectively

If it goes badly:

• They’re not as involved in day-to-day execution so the advice might be implemented as quickly

• Become overdependent on external advice and don’t build the right strategic skills in-house.

• Although more cost-effective than a full-time hire, they don’t get tangible results or drive a return on investment

More information needed:

• How much day-to-day oversight would be needed?

• What relevant experience, perspectives and insights do they have that I may need?

• Do they help to have a strong network or will they be able to support me in finding a team?

You should now have a framework to make better decisions and be a better strategic thinker - especially around growth.

You may still need some help to think through some of your next steps.

So if you’ve gone through this and felt like hiring a Growth Advisor might be a good option for you, let’s talk.

I have a couple of spaces for Q1 2024, where I want to work closely with a few teams to help take them from startup to scaleup in 2024.

You can book a free intro call or just reply to this email and we can discuss what advising looks like in more depth.

Here’s what some founders and marketing leaders have said about working with me:

You can find out more details and see more testimonials here.

Cheers,

Theo