A Practical Guide to Building a Growth Team
Your startup has achieved Product/Market Fit (PMF) and your priority now is to build scale. You need to develop growth capabilities within the company, but when and who should you hire, and how do you get the most out of them? This article will help you understand what you should and shouldn’t do on your path to building an effective growth team.
First, it’s important to understand what a growth team does and why you need it. A growth team exists to discover the growth drivers of your business and utilize them to move the needle on some or all of your business metrics (acquisition, activation, retention, revenue, and referral).
A growth team achieves this by conducting growth experiments – formulating hypotheses, running tests, and capturing learnings. Why experiments? Simple. If you don’t do experiments on a limited scale, you are experimenting with 100% of your users 100% of your time.
Building an effective growth team all at once is an impossible task. It requires a gradual approach aimed at maximizing your chances for success at any given stage of your startup journey.
The path you take will depend on the lifecycle stage of your business, your business model, your customer acquisition channels, your company culture, and your overall strategy.
GROWTH TEAM EVOLUTION
The following roadmap reflects some common principles of building growth teams that have emerged at leading companies.
Pursuing growth prematurely is a common mistake made by startups. You need to be sure your startup has achieved PMF and you deeply understand the needs of your customers before embarking on the growth journey. A sure sign of reaching PMF is a base of paying users who are happy about your product. According to Andrew Chen,
[At Uber] We waited until we were a team of 16 with thousands of paying customers before we looked for a growth marketer.
As soon as PMF is a certainty, consider hiring your first Growth Hacker or PM Growth. This is the first person on your team for whom growth is the sole priority.
This single hire with a dedicated mission of driving growth can make all the difference in how fast your company grows. After all, what gets focused on usually ends up improving.
Avoid hiring the Growth Hacker from within since the chances of finding the right person among your early employees are slim, and a single wrong hire could tank your growth initiatives.
Hire for skills and experience rather than potential at this point, as this will be the only growth expert on your team for some time. Look for a person with a T-shaped skill set and demonstrable experience of driving growth for a company in a similar stage and industry. Hiring a generalist growth marketer with stellar credentials but little relevant experience may be a recipe for failure.
Look for candidates who had to fight their way to success in a situation similar to yours. Hacker mentality and a track record of calculated risk taking in a candidate are a must as marketing resources are usually scarce at this stage.
As an alternative to a full-time hire, consider engaging a growth expert on a trial or project basis. This lets you test the candidate’s skills without making a costly commitment.
Hiring a growth marketing agency is another viable way to quickly obtain growth capabilities for early stage companies. See this article discussing the pros and cons of hiring an agency vs. building an in-house growth team.
Get other enthusiastic employees on board as ad-hoc members of the nascent growth team.
To properly align incentives, consider tying Growth Hacker’s compensation to their performance. This can be achieved either with a profit sharing arrangement or via offering them an equity stake, typically in the 0.5-2.0% range.
You can dramatically increase the chances of early wins and simplify your task of measuring the Growth Hacker’s effectiveness by initially focusing on one or two critical metrics. Ash Maurya in his book Running Lean recommends focusing on Acquisition and Referral after achieving PMF.
As your growth hacking efforts show unmistakable signs of success, it’s time to think about assembling a full-fledged growth team. As this move involves considerable organizational and budgetary changes, make sure you get the buy-in of key people on your leadership team.
Look for candidates for the PM Growth role with a track record of building growth processes and infrastructure as well as strong project management skills. Other members of the growth team should also be accustomed to and ready to work in a process-driven environment. Team and communication skills are a must.
To ensure the team is nimble and effective, it is important to endow the PM Growth with a considerable amount of independence and authority. Although various organizational models are used in practice, an obvious way to elevate the status of PM Growth is to make him or her report directly to the CEO.
The skills required within a growth team fall into four major buckets: creative, engineering, data and project management. Matt Lerner of 500 Startups suggests also having at least one person with a science background on the team in order to infuse the seemingly chaotic growth experimentation process with scientific rigor. For a description of individual roles on the growth team see this discussion on Quora.
Growth teams are notorious for consuming an inordinate share of scarce engineering time. Conflicts with Engineering and Product are also common due to the experimental nature of growth team’s work resulting in a constant cycle of introductions and discontinuations of product features. Thus, it is important to delineate the engineering responsibilities of various departments and provide the growth team with sufficient engineering resources.
With well-functioning growth processes and infrastructure in place and a clear growth trajectory established, expand your growth function to include multiple growth teams focusing on different key metrics / parts of the funnel (such as user retention and onboarding) led by Head of Growth.
This is the model successfully employed by large tech companies like Uber and Airbnb. The challenge at this stage is balanced hiring. You need a healthy mix of deep functional experts and junior employees with strong potential.
Also, make sure your growth function is aligned with the business model of your company. Uber and Lyft (two-sided marketplaces) have separate supply and demand teams. Buffer has built a distributed growth team in line with its remote work / no office culture. A FinTech company growth team is going to be heavier on engineering than marketing.
Finally, make sure your expanded growth organization (e.g. Pinterest’s growth team includes over 50 people) doesn’t succumb to organizational entropy and continues to focus on driving growth and not on building new product features. It’s really hard to do both at the same time.
The first thing you really need to build is core product value. You need to solve a real problem and build an amazing product. Product clearly owns this piece of the pie. Growth teams should not be working on building that core value.
GROWTH TEAM MODELS
A growth team model refers to growth team’s role in the organization and the way it’s organized. Selecting the right growth team model is critical and can either break or make your growth efforts.
Growth Team Role
According to Brian Balfour, in order to select the right model for your growth team you must first define your fundamental goals (building the core product value, getting the target audience to experience that core value as quickly as possible, and getting that audience to experience that core value as often as possible).
Then consider at what stage you are as a company, what your customer acquisition channels are, your culture and strategy.
Brian describes three types of growth team models:
- Full Product Ownership. Growth team assumes total responsibility for product growth after core product team got it to Product/Market Fit. This is a model commonly found at B2C companies like Uber and Facebook (growth team taking over Messenger).
- Growth as a Service. Growth team acts as a consultant or an independent SWAT team looking for the biggest friction in the growth model and then jumping in to solve that problem.
- Hybrid Model. Growth team owns the quantitative and tech pieces of marketing (e.g. high scale SEO and email push) as well as major pieces of the product that heavily touch growth (e.g. onboarding, new user experience, referral or virality).
In the early startup stages, while your resources are limited, the Growth as a Service model is often the right choice, while Full Product Ownership model is more appropriate for later stage businesses with multiple growth teams.
Growth Team Organization
Andrew McInnes of Tradecraft describes two popular models for structuring a growth team that emerged from interviews with 20 growth leads at some of the fastest-growing companies like Pinterest and FanDuel.
- Independent Model. In this model, a VP of Growth heads the team. Two versions of this model are organized by (a) Flows and Features (e.g. signups, onboarding) and (b) by Metrics (e.g. acquisition, retention). Uber and Facebook use the Independent Model.
- Functional Model. In the Functional Model, people working on growth initiatives report to functional heads (e.g. Product, Engineering). Pinterest, Twitter, LinkedIn, Dropbox, and BitTorrent use this model.
Each model has its pros and cons. The Independent Model is characterized by speed and iteration. At the same time, growth may come at the expense of the broader user experience as well as tension between growth and product, which can create distrust within an organization.
The Functional Model serves well both growth and non-growth needs of the respective functional head (usually the VP of Product) while the tension between user experience and growth metrics still exists. The latter model works best when the functional head is data driven and takes iterative approach to product management.
The interviewers didn’t find much difference in the eventual outcomes between the two models. According to Andrew,
This suggests choosing a growth team model based upon cultural, organizational, and strategic fit may be the better path forward. […] Pick the model with the tensions that your ‘team DNA’ can best resolve today, and choose a growth team leader with attributes that also fit the situation.
Which growth team path and model did your company choose? What are the results? Please share your opinions in the comments below.
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