In this magazine issue, we interviewed Jeff on startup growth, challenges, competition and growth hacking. He is a growth guru who understand growth hacking from inside out.
Describe about your background, company, products and customers.
I have been a startup entrepreneur for about 15 years, beginning in the dot com bubble and continuing on until today. I have launched 6 consumer facing businesses over that time and have learned a lot about the proper way to launch a business. Currently, I am Head of Growth at Borrowell, Canada’s leading online marketplace lenders. Similar to Lending Club in the US, our loan platform connects lenders and borrowers and uses technology to make the borrowing process much faster, more fair and transparent and friendlier than the traditional banks. Borrowell just celebrated its 1 year anniversary. In that year we have had almost 50,000 Canadians apply, representing almost $700M in loan applications.
I also work with a ton of other startups in Toronto. I am an Entrepreneur-in-Residence at MaRS Discovery District, as well as a startup mentor at Techstars/Startup Next and 500 Startups. Through this mentoring, I get to work with dozens of high rising startups, and I try to help them avoid the mistakes and pitfalls that many startups face.
I recently co-authored a book called The Growth Hacker’s Guide to the Galaxy, which is a marketing recipe book for non-technical marketers. The goal of the book is to empower non-technical marketers and help them think like a growth hacker, so they can achieve rapid growth in their own businesses.
What are some of the challenges that companies face when growing a business?
There are many, many challenges that startups face when trying to grow, and the odds are incredibly stacked against them. For a company to grow in today’s age of competition, they need early product-market fit, access to growth capital, a great team and a culture of experimentation that will allow them to systematically uncover growth channels.
Product-Market Fit – the biggest mistake I see companies make over and over is to try to grow too soon. Startups begin with product-market fit, which is the state in which the company has proof that their value proposition is wanted/needed by their customers. This sounds obvious and simple but it’s not.
To achieve product-market fit the company must identify a value proposition that customers are willing to pay for. Then they need to figure out how to communicate that value proposition clearly and quickly, so they can attract customers through advertising. Next, they need to identify specific market segments or ‘buyer personas’ of specific groups of customers that benefit the most from the value proposition and are willing to spend good money to get it. Finally, the company must be able to show empirical proof of customer demand, to know for sure that they’ve achieved this state. Only then can the company contemplate growth. If you try to grow before achieving product-market fit, you will waste your scarce marketing dollars.
Access to Capital – access to investment dollars to grow your business is difficult as the startup barriers to entry decrease. Initially, with only a good idea and some nice slides in hand, the entrepreneur needs to raise some “seed” investment to give them capital to get off the ground. This capital will often comes from “friends and family” and other people who know the entrepreneur enough to believe in their abilities. Once the business has been established, the company needs additional capital to fully build out their product and to begin experimenting with different customer acquisition channels. If the company is lucky enough to find a channel that acquires customers cost efficiently, the company is then in a position to raise serious investment through a Series A round, where the company will bring on funds to rapidly expand their marketing channels and growth very quickly. This process is extremely difficult and time consuming, and founders need to be sure to keep a hand on the steering wheel the whole time. Set a single milestone for each stage, and only work on the initiatives that get you closer to that one single, current milestone.
A Great Team – for most startups, a good team won’t do and a great team is needed. This is very difficult for early stage companies that can’t afford to pay competitive salaries to their employees. Founders can attempt to find a co-founder that has complementary skills, and can make up for the deficiencies of the original founder. Advisors can be brought on board to provide advice and further fill the gaps in the team’s skills. Early employees can be attracted by a good idea, a good early team and some positive traction, and can be paid with cash and stock options to motivate the early hires. Putting together a killer startup team is part art and part science, and is critical to building a hyper growth startup
Culture of experimentation – startups don’t know where their customers are going to come from, and the startups that assume they know are often met with an unexpected surprise. Startups need to be approached with an open mind and a curiosity to experiment, and need to constantly poke the box and see what happens. The only way to do that is to try a lot of things, be systematic about how you test, measure and learn and need to be willing to fail, because many of the things you try will fail.
If this all sounds hard, it should be. Starting a hyper growth startup is really difficult, and in my 15 years on the front lines, I’m beginning to see patterns that exist amongst the most amazing startups. It’s lead me to believe that there is a “proper” way to start a startup.