Why growth isn't a phase when you build a Beta Business
October 31, 2019
By Charlotte Fereday, Business Design Director at Idean UK
When we first started talking about our approach to Beta Businesses, we defined four key phases: Discovery, Set Up, Get to Market and Grow. But as we’ve launched more Beta Businesses over the past few years, we’ve learnt that having a phase called ‘Grow’ can be misleading: growth isn’t a phase - it’s a mindset.
At the heart of our Beta Business approach is the drive to get something live as fast as possible, in order to start learning from customers. And growth, especially in the early days, is about finding enough customers to learn from.
You need to get customers as early as possible so you can start learning.
Start-ups have to focus on growth from day one, just to survive. But finding people who will pay for your product is not only a requirement for paying the bills, it’s the strongest possible indicator that people are willing to pay for your product.
While Beta Businesses might not face the same pressures to pay the bills, they do need solid proof that they’re onto a good thing. You need to get customers as early as possible (ideally customers who aren’t related to you by blood, friendship or marriage) so you can start learning.
This article is taken from a talk I gave at our Beta Business Makers meet event. Watch it in full below.
It’s all about balance
Yes you need customers, but growth isn’t just about growing customer numbers; it’s about growing your customer base, your product and your organisation. And the key to sustainable growth is getting those three working in balance.
Grow the product too fast, and you’ll end up building stuff that no one wants. Grow your customer numbers too fast and you won’t be able to service them. Grow your team too fast and you’ll burn money, waste time and lose the connection between customers and product decisions.
The Beta Business approach is to get a small number of customers using the smallest possible version of a product, built by the smallest possible team. It’s definitely the most cost-effective way to build product, but more importantly it supports strong feedback loops between the customer, the product and the people building it.
Early growth is good product design
There are specific growth activities that are about growing your customer numbers, but even those shouldn’t be treated as a late phase in your product cycle.
Designing in stickiness and virality (as Eric Ries called them in The Lean Startup, should be integral to your product development process. If your early adopters are falling by the wayside, then the data is telling you that there’s a problem with your product. Similarly, if none of your early adopters is recommending your product to their friends, it probably means there’s a problem with your product.
Early growth is about gathering feedback and data from your early adopters and evolving your product until the growth data tells you that you’re winning.
High retention, high virality, and week-on-week growth, all tell you that you’re going in the right direction.
Preparing to scale
When you have a product that your early adopters love using, and are willing to recommend to their friends, it’s time to think about scaling. But it’s not as easy as hitting the ‘Paid Growth’ button and waiting for a hockey stick growth curve.
Before you open the flood gates, you need to check the balance of your customer numbers, product and org design and make sure you’re ready to face the new challenges that scaling will bring.
First, look at your product from the perspective of the masses:
- Forget your early adopters, from this point on they are only holding you back.
- Your future customers are people with higher expectations and a lower tolerance for bugs, customer service cock-ups and confusing experiences.
This is also the time to look at how you’ll scale your operations:
- What manual processes are likely to break first?
- How will you scale your customer support as you go from 100 to 1000 to 10,000 customers?
- How will you organise your teams as they grow?
Only when you’re confident that your product and business can cope with scaling, can you start thinking about really growing your customer numbers. It’s only at this point in the process where people typically say you should think about growth.
Don’t blow it
When most people talk about growth, they mean marketing. And marketing is super important once you have a product you are confident is going to smash it, and a clear idea of who your audience will be, where to reach them and what to say.
An experimental mindset will help make the best use of your marketing budget. But if you don’t start thinking about growth from day one, you may never get to spend it.
If you’re interested in the early stages of launching a Beta Business, new venture or spin out check out Inés Oliveira’s post about Beta Brands.
Hungry for growth? I’d love to hear how you’re setting your team up to grow. Let’s start a conversation.
Read or hear more about early stage growth:
Patrick McKenzie from Stripe on why your first 10 customers are the most important.
Alex Schultz, VP of Growth at Facebook, on nailing retention and why you shouldn’t have a separate growth team.
Marcia Kilgore, founder of Beauty Pie, Fitflop, Soap and Glory and Bliss on not scaling before you’re ready.
Eric Ries on the three engines of growth in The Lean Startup.