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🎢 #49 - How to grow your early-stage consumer startup?
+ interview with Mike Duboe (Partner at Greylock)
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🔥 Deep Dive
How to grow your early-stage consumer startup with Mike Duboe
(Image credit: Mike Duboe)
Mike Duboe is a growth legend and a general partner at Greylock focusing on commerce, marketplace, and consumer technology businesses.
Mike started his career at Bain after graduating from the University of Michigan and later joined Tilt as the first growth hire, helping them define, understand, and accelerate growth. He then joined Stitch Fix where he built the Growth organization and developed a set of operating frameworks that helped take the company through an IPO. Since, Mike has taught growth at Reforge, served on Y Combinator’s growth advisory council, and advised multiple VCs and startups.
It was such fun catching up with Mike to learn more about his growth philosophies and advice for early-stage consumer founders.
🤔 How should an early-stage founder approach growth
1) Demystify growth and identify growth levers
“Abstractly speaking, growth is a structured form of experimentation. You're accelerating the pace of learning for a company. Alex Schultz from Facebook used to say the growth team never rings the gong because the job never ends. You set the pace of learning, so you need to be a few steps ahead of the rest of the company.
In order to drive growth, you need to first understand it. It is important to have early analytics hires to help demystify growth levers for the business. Just list them in a spreadsheet. I see a lot of founders that are eager to try and find a strategy that sticks early on, and while this is not the wrong approach, it can be dangerous and often inefficient to do so without first acquiring an understanding of growth levers.
At Tilt (group payments product), the first thing I did was to call our Top 100 users ranked by the intensity of usage. It turned out that everyone was a college campus organizer of some sort. In addition, we were strategically growing the product campus by campus, so these discoveries led to the insight that if we could make it easy for existing users to recruit others onto the product via referral mechanisms, we could drive ubiquity on college campuses. This led to an ambassador program which helped us a lot with growth.”
2) View your growth as a loop, not a funnel
“At least in e-commerce, it's common for people to look at growth as a funnel, i.e. acquisition, activation, conversion, retention. I think the most interesting businesses from a venture standpoint have a loop in them. It is a simple, but powerful mindset shift.
At Tilt, for instance, the product’s output led to another input - contributors would come on and want to go organize an event. The hard part is finding an output that can be fed back into an input in your business, but that’s why many businesses have their own unique loops.”
3) The power of focus and getting your retention right before scaling
“At Tilt, we suffered from a lack of focus. We had three different business lines and each of them could have been a very interesting business. We were trying to do too much at once partially because we raised a bunch of money and didn't have as many capital constraints.
On the other hand, Stitch Fix was this interesting story where the company was profitable but hadn't raised that much money. We were forced to focus to build strong retention, which helped us build a strong enough foundation to layer on performance marketing.
Retention generally trumps acquisition because you get insights on who is best to acquire by understanding those who stick around. It is important to start at the bottom, with the people who are actually there before trying to acquire new people.”
🤔 Common mistakes early-stage founders make with growth
1) Too dependent on one growth channel
“Channel diversification is crucial to successful performance marketing. At Stitch Fix, we set a number where I would not let our budget get more than x percent distributed toward any one channel even if it will be short-term optimal to do so. This can mitigate many risks.
For example, in 2017, the Facebook algorithm malfunctioned after the Cambridge analytical scandal. A lot of our peers saw their Facebook spend go bonkers while we maintained business as normal because we weren’t over-concentrated on that channel. Sometimes, it can be easy to funnel all your money into one channel but it is important to diversify.”
2) Thinking growth is only the Head of Growth’s job
“Another common mistake I see first-time founders make is the assumption that once you hire a Head of growth, growth is their job, and their job only. In reality, the responsibility for growth lies on the entire company. If you place too much of that responsibility on the Head of Growth, you could have a disconnect in the organization. The Head of Growth’s role is to experiment, orchestrate, and accelerate learnings.
At Stitch Fix, the biggest impact that I had was organizational. For instance, I would loop our creatives into conversations about what kind of ad creative was performing so they could see their work move the needle. This inspired them to go and develop more of it.”
💡 Growth = Art + Science
“I think a lot of growth people are very analytically driven, like quants, which was my background. As I started to work with more marketers and designers, I realized that it's also an art. I think the best growth teams have both - you have designers, marketers, data scientists, and engineers all working together toward one shared goal.
You could take this stuff to an extreme and assume that the business could run on a spreadsheet, when in reality, the best growth experiments, the best growth teams, the best growth loops all have some creativity to them. I think you need to have both left-brain and right-brain to do growth right.”
👨💻 What I’ve been reading
Insider story of how a founder ran a viral meme website for 5 days about Suez Canal and his various attempts to capitalize on the insane traffic (affiliate, NFTs, etc)
Great Twitter thread on how a team at Paypal cracked a $100M churn problem by using first principles thinking
Inside BitClout, the Dystopian Social Network with Big Backers and Vocal Critics
The a16z marketplace 100: 2021
The company behind NBA Topshot is valued at 2.6B and their vision for the future of NFTs
😍 Jobs & Internships
Gather - Product Manager (Remote)
Lerer Hippeau - VC Associate/Senior Associate (Remote/NYC)
Streamlined Ventures - VC Associate (Bay Area)
Cowboy Ventures - VC Associate (Remote)
Plaid - New Business Associate (SF)
Flow - Business Analyst (Remote)
Invesco - Product Manager Intern (NYC)
Buzzfeed - Data Science Intern (NYC)
Legacy - Product Manager Intern (Remote)
Ripple - Product Marketing Intern (SF, Remote)
Uber - Marketing Associate Intern (SF)
Stripe - MBA Revenue Ops Intern (SF)
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