Managing hockey stick growth
2x is different than x^2
Startups (and businesses) continually strive for hockey stick growth, but a word of caution - you need to really be ahead of the game to make sure you can manage the ‘exponential’.
I know the title is a little misleading, the exponential doesn’t need to be x^2 it can be x^0.2 (or any exponential, but lets stick with this so I can drive my point home).
I’ve drawn ‘ticks’ as 1, 2, 3, and 4 (at the top of the diagram) — these can be quarters, months, years. Regardless of the time-step, if you look at the two functions of 2x and x², you’ll see that up until tick 3, it’s good… until you hit tick 4, where you end up with 16 versus 256.
This is the inflection point at which scale and scale management is really needed.
I’ve animated the 4 tick marks, and you can see how crazy it gets when you start to get into the 3–4 territory.
At Sutro, we’ve just seen exponential growth (and we’re just in the beginning of it)— and it’s absolutely crazy managing up and down the ‘stack’. I’ll go into a bit of detail below.
For simplicity I’ll separate out north versus south of the buy button.
North of the buy button
Paid, earned, and generated media
Ads, social management, influencers. With a few hundred users — it’s easier to see where the brand is going, what people are saying. But as soon as you open the flood gates, there needs to be a cohesive strategy on how you’re going to answer Facebook comments on ads (and on your own page), and across the input spectrum, because people will try to talk to you everywhere.
Ariyh wrote this great piece on negative feedback loops, and figuring out how to squash this in real time (not by deleting comments but by answering them), helps really turn negative feedback loops into positive.
The Shopify store
Now comes the ‘buy button’. Do you have a cohesive strategy that’s taking all the comments from the ‘front-end’ and recycling them back into the website? Every little nugget that a customer leaves from a Facebook comment, a question that someone asks into your Zendesk Customer Service help forum all should be reviewed on a daily / weekly basis and then restructured and rebuilt back into the website to increase conversions.
Shopify Apps
We use ReCharge to manage our subscriptions, and I can tell you IT’S A PAIN! I haven’t found one good subscription software that can help us manage monthly payments, and properly connect to our distribution warehouse.
And with more complexity comes more returns, more charge-backs, more issues with credit cards…etc.
South of the buy button
Shipping
We used to ship out of our houses (and out of our office prior to COVID), this all changed when you get to the ‘256 complexity level’. When you’re shipping thousands of units (and hundreds per week), that’s really difficult to manage. So having a distribution house, solid SOPs (standard operating procedures), and how to handle RMAs are key!
The App
Is your server built to handle the 16 to 256 jump? Will your app crash? How do you manage downtime and upgrades, when you have A LOT of people depending on your app to give them information.
The Hardware
When you have hardware issues, or your factory has blacklisted a series of SKUs, will you know what units are where (in your warehouse or to what customers), to be able to manage that. It’s fine at the 4 and 16 level, but again that big jump between 16–256 is where it gets crazy!
In Conclusion
We all want hyper growth, but just make sure you’ve at least thought about all the things that can go wrong (and what you hope to go right too). It’s more important than ever, at this juncture, to at least have a plan. Because plans can be changed, but not having one may blindside you.
Ancillary reading as a corollary to ‘planning’ is Nassim Taleb’s Black Swan.
Music I was listening to while I wrote this
This is day 21 of my #90DayOfProse challenge
