Here’s Why Facebook Beat Friendster: Intro to the Science of Growth

Current start-up advice focuses on a circuitous cycle of customer discovery and customer validation in order to achieve product market fit. This focus is warranted as there is nothing more important than finding that sweet spot. This is because you don’t really have a business until you have a sustainable and repeatable model of bringing in users and turning them into active (paying) customers.

What happens when you achieve product-market fit?

The obvious answer is that you need to scale-up. However, doing so is not as easy as hiring a growth hacker, because there is a difference between scaling and scaling properly, as evidenced by premature scaling being one of greatest reasons for failure in many start-ups.

So is there a specific startup methodology for achieving proper scale?

This is the question me and a former professor of mine at Carnegie Mellon University sought to answer. As lead researcher on Sean Ammirati’s recently published book, The Science of Growth, we dove deep into the journeys of 10 well-known companies ranging from modern marvels like Tesla, Facebook, YouTube and LinkedIn all the way back to the retail juggernaut McDonalds.

We took contrasts of each story and made a comparison to that of a lesser-known startup that was created at about the same time, with a similar product, targeting the same market.

What we wanted to know was, “what happened that caused Friendster to stumble and Facebook to triumph?”

And is there a set of lessons to be learned from these side-by-side comparisons that we can share with the entrepreneurial world in the hopes of reducing incidents of startup failure.

Our biggest takeaway is this: Just as you can’t take calculus before basic arithmetic, you need to focus on nailing the following prerequisites in your business before focusing on growth:

Four Prerequisites for Growth

PREREQUISITE 1: Founder’s Core Vision

In addition to providing leadership, it’s important that the problem the founder sets out to solve is one they are passionate about and prepared to address.

PREREQUISITE 2: Scalable Idea

You can’t scale a startup that serves a market of only a few people or organizations.

PREREQUISITE 3: Solves a Real Problem

That large market must actually get value from the solution that you have developed.

PREREQUISITE 4: An Excellent First Interaction

As you start to focus on scaling, you must make sure the world’s first interaction with your product is not just good, but excellent.

Pivotal Events for Growth

Once you have satisfied each of the four preceding prerequisites, the next step is to think through what you can do to accelerate your growth. Each of the catalyzing techniques below attempts to answer the question: How can I increase awareness of those people who would find my solution valuable?

CATALYST 1: Double Trigger Events

In the evolution of many startups, there were events not governed by the company, which accelerated company growth by increasing awareness of its product. People often think of these events later as the company’s ‘launch’ event, even though the company usually released the product publicly months before.

CATALYST 2: Drafting off of Platforms

In other cases, the catalyst is not an event in time but is instead a large, existing platform of engaged individuals who are looking proactively for your solution to augment their experience on a current platform.

CATALYST 3: Gaming Algorithms

Over the last decade, as software (search engines, app stores, and mobile recommendation apps) become a more significant way to discover products and services, an effective way to increase awareness is ‘gaming,’ or optimizing the rules those systems use to recommend solutions so your startup is at the top of the list.

CATALYST 4: Viral Growth

The last way to dramatically increase the number of potential customers who are aware of your product or service is to get your existing customers to tell their colleagues and friends. While using existing customers as a referral service predates the Internet, current tools and technologies make this channel much easier to optimize.

Elements for Sustained Long-Term Growth

Finally, the last step is to focus on making sure you have the foundations for long-term sustained growth. After studying our chosen companies, the team and I concluded there were five elements that served as the foundation for sustained growth.

FOUNDATIONAL ELEMENT 1: Be Data Informed, Not Data Driven

How to handle data is a crucial question most organizations are asking themselves today. It’s easy to become either too reliant on data for answers, or conversely, to ignore data and just rely on your creative instinct and vision. The chosen companies struck a balance by being data-informed, but not data-driven.

FOUNDATIONAL ELEMENT 2: Finance Growth Appropriately

While it has become less and less expensive to test an idea, it is still very expensive, in most cases, to scale a startup. Specifically, it is very difficult to support explosive growth using only the cash provided by organic operations. Therefore, your company needs to determine the right financing strategy if it is to thrive while scaling.

FOUNDATIONAL ELEMENT 3: Recruit a High-Performing Team

As you scale, it becomes important that your organization creates a culture to attract and retain high-performing individuals who compliment the team and accelerate growth.

FOUNDATIONAL ELEMENT 4: Maintain Discipline & Focus

As we looked at our chosen companies, it became clear that the best, most high performing were ruthlessly disciplined, prioritizing and focusing only on the activities most important to their strategy.

FOUNDATIONAL ELEMENT 5: Maximize the Value of Your Network

Finally, as the last of our five foundational elements, we talk about strategies to maximize the value of the networks being developed. There may be no term more misused than “network effects,” but when a company really starts to scale, they do end up creating actual network effects.

Conclusions on Startup Growth

While some of the above may seem obvious, adhering and eternally placing emphasis on the fundamentals is a recipe for success.

For example, Vince Lombardi, the famed football coach for whom the super bowl trophy is named after, started every season teaching and coaching the most basic fundamentals of the game even though he had a group of professional athletes who had played football for many years.

David Maraniss tells a story in his best-selling book When Pride Still Mattered: A Life Of Vince Lombardi, in which he details how Vince Lombardi walked into training camp in the summer of 1961.

“He took nothing for granted. He began a tradition of starting from scratch, assuming that the players were blank slates who carried over no knowledge from the year before… He began with the most elemental statement of all. “Gentlemen,” he said, holding a pigskin in his right hand, “this is a football.”

So while of course there’s a lot more to be learned on how to implement these tips to successfully grow your company that we provide in the book, by keeping these principles in mind as you seek to scale your venture you hopefully can become the best at the tasks everyone else took for granted.

Have any feedback on what we may have left out or what best practices above you may be skeptical of? Let me know in the comments!