Agile Strategy for Startups

Sam Mallikarjunan

Principal Marketing Strategist @HubSpotAdvanced Marketing Instructor @HarvardContEd

Sam @Mallikarjunan

historyWe live in the one of the most

of commerce.

interesting periods in the

“May you live in interesting times.”

We are in a mass extinction of businesses.

6

new within the last decade

1000 are >70%

of businesses on the US Fortune

The average life expectancy of a Fortune

500 company has declined from around

75 years half a century ago to less than

15 yearstoday

and projected to be 5 years if disruption continues.

Mass extinction brings opportunities for new species to flourish.

Rogers Market segments

Innovators Early Adopters Early Majority Late Majority Laggards

Trial usersVastMajority

Big BangMarket segments

1. Getting Product Market Fit — Can you build something useful that can pull in some money in some way?2. Getting the Math to Work — Can you acquire customers for X and get at least 3X in return?3. Getting the Math to Scale — Can you pour lots more money into the top of your machine and keep that at least 3x ratio?4. Getting Saturated — You are running out of potential customers in your market or being disrupted.

HubSpot’s Playbook for Going From Startup to Scale-up

1Getting Product Market FitSTART-UP:

Jobs-to-be-done

Step 0: Define the

User Assumption

“As an x I want to y so that I

can z.”

No one wants a 9 ¾ inch drill bit.They want a 9 ¾ inch hole.

Fake it before you make it.

Animated explainer video.

01

02Landing page to generate

sign ups

Button in an existing user

interface

03

Wizard of Oz

“Pay no attention to the man behind the curtain."

The question you have to answer isn’t “can you build this?”

It’s “do people want this?”04

05Crowdfunding campaign

Iterate

It’s tempting (but wrong) to look at this chart for P/M fit.

Product B Does NOT Have P/M Fit

Product A

Product A HasProduct/Market Fit

% Active

Time

Product B

0%

25%

50%

75%

100%

How to know when you’ve found product/market fit

How to know when you’ve found product/market fit

Just as important as knowing why

customers started using your product

is knowing why they stopped.

Congratulations! You have something people will start – and stay – using.

2Getting the Math to WorkSTART-UP:

Start with the customer, and work your way back.“My CLTV is $1,200 and I want

a COCA:CLTV of 1:3”

CoCA: $400

CoLA: $40

CoVA: $2

5% Visit-to-lead

10% Lead-to-customer

Starbucks has an AOV of ~$6*

Using the AOV:COTA model, to get a 3:1 ratio a Starbucks marketer would spend ~$2 to acquire that $6 transaction.

$14,099Average LTV

How Much Would You Spend?

*

*Source: KissMetrics

A Business Model

A More Profitable Business Model

COCACLTV$1 in, $2 out.

$2 in, $12 out.

A Faster Growing Business Model

$2 in, $4 out. Scalable model.

COCA

CLTV

Cost Of Customer Acquisition

Customer Life Time Value

CLTV

CLTVCLTV

CLTVCLTV

CLTVCLTV

CLTVCLTV

CLTVCLTV

CLTVCLTV

CLTVCLTVCLTVCLTV

COCACOCA

COCACOCA

3Getting the Math to ScaleSCALE-UP:

01

02

03

0405

06

07

Am I truly delighting my customers such that they are

helping lower my cost to acquire new ones with word

of mouth and increasing their own monetary value to me?

Am I a startup or a scale-up?

Persona perfection?

Are we focused?

Do I have enough resources on my core delightion?

Is my pricing model aligned with the success of my customers?

Are my sales reps’ incentives aligned with the

customers’ incentives?

Complexity

is the enemy of

scale

What made Jeff Bezos the best CEO in the world wasn’t that he runs a profitable business.

12%

59%

47%

78%

It was that he delivered the best shareholder returns.

Profit isn't the only goal of business. You want to scale-up.

70% 80% 90% 100%

Time

Investment Period

PaybackPeriod

ProfitPeriod

Growth Leverage

Self funding point Break even point

Disc

ount

ed ca

sh

Max Cash Consumed

“Nice rocket ship, how far can it go?”“Oh, it doesn’t go anywhere. Looks cool, though. Right?”

4Surviving Creating DisruptionSCALE-UP:

What’s good for business today May send you plummeting to your demise tomorrow.

So how do you ensure that you’re still around in the future?

Moats and Extendable Cores

Your extendable core is the job you do for customers that a competitor couldn’t replicate

without adopting the same cost-structure.

You can survive disruption.

You want to do more than survive disruption.

You want to create it.

“We don’t want to wake up one morning to find ourselves left at the dock while the ship has sailed.” So we compete with ourselves. LeadIn is a good idea. Someone was going to build it. We made sure that someone was us.”

Christopher O’Donnell, VP of Product at HubSpot

0201 03

Acknowledge Allocate Assess Adapt

04

Building a Moat

S-CurveFigure 1.

Reed Hastings knew DVDs, be it by mail or in stores, was not the only future to plan for — the internet was. By innovating a way to use the web and integrate with other products, Netflix’s streaming video effectively staved off disruption. Once-giant Blockbuster found themselves scrambling to react, and are now in the pantheon of distant memory.

NetflixFigure 2.

DVDs

Sonos’ future market share is evaporating because of artificial intelligence and voice recognition technology. The company that did innovate for this type of disruption? Amazon.

SonosFigure 3.

WirelessSpeakers

“When you’ve done something well enough, you deserve a trophy. But businesses that fail to continually compete against themselves, turn those very same trophies into anchors.”

– Christopher O’Donnell, HubSpot VP of Product

Thank You!