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The Source of Growth Slowdowns
When the growth slows down for a product, product and growth leaders spend most of their time focussing on internal causes of growth slowdown.
“It must be because the redesign we launched last month led to reduction in signups”
“It must be because our email and notifications performance/opening rate has gone down as compared to the last year”
“It must be because inside sales has not been able to convert as well as last quarter”
“It must be because we couldn’t launch product X on a promised timeline”
This can become a fleeting list that never gets fulfilled! It always feels you aren’t moving fast enough. PMs perfect every slide of their roadmap, Developers pull all-nighters, and yet.. the growth doesn’t happen!
Quick note to readers: Applications for 3rd cohort of Product-led Growth for PMs and Entrepreneurs are going to close this week. Please check out the course and apply if it is useful to you. The 1st shortlist is out, the second and final one would be out by 22nd Dec.
The reason growth doesn’t happen is because most of the times, growth slowdowns happen because of external factors like changing needs and preferences of users, macroeconomic factors, competition, etc.
Part of the reason why we focus internally is because the product and internal processes are well within our control. We have all the data to do RCA and all the brainstorming sessions to figure out who/what is the culprit.
Contrary to that, external factors are outside our control. Even if we figure out which of the external factors might lead to growth slowdown, it takes a lot of energy to convince leadership and figure out solutions.
We have to be comfortable with imperfect, ambiguous data in the case of external factors — not the strongest suite of product and growth leaders who have trained their entire life to make scientific and data-driven decisions.
That is where strong founders shine who can make decisions by looking at market factors.
If you are looking for example, you can look at every large company there is. Every large company eventually hits growth ceiling in their core business. Those who identify external threats/opportunities figure out other avenues to growth.
Facebook is a clear example.
In 2006-08 period, Facebook struggled to clear the barrier of 80 million users. All social media companies of the era had hit ceiling at 70-80 million users. Look at the Myspace graph of MAU plateaud at 60 million.
The growth started slowing down with no fault of their own, and then they took multiple good calls to cross the barrier
news feed where they faced opposition from users but still continued and made large success
platform apps — remember candy crush :)
After hitting the first 100 million in first 5 years since their inception, they took just 8 months to hit 200 million MAU. That’s the power of unlocking another level of growth by building features that are appealing to most people out there.
But that isn’t all. The brilliance of Mark Zuckerberg is that even if Facebook became mega-successful, it kept at looking at market trends and picked clues on what to build or replicate.
These bets worked very well for them — Instagram, focus on videos, Whatsapp, etc. Snapchat would have been an external factor of growth slowdown for them, until they executed better aspects of Snapchat like stories quickly and kept users hooked to their platforms.
Now imagine a world where Mark Zuckerberg would have been hyper-focussed on how to improve funnel and resolving customer complaints.. All of these optimisations are important and Facebook did work on them in their initial years as the top priority, but once they achieve a particular scale, merely focussing on optimising things internally wasn’t going to solve growth.
The sources of growth slowdown are majorly external and figuring those out and how to tackle them is a necessary condition to grow.
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