Embracing the Incrementality Mentality

We’ve all heard that line about the 10 year “overnight” successes.

A friend* recently told me a key metric of his company was growing 4% week-over-week. Actually, he related with some dismay that it was only growing at 4%, and he was looking to build another product to make their company more attractive for raising the next round of funding.

I was shocked.

The base number that this 4% growth is accumulating on top of is in the billions, without much marketing or distribution yet. They found a problem many people had, solved it elegantly, and then forgot to tell those people about it.

Instead of doubling down on something that was working, going big and blowing it out of the water, they went chasing after another adjacent product without real market validation, significant platform risk, and delusions of grandeur. All to raise a Series A.

I’ve seen this story play out before, and it doesn’t end well.

Double Digit Growth Addiction

Paul Graham’s essay on Growth is extremely important reading for early stage startup founders, and this guideline in particular is quite useful:

A good growth rate during YC is 5-7% a week. If you can hit 10% a week you’re doing exceptionally well. If you can only manage 1%, it’s a sign you haven’t yet figured out what you’re doing.

Important context for this advice, which I believe is often missed, is that the majority of companies in YC launch during the tail end of the program.

If your startup has some success in the years following graduation from the incubator, you’ll discover the painful truth: it’s incredibly difficult to grow 10% week-over-week once your TechCrunch spike is gone, you’re 3 months out from demo day, and you’re still not doing marketing because [enter excuse here].

Gone are the days of the lovely hockey stick graph you proudly showed investors from the Demo Day stage. It’s been six months now and their money is in the bank, but the rush of winning those signatures has long passed. You feel like every update you send them is a bit anti-climatic. “Grew 14% this month,” you write, and paste in a graph with bars as blue as you feel.

The 6 Month Crisis

For startups who are funded, it’s easy for founders to tell themselves that fundraising isn’t the most important thing but a lot harder to feel it, know it, and truly believe it. Often raising a round is the first external-facing “win” you’ve experienced in months. It becomes a new emotional local maximum, and six months after raising you might find yourself looking for the next burst of excitement and validation to match it.

Long gone are the double digit numbers, because the base you’re growing from is much bigger now. You can’t hand crank this machine you’ve built anymore. You need people to help you feed it. There aren’t enough hours in the day. You’re a generalist but now you need specialists.

Things have changed, and that’s okay.

Building a company is quite different from starting one. The shine of being a “startup” wears off, and it’s time to be a business. As soon as you’ve found some product market fit your job shifts from finding the market to capturing it. If you don’t make this mental switch, and keep fighting for the new hotness, you’ll be like so many companies with too many ideas and too little execution. You’ll die.

Incrementality

Most wins you’ll have are incremental, so subtle that you might not even realize you’re winning. When seasoned CEOs say the harder road lies ahead as you toast champagne to a milestone like a financing round closed, big contract signed, crucial hire started, key acquisition completed etc… they know the truth.

All that vision, all that ambition, all those grand dreams of the future… they felt so close as you pitched your big vision but as you wallow in the weeds and details of really nailing each sales call, each deployment, each planning session, each new hire… all that feels so far away. In some ways, you might feel held back.

folk albums

It’s so tempting to dabble. Now that you have money in the bank, a team around you, and some traction you feel you could build anything. You can see your market more clearly than anyone else on Earth, and you’re intimately aware of the problems your customers face. You want to solve all of them. You want to be their hero.

Just stop.

Your ego is going to hate you for this, and it will fight you.

Stop.

The Longest Road

Building a startup is about fighting all the temptation that lies out there for a maker. You can prototype anything, maybe you also have some visibility and platform to speak from, it’s easy to think you can dabble in anything that could be a big market opportunity. The “Crossing the Chasm” strategy of tackling and winning a beach-head, which sounded so right and so daunting 6 months ago, is now happening. You haven’t won yet but like a soldier who yearns for home you’re looking to the future and, if you allow it, that distraction can become so acute you’ll die in a daze on the battlefield. You might not even know you’re dead.

Investors, advisors and other people will also start seeing the future more clearly – because you did a great job painting the picture for them. They’ll try to get you to talk about what’s next, they’ll add more temptation to focus on the next battle when you haven’t yet won this one.

Don’t let them.

are you not entertained

Win.

*details have been changed to protect the anonymous

  • everyone

    “you’re” != “your”

  • Good post! At which stage do you think a company should be before it should try out other new ideas?

    • Tommy

      You should be a public company or clearly failing.

      The exceptions are mid-sized companies whose original opportunity turned out to just be smaller than they thought but have a lot of penetration in the market OR companies whose original concept was predicated on penetrating their market with a low margin product and making money with a high margin product to those same customers and can’t survive without it.

  • You hit the nail on the head. I hope a lot of entrepreneurs take that advice, although…as we know, entrepreneurs are very stubborn.

  • Sergey

    Great article Danielle!

    One thing that I question when reading this though is what happened with Refer.ly? It seems like you didn’t take your own advice!

  • Pingback: Reading List: 3.8 – 9.8 | Путеводитель по галактике для пытливых стартаперов()

  • Pingback: 都在说着目光长远,真正做到的能有几个 | 牛 X – Hot Key()

  • Pingback: 都在说着目光长远,真正做到的能有几个 | シ最愛遲到.!()

  • Pingback: 都在说着目光长远,真正做到的能有几个 - 聚合阅读()

  • Great post, Danielle! On my second go around the block, this ranks high on the list of things I wish I’d known the first time. We just reached product/market fit in the last couple of months, and knowing how tough the road ahead will be is daunting, but when you can measure everything, it’s easier to point to the little wins. Maybe our conversion rate didn’t double this week, but our email click-throughs did, etc… It helps the team stay motivated and focus on each day, instead of trying to predict the future.

    • Thanks Alex, and congrats on finding your product market fit!

  • Great article, Danielle. You hit the nail on the head.

    At the end of the day, startup founders need discipline and laser focus.

  • Pingback: Focus | Danielle Morrill()

  • Time Tracker Can Increase Trust for Coders

    When discussing problems of trust as related to contractors, automobile mechanics are among the convenient examples to rely upon. Many people, only because they don’t like seeing the large figures typical of these bills, tend to doubt whether or not a mechanic really spent two or three hours they billed for the job. While a garage is a much different context than a computer programming shop or another company run by small business owner, there is a similarity. A time tracker can really provide an effective way of increasing trust between a contractor and a customer and, with that, help a contractor to understand their own business model much better.

    Understanding The Challenge

    Look at some of the questions people ask online about contractors and you’ll see that the answers they get usually have to do with hiring a vendor they can trust. Every time when somebody hires a computer programmer, computer repairman or another employee involved in IT for a job, there is always a question as to whether or not they are padding out their hours or engaging in other work projects that will permanently reduce the level of trust that the customer has in the contractor. By providing the accurate time tracking data, a contractor can remove any such doubts.

    Track Every Single Minute

    Using an accurate automatic time tracker, a contractor can essentially clock into any stage of a project. For many coders, every various element of a project may be billed at different rates. For instance, programming in a complicated language such as C++ may be billed at a much higher rate than writing HTML, but both tasks may be involved in a single project. Using a time tracker to measure the amount of time spent on both it’s much easier for a vendor to communicate to their customer why some part of a project took much longer than another part and why, therefore, that part of the project is more costly.

    Conversely, this may really make for a very happy customer when they see that what they have been billed for is fully justified. As an example of this, customer can be presented with an invoice with 10 hours of HTML programming that is relatively cheap and one hour of C++ programming that costs nearly as much as all that HTML. When they look at this detailed invoice they’ll see exactly how the time on the project was allocated and why the project costs what it did.
    Such honesty and trust may set up a very productive business relations between a contractor and a customer. When the customer sees that they can trust this vendor to bill accurately and when they see that the vendor very diligently tracks their work hours, they don’t have to worry that they are spending funds on something not worth the amount of money they are putting down for it.

    Make It Easy

    For programmers, one of the hardest parts of time tracking is simply the fact that, during the course of the project, the rate at which they are billing can change several times. By reason of this, it’s imperative that programmers who do want to develop their time tracking and their relationships with their customer by doing so utilize a solution that makes it easy for them to switch over between various tasks and to accurately track the amount of time spent on each.

    This should not require any great investment of time by a programmer. They should, actually, be able to simply select an option and start tracking time. When they are done, they should have to do no more than stop a time tracker and have that time logged in the project that they’ve been working on.

    Such a practice does much more than to keep things smooth with customer. Really, it guarantees that a programmer is able to pay his bills, as well. When programmers become careless with a time tracker, one of the detrimental effects is the loss of money that they should be earning. If they sloppily track their time, for example, they may end up billing an hour of very advanced, very involved working as if it were a plain task. This doesn’t help anybody, the programmer most of all.

    Finding the Tool

    The best time tracker for the task is generally the one that can be understood and used by the customers as easy as byt programmers. To facilitate this, the better programs out there will use formats such as PDF, Excel, or HTML to output reports and other data. It guarantees that any time a programmer needs to report that information to a customer they may do so almost instantly and sometimes they can really do it with one click of a button. The best time tracker will allow sharing information via email, which is one of the easiest and most efficient ways to share information between companies.

    A good time tracker can really increase the profitability of the business. While discussions of time trackers are generally related to rising efficiency and maximizing the usage of work time, they also maximize the generation of profit by allowing a programmer to be accurate about how much time and money they are spending on a different project and how they need to bill that to their customer to make the project profitable.
    With the right time tracker at hand, the facilitated communication ensures that the customer and the contractor are always on the same page. And that the customer, when they get the bill, understands exactly what they are paying for and why it is of value to them. With time tracker available, there is just no reason to have the types of relation difficulties that plagued the b2b world of programmers and customers in the past and that made it difficult for some programmers to find customers who trusted them.

    https://crocotime.com/en/