Lenny's Newsletter · Product & Work
TIER 4 2022-08-23
### 🎖 Big week of milestones What a week: 1. The newsletter crossed **[200,000 total subscribers](https://twitter.com/lennysan/status/1561774321676083202)** yesterday 🫣 2. The podcast is now at over **[1,000 five-star reviews](https://twitter.com/lennysan/status/1561774321676083202)** across [Apple](https://podcasts.apple.com/us/podcast/lennys-podcast-product-growth-career/id1627920305) and [Spotify](https://open.spotify.com/show/2dR1MUZEHCOnz1LVfNac0j?si=056d68e339e04028&nd=1), and over **450,000 total downloads** 😬 3. The [Talent Collective](https://www.lennysjobs.com/talent) made its **1,000th introduction** between a candidate and a company 4. We’re also the **[#1 business newsletter](https://substack.com/discover/category/business/paid)** and the **#[2 podcast](https://substack.com/discover/category/podcast/paid)** across all of Substack 🫠 I can’t begin to describe how thankful I am to you for being a subscriber and for supporting this work. You allow me to do the most meaningful work of my life. Thank you from the bottom of my heart ♥️ *Now, as our [six-part series on kickstarting and scaling a consumer business](https://www.lennysnewsletter.com/p/kickstarting-and-scaling-a-consumer) comes to a close, I’ll be transitioning back to our regularly scheduled programming—answering questions from wonderful readers like you. Here’s this week’s question…* > ## Q: I loved your consumer growth series, but I’m also wondering, are there other growth tactics or levers, beyond what you’ve shared in the last few posts, that founders found effective? Yes indeed, there are. There are two additional growth levers that I didn’t get to cover in the series because they were neither growth engines nor kickstarting tactics. But before I explore them, let’s quickly review where we stand. Coming back to the [Racecar Growth Framework](https://www.reforge.com/blog/racecar-growth-framework), there are five components that help a startup grow:  #### **[Kickstarts](https://www.lennysnewsletter.com/i/38506758/how-to-find-your-first-users)—the seven ways to acquire your early users and get your engine rolling:** 1. [Reaching out to friends and colleagues](https://www.lennysnewsletter.com/i/38506758/strategy-reach-out-to-friends-and-colleagues) (e.g. emailing your friends) 2. [Reaching out to targeted strangers](https://www.lennysnewsletter.com/i/38506758/strategy-reach-out-to-targeted-strangers) (e.g. DM’ing celebs) 3. [Going where your target audience hangs out](https://www.lennysnewsletter.com/i/38506758/strategy-go-where-your-target-audience-hangs-out-online-or-offline) (e.g. college campuses, Reddit) 4. [Enlisting influencers](https://www.lennysnewsletter.com/i/38506758/strategy-enlist-influencers-paid-or-organically) (e.g. people with large Twitter followings) 5. [Getting press](https://www.lennysnewsletter.com/i/38506758/strategy-get-press) 6. [Creating viral content](https://www.lennysnewsletter.com/i/38506758/strategy-create-viral-content) 7. [Getting physical placement](https://www.lennysnewsletter.com/i/38506758/strategy-get-physical-placement) (e.g. flyers, stickers, signs) #### **[Growth engines](https://www.lennysnewsletter.com/i/57395431/-virality-which-can-be-driven-by-word-of-mouth-sharing-content-sending-invites-to-your-friends-or-a-referral-program)—the four self-sustaining growth loops that drive your growth:** 1. [Paid ads](https://www.lennysnewsletter.com/i/57395431/-paid) 2. [SEO](https://www.lennysnewsletter.com/i/57395431/-seo) 3. [Virality](https://www.lennysnewsletter.com/i/57395431/-virality-which-can-be-driven-by-word-of-mouth-sharing-content-sending-invites-to-your-friends-or-a-referral-program) 4. [Sales](https://www.lennysnewsletter.com/i/57395431/sales) #### **[Lubricants](https://www.lennysnewsletter.com/i/57395431/lubricants)—the four optimizations that make your growth engine run more efficiently:** 1. [Conversion](https://www.lennysnewsletter.com/p/this-week-21-strategy-and-tactics) 2. [Retention](https://www.lennysnewsletter.com/p/how-to-increase-your-products-retention) 3. Activation *[Haven’t written about this topic much yet]* 4. Brand *[Haven’t written about this topic much yet]* #### **[Turbo boosts](https://www.lennysnewsletter.com/i/57395431/turbo-boosts)—one-off growth spikes that quickly fade:** 1. PR (e.g. [Snapchat Spectacles launch](https://www.theverge.com/2016/11/10/13584488/snapchat-snap-inc-spectacles-vending-machine-snapbot-available)) 2. Viral content (e.g. [Dollar Shave Club video](https://www.youtube.com/watch?v=ZUG9qYTJMsI)) 3. Influencer posts (e.g. [Kylie Jenner and Casper](https://www.instagram.com/p/0gMVQOnGnn/?hl=en)) 4. Marketing campaigns (e.g. [contest](https://www.lennysnewsletter.com/i/40915593/coinbase-dogecoin-sweepstakes), [giveaway](https://www.lennysnewsletter.com/i/21779937/-offer-a-remarkable-giveaway), [billboards](https://neilshah.com/downloads/venmo-lucas-case-study.pdf)) 5. Co-marketing campaigns (e.g. [Uber and Spotify](https://time.com/3589281/uber-spotify-music-ride/)) 6. Events (e.g. [Hinge launch party](https://www.lennysnewsletter.com/i/38506758/-host-a-launch-party-hinge)) 7. Stunts (e.g. [Half.com renaming a town in Oregon to Half.com](https://www.lennysnewsletter.com/i/21779937/-execute-a-remarkable-offline-stunt)) 8. Mini product launches (e.g. [Calm’s donothingfor2minutes.com](https://www.lennysnewsletter.com/i/40915593/calm-do-nothing-for-minutes)) 9. Getting featured by a highly trafficked platform (e.g. [Amazon on Yahoo’s homepage](https://www.quora.com/How-did-Amazon-get-initial-traction/answer/Anurag-Bhatia-6?ch=10&oid=17256326&share=bfa62c79&srid=pil&target_type=answer)) 10. Creating controversy (e.g. [DHH vs. Apple](https://www.lennysnewsletter.com/i/40915593/-pick-a-fight)) Now, coming back to your question, there are two additional growth levers that we haven’t covered, which I call *mid-stage growth accelerants*: 1. **Channel partnerships:** Getting distribution through someone else 2. **Geographic expansion:** Doing the same thing in more places These are rarely useful in the early stages and aren’t really growth engines (thus why I didn’t cover them in the series up to now) but, when used effectively and at the right moment, can significantly accelerate your growth. Here are stories from founders who utilized these levers to great effect. ### 1. Channel partnerships Channel partnerships are business arrangements where you tap into another company’s channel to distribute your product. For example, [Google made early deals with Netscape, Yahoo, and AOL](https://hackernoon.com/the-deals-that-made-google-the-tech-giant-we-know-today-470f07f09381) to get in front of people searching online, and [Spotify made early deals with telcos](https://books.google.com/books?id=yoTxDwAAQBAJ&pg=PT108&lpg=PT108&dq=spotify+launch+deals+telcos&ots=f_NOgKvDyW&sig=ACfU3U0d31aJrAxYsJUnokCb5-KAHk6w0Q&hl=en&sa=X&ved=2ahUKEwj578K9_Nj5AhU_DEQIHQdWDIIQ6AF6BAgiEAM#v=onepage&q=spotify%20launch%20deals%20telcos&f=false) to come pre-installed on people’s devices. Here are a few additional examples from Kayak, Netflix, and OpenTable: **Kayak: AOL** > “**We struck a pretty cool deal with AOL back in ’04 [the year we launched] to take over travel search for the AOL portal. That got us a lot of attention. AOL travel was a top-five destination back then.** > > I think [avoiding partnerships] is a mistake. Some people say business development (BD) can be a crutch to an inferior product—if you have good distribution, you don’t have to work as hard to build a great product. But the thing I like about BD, and I’d recommend to new startups today, is it’s hard to get those deals but it’s a huge emotional win and PR win when you do. To tell people you’re an unknown startup but you’re powering photo management or travel management for a big company, it gives you a lot of cred that then allows you to ask for other things.” > > —[Paul English](https://paulenglish.com/), co-founder, via *[How I Built This](https://www.npr.org/2021/09/24/1040555343/kayak-paul-english)* **Netflix: DVD manufacturers** > “Launching a startup is not unlike getting a huge truck to move. Throw it into high gear from a standing start, and you’re going to end up with a smoking engine and a burned-out transmission. The only way to take the resources you have and get something moving is to slowly move through the gears. > > For us, getting moving was particularly challenging, since we were so early in the adoption of DVDs. Our first gear was simply trying to make some noise in the random collection of user groups that DVD aficionados congregated at. But we knew that would never be enough to sustain us, so **second gear was going to be partnerships with the DVD manufacturers, in which we placed a coupon in the DVD player box. It took everything we had to convince someone in the ultra-conservative consumer electronics industry to take a chance on an unproven startup, but eventually Toshiba—the perennial number two behind market leader Sony—decided to let us work with them.** > > But of course, even that wasn’t enough, so shifting into third gear meant bringing on others: Panasonic, Sharp, and eventually Sony itself. Eventually we had deals with virtually every significant manufacturer, and from then, we just needed to wait. As our coupons worked their ways into the boxes, and boxes worked their ways into the stores, and the players worked their ways into consumers’ homes, we watched our numbers start to climb, slowly accelerating into the single thousands, and then eventually the tens of thousands. > > We still hadn’t found the repeatable, scalable business model. It still cost us more to fulfill orders than we collected from customers. We still hadn’t found a way to make DVD rental by mail work effectively. That solution was years away. But by having a steady flow of thousands of customers to experiment on, we were on our way.” > > —[Marc Randolph](https://en.wikipedia.org/wiki/Marc_Randolph), co-founder **OpenTable: AOL, Citysearch, Yahoo, Metromix** > “**We leveraged partnerships to drive demand. We partnered with Citysearch, AOL Digital Cities, Yahoo, and Metromix.** Anytime one of our restaurants was listed on an online directory, you could find an OpenTable link (before APIs, you actually went to the OpenTable site). However, despite the breadth of partnerships, it only accounted for about 15% of our bookings. The rest came from OpenTable.com directly or our restaurants’ websites.” > > —[Mike Xenakis](https://www.linkedin.com/in/xenakismike/), early executive This lever is game-changing when you can pull it off but, in practice, normally goes nowhere, or takes far too long to make a dent when you most need it. My advice is to treat this like any high-risk/high-reward opportunity—put some resources into it, but don’t expect it to work out. ### 2. Geographic expansion A second big mid-stage growth accelerant, which is really only applicable to companies that start off serving a single market (e.g. Uber, Instacart, DoorDash, Spotify, and even Facebook), is expanding into new geographies. A few examples: **Instacart:** > “**For many years a big lever for us was expanding geographically.** As we got better at selecting and launching new markets, each new market would reach critical growth milestones faster and faster.” > > —[Max Mullen](https://www.linkedin.com/in/maxmullen/), co-founder **OpenTable:** > “Market expansion was absolutely **one of the most important growth drivers**.” > > —[Mike Xenakis](https://www.linkedin.com/in/xenakismike), early executive **Grubhub:** > “When we began to scale, **expanding geographically was one of our top two or three growth levers** for both supply and demand.” > > —[Casey Winters](https://www.linkedin.com/in/caseywinters/), early growth leader **Rover:** > “**We started in Seattle, kept it focused, learned about the dynamics of the market ... then we flipped the switch and went national.** > > We entered a city by just spending on Google AdWords. We had a concept of ‘activated markets’ and a target list of markets we were trying to activate. When we saw organic growth bubbling up in a new market, that informed where we would go next. For non-activated markets, we knew that performance was going to be bad because liquidity was low. We were willing to let it ride.” > > —[David Rosenthal](https://www.linkedin.com/in/davidjamesrosenthal/), early board member Though this growth lever is fairly obvious, what isn’t obvious is when to make this investment and how to execute it effectively. For more on these two questions, check out my previous posts on [how to choose cities to expand into](https://www.lennysnewsletter.com/p/marketplace-city-expansion) and [how and when to expand internationally](https://www.lennysnewsletter.com/p/this-week-12-expanding-your-business). Broadly, expanding geographically is one of the biggest growth accelerants you’ll have, but it’s also something you can really only do once. From what I’ve seen across the growth stories I’ve gathered, broad geo-expansion normally happens post-PMF but before the growth engine is at full steam. Here are a few examples of the GTM sequences of a bunch of startups: - **Instacart:** Press + physical placement → Virality (WOM) → **Geo-expansion** → Virality (WOM) + Paid - **Tinder:** Go where target audience hangs out (college campuses) → Enlist influencers → **Geo-expansion to new schools** → Virality (WOM) - **Facebook:** Friends → Virality (WOM) within one school → **Geo-expansion to new schools** → Virality (inviting) - **Spotify:** Influencers + press → Virality (inviting) → **Geo-expansion (U.K., EU)** → Virality (WOM) + Paid - **DoorDash:** Targeted strangers + physical placement → **Geo-expansion →** Paid + Sales + Supply drives demand Beyond these two levers, there are certainly other ways to grow (e.g. adding a new business line, M&A), but for one product, within one business, here’s a summary of all the ways to grow (that I’ve collected so far, and that I’ll evolve as I learn more):  ### 📚 Further study 1. [Racecar Growth Framework](https://www.reforge.com/blog/racecar-growth-framework) 2. [From zero to 10,000 clients in two years using channel partners](https://review.firstround.com/From-Zero-to-10000-clients-in-Two-Years-Using-Channel-Partners) by Alex Rampell 3. [Expanding your business internationally](https://www.lennysnewsletter.com/p/this-week-12-expanding-your-business) 4. [Marketplace city expansion strategy](https://www.lennysnewsletter.com/p/marketplace-city-expansion) 5. [How to kickstart and scale a consumer business](https://www.lennysnewsletter.com/p/kickstarting-and-scaling-a-consumer) Have a fulfilling and productive week 🙏 ### 📣 Hiring or looking for a new gig? Join Lenny’s Talent Collective. [Join Lenny’s Talent Collective](https://www.lennysjobs.com/talent/welcome) to get bi-monthly drops of world-class hand-curated product and growth people who are open to new opportunities.  If you’re looking for a new gig, join the collective to get personalized opportunities from hand-selected companies. You can join publicly or anonymously, and leave anytime. [Apply to join](https://www.lennysjobs.com/talent) ### ❤️🔥 Featured job opportunities 1. **Walmart:** [Sr./Principal Product Manager (Store No8 incubator)](https://www.lennysjobs.com/jobs/22be805a-9d53-46f9-ac69-ddf6b158c2fb) (S.F., Manhattan, San Diego, Seattle) 2. **TaskRabbit:** [Director of Product, New Ventures](https://www.lennysjobs.com/jobs/6c0915d0-3ac3-4ba8-b53e-4684948711a6) (Remote) 3. **Credit Karma:** [Senior Product Manager - Recommendation Systems](https://www.lennysjobs.com/jobs/a2999f74-7e88-458c-bbd3-781b7ce48a3e) (Oakland) **If you’re finding this newsletter valuable, consider sharing it with friends, or subscribing if you haven’t already.** Sincerely, Lenny 👋