Growth in Turbulent Times

Key takeaways

Companies must aggressively reassess and potentially overhaul their existing growth models to adapt to rapidly changing consumer behavior.
Proactive engagement with customers is essential during uncertain times to stay ahead of shifts in market demands.
Focus on cash efficiency and redefine growth expectations away from hyper-growth towards sustainable, product-driven growth.
Founders should engage in detailed scenario planning to prepare for both optimistic and pessimistic futures, maintaining flexibility in strategies.
Consumer behaviors may experience long-lasting changes, and founders must adapt their products and services to align with these shifts.

Summary

Reassessing Growth Models

Amidst the pandemic, companies are forced to rethink their growth models that previously relied on specific data-driven frameworks. Brian and Andrew emphasize understanding how user cohorts interact, how new user acquisition is changing, and the importance of revising hypotheses around these interactions. As existing models lose validity due to shifting consumer behaviors, companies must go back to basics and reassess their business strategies by closely engaging with customers.

Strategies for Surviving Uncertainty

In the face of economic uncertainty, companies must develop strategies that allow them to pursue growth despite cutbacks. Founders are encouraged to engage proactively with customers to understand evolving needs. Companies must focus on cash efficiency rather than traditional top-line growth metrics, indicating a robust shift toward product-driven growth strategies that can sustain engagement and growth.

Scenario Planning and Long-term Impact

Planning for future scenarios is critical as founders must contemplate both worst-case and optimistic outcomes. Andrew and Brian suggest founders should develop a wider range of outcomes than usual, considering cash positions and customer behaviors that can shift dramatically. The conversation highlights the importance of being prepared for varying levels of market recovery and continually assessing which strategies will work best in the long term.

The Future of Growth Post-Pandemic

As we look to the future, the implications of shelter-in-place orders could drastically change consumer behavior in ways that persist long after the pandemic. Businesses focusing on remote collaboration, entertainment, and online engagement are likely to benefit. Founders must grasp this shift and innovate their offerings to align with new consumer expectations while considering how these changes might influence sustainable growth.

Show notes

In normal times, every company operates against some hypothetical growth model—a data-driven framework that describes how your product grows and how you acquire new users. These, of course, are not normal times. In the fallout from the pandemic, most founders and CEOs are in the process of completely revamping their growth models from the bottom up amid new and unpredictable consumer behavior.

This episode explores how to think about growth in turbulent times, according to two growth experts: a16z general partner Andrew Chen, who previously led the growth team at Uber, and Brian Balfour, formerly the VP of Growth at HubSpot, now the founder and CEO of Reforge, a masterclass in growth strategies (in conversation with host Lauren Murrow).

The discussion spans four sections: first, how to reassess your existing growth model, particularly when, as Brian says, the data is "completely messed"; next, we drill down into strategy and tactics for surviving the current crisis and talk about how founders can pursue growth even in the midst of widespread uncertainty and cutbacks. Third, we look ahead to discuss scenario planning and how leaders can forge a path forward. Finally, we zoom out and assess the big picture: how various categories of company may be impacted long-term, how this crisis compares to 2008 (and what that means for early-stage founders), and the industries and business models that are now prime for growth.

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