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Scaling a Startup
Howard Lindzon
January 21, 2019
Before I get into it…yesterday I had a Sunday Brunch at a favorite spot in SOHO – 12 Chairs – an Israeli restaurant. The food is so fresh and fantastic, and the energy of the small restaurant was high. I was really surprised by the fresh cheesecake for dessert which was delicious.
Onward..
Everyone wants to scale a startup or break 70 in their diapers….
The Thumbtack founder shared a great post yesterday (8 lessons) on scaling/growing a startup to $1B. Read it all.
Because I have seeded a few $1B companies at Social Leverage, lesson #4 stood out The best companies win on product innovation AND business model innovation:
We talk a lot about product innovation, for good reason. But business model innovation is sometimes even more important to your company’s success. Why? Very few companies grow virally, so most startups succeed or fail based on their ability to acquire customers. Growth hacks are effective at subscale but to reach meaningful scale most startups need to unlock paid acquisition. Paid acquisition is effectively a business model competition: the company who can pay the most for an impression, click or call wins. This is true whether you acquire customers programmatically (Google/Facebook) or via sales. That is why business model innovation is so crucial. If you can invent a new business model that monetizes better than your competitors, you will win.
Takeaways: 1) Acquisition is a business model competition 2) Early-stage founders should spend more time thinking about business model innovation and acquisition strategy.
In our portfolio – Robinhood and Lifelock stand out. Both companies executed creatively and almost perfectly, but most importantly they created a new business model to go with their genius at acquiring customers.
PS – This is a great podcast/interview of Keith Rabois with Kara Swisher on all things Venture Capital. Keith has invested in and operated multiple billion dollar startups so I know any founder and investor will learn a lot.
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