Growth Models & Loops: Starter Learning Notes

Jun 11, 2022


Narayan Prasath

Exploring 'Growth Models' has been an exciting and enriching journey. However, I felt a compelling need to etch this newfound knowledge into my memory. To me, this meant crafting a succinct, personal definition of growth models.

‘Growth models distill the essential mechanisms that drive compounding growth for your business. It does so by integrating growth marketing, product analytics, and financial aspects under one spreadsheet.’

What’s more profound is that it’s not only a destination where the necessary quants come together, but also a great kickoff point to ideate qualitative experimentation.

I’m planning to write a more in-depth view of the models and how they can be adapted to different business models. The current resources are primarily in the B2C, D2C Saas space(I’m still exploring), I’m curious to find/build out models that fit SMBs, Service companies.

Among all these different view points I have collected, something that was resounding was the focus on ‘retention’, which will be something to deep dive at a later point.

But before sounding like ‘I know it all’ about Growth Models, I have to admit I’m just scratching the surface on this new knowledge, and keen on understanding them on a more deeper level in theory and practice. Because the more I learnt about it, there’s a whole body of work that arises from consolidation of learnings from some of the leading companies that grew and scaled using this tool.

At first, what got me into exploring this new knowledge was this Growth Model for Braid by Ruslan Nazarenko. As I kept exploring I found more and more in-depth articles mostly from professionals who are Head of or VP Product & Growth professionals at some of the leading companies, in some cases planet scale like this amazing article from 2017 by Chris More, who was at that time at Product lead at Mozilla.

Acknowledging the evolving nature of growth models is crucial. These models synthesize insights from top companies that have achieved significant growth and scaling. However, it's not to say that such analyses are entirely new. The essence lies in examining data at a macro level to identify growth levers.

Growth models offer a structured framework to articulate these insights. In my professional experience, I’ve developed analyses serving similar objectives, combining quantitative data from sales and marketing. The goal is to weave a narrative, focusing on the bigger picture to spot key financial drivers and essential actions.

In the B2B realm, the customer journey is distinct from the typical 'new user to paid user' trajectory common in B2C models. It begins with converting a 'new visitor' into a 'new lead,' progresses through stages like 'MQL' (Marketing Qualified Lead), and 'SQL' (Sales Qualified Lead), and reaches a critical point at 'meeting set.' This stage marks where an account is usually created, culminating in the 'Opportunity Won' phase, essential for revenue tracking.

These stages typically involve a synergy of Sales and Marketing efforts. In crafting a growth model for a B2B context, it's vital to maintain the integrity of inputs, actions, and outputs, with a focus from the 'visitor' to the 'opportunity won' stage. It's noteworthy that a significant portion of growth activities happens between the 'lead' and 'meeting set' stages. By understanding these nuances, we can develop a growth model that effectively caters to the B2B environment, taking into account these specific stages.

Previously, my understanding of growth models was more inclined towards their financial and product dimensions, slightly neglecting their significance in marketing. This perspective was challenged when I examined Phil Carter’s comprehensive Growth Model for Quizlet. Despite grasping the quantitative elements, I faced hurdles in fully appreciating the depth of these models within a B2B setting, where sales motions are integral to 'activation.' This realization highlights the potential to delve deeper into the interplay between sales and growth strategies.

Moving forward, my focus will be on exploring this dynamic between sales and growth activities. This exploration not only serves as an excellent practice of my learning but also opens up avenues to enhance the effectiveness of growth models in B2B contexts.

And it wasn't until watching this interview of Dan Hockenmaier on Lenny Rachitsky's channel about 'developing' your growth model, that I started to gain a better grasp. It enabled me to translate the abstract concepts of growth models into practical, real-world applications.

If you prefer watching over reading, this video is great. It gives a 'insider' view into Growth models from Dan Hockenmaier, who is probably one of those professionals who you want to hear insights around this topic from given his experience scaling growth at Thumbtack and having been part of the YC's council, partner at Reforge among many others. Hockenmaier’s insights were instrumental in bridging the gap between theory and practice, helping me contextualize these models within tangible business scenarios The true utility of these models becomes apparent when you begin to see them as foundations for analyzing and developing 'growth loops' another adjacent concept that once you learn, can't stop thinking about it. Again, Reforge has been particularly illuminating in this aspect, vastly given their stellar network of mentors and course creators who have been pioneers leading this framework like Casey Winter. This is just the beginning of my exploration, and I look forward to sharing more concrete insights beyond mere opinions as I continue learning. Another noteworthy resource is this medium article 'Key blocks of a great growth model' by Paul Levchuk was exceptionally helpful in deconstructing these models into comprehensible segments, providing a practical understanding step by step.

In my next post, I'm excited to dive deeper and compare the different growth model samples out there. I'll be looking to create a model for Demand Local, where I'm leading the Growth team. The idea is to adapt these insights and see how they fit in some unique enterprise B2B business models, just like the example I shared earlier. I'm really looking forward to sharing this journey with you, especially if you're in a similar space.

Some companies that come to mind to build Growth Models for:

  • Midjourney

  • Writer

  • Kikoff

  • Facet.AI

  • feel free to add any companies that you would like to see on the comments

I'm also planning to collaborate with a few pros/companies. I can't wait to roll up my sleeves, dive into their unique challenges, and design growth models that really make a difference. It will be interesting to see this play out with modern AI startups where UGC plays a vital role. Stay tuned!


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