Responsibility for growing a start-up or scale-up weighs heavy at the best of times.
In the last few weeks - for Founders, CMOs, CHROs, CFOs and the like - it has felt even heavier.
From all corners, pessimistic noise has been dialled up to the max and the result is a temptation to believe that, today, new rules are in place.
If you can hear that noise loudly, and if it’s pulling you in, we at Passionfruit would encourage you to also remember that not all the facts point to radically fluctuating trends in the wider world.
Consider these graphs below, put together by Mark Ritson for one of his many excellent essays on marketing.
The reality is that, as the “boring brown lines” denote, if your perspective is wide enough, macro trend lines are often quite stable.
These types of trends do not flip in a different direction overnight, or over a month, or even over a year.
Of course, there are not many Twitter followers, or newspaper sales, or podcast listeners, in saying as much, but this is a plus point that’s worth holding onto: if you were on the right side of a macro trend in March, you remain so today.
That said, in the short-medium term, there’s unquestionably a higher bar when it comes to investors and fundraising.
Investors matter less than your customers, but if you’re in the business of raising outsized amounts of capital to deliver outsized returns in a compressed time period (a.k.a raising VC), you can’t serve your customers properly without them.
As the fundraising bar goes up, the correlation between businesses that are growing well and businesses that close rounds will become tighter still. Phrases like “burn rates” and “down rounds”, largely absent for the best part of a half-decade, are back with a vengeance and, as the WSJ put it succinctly, "the party is over”.
Here are three mantras worth keeping top of mind, based on all the data and learnings we’ve acquired here at Passionfruit:
1. Get the right personnel on the field:
Time is your most precious commodity. To scale your business and yourself, you can’t do it alone. You’ll need to entrust key parts of the mission to seasoned operators. Leaders are realising that hybrid teams of fractional and full-time talent, brought together in days not months, are one smart way forward; delivering quality while retaining flexibility.
What’s critical here is mapping your team against your flywheel - how does each member contribute to your overall north star metric? Jake Singer has a Substack where he breaks down and interrogates company flywheels, and, while this one on Doordash is harsh, you’ll want to apply the same level of rigour to your approach.
2. Stay laser focussed on the customer context:
Everyone is offering their opinion right now, but the truth is that the ultimate set of checks and balances for your businesses your customers. Even if it feels like fires are raging around you, you have to keep allocating time (3 x 30 mins at a minimum) to speak with customers every week. If you skip this for just two weeks you will start making decisions based on unvalidated assumptions and you will lose oversight of the context and mindset of your customer.
That’s dangerous in normal times, but if you’re making mission critical decisions related to team, budget allocation and product development - this is like driving with a blindfold on. Remember, shifts in consumer behaviour are “not driven by people acting in a fundamentally different way. [They are] a result of the context in which they are operating is changing.”
If Parker Conrad, CEO of Series-D juggernaut Rippling, still describes himself as working in “Customer Support”, then hours spent listening and keeping close to context for customers will never be beneath you either.
3.Don’t stop experimenting:
The most steadfast underpinning of growth is Andrew Chen’s “The Law of Shitty Clickthroughs”. Put plainly, if you’re using that channel to grow, offline or online, you’re competing with every other business that’s using it.
Your choices are therefore to do it 10x better than anyone else, or to discover and win in a channel that remains uncontested. In practice, this means, a) yes, run content marketing, but you should be treating it like a media business, b) you have to be brave enough to ask, “have you ever seen someone do XYZ to acquire customers?”, and if the answer is “no”, press ahead with XYZ.
Little will improve a burn rate so much as unearthing a proprietary means for distribution that allows you to lower CAC while piling on revenue.