How to Set Up, Hire and Scale a Growth Strategy and Team: Growth, Hiring, KPI

How to Set Up, Hire and Scale a Growth Strategy and Team: Growth, Hiring, KPI

In today's competitive market, setting up a growth strategy and team is essential for the success and expansion of any company. While the growth team alone cannot be attributed to overall success, having a dedicated team in place early on can greatly accelerate the growth trajectory of the company. Take Facebook for example, which launched its growth team when it had around 50 million monthly active users. This team played a crucial role in Facebook's rapid expansion to 2 billion monthly active users today.

However, it is important not to rush into hiring a full-fledged growth team and investing major ad dollars into growth without addressing any underlying issues. Before building your growth team, it is crucial to ensure that you don't have a "leaky bucket" problem. In other words, you need to make sure that your long-term retention is stable and parallel to the x-axis. This can be done by benchmarking your retention against companies in your specific vertical. For example, if you are a social network, a stable long-term retention rate of 10% would be considered poor.

Once you have proven sustainable retention, you can focus on building a dedicated team to further improve retention while acquiring, activating, and retaining incremental new users. Most companies make their first growth hire when they have about 15 engineers working on the product. It is important to note that prior growth experience is an important characteristic for the team lead to have, as mentioned by more than 90% of growth experts. Interestingly, 60% of growth experts in our interviews were former founders themselves.

Setting clear and achievable goals is crucial for the success of your growth strategy. The goal should be an absolute number that the entire team needs to hit. It is important to set a goal that is halfway between "Sandbagging" (setting a goal that is too easy to achieve) and "Too hard to achieve". You want to set something that is a stretch but at the same time motivates the team and is realistic to achieve.

Identifying the right channels for growth is another key aspect of setting up a successful growth strategy. Most products find 1-2 relevant channels early on that work well for them. Referrals were mentioned by around 70% of growth experts as the top channel within the first year. It is important to understand your users' behavior and preferences to identify these channels. The two key questions to ask are: "Where are your potential users spending their time?" and "Where are they already looking for solutions to their problems?"

Running experiments is a crucial part of a growth team's work. A company at scale typically runs 1 experiment per growth engineer per week. It is important to start early with a solid growth experiment dashboard to track and analyze the results of these experiments. A common piece of advice from growth experts is "Don't test things you wouldn't ship to everybody". This ensures that the experiments are meaningful and aligned with the overall growth goals of the company.

Incorporating collaborative filtering can also enhance the effectiveness of your growth strategy. Collaborative filtering is a method of making automatic predictions about a user's interests by collecting preferences or taste information from many users. The underlying assumption is that if person A has the same opinion as person B on one issue, they are more likely to have the same opinion on a different issue. This approach uses information from many users to make specific predictions for individual users.

Collaborative filtering algorithms require users' active participation, an easy way to represent users' interests, and algorithms that can match people with similar interests. One challenge in collaborative filtering is how to combine and weight the preferences of user neighbors. Commercial recommender systems often rely on large datasets, which can result in a large and sparse user-item matrix. This data sparsity brings about challenges in the performance of the recommendation, including the cold start problem for new users.

In conclusion, setting up, hiring, and scaling a growth strategy and team is vital for the success and expansion of any company. It is important to ensure stable long-term retention before investing heavily in growth. Setting clear and achievable goals, identifying the right channels, and running experiments are key components of a successful growth strategy. Incorporating collaborative filtering can also enhance the effectiveness of your growth efforts. By following these actionable advice, you can set your company on the path to sustainable growth and success.