Life is too short to Build Something Nobody Wants. – It’s time to build a sales strategy that works.
Wish to grow a 100 Million Dollar Business? That seems like a very daunting task. But, with the right product, the right strategy and financial backing, it may be doable.
Today, we are going to break this goal into actionable steps that are easy to understand and implement. The animal framework is based on the brilliant 2014 article from Christophe Janz on 5 ways to build a 100m business. We added commentary and thoughts based on our experience at Slash.
The article below is based on the talks that Andries De Vos, the CEO of Slash, has delivered to several organizations and audiences including R3 Corda Series-A Startups and B Work Bali. For the original slides, see Slash Slideshare.
Steps to Grow a $100 Million Business
It is important to understand the fundamental building blocks of making a product driven business. If you are planning to build a big business, you need to get two things right;
- Build a solution users want – this one seems quite obvious, yet most people choose to dive into other aspects rather than starting out with the key.
- Get as many users as you want – Once you have a plan in place, the next step is to acquire customers to help you reach a specific goal.
Two Key Assumptions
We’ll start by taking two key assumptions, based on the Lean Startup methodology:
- Value Hypotheses – Value Hypotheses tests whether a product/service delivers value to customers or not.
- Growth Hypotheses – Growth Hypotheses tests how new customers will reach your product/service.
What is Growth?
The first thing you need to understand is; ‘growth isn’t a strategy, it is the outcome’. Next, you need to determine whether you are in a ‘product’ business or a ‘service’ business.
If you are in a service business, you are essentially selling time to solve a job.
If you are in a product business, you are selling a thing that solves the job.
Animal Framework and Slash
There are different ways you can build a USD 100 Million Business. You need to be sure of two things; “What is the average contract size per customer? and “How many customers will you need?”.
“It all comes down to what you are hunting; flies, mice, whales, rabbits, microbes, dears etc. For instance, at Slash, we are hunting elephants that essentially translates to customers who offer $100,000 and above”, notes Slash CEO Andries De Vos, stating that this will become the driving framework of your marketing and strategy.
For example, there could be 1 million customers giving 100 dollars. Or 100 customers giving you a million dollars. As per the image listed; if you are hunting whales, you need 10 whales, if you are hunting dinosaurs, you’ll need 100 dinosaurs, if you are hunting elephants, you’ll need 1000 elephants, and so forth.
Anatomy of Growth
Before we proceed further, let’s look at the anatomy of growth. Essentially products plus users translate to growth. There are three different types of growth engines. Before looking at them let’s explore a few key metrics:
The first one is CAC – Customer Acquisition Cost measured over X months.
The second one is LTV – Lifetime Value of the Customer which is the revenue measured over X months.
You need to compare these two values and ensure your LTV is at least three times higher than the CAC. It gives you the ability to get the payback of the customer in less than a year.
How to Get Your First 100 Customers through Market and Sales?
To achieve this goal, you can follow three fundamental strategies;
- Paid Strategy
You buy users for less money than they earn you. This strategy is proven but requires a lot of money to be spent on salespeople, physical stores, search, advertisements, Press, SEO, content marketing etc.
Your acquired users will bring you more users. Viral growth is essentially a product or a brand strategy. It is slow but potentially huge.
To implement this strategy; you need to have a design and tech team. Alongside that, you need to prioritize growth over everything else. Make sure that virality is the core of your product.
The sticky strategy essentially means that once a user shows up, they never leave. You need to ensure that your customer stays for as long as possible. This is primarily a product and channel-centric strategy and is a suitable option for nearly 90% of companies.
Here are a few things to keep in mind: Customer retention is everything, your old customers are more important than acquiring new customers, you need to over-deliver and convert subscribers into paying clients. The idea is to retain, upsell and get referrals.
Based on the three growth strategies, you need to get down to the hunting.
Hunting Microbes and Flies
To hunt microbes and flies, you need 10 million active users and 100 million people who download your app/use your website. This is an oversimplification and the exact number is based on multiple factors such as conversion rate, user activity etc. There are two ways to achieve this goal; with the help of SEO traffic and virality. Some great examples are Yelp and Brainly.
Hunting Deers and Elephants
To hunt deers, you need about 10k customers with 100k business leads. It is quite similar to hunting rabbits. Adding an inside sales force supports the growth.
Think of Elephants as large enterprise clients which need 1000 customers who spend $100k. Elephant hunting requires an entirely different approach than rabbit and deer hunting. Essentially, you will require two things; a lot of money for product-market fit and an enterprise field sales team.
Hunting Brontosaurus and Whales
To hunt Brontosaurus, you essentially need 100 customers of $1M ARPA. You need to have a solid background, at least 20+ years of experience, and a strong network in the target industry. Veeva and Workday are great examples.
Consider whales as very large enterprises and government clients. Essentially, you will need 10 clients, a unique solution, and a sales reputation. A great example would be PALANTIR.
Hunting Strategies for First Time Founders
The best strategy for first-time founders would be B2C for flies and mice, B2B for rabbits and deers, and enterprise-ready solutions for elephants and brontosaurus.
Essentially, it comes down to finding a solution that your users want and getting as many users as possible!
Animal Framework is a practical approach to guiding your growth strategy. If you understand who you are chasing, you’ll be able to formulate the right strategy and playbooks. We sincerely hope you found this article helpful! If you have any more questions, feel free to reach out to the Slash team.
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