To Create Sustainable Growth, There Are No Shortcuts16 February, 2016 / Articles
For years now, the entire startup world has marveled at the rise of the so-called Unicorns, companies that seem to grow at breakneck speeds and achieve unprecedented valuations. Among entrepreneurs, companies such as Uber, Zenefits, and Theranos represented a form of “startup nirvana” that everyone strove to recreate.
Recently, however, we’ve begun to see cracks in the façade of these Unicorns. Theranos, the former darling of the biotech world, has been faced with crisis after crisis, and just yesterday another scandal rocked Zenefits, once hailed as the fastest growing software company of all time.
This has been an interesting phenomenon to watch unfold. As the founder of a software company that focuses on serving small business, I’ve often been frustrated and frankly jealous of the quick growth that many technology companies enjoy. At Bode Tree, every single customer we have has been won the hard way, and I’ve been guilty of thinking that our slow yet steady approach lacks some of the elusive “unicorn magic.” However, I’ve come to realize the simple truth—when it comes to creating sustainable, long-term growth, there are simply no shortcuts.
Winning with early adopters is easy
So-called early adopters are appropriately named, to say the least. These are individuals and companies that represent the most forward-thinking and creative customers your company will ever encounter. In the world of technology, there is a very strong community of early adopters, nearly all of whom tend to be young, educated, and relatively affluent. Early adopters are wowed by slick design and tend to be very forgiving when it comes to user experience.
Many companies have perfected the art of focusing on early adopters and, as a result, tend to see explosive growth in the early years of operation. Unfortunately, this growth can give founders a false positive of sorts, leading them to believe that winning over the middle and late-stage adopters will be just as easy. In reality, this couldn’t be farther from the truth.
Winning over the middle and late-stage adopters is a different story
I tend to believe that companies run into problems when they start to pursue customers who aren’t early adopters. For teams, reaching this stage of the business is like running into a brick wall. It’s as painful as it is jarring. These customers are less forgiving and often difficult to reach. The “cool factor” of a product doesn’t phase them in the least, and they’re quick to question everything from its purpose to your messaging.
At my company, we work with banks and other financial institutions to connect with small businesses. This institutional approach has provided us with the ability to gain access to a large number of small businesses, but it’s always a challenge to find ways to convert these organizations into fully engaged and active users. My team and I have learned that you have to get creative to connect with these types of users at scale. A cool brand and slick interface aren’t enough. You have to fight for each and every user and get comfortable with more traditional, “analog” methods of marketing. Even though we’re a web application, we rely on multi-channel methods of winning over customers, including brochures, direct mail and even in-branch collateral to win over customers.
This is a totally different approach than what works for tech-savvy, early adopters, and it can be difficult to deal with. When confronted with these challenges, fast growing companies get desperate, and that’s when they start to make bad decisions. They cut corners, betray their values, and adopt a grow at all costs mentality that almost always comes back to bite them.
The path to victory is long and painful
I often think back to a story about the legendary movie producer Jerry Weintraub. Weintraub was fond of telling the story of how he kept a flock of plastic pink flamingoes in the grass near the entrance of his Hollywood office. When asked about the unique design choice, he responded that he kept them there to remind everyone that it’s the mainstream public that determines if a movie is a hit, not the Hollywood elite.
The same holds true for tech companies. Sustainable growth doesn’t come from early adopters and cool technology. It comes from the ability to slog it out with the middle and late-stage adopters, and that takes work. There are no shortcuts when it comes to serving these individuals. It takes patience, creativity, and most importantly persistence to crack that nut. The worst thing a company can do is try to cut corners in the pursuit of fast growth. When that happens, you break the trust that exists between brand and customer, and that is a trust that is not easily repaired.
I expect we will see more so-called Unicorns stumble as they’re forced to move beyond their base of early adopters. When that happens, they’ll start to realize when it comes to creating sustainable growth, there are shortcuts.