Only 40% of Series A startups with product-market fit will raise a Series B. But why does their startup growth stop there?
Most startups at this stage fail due to a lack of growth from unclear strategies and unfocused execution. Achieving growth goals requires executive and team buy-in, and alignment around vision, mission, strategy, plans, and KPIs.
Learn with Ha Nguyen (former CXO, Swimply and Founding Partner, Spero Ventures) and Garrett Kelly (former Strategy & Operations, Swimply and Airbnb) as they discuss in the Fall CPO Series how to ensure startup growth by maximizing team alignment and outcomes.
In this webinar, Ha and Garret cover how to:
- Tips and tools to align your startup growth around the strategic planning process
- How product leaders and Chief Product Officer can set impactful goals
- How to craft roadmaps to maximize team alignment and outcome-driven execution
Ready to maximize your startup growth? Get the slides below:
Read the Full Transcript
The following transcript has been altered for readability.
Ha Nguyen: Hello product leaders and Chief Product Officers! Welcome to the CPO Series!
Thank you again to the Dragonboat team for hosting us. I’ve been a big fan of the product for quite some time. I’m excited today to co-teach this webinar on startup growth with my colleague Garrett Kelly. We’re going to talk about the strategic planning process and specifically, it’s geared for startup growth. However, if you are a later-stage company, I promise that you’ll walk away with a few tips and tricks that you can hopefully go back to your companies and start to implement. First, a little bit about us so I’ll share a little bit about my background. I have been in tech in Silicon Valley for the last 22 years. My early career started at eBay. Back when it was an early-stage startup back in 2000, I cut my teeth in product.
I was a product executive at eBay for five years. And then VP of product at four other generally Series A startups and a bunch of marketplace startups. After 16 years of product leadership, I moved into the world of venture capital where I was a founding partner. I started investing in tech startups. I was starting to apply all the product principles that I learned in my 16 years of product leadership into the investing world and I think it actually served me quite well. In the fall of 2020, the Swimply founders had pitched to me, and for those of you who may not know about Swimply, it’s essentially the Airbnb of swimming pools.
It allows homeowners to rent out their pools locally and by the hour to their neighbors. It completely blew up during the pandemic. I loved the story so much that I not only wanted to invest in Swimply, but I also begged the founders to let me join the company. I joined as the first full-time employee of the company. I’ll kick it off to Garrett to introduce himself.
Garrett Kelly: Hey everybody, and thanks Ha. My name is Garrett. I come from Strata, the world of strategy and operations. I spent seven years at Airbnb from 2013 to 2020. Last two years I was the global head of the safety team. And then after Airbnb when the pandemic hit, I took some time off. Ha and I got connected and I became the director of strategy and operations at Swimply. I ran the customer support and trust and safety teams. Then on the strategy side, helping with annual planning, facilitating leadership, offsite OKR goal setting across departments at the company level, road mapping, and all the things in between, and what we’ll be talking about today. Thanks for having me. I’m really excited to talk about startup growth.
Startup Growth: The Strategy
Ha Nguyen: Well, so I thought I would just start with Swimply’s story. As I mentioned in the fall of 2020, the founders pitched to me as they were looking to raise their first round. And they were able to successfully close a $10 million round. After a huge success, the site completely took off and blew up as a result of the pandemic. People were locked up at home. They couldn’t travel, but they wanted to go outside and do something COVID-safe. With all of the public pools and beaches closed people started to hop on Swimply. We closed that $10 million round. Then, exactly one year later, we raised another round that was a $30 million round.
We went from about $5.5 million to close to $18 million in bookings and the market was great. So we decided its a great time to raise. We were able to successfully close that round, but not all startups are quite as successful. Most startups fail and they fail mostly because they run out of cash. 60% of Series A startups aren’t able to raise their next round. You could see that 100% of seed stage-funded startups might start out, a very small percentage of them will get to Series A, smaller percentage will get to Series B, Series C, Series D, et cetera. Why is that? Well, having issues with the controls. There you go. One is that they don’t know what milestones are needed at least from VCs in order to raise the next round.
One secret that I’ll let you in on is that we struggled actually with raising our round. We talked to dozens and dozens of investors and we had a lot of no’s. That was because our startup growth was not enough. Even though we grew three times, that wasn’t enough.
There was a lot of feedback from VCs at the time that they wanted us to prove other things. Some of the things that they wanted us to prove included expanding beyond pools into other verticals to reduce the seasonality of the business. They also wanted us to prove healthy unit economics. They also wanted us to prove great cohort of attention, so not that users are just using the pool once or twice, but they’re coming back over and over and over again to build habit. And so we almost didn’t close that round. However, luckily we had one investor who believed in us.
But had we known the milestones before we went out to raise, startup growth would’ve been a lot easier. Likewise, if you don’t know what the startup growth milestones are, you probably don’t have a clear path. Not only to achieve the milestones of startup growth, but also to deliver true enterprise value. So these days, and especially in these market conditions, it’s not enough to just raise on growth. People, VCs in particular are now looking for indications that you can have a really solid business model and have very healthy unit economics and a viable defensible business. As I mentioned, a lot of startups might grow but still not achieve the other goals needed to raise the next round. Finally, poor mitigation of risks and did come up in some of the conversations. There were some concerns with insurance or trust and safety or regulatory shutdowns.
Those were all concerns that investors had before they would be willing to write the check into us. It gets me to the main reason why we’re here. Garrett and I posit that all startups, no matter what stage you are, you need a strategy. And Garrett, I’m going to make this a little bit interactive. I’m going to ask the audience to just type into the chat why you think startup growth requires strategy. Go ahead and type into the chat why you think startups might need a strategy. As the answer roll in, Garrett, if you can just read off two or three other responses. Don’t be shy, it’s probably not a wrong answer here.
Garrett Kelly: We have strategy sets the direction for startup growth. We have knowing where to focus efforts or resources.
Ha Nguyen: I love that.
Garrett Kelly: Alignment across stakeholders.
Ha Nguyen: I love that. You guys got it. This is an articulation of what you guys all came up with, which is achieving outcomes, alignment is really critical so if folks don’t know where we’re going as a company, they probably won’t be able to figure out it on their own and you’ll have teams with misalignment and making assumptions around their own strategies and plans, so alignment is really critical. Somebody mentioned this, helps you stay focused and say, no, I think that’s really important. It’s probably one of the things that I love most about strategy is because you know then what to prioritize and what to say no to because as you know, and especially for us product leaders, everybody will have requests, marketing will have their requests, sales will have their requests, this dev will have their requests.
How do you figure out which ones to say yes to and which ones to say no to? Well, strategy will help with that. Finally, and this speaks to my heart, strategy is inspirational, motivational. Teams are there and the folks who are working with you are working, and it’s more than just a job for them. They probably join your company because they’re connected to the mission. But what’s going to get them out of bed every day it’s that they have a very clear direction of where the company is going and they know how they themselves are contributing to that overarching strategy.
You have to pick carefully. I’m actually as proud of the things that we haven’t done as the things that we’ve done. That’s what strategy is all about. What is strategy? Anything there, Garrett?
Garrett Kelly: So far we have focus from Michelle.
The plans to achieve an outcome and a plan of action, the planning around outcomes to help you take action.
Ha Nguyen: Excellent, love that. Yes. One, it’s outcome driven. It’s the end state, but it’s really about defining how we will win in the marketplace. Of course, we’re all product leaders here. And so it’s also about what value are you creating for customers. What are their needs? Do you know their pain points and how will your product or service uniquely deliver value to them? As I mentioned before, it’s not enough just to have an amazing product. You also have to have an enduring viable business model. And you have to know how to create enterprise value and figure out path to profitability, path to network effects, a path to defensible moat. Folks in the chat did mention it’s also about outlining the plan for how you’ll make this into a reality. Crafting strategy, how do you craft a strategy for startup growth?
These are the elements of a strategy for startup growth. First, it starts with mission. Mission is what are we trying to achieve. Then it also includes vision, so what does the world look like after we’ve achieved it and I’m going to go through these fast and share some examples with you. Value proposition, what unique benefits will your product or service offer to our customers? Differentiation, how will we distinguish ourselves in the marketplace? Finally, strategy. What is our path to winning? All of these elements go into crafting a great strategy. And so to bring it to life, I thought I would share a Swimply example that I worked on in the first year. Swimply’s mission, and as I mentioned before, missions should be inspirational.
It’s to bring local communities together through joy and play. You can see this as being the 5, 10-year mission of something that’s really inspirational. Our vision is that we would do this, achieve the mission by creating a world where everyone has access to the space that they need to pursue their passions and build connection. The value proposition was that we were going to build a marketplace where homeowners could rent out their unique spaces to neighbors locally and by the hour. The differentiation for us was that these experiences would be private, so if you were to go to a public pool or to the beach, that’s not a private experience, our experience is private. You can, unlike Airbnb, you could rent these spaces by the hour instead of having to rent it overnight.
The experience should be joyful, but it also should be a trusted and safe marketplace. We were going to start with pools and win pools before we decided to expand into other spaces. Our strategic pillar was that we were going to first start by creating a market around pools. That was because nobody had ever done this before. And we would help to normalize it. if anybody remembers Swimply in the first year or two, it was weird. Maybe it’s still weird to go into a stranger’s backyard and just use their pool, so we really wanted to normalize it. However, we also wanted to lead on trust and safety, and regulatory.
That was one of the reasons why we brought Garrett into Swimply. We knew his seven years of Airbnb experience was exactly relevant and super helpful for us. Especially, as we look to build out a trusted marketplace in that stage of our startup growth.
Finally, category expansion. Beyond pools, and this was some of the feedback from the VCs, so they wanted us to reduce the seasonality of the business. But then also look to prove out other verticals and so our next foray is into sports courts. And so I thought that it would be fun for all of you to guess what Tesla’s strategy might be. Let’s start with mission, vision, value prop, et cetera. Can anybody take a stab, would you know maybe what Tesla’s mission is? Garrett, if you see any responses, love to have you read it out. I thought I’d start with a really well-known example so this shouldn’t be hard for most of us.
Garrett Kelly: From Jennifer, to build the best EV cars in the world, accelerate the transition to electric vehicles from Stephanie, and then someone said, the mission to create long-term mobility solutions, keeping the environment in mind.
Ha Nguyen: Those are great. Those are excellent stabs at it. I’ll do the mission, vision and value prop all at once. Tesla’s mission statement is to accelerate the world’s transition to sustainable energy. Again, so it’s like a 10-year vision. It’s super inspirational and they’re not actually telling us through the mission how they’re going to go about it. But it’s what do they want to bring into the world. The vision is to create the world’s most compelling car company, that’s how they were going to achieve their mission. The value prop was that they wanted to start with building best-in-class electric vehicles. Differentiation and strategy, does anybody want to take a stab at that?
Garrett Kelly: Make EVs Cool, I like that.
Ha Nguyen: What’s that?
Garrett Kelly: Make EVs cool.
Ha Nguyen: Make EVs cool.
Garrett Kelly: Make it accessible.
Ha Nguyen: I took a stab at this. I didn’t pull it from the website or anywhere so I could be right or I could be wrong, but this was my stab at what I think Tesla’s differentiation is and what their strategy is. I think some of the differentiation when you look at the world of non-EV cars or even EV cars is a long-lasting battery, software, software is huge piece of what makes Tesla different. Vertical integration, so they own the plants, they make all the parts and the batteries, the charging stations. They also wanted to focus on direct distribution so they’re not selling through dealerships. They’re selling their own cars in retail and online and they wanted to build a reputable brand. The strategy in my opinion, is first we’re going to start by creating the market for electric vehicles.
We’re going to start with a beautiful sports car that had fast acceleration. However, over time we’re going to build out and build a more affordable car. And then we can use that money to build an even more affordable car. The second part of the strategy, and again this is my stab at it, is lead with vertical integration. Third was to own the distribution channel.
Anyways, it was fun for me to last night, take a stab at Tesla’s. But you should for your companies track, take a stab at this. Take a stab at mission, vision, value prop, differentiation and strategy. It’s vital for figuring out your startup growth strategy. One thing that we love and Garrett and I do a lot of facilitation of this is strategic planning or annual leadership offsite. With that, I’m going to pass over to Garrett to talk the rest of our tips on startup growth.
Executing Startup Growth
Garrett Kelly: Everyone see my screen okay?
Excellent. Thank you, Ha, appreciate that. Ha talks a lot about mission, vision and strategy when talking about startup growth. And she covers why it’s important with some examples of how companies have done it pretty well and pretty clearly. What I’m here to tell you is that’s not enough. You could have the best strategy in the world, but without the right goals and targets and roadmaps and operational rigor and discipline and employee behaviors and institutionalized habits around operating and achieving that strategy over time, startup growth will just fall flat.
I want to emphasize that there’s more to it than just strategy. That’s just stage one. I’m going to talk about goal setting. I’m going to use the OKR framework because we find it’s pretty clear and helpful. I’ve also seen it work in action at multiple companies and seen it done well. So that’s how we’re going to measure success. And then separate from that one, level down is roadmapping, how will we get there?
What are those individual tasks or initiatives that help us achieve those goals we’ve set, which help us achieve the strategy which help us achieve the mission and vision over time. Goal setting, the O stands for objectives, the goals that inspire and set direction. We’ll give some examples on the next slide of what this looks like, but where do we need to go, then you have the key results, the specific measures and targets of how we’ll achieve those objectives and initiatives is separate from the OKR framework. OKR is really focused on the first two, but when I would work with teams a lot on implementing the framework, I would find almost every time people would initially put initiatives in as key results or objectives. We’ll give some examples now on how to properly split these out.
For Swimply go through four objectives and key results here. First one, build a happy and productive team. Because it’s such a seasonal business, we want to make sure we have a hiring sprint in the spring as summer in the United States and Canada is where we see 80, 90% of our business for the year, and for them to be happy, we need to be measuring their satisfaction levels, we want to hit a very high mark.
How are we going to hit 90% employee satisfaction? We need values alignment, so we’re going to roll out core values and we’re going to hire and performance manage across those values to make sure we’re encouraging the right behaviors. If we achieve that values alignment well, they should be fairly satisfied. We want to recognize them and celebrate wins when they’re doing great work, and then when we performance manage, we’re driving clarity of what success looks like in their roles.
We’re coaching them for growth and helping them develop their skills, which we believe also will in turn affect the key results of employee satisfaction, and if we do that well, we’ll achieve the objective of happy and productive teams. For two, grow the market for pools, we need to focus on our core business. We need to increase the supply that we have, which we believe will fuel demand. We need to increase the number of bookings we have, and we want to make sure that if of the users’ guests, and host that guests, particularly for this metric that use us, are they coming back and using us again, and that’s an indicator of sustainable growth over time. How are we going to achieve these metrics? We’re going to do billboards and use social and influencers because we’re such an experiential brand around joy and play.
Having big billboards where people are playing in a pool and having fun in the summer, we think we’ll drive engagement. Going to three, build a healthy and trusted marketplace. Coming from Airbnb, trust and safety was so critical to the growth of the company. A lot of times when people were hesitant to or resistant to hosting or trying it as a guest is they didn’t trust it. They didn’t feel safe doing it. And so this goes across all shareholders. It’s guests — do I trust that the experience will be what I expect? It’s hosts — can I trust that I won’t have a liability concern or issue should something go wrong? For cities and regulators — is this going to be a neighborhood disturbance and create a problem for our communities and should be regulated or kick it out?
Or do we trust that it’s a safe experience that provides a value add to the health and satisfaction of our communities? The initiatives that we want to prioritize on our roadmap and invest in, we want really responsive and well changed CS and TNS teams. Part of the Responsive component is unlike Airbnb, which is while you’re traveling, people usually book that in advance and they have a lot of time between when they search, book, when they check in, check out, at Swimply, we would see very often, I sign up, I book a pool for same day, I have a check in within an hour, but with a new product and new service and new experience, it comes with a lot of questions, so even more than at Airbnb and we were running CS and TNS teams, we at Swimply had to be incredibly responsive.
In the moments we were investing in things like chat, so you could be on the app, you booked it, now you have a quick question where they’re right there in the moment to respond to you. That helps build a sense of trust that this experience is going to be worthwhile.
For hosts, securing the $1 million host insurance is critical. Not only is it a differentiator for us for potential competitors by getting into that market and making sure our hosts are covered, that’s going to pull the supply over to our platform, but it’s also going to give hosts that sense of peace of mind that it’s okay to sign up, we have your backup to a $1 million. Expanding beyond pools, yes, we want to focus on the core business always, but the core business is incredibly seasonal so as Ha mentioned earlier, investors are looking to how are we mitigating risk and growing the business in a healthy way that isn’t just a few months out of the year.
We want to go into tennis courts and sports courts. We identified that as a growing sport, especially pickle ball. Some of you might not have heard of it. It was the fastest growing sport through the pandemic in the United States. So we want to help secure that. Onboard those courts and then increase the amount of bookings we see per supply.
There’s also initiatives around, besides the tennis partnerships, productizing lessons, so what we learned is that you have a host and a guest like Airbnb, but we also have service providers so those that want to teach swimming lessons and then they want to book a pool and they want to bring the guests in, which would be their class that they then teach, so how do we productize this new demographic or customer type into the product and so even though it’s not necessarily expanding beyond pools, but it’s expanding beyond the actual core business we started with in unique ways.
Bhaji Illuminati: Hey Garrett, before you move off that slide, we had a question specific to one of the key results from Kate. She asked how did you choose 40% repeat users as one of the key results?
Garrett Kelly: I’ll let Ha speak to that one actually.
Ha Nguyen: If you’ve ever measured cohorts, and it depends on the product, so like a social network, the user repeat would be higher than say an e-commerce site, but for marketplaces, you generally see a large number of people book once and then never book again but being in venture capital, I know that if you can get almost 50% of your users to come back, then those numbers are really solid, so for many of you to come up with the number, I would ask around.
For example, I might do some research. If you’re working on a marketplace company, you might want to talk to some of your marketplace peers around what they’re seeing in terms of repeat, founders would probably end up talking to a lot of VCs, especially growth VCs who are looking to invest in the next round to see what they’re expecting, so a little bit of it is calibration and a little bit of it is where you are now, so at the time we were at 25% repeat so we thought that we could actually get it, with some effort, closely to 35 or 40%.
Garrett Kelly: With a lot of goals, a lot of times it comes down to where are we at today and we baseline it and then we just seek incremental improvement over time so to Ha’s point, we knew we were at 25%, so we’re going to try to incrementally improve and have a stretch goal of additional 15% over the next year.
As you were saying, if you want to show good startup growth, you could always just move into new markets. We were based in the United States, Canada, and we’re starting to go into Australia. That shows growth to new markets but what is an indicator of how well those markets will do over time, and that’s where you’ve already moved into, how loyal are your customers and how often are they repeating it and that can be a leading indicator if you go into a new market, will those patterns also be there so now we can forecast that growth a year or two in advance, because we expect it to follow suit as the growth we saw in loyalty metrics we saw in the countries, were already in. Great question.
Here we go. Going into roadmapping, this is what is going to help you prioritize the resources and tasks that bring your strategy to life and help you achieve your goals. We put together this little chart, you have on the Y axis, the business impact. What degree do we expect this initiative or task to impact the business, on the X axis, what is the complexity to deliver that. A lot of times in product engineering teams you’ll define complexity and the time it’ll take an engineering team to build this tool or feature and so really high complexity might be greater than six weeks of engineering team’s time.
Low complexity might be, we could achieve this in a couple days, or middle complexity, we could get this done within a two week sprint, but four categories we have here are high impact, low complexity, a lot of times you’ll hear the phrase low hanging fruit. These are easy wins, they’re going to make it on your roadmap every time, or they should rather. Then you have high impact, high complexity. These are usually the strategic initiatives that do take a lot of time, but are identified as foundational pieces that will help you scale with the business or then achieve these quick wins much easier once this strategic foundational thing is built. Then you have low impact, low complexity.
If it’s low impact, low complexity, these are things we could quickly build and they might have some value add, but not a ton, so I put pursue or revisit here to say, can we bundle a lot of these low impact, low complexity things together or can we reframe or repackage it in a way where we can drive the impact up, but either way, these are definitely things that are teetering on, do they make it or not on the roadmap and this totally depends on the resources you have and all of the different initiatives you’ve identified. Then you have the low impact, high complexity, don’t waste your time deprioritize these. If they’re not going to make an impact, they’re going to take a lot of resources, save them for a future date.
We have strategy, we’ve now built our roadmap, we have an idea of the goals we want to achieve because they’ll inform us the outcomes, the mission and the vision, and then we have the tasks. Now we need to build. I call it institutionalizing habits around operational rigor.
There’s a certain cadence annually you’ll have a certain focus. Monthly, weekly, it’ll be different, so annually you should be doing an offsite, annually with the leadership team to identify the resource allocation for the year and the overall annual plan, what are those big strategic bets you’re going to make and what are those OKRs you want to achieve for that year? This can be around the company retreat. We’ve seen it done different ways, but generally in offsites best, change of pace, change of place equals change of perspective. You get the leadership team together, offsite in the different environment.
We find that’s the best environment to come up with great ideas and align around your goals for the year. Quarterly, you want to adjust these OKRs. So you have your annual plan, but you should be checking in quarterly on those goals. Are these the right goals? Are these the right metrics that we’re tracking? We should stretch that goal out a little more. Are we not even close to hitting it? We should maybe reset expectations. Monthly, how are you connecting your employees to the strategy and the targets? We’ve seen this done best through All-Hands. How are you tracking progress within your individual departments or programs? Monthly business reviews, so they come and present on how well they’re doing, how well they’re tracking towards those targets and then you get to ask the questions, do you need more resources?
If you’re not hitting it, you’re hitting it, you’re head of pace, can we borrow some of those resources and reallocate it over to this goal that’s struggling. Employees pull surveys gauging how everyone’s doing. Do we feel like we’re on the right track? Weekly is that cadence for project management and roadmap review. This is where your project management or program manager will come in and with the project team and say, how are we on this task, this was due last week, did it get accomplished, if not, why? What do you need in order to get it done and what’s your new due date? That’s building that muscle and habit on a weekly basis so that when you’re presenting monthly to department leaders and executive stakeholders, you’re able to speak to it clearly and you’re able to hold each other accountable, et cetera.
The last thing about startup growth that I want to leave everybody with is this. You could have the best strategy in the world, you could even have an incredible operational discipline and rigor and habit but who’s at the center of all of this? People. You hire people. You train people. Then you onboard them. And performance manage them. What do people need in order to deliver their best work?
At the strategic level, we recommend investing in performance management, core values, recognition programs, learning and development, diversity, equity and inclusion, structure, clarity, ERGs, and what are the behaviors that we see these translate into? This is the behaviors you’ll see in that operating cadence we talked about, productivity, engagement, motivation, sustainability, accountability, belonging, diversity, innovation, retention, et cetera. And people, again, are at the center of all of this so they’re the ones that’s going to be building all these tasks and delivering these initiatives that are going to be the ones that bring your strategy to life at the end of the day so we lest not forget them. Thank you.