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In other words, software companies must grow quickly to survive. Slow growing businesses suffer from the lack of oxygen that fuels growth. Raising money is more expensive. Hiring becomes challenging. Without the capacity to invest capital in growth or the ability to compete for top talent, the slow growth cycle reinforces itself.
The McKinsey study breaks down rapid growth into two parts. In part one, the authors identify five key factors of success in the early stages. Large market; logical revenue model; rapid-adoption; stealth/secrecy; proper compensation of the leadership team.
This list will surprise no one, except perhaps for stealth. Is secrecy and stealth a prerequisite to success for every massive software company? For most bottoms-up businesses, stealth isn’t a competitive advantage, but awareness is.
Part two is more interesting. The defining characteristic of enduring software businesses is they “master the transition from one act to the next.” Fast-growth startups must metamorphose constantly because the market demands it of them.
Tomasz Tonguz
More Growth Strategy Stats
In 2018, the global tech spending is forecast to amount to 3,212 billion U.S. dollars.
56% treat “Existing Customer Renewals” as high priority
55% of SaaS companies rate Customer Retention as the key metric to measure
Internet Sales strategies have a significantly lower CAC of just $0.42
The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18