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The Three Stages of Hypergrowth

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Why do some companies, products, services, and ideas achieve Hypergrowth, while others only capture a small portion of a market?

That’s the question I was trying to answer when I came up with the Hypergrowth Curve.

The curve consists of three stages of growth that every breakthrough company, product, service, or idea transitions through. And in each stage, the strategy and focus totally shifts.

In the first stage on the Hypergrowth Curve, you’re building a product and finding your tribe. You’re seeing if the idea is even possible.

In the second stage, you’ve found product/market fit and are now focused on rolling out your invention to the masses.

Finally, in the third stage, you’re focused on building a global brand and dominating an entire category (or micro-niche).

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The Three Stages of Hypergrowth

  1. 1. The Three Stages of Hypergrowth David Cancel | Co-founder & CEO at Drift, Host of Seeking Wisdom
  2. 2. Why do some companies, products, services, & ideas achieve Hypergrowth, while others only capture a small portion of a market? That’s the question I was trying to answer when I came up with the Hypergrowth Curve.
  3. 3. The Hypergrowth Curve Three stages every high-growth company transitions through THE EDISON STAGE Discovery. Invention. Is it possible? 1998 THE MODEL T STAGE Mass production. Building factories Does it scale? 2008 THE P&G STAGE Differentiation. Brand building Why is it better? TODAY
  4. 4. The Hypergrowth Curve consists of three stages of growth that every breakthrough company, product, service, or idea transitions through.
  5. 5. The three stages of growth Edison Stage Model T Stage P&G Stage03 02 01
  6. 6. The Hypergrowth Curve In each stage, the strategy and focus completely shifts. THE EDISON STAGE Discovery. Invention. Is it possible? 1998 THE MODEL T STAGE Mass production. Building factories Does it scale? 2008 THE P&G STAGE Differentiation. Brand building Why is it better? TODAY
  7. 7. The Edison Stage
  8. 8. Genius is one percent inspiration and ninety-nine percent perspiration. — Thomas Edison
  9. 9. This is the stage Edison went through when he was working on the light bulb. You’re investing all your time trying to figure out: ● Can we actually build this thing? ● Is it possible to build this thing?
  10. 10. And this is really the stage where patents come into play, where invention comes into play. This is the first stage of a market.
  11. 11. Using blogging as an example, the first stage was back when there were no blogging platforms…
  12. 12. So how did you post a blog? To create a blog post back then, you would create a static HTML page and then upload that page using FTP to a web server that you had somewhere. And that was considered a blog post. That was the first stage.
  13. 13. What about SaaS companies? Using SaaS as an example, the first stage was when Salesforce came into market and started to build software as a service. They were the first to take on-premise software and bring it into the cloud.
  14. 14. In that first stage, it’s all about finding early adopters, and building your tribe.
  15. 15. In the next stage, the tribe goes mass market.
  16. 16. STAGE 2 The Model T Stage
  17. 17. Coming together is a beginning, staying together is progress, and working together is success. — Henry Ford
  18. 18. The Model T stage was when Henry Ford took something that had previously been invented, the automobile, and figured out how to bring it to the masses.
  19. 19. This stage is about building factories. And it’s about operational moats that you build in your business.
  20. 20. Examples of these moats might include: ● The way you price something. ● The way that you go to market ● How you build a product in a way that you can easily productionize it.
  21. 21. In the world of blogging This is the stage where WordPress (and others) brought CMS to the masses. It’s the stage where content marketing and SEO became popularized.
  22. 22. During the Model T stage, it’s relatively easy to stand out in your niche. There’s low competition for attention — you might have 10 competitors or so, and you can easily name them. However, in order to advance to the next stage on the Hypergrowth Curve, where you might be facing up to 100 competitors, you’ll need to change your approach.
  23. 23. STAGE 3 The P&G Stage
  24. 24. To make good choices, you need to make sense of the complexity of your environment. — A.G. Lafley, former P&G CEO
  25. 25. In the third stage, the P&G Stage, we cross the chasm into a global audience.
  26. 26. Using email as an example, in the third stage, winners look like MailChimp. They succeed by differentiating on brand, and the winner takes the biggest share of the market.
  27. 27. What about Drift? This is the stage Drift is in now, and we call it the P&G stage because in this stage, it’s all about investing in your brand. It’s about selling Tide laundry detergent and getting 20 cents more for a box of Tide than for a box of All or a box of Cheer or a box of whatever laundry detergent.
  28. 28. In this stage, you’re trying to create a moat around brand, and brand preference. You’re helping a global audience answer the question, “Why do I want to buy this brand versus another?”
  29. 29. This is where we, as a company, are spending a lot of energy and resources. We think SaaS is in its third stage right now. The companies that are going to stand out are the companies that are the top 1% globally for the overall category, or the companies that niche themselves all the way down to be top 1% in their micro-niche. Those are the two ways to win in this world. Example: Tide is top 1% in the laundry detergent category. To enter this category, you have to micro-niche yourself like Seventh Generation did by inventing the organic/green laundry detergent category and then dominating it.
  30. 30. Final Thought
  31. 31. The important thing here is whatever you’re creating, whatever you’re doing, you need to understand which stage of growth you’re in. Because that’s going to dictate the strategy and tactics that you use.
  32. 32. Want to learn more about how you can achieve Hypergrowth? In his book, HYPERGROWTH, serial entrepeneur and Drift Founder & CEO David Cancel shares a modern approach for building products and structuring teams that makes customer communication a central priority. Get the book that’s revolutionizing business at drift.com/insider/learn/books-reports/hypergrowth/
  33. 33. Thank you!

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