Growth Engines for Startups - Deepstash
Growth Engines for Startups

Growth Engines for Startups

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Growth engines

Growth engines

A growth engine is a process that startups use to achieve sustainable growth i.e. growth where new customers come from the actions of past customers.

There are three growth engines, each with its own set of metrics:

  1. Sticky engine of growth
  2. Viral engine of growth
  3. Paid engine of growth

Successful startups usually focus on a single growth engine. Chasing multiple engines at once creates confusion and leads to poor results.

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Sticky engine of growth

Sticky engine of growth

Applies to products designed to attract and retain customers for the long term. They rely on high retention rates to grow.

Metrics to track: Growth rate, Churn rate, Retention

Rule of growth: Growth rate > Churn rate. The larger the difference, the faster the product grows.

Focus on: Improving the product to make it more engaging and to drive retention.

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Viral engine of growth

Viral engine of growth

Applies to products designed to spread rapidly from one person to another. They rely on existing users to bring in new users.

This is different than word-of-mouth growth because customers are not intentionally promoting the product. Instead, they are promoting the product by using it. Viral growth happens automatically as a side effect of customers using the product.

Metrics to track: k-factor

Rule of growth: The higher the k-factor, the faster the product spreads.

Focus on: Increasing the sign up rate and the number of invites sent per user.

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Paid engine of growth

Paid engine of growth

Applies to startups that acquire users through ads or sales, make a profit on each new user, and then reinvest the revenue to acquire more users for larger profits. They rely on getting more money from a user than they paid to get him.

Metrics to track: CAC, LTV

Rule of growth: LTV > CAC. The larger the difference, the faster the growth.

Focus on: Increasing LTV and decreasing CAC

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