Episode Transcript
[00:00:05] Speaker A: What's up, founders? And welcome to the In Demand podcast where we talk all about how to troubleshoot growth for your PLG SaaS. I'm your co host, Asia Arangio, the CEO and founder of DemandMaven.
[00:00:15] Speaker B: And I'm Kim Talarczyk, client services manager at Demand Maven, where we help SaaS
[00:00:19] Speaker A: companies reach their toughest growth milestones.
All right, Kim, let's get into it.
Alrighty. So I think our topic today is growth stalls, which is not a phrase I typically use. Like, usually I'll just say like, oh yeah, slow, slow growth or growth plateaus, but growth stalls I think is another pretty common phrase used in SaaS world. And I was just thinking like, we haven't really talked about this much despite it being like one of the top things that we help teams overcome unblocking growth.
[00:00:53] Speaker B: So a stall is different than a plateau.
[00:00:56] Speaker A: I think that they are the same. I think they are used interchangeably. But what I've been coming across the phrase I think more recently and I'm like, oh, you know, I don't think I've ever used that terminology. Whenever I talk about like slow growth, usually I'll say, you know, slow frustrating growth or what have you. But growth stalls are certainly a phenomenon that we've seen.
We've seen companies get stuck at really specific stages of growth and really specific ARR numbers.
And what I think is really interesting is there are really common patterns between where the growth stall is actually happening, how it's happening, why it's happening, but then also what ARR number is it happening at? And that's something that I think is, I think it's really interesting. But, but in my mind it makes sense like just based off of what we've seen.
And we've worked with over a hundred companies at this point and we've seen a lot of growth stalls. We've also seen a lot of like companies really working extremely hard to overcome them, but it not necessarily being obvious how and like how and where and why, like the stall is actually happening. Yeah, so I, I want to talk about that today.
[00:02:15] Speaker B: Yeah, this is a good topic and especially cause it's applicable to, I mean across really any. I mean we've worked with so many different types of SaaS companies, so it's not just in one area or industry focus.
[00:02:28] Speaker A: Yeah, tons. So I think, I think the first is, well, what is a growth stall? And this is going to sound so obvious, but I think it's worth defining a growth stall to me and I did do a Little bit of research on this just to make sure. I'm not talking out of school here, but from my perspective, a growth stall is you are growing extremely slowly.
Could also be you're not growing at all, meaning you're kind of like, with new mrr, you're also churning basically the exact same amount and maybe not expanding anything. But growth stalls, to me are when growth has literally stalled, you aren't growing much. And to me, much is like, maybe you're getting a percentage or 2% month over month, but it's still not a whole lot. And even then, it might not even be that. There are some companies that we've worked with that have only grown 2% in the whole year.
So there are some companies out that we've seen, like, in that bucket as well.
But all that to say, yeah, to me, a gross doll.
That's what it means.
But if you look at the math behind it, what's actually happening is net new MRR is basically being neutralized by the amount of churn you're getting every month.
And then there's also. It's also possible, of course, to see contraction, meaning it's not a stall. You're actually declining in growth.
So growth is slowly declining and kind of dying a little bit.
And that means, like, obviously revenue is getting smaller, which is not great. Usually that's like an emergency situation, and you need to kind of, you know, stop everything and kind of figure out, like, okay, what's going on.
Growth stalls are interesting, though, because it usually means, like, you are getting enough revenue to kind of net out, like, what you're turning every month. And because it's neutralizing itself, that MRR number is not really moving month over month. Or maybe those two are netting out. But you're getting, like, a tiny amount of expansion revenue every single month. And that is potentially creating, like, the most marginal, tiny, like, little, tiny baby growth. But it's still pretty flat. So that's what that looks like. That's what it is.
[00:04:40] Speaker B: Okay,
[00:04:43] Speaker A: sounds like. Sounds great.
[00:04:44] Speaker B: I have a question on that. No, that's clear.
[00:04:47] Speaker A: Cool. Okay, so from there, let's actually start with, like, when they happen, the most common growth stall, like, points in the growth journey. To me, there are three. So the first is at a million.
It is extremely common to get to a million in ARR and then completely stall. And we'll talk about reasons why, but usually it's because there's an over focus on a couple of things, but also an under focus on other things.
So usually we're Overly focused on customer acquisition, but we're not focusing enough on our core icp, go to market strategy, product. Like there are a number of things that can be happening at that million mark.
Sometimes though, this can get extended to the next milestone or like potential break point, which is 3 to 5 million. It could be 3, it could be 4, it could be 5. But usually there's like, okay, you made it past a million, great. But three to five is another point in the growth journey where you can reach a stall.
And I find the reasons here are they certainly could be the same reasons as what would make you get stopped, so to speak. At a million, it's possible that your market just was maybe a bit more expansive or maybe like you had a slightly better handle on certain things and so it got you a little bit further. But usually we see breaks here because there's something like internally amiss, like operationally team. And it also could be again, like there's an over focus on marketing and not enough on any of the other levers for growth. And we'll talk about those here in a second.
But those are the first two that come to mind. And then, and then the next one is actually one that I find is a little bit more elusive because some companies get stuck here, but a lot don't. But it's the 10 million mark, so 1 million, 3 to 5 million and then 10 million. Like those are like the three break points in the growth journey that can totally get you stuck.
10 million is interesting, especially in the bootstrapped world because there are so few companies that reach 10 million. ARR.
That it's, it's kind of, it's a little hard. It's a little harder to study in my opinion because like the ones that are there are just like, they're just in a different bucket. But what I find is really true about these companies is if they're lucky enough to get to 10 million, great.
What needs to happen next is they ideally need to start thinking strategically about product and about market expansion and about go to market, but in a way that they might not have had to have before.
And also they do still need to kind of balance what makes them great, what makes them awesome. Like, it's all the same things that could get you stuck at a million or get you stuck at three to five.
Um, but I find like, if you're stuck at the 10 million mark, it's either like you're in one camp or you're in the other.
It's either you might need to do a Bit more product innovation. It just depends on who your competitors are. Or it's nope, you, you're doing like, you have extremely strong product market fit. You've maybe lost it a little bit because you're not as focused on your icp. And we need to refocus on the icp.
So I feel like it could be either or. And both of those are different scenarios. Like both of those are different games to play.
But that's at least from what in what we've seen.
Usually whenever we work with companies, it's because they either get stuck at the million mark or they're stuck at like the 3 to 5 million mark.
And they're extremely similar to each other in my opinion.
Usually if they're at a million, I mean, there could be a number of scenarios here, but usually we see small, smaller teams. We don't typically see a whole lot of like internal leadership.
Usually we see like there's the founder or founders and then there's a bunch of contributors and ICs.
Maybe some of them are full time, maybe some of them are not.
But usually there's some type of combination of like, okay, they made it to a million, great, but now what needs to happen next is they need to mature their function a little bit.
We also need to get really hyper clear about, okay, what got us here won't necessarily get us there. So what needs to be realigned or refocused or recentered like in the business? And this could be from a go to market perspective, this could be from our product perspective, this could be from a product marketing perspective. Like there's there are a number of things that might need to get just like realigned and refocused.
The hope is that by a million you have a solid understanding of your channels like acquisition wise, like what actually gets you more customers, what activities get you here or will take you beyond? And what we find is like at a million, that's not always clear. Like it's not always clear to the team.
Oh yes, SEO, AI, SEO or ads. Like, like what? Like what's the channel that's going to be super scalable for you that you can continue to invest in to get you more customers?
Is it neither of those things? Is it more like you need to focus on building your email list or attending conferences or whatever it is? And all of that is going to be super hyper dependent on of course, your market, your budget, all those things.
And a million is tricky because if you don't have that scalable channel and also you're not thinking about the other growth levers. Talk about here in a second. It's really hard to break past a million or even like getting to 2 million seems and feels really hard if you don't have those other things dialed in. But usually what we do at a million is we're basically digging deep into like, okay, like, do you have a good assessment of this or a good framework of this?
Because if you don't, growth is gonna feel really frustrating and difficult and, and on the chance that you have it locked down, like, maybe you have a super solid understanding of customer acquisition and that's amazing, but maybe it's actually the other levers.
Which brings me to the other levers in the business. So usually like getting to a million, you're hyper focused on customer acquisition.
But there are other levers which we talked about before on the pod.
But if you're trying to get to 10 million, like you have to be pulling the other levers. Like, you can't just be pulling the like marketing customer acquisition lever because you will.
Not only is it one of the least efficient ways to grow, but it's also like, like it's more expensive than it's ever been. Like all the things, which is why it makes it less efficient.
But that's again where we start looking at how are we doing on the activation side, how are we doing on the retention side? And not just short term retention or like monthly revenue retention, but like long term retention. Are we keeping customers longer than 12 months?
And if so, what percentage of them from the moment that we acquired them out of that cohort? Do we still have solid net revenue retention at the 12 month mark?
And then we also get into pricing and monetization.
So this is where we start thinking about, okay, we're starting to maybe refocus and recenter a bit on our ideal customer profile, our icp.
Do we have the right pricing model for those people? And similar. The same is true for some of the other segments that we're targeting.
And then we also get into thinking about internal operations and process, which is a word that, a phrase that I think people underestimate. Like they kind of underestimate your like product development process or like your product roadmapping process as being maybe a contributing factor to your slow growth. Like, not everyone thinks about it like that. But if you're not looking at product as a growth lever, then again if you're just kind of like check, you know, ticking off boxes because you've got to reach feature parody with something that may never actually Happen, you're leaving a huge thing on the table basically. And you're basically saying to the world, hey, I'm not going to really pay attention to what customers need. I'm just going to pay attention to like what other competitors are doing and you know, just check the boxes of like what it seems like I need to do. Some of that might be real, but a lot of it might not. And we've seen many companies chase feature parody to their detriment and it not work out at all.
And then we get into too like, you know, that's product operations, but there's also like marketing ops. There's thinking about like, okay, who's on the growth team, things like that. And then there are like more nuanced things like, you know, what's our go to market strategy, things like that. But what we find is within each of those levers to pull some of that might be working well.
But my guess is with a growth stall and just from what we've seen with a growth stall, it's probably more than one thing happening.
And you've really got to dig into each of those and just make sure that everything is up to snuff. This is really, really, really hard to do though if you've never seen what a like high performing growth team looks like.
So this is where I would say like you've got to surround yourself with other people who have experienced growth styles and come out of them, other people who have solved particular challenges. Like you might have, like, you might think like your pricing is perfect until someone like you work with a pricing expert and then you're like, oh my gosh, wow, like this is actually trash. Let's start over. So I do think, you know, surrounding yourself with experts helps a lot and is going to be infinitely more effective than you trying to kick around like by yourself. But yeah, those are so those are the levers, those are like the points where you can get stuck.
And I've talked a little bit about like the differences between like, you know, what levers come up for each of those phases and stages.
And also too, you know, we, we kind of talked a little bit about like how to know. But we could probably go more into that here in a sec. Yeah.
[00:14:25] Speaker B: And so this would apply to the stall at a million and also 3 to 5 million.
[00:14:32] Speaker A: Yeah. So if we're at 3 to 5 million and we're stuck, my usually for me that usually says okay, we, we probably have a solid understanding of marketing and like customer acquisition that automatically makes me think we need to look elsewhere. So like what else is causing the company to be stalled? And this is kind of where what you find may be surprising.
So there's a company for example, that we're working with, they're stuck at 4 million.
Like 4 is a number that they're stuck at. And they've been stuck here for a while.
Growth has been like super slow.
But the thing that's preventing them there are a couple. The first is their internal team structure.
So they've got some really experienced marketers who are amazing, but there's no marketing leader. So like there's no like one person they're reporting to like on the marketing side.
And the organization is also very flat.
This is where we start looking at like, like it might actually not be effective for your business to have a flat organization. It might actually be better to start thinking about like internal management or like internal internal leadership to create better efficiency. Because if it's the founder who's managing everyone well, the re. The reality is they're not going to be able to manage everyone effectively. It's just not going to, it's just not going to happen. Like, and also too, that's the. Under the assumption that the founder is a good manager, the founder might not be a good manager, Founder might be a terrible manager. And it not. That might also be like a part of the problem.
So if you have more of a team, so like there's more than one person on the marketing team, for example, it might be time to start thinking about, okay, who's going to be the head of marketing and who's going to oversee this function and be responsible for the performance of the function.
And as founder CEO, I'm going to work primarily with that person. But I'm not going like, it's not, it will not be expected of us to work with like the individual contributors on the marketing team. Because really the head of marketing should be responsible. The same is true for product. So this is also when we start seeing.
And this is, this is one of the fundamental questions that I think founders have to ask is are you still the right person to lead product?
And you might not be, but you also might be like I, I have seen scenarios where like, oh no, that person really should be the person to lead product. Like the founder should be the one to lead product because they are the most dialed in the customer. They like every new feature creates growth opportunity for them. Like it's not just like quality of life improvements or whatever. Like it's, it's stuff that people care about. Maybe it actually could be quality of life improvements. It's also stuff that people fundamentally care about and that it makes customers happy. You know, every time they make a change, they get another brush of word of mouth or whatever.
Sometimes the founder is the right person, but sometimes, and a lot of the time, from what we've seen at least, they're not always the right person to lead product. And it's because they've been running product in the way that they know they've never seen an expert come in and do it. And what we also find too is sometimes there's just not enough product market validation or there's not enough discovery that happens on the product side to know if this is the right feature anyway.
And, and then there's also too like with, if you're stuck at like 3 to 5 mil, there's usually no person in charge of UX design, there's usually no person in charge of product management and there's, there's no one consistently doing like no one's really using product analytics or understanding user behavior in the way that you would need to identify really sticky problems that, that do fundamentally unlock growth. And if you're not looking at your product function that way, if you're looking at your product function as order taking, you're leaving the most critical part of growth on the table. Like a SaaS company cannot grow unless product is delivering value constantly at every single possible moment that it possibly can.
And if you're, if you're treating your product function like, oh, we're not gonna expect growth from product, I think you're like, you're going to flatline, like you're literally going to hit a ceiling because basically no one's thinking fundamentally or strategically about product anymore.
But again, if you're the founder and if you've never had a good product management experiences, if all you know is what you've done yourself, then it's not surprising. Yeah. So could very well be either the founder needs to level up on the product side or they might want to consider hiring someone who's pretty experienced in that area and can, can ask those questions and think deeply about what do we build next that's actually going to create the best momentum for us.
[00:19:26] Speaker B: Yeah. And if the founder is going to spend more time on like level up on the product side, then they likely will have to pass some things off.
[00:19:36] Speaker A: Right. In other areas.
Right. The founder really becomes more like a true CEO or they're working on the business and not always in the business.
But that can be a Weird, scary transition to make for a lot of founders. So there's that, but then there's also. I will. So those are examples where like process team structure, like it's like the, it's the internal stuff that isn't as obvious.
And this is a company too that like their, their net revenue retention for the qualified folks at least it's pretty healthy.
Pricing is definitely a lever to pull, but it's, that's going to be a hard lever to pull for them. There's a lot of reasons why I could get into that. But basically like pricing is, is obviously an opportunity, but it's one of those things where it's like there might not be as much wiggle room without dramatically overhauling everything that they've got, which could be very, very risky. But it could also be worth testing because again like they're flatlining. So it's not like they're necessarily going to lose anything.
The risk obviously would be like if they did anything that created contraction. So that's the risk. But, but beyond that, it's stuff that might surprise folks and it's to me it's under the operations bucket. So like this company really suffers from massive technical debt.
The product that they have, it's really hard to build new things on top of and it's also hard to even make improvements on existing features. There's something about the infrastructure that wasn't really well built or designed and this creates a huge ripple effect because the technical debt also means that they have analytics debt, they have data debt. Basically there's no way for the growth team to get the data that they need to understand user behavior or understand, you know, if we change this fundamentally in the product, how is that going to impact everything else? Or if we look at just this segment of user, does that perform better than like another segment of user? They have no idea. There's no way for them to analyze that data. And if they did, they what, what they do now is they basically hire like an analyst to try to like sift through that information for them.
And it's a very tedious, it makes everything growth related extremely tedious because there's no, there's no analytics really. So like it, it's a human crunching the numbers and it's not like, oh, just like plug AI into it. Literally can't like it's impossible to plug AI into any of this because the technical data is just that bad. So this is the type of thing that creates a ripple effect across the entire organization where part of why they are stalled is because they don't have the insights and data that they need to make better decisions. But it becomes a self fulfilling prophecy. So they do things without the information. Basically it has a neutral effect, doesn't really do much.
And when they get data that they can actually use, even if they were to implement certain things, they wouldn't necessarily know if that made a positive or negative impact.
So they can pretty much only look at the top level numbers. Oh, did that change revenue?
Who knows? Looks like probably not if you know, if it didn't move.
So if you can imagine it's, it's the blind leading the blind a little bit. And also too it's like you're just, you're literally feeling your way in the dark for, you know, like is this a growth opportunity? Don't know, but I guess we'll try it. And as you can imagine that makes it really, really, really challenging for the growth team. Cuz they again you've got these like and this is kind of rare cause they, they actually have a very experienced team, super experienced, but that team doesn't have what they need to do their absolute best work. And so there's automatically a limitation, a ceiling that they have a hard time breaking through but they can see through it because they know what great looks like.
So it's not like, you know, it's a mystery. They're all very experienced and it might be a little bit too, you know, the technical debt makes it really difficult to, to move quickly on the product roadmap.
So they also have this backward network effect of like this product isn't growing very much and customers can tell.
But what's interesting is the customers that stay aren't very high expectation users. So it creates a self fulfilling prophecy. Well I don't really have to build more or I don't have to improve things because our best customers stay anyway. And it's like sure, but the customers that you could add to this base you're losing because nothing like they can feel this product not changing.
And so that tells the founder, oh I don't have to do much, I just need to. But it's actually the opposite is true. It's like no, actually you need to do a lot more for these other like you are attracting, you know, higher expectation buyers within your icp but their Personas are different and they feel different.
Those people you're losing but you should be keeping like if you didn't have this problem, you know, massive technical debt. So that's what it looks like for a Company. There's another story I can tell too about another company also stuck at the 4 to 5 million mark. But I'll pause here just in case.
[00:24:47] Speaker B: Yeah, it's just a call out. We, we talked about technical debt in the last episode.
Some more, more details on that.
But yeah, that's, that's really interesting. No, I'm. Yeah, I'm curious to hear what else you have to say.
[00:25:01] Speaker A: Yeah, I was just going to say, you know, the 3 to 5 million mark is, is tricky because I don't think it's. It's always obvious stuff. I think it's stuff that's like, it usually is. It certainly could be something clear like, oh, you should pull the pricing lever. Like, duh, pull monetization. Like, that's so straightforward. Sometimes it is like, like we work with companies, but usually it's when they're stuck at the million mark. I feel like million mark is when it's obvious and you can just like, look.
Excuse me. You could just like look at a company's performance and be like, oh, activation. Like that's the thing.
Or oh, pricing, duh. Or like sometimes, you know, sometimes we, we work with companies. I will say it's, it's rare to get to a million and have terrible nrr.
So I will say, like, if you're trying to get to a million and your NRR is not great, you have a lot of very fundamental product slash go to market work to do. Like, like that needs to be the thing that you clear your whole desk for. Because if you have poor nrr, which we've talked about in the before in the pod, but as a refresher, anything less than 80% at 12 months net revenue retention, you're gonna have a bad time. Like, your growth is gonna be slow and you're gonna be like, why is it so slow? And it's. Well, because Grand R is not too great, which means people are churning, but they're slipping by you. Like they're slipping through your fingers and you need to figure out if that's qualified churn or unqualified churn.
And if you don't know, ideally qualified churn. If it's more than that 80%, you're gonna do great. But if it's like, if it's unqualified churn, you probably don't care as much. But it's critical that you understand that. But anyway, I digress. So I feel like a million. Yeah, like you can look under the hood and like you can see it really quickly, at least for me. I can. But at 3 to 5, it's usually more than that. It's usually like, it's operational, it's, it's leadership driven.
And part of the job is getting really critical about, okay, there probably are some obvious things, but again, how is a team structured? How do they make decisions? What are they actually tracking and measuring?
What are the goals that they're actually working towards? Who decides those goals? Who's in charge of this part? And then on the product side, who's responsible for deciding what goes on the roadmap? How does that decision get made? What research are you guys doing on the user side? And like the, like on the discovery side, user experience side, who's your designer? Things like that.
And based on how those two motions, especially for a PLG SaaS company, if there's a sales team, usually we're asking like sales performance questions. I've talked to support. I, I have talked to customer success and I've talked to engineering kind of understanding, like, okay, what are all the things? And like, like, what do all these teams say about what's working and what's not?
And you. And it won't be shocking, but it might be surprising to find that there's a lot of like, not disagreement but like conflicting perspectives on what's making something slow. So the company I was just talking about, customer support, is like, how do we build as many features as possible? Because we're losing people who want features but aren't getting them, aren't seeing them and are kind of feeling like the product is stagnant, but the founder is like, we don't need to build more features.
Everyone's happy.
But support doesn't feel that way at all. Support's like, what?
So that's, that's the kind of like potential misalignment that you might see within a company anyway. So another example I'll give this is a company that's been stuck at the, they're stuck at the 5 million mark and they, they want to get to 15 mil and then they want to exit. And this. So I've talked about operations and team structure before.
They're in a similar boat where they're stuck, in my opinion, primarily because of two things.
The first is they really need highly scalable customer acquisition.
But their challenge is they have to manage their cac. Like their pricing is such that they can't spend infinite amounts of money. The LTV per customer is very low, comparatively speaking, which already creates this conundrum.
But what's interesting is the founders don't want to build more product, they want to stay in the specific category, software category that they're in and they don't want to do any product expansion, which basically means what that says is, okay, we don't want to do any expansion. That means that we're kind of locked in to how much a customer is going to be willing to pay based on product, who we're targeting in our pricing model. And we know we can't really change the pricing model much that's already been tested to death.
And we know we can't really do much like channels wise because you can't spend infinite amounts of dollars on paid, for example, on paid acquisition because the CAC won't make sense. So to me, what that says is, okay, our options basically are you've either got to create a brand that people love, that that just naturally attracts other people. People.
And brand work is very different because it doesn't have a clear roi. It doesn't have like, oh, yeah, you run some brand campaigns. How much revenue that generate? Probably nothing because whatever. And. Or maybe we go back to product and we say, okay, we might not build more, but maybe we can make what is here feel premium.
And like, this feels like the cream of the crop. Best of the best.
Every time you use it, it feels luxurious. Like it should feel like your favorite soap that you use, like in the shower. Or it should feel like your favorite shampoo that maybe you spend $40 on, like for the bottle.
All the guys out there are not probably going to understand that reference, but all the ladies out there, what? Yes, sis. My. Okay, Sacred is like Beyonce's hair care line.
Listen, I've spent a lot of money on Sacred and like my hair loves it. I don't know what else.
[00:31:06] Speaker B: Yes, pay it.
[00:31:09] Speaker A: All the guys are be like, what?
$40 for a bottle of shampoo? Are you kidding? But that's the feeling that you should incite in people. Like, not only is this product quality, but also like, I am happy to pay the money to have this super quality product because if we're not going to grow the product, we're ultimately saying, okay, well, we're not going to expand, go to market.
So then we need to really hyper focus on creating something that everyone is going to love and they're going to love it from the moment that they see it and the moment that they use it. And it's going to feel premium and it's going to feel like, ooh, like this is awesome. And that they're going to want to tell everybody about it.
In order to make those investments, a few things also have to be true.
You also like you, you have to one have like a dedicated X designer who, who also understands brand.
You have to ideally also have a product leader, someone who can identify opportunities to improve experiences like within the product. And then on the marketing side you've got to have someone who also understands brand but can also think about the demand generation side of things and can help meld those two visions together.
And part of why this particular company is stuck is because they have a completely flat organization.
They have, there's no internal management, there are no team meetings, there aren't any company meetings.
There are 30 or 40, I think individual contributors and the two founders.
And basically like those two founders have like there are like two days where they do all their check ins like with everybody and the contractors. Like so that's the other thing too is there are very few individual, like there are very few full time employees. Most of them are either contractors or agencies or freelancers.
And basically like these two founders have like sprints where, or sorry like daily scrums where they have like 30 meetings like in a day or something like that. Like it's crazy. And like the contractors and freelancers and consultants, like none of them actually talk to each other or if they do, it's very minimal. And so basically like this is an operational, I was going to say nightmare, but that makes it sound mean.
But to me it's an operational nightmare because basically those two founders are the bottleneck for everything. And, and because there, there's no internal leadership and they've, they've tried in the past and unfortunately like a lot of those internal leaders didn't make it but a lot of it is because of how they're structured. So it's really hard to hire one person and that's the one full time employee, so to speak. Or like the one full time employee like on this side of the house. Like you do have to continue to make hires. Like you can't just be like you hire one person and you're done. Like you, you have to keep going to create true change in the, in the organization. But because there's no internal leadership, these founders are responsible for making decisions across every single part of the business.
And that would make sense if they were experts in everything, but they're not.
And also too, even if they were, there's not enough time in the day to like make salient, reasonable decisions. So these founders are constantly in my opinion in panic mode. Like they're always Panicking. And if they're not panicking, it's like they're not dialed in enough to be able to give their best like brain forward and that's a really tough position to be in. So this company is hamstrung because of how they're structured and also a little bit of their decision making around like okay, well if we're not going to span product, which to clarify, I'm not going to give the industry because again I just don't, I just want to be respectful. But they could expand into other software categories and it'd be a perfectly horizontal, like it would totally make sense for them. Like it would, it would be a win win. Like it would make customers happy if they expanded into these other like horizontal software categories that they could totally like surprise and delight customers with. They won't because I just think they're just so stressed and so busy all the time that they're like, they just can't even, like there's not even enough space to even entertain the idea because of how busy they are because of how they're structured. So it's this like, you know, we talk about growth loops and growth world, but I think like there are anti growth loops. I think there are things that like keep you stuck. So like there's a stuck loop and I think their stuck loop is how they're structured their decisions around that's impacting their decisions around growth and their decisions around like product expansion. But it's also impacting their decisions around customer acquisition as well and also to pricing because if they never expand the product, they'll never be able to charge more and that will forever keep their LTVs low. And I, and I think like that's a pro. That's a problem.
So that's another example of a company there. And again they're stuck at 5 million and but it's funny, right? Like how it's not obvious. Like that's not an obvious thing. Like someone would have to come in and like analyze your whole business which is ding, ding, ding, literally what I do.
[00:36:16] Speaker B: Right?
[00:36:17] Speaker A: But you wouldn't think that.
[00:36:19] Speaker B: Yeah, it's funny because I was, as you're talking, I was just gonna say, okay, so if people aren't hiring someone like demand maven, like what? And you know when you had said too well this client and I talked to the customer success person and I talked to engineering team and so should founders if they're feeling stuck as a first step to start interviewing internally.
Or does that not really matter because it's still there in it.
[00:36:48] Speaker A: Founder?
Yeah, no, I, I think it's, I think a couple things can be true at the same time.
I think if the founder is self aware enough, they totally could.
[00:37:01] Speaker B: Yeah.
[00:37:02] Speaker A: Like I, I think if, you know, for any of these clients, even if they didn't hire us, like, I feel like if they had paused everything and been like, pause every project and had conversations with everyone individually, not as a group, but individually, have an individual conversation, I think that they could unearth a lot of this.
[00:37:25] Speaker B: Yeah.
[00:37:26] Speaker A: I think where it's tricky is does your team trust you enough to tell you the truth?
I think that's where it's tricky. And if you haven't built that rapport or if you haven't built that trust, I think that's where, that's where your team, it's not that they're gonna lie. They just might not tell you the whole truth or they might not give you like the whole story. And I think that's kind of where like bringing in a provider like us is, does hit a little different because even though I'm relatively a stranger, I do feel like I hear more of the truth. Especially when I say like, hey, I'm not recording this.
You can tell me whatever you want. You can be like, this place sucks, or you can be like, I love it here, but X.
Right. And usually it's the latter. Usually it's like, I love this place, it's amazing, but I care a lot and here's what's wrong. And I just, I do feel like I hear things that maybe the founder might not hear. But also I interpret the information maybe differently than how a founder would.
Especially if.
[00:38:30] Speaker B: Yeah, I think that's it too, because especially like you're not doing this person's performance review.
If you're an employee talking to the CEO or founder, you're like, okay, if I say something and I give an idea, I need to back it up. I need to make sure I present it the right way if they want it. But for you, it's less about. If someone has an idea, it doesn't mean you're gonna. That's what you do. You're literally getting context from different parts of the organization. So and so in that way, an employee, it's much easier to speak to an outsider, not because they have anything necessarily bad to say about the company, but just because they can sort of speak freely in that way.
[00:39:05] Speaker A: Totally. And then I think too like, there, there's also, there's also the challenge too of seeing the whole picture and I think most leaders have bias towards what they think is the thing, so to speak.
[00:39:25] Speaker B: Yeah.
[00:39:26] Speaker A: And I think the other thing, I think the other part of the story is like, you know, the CEO and founder might be very biased about what they think the problem is.
And I very much. And I've. We've seen this happen so many times. But like it is just so easy to create self fulfilling prophecies in your own organization. It's so easy to have an assumption, have a bias and then make that true based on information that you pull up or what you find or what you interpret. Like we've just seen this happen so many times. I gave the example earlier of one of the founders of one of the companies I was talking about earlier.
Fundamentally believes that growth isn't going to come from product, but customer support is. Like we're losing customers because we're not growing the product because we're not doing anything with the product. Actually we're just kind of like patching things on top and crossing our fingers that it's going to work and that the customer support team might not be in the position to tell the founder, CEO, hey, you have this fundamental belief or this bias.
We see the opposite. Here's why, like they may never feel empowered to do that.
But that's easy for someone like me, the consultant who like, like my job does not necessarily depend on appeasing, you know, and scratching someone else's ego. Like my job is to like, I'm here to do the thing I was hired for, which is to help troubleshoot the growth and overcome the growth stall. Yeah, but that's the type of thing too. Like the type of dynamic that might happen. And it's for no other reason than just you're the boss. And like when you're the boss.
I hear this all the time from, like other CMOs and VPs and CEOs, but like when you are the executive leader or like the boss of the company, sometimes you'll say things and people think that that's the thing that you're supposed to do.
And like you have to be really careful about like what you say around your team because they're going to assume like, oh wait, no, that was just an idea. I didn't say go do that. Like I'm just sharing this is an idea or whatever. And I, yeah, I think a lot of CEOs and founders kind of forget that they hold a power despite them not being like corporate or you know, executive Y or whatever. Like you still hold a particular spot in everyone's minds and that's a scary spot sometimes for folks. So you might not actually ever get not the truth, but just like you might not ever actually get like the reality because of how people perceive you. Like you and your perceptions of things. So. Which is another really weird phenomenon to observe. But it's so it gets so common because it's like it's people and it's teams and like of course it happens. But yeah, that's another big one.
And all this actually reminds me of when I think it was Buffer.
Buffer overcame like a really big growth plateau and Joel talked about how he overcame it and it was fascinating because they.
Yeah, 15 years old, 23 million. But they got stuck. They got stuck at a stage that is not very common.
Okay, so Joel, I actually don't know how to say his last name. Guess it's. It looks Italian to me. Gascoigne.
Gashon. I'm actually not sure I should, I should figure out how to say his last name. His first name I've got though, Joel. So he talks about. Buffer's ARR dropped 20% over four years to 17 million.
In this nerve wracking situation, Joel persisted in leading Buffer to new all time highs. And Buffer's ARR now sits at 22.3 million a story five years in the making. Joel will share his journey navigating Buffer's decline and the monumental effort it took to turn around.
He.
If I recall correctly, they basically had like a hyper focus on Churn. So they were experiencing like pretty bad churn and they had a hyper focus on Churn from like a company level. And what that means is pausing every project and getting every team aligned on this one problem, which I crave that type of leadership so much because I think so many leaders today just operate in status quo.
And I'm guilty of this too sometimes. Like even I like when I think about my fractional CMO work, for example, like I'm kind of having this like internal like kicking myself because I'm like, damn, am I just status quoing right now or am I like, like I need to get out of my own way and I need to like I need to see outside of myself, which is really hard to do.
But I crave like the leadership of Pause every fucking thing because nothing else matters until we fix Churn. Oh my God. I just like that made me so happy just saying that because I think, I think a lot of teams are in free fall or have experienced free fall or in a stall and they don't do that. And they're like, oh, well, we can just continue operating and maybe something will happen and it'll get fixed. But usually what it requires is no, maybe you need to like pause every project for a second and just like
[00:44:28] Speaker B: actually address the problem. Doing status quo and then adding random projects here and there, that sort of makes everyone a little frenetic.
[00:44:36] Speaker A: Yes. And, but then it's like all you're doing is just adding more people, like adding more things on more people's plates. And that makes it kind of worse in my opinion, because you're, you're still not really addressing the problem. So that's not an option in my, in my mind either. And maybe you get lucky and like, it works out, but I find nine times out of ten it doesn't. And like, you do just need to get like hypercritical about, okay, what's on everyone's plates. Does this make sense? And if not, toss it. This is now the new priority. And so if I recall correctly, like, that's exactly what he did. And he also, he and his, his leaders and his team, they basically were like, what is Buffer actually good at?
They basically did like a go to market realignment. What is Buffer actually good at? Who is it the best for? And let's look at the product roadmap and clear out anything that's not for those people. And now let's look at go to market and like customer acquisition and clear out anything that's not for those people.
And now what are we left with? And that type of like, refocusing and realignment is so critical, necessary, like all the words like, it, it takes a lot of guts to do that, but it also takes a lot of like, like, if you're the leader, you're, you're exercising leadership. Like you're using the power of leadership to make a fundamental change in the business.
And they were at a different growth milestone. But like, Joel is a testament to, like, it doesn't matter what stage you're at, you can experience a growth stall and actually for them, contraction decline.
They, I don't remember where they were well, I guess they dropped 20% off.
Sorry, 20% over four years.
I don't know what 20% lift would be, but math, the math is not mathing in my brain right now. But like, it can happen anybody. They probably were at the 20 million mark or something, or 19 million or something.
And that was a wake up call for them. So it can happen literally any stage.
But I'm excited for them though, because I remember seeing that on I can't remember if it was threads or Twitter.
Might have been blue sky, actually. But I remember seeing the story and Joel talked about it and I was just like, that's incredible. And it, that's the kind of like leadership that you have to have about a growth stall. Like, you can't just, you can't sit and add more projects and hope that that works. Like, you might have to pause things and also throw certain things just completely out and refactor everyone's brains about what needs to happen in the business.
And there's a term for that that no one likes, but it's change management.
It's change management, it's transformation. All these like, Harvard Business Review words, change management and transformation. And that's the shit that like, people don't like to do. But it's what's necessary.
[00:47:23] Speaker B: Yeah. And that's, it's like a very enterprise level term, right? Very. But it still doesn't mean it's not applicable to a startup.
[00:47:32] Speaker A: I also think too, there's this belief, there's this myth that like, just because you're a small team means that you won't experience these problems. Or like, oh, well, I've heard this before from founders and CEOs. Well, we're small, so we don't really need to have change management.
Or. And sometimes I have a bias towards this a little bit as well. But from my perspective, sometimes I'm like, we're too small to have growth problems. I actually take the opposite. I'm like, we're too small to have growth problems. Like, you've got 10 people on your team. Those people should be pretty deeply aligned.
Or like, you've got, I don't know, 20 people. Like, that's so small. Like, there's no excuse to me to not have people like, aligned in terms of, okay, well, what are their priorities? What are they doing? And, and do they have like, clear goals and great, okay, are they clear on their expectations for like, what they should be doing?
So I'm actually kind of the opposite. But I think a lot of founders and CEOs when they're, when they're that small, they kind of think the opposite of like, we don't need processes, we're small. Or like, we don't need ops, or like, we don't need to have a kickoff meeting before a project because, like, everyone should just know what they're supposed to be doing. And I'm like, absolutely not. But this is how operations becomes a growth lever for people. Because there are assumptions that you don't need to be structured when you're. Even when you're tiny and like, in the early days.
But actually, OPS is how you scale. It's literally how you scale anything.
But for whatever reason, it's just this, like, redheaded stepchild. I feel like. Like, it's like nobody cares about ops.
[00:49:05] Speaker B: Yeah.
[00:49:05] Speaker A: Despite it literally being the thing to help you, like, operationalize and grow.
[00:49:09] Speaker B: Yeah.
This is maybe a little bit of a tangent, but is Buffer. I remember following Buffer in their early days, and they were like the, like, big on remote first. Right. And being very transparent about thought it was Buffer.
[00:49:22] Speaker A: If it wasn't them, it was Basecamp.
[00:49:24] Speaker B: Well, I know Basecamp definitely. And I thought then Buffer followed them as. And they did a lot of remote kind of before.
Like, before COVID times where, you know, everyone then became a remote company.
[00:49:36] Speaker A: Yeah. It is kind of wild that, like, I feel like Buffer, Basecamp, and there were a couple others. Yeah. They really did kind of create the framework for how to be remote before everyone needed to be remote. It's kind of cool. Right?
[00:49:46] Speaker B: They kind of pioneered some of that. And so which. Which sort of makes sense of why.
And Joel, the founder, just being so that sort of people, operations focus that you need to have if you're building that remote infrastructure. It's also interesting too, because everyone being remote also means you need to, in many ways have more structure rules around how you're doing things in the remote way.
[00:50:13] Speaker A: I completely agree.
[00:50:14] Speaker B: Yeah.
[00:50:14] Speaker A: Yeah. Yes.
[00:50:15] Speaker B: It just seems easy that anyone can just work at any time and then send a bunch of slack messages, but if you don't have structure around that, then it's just everyone's in their slack all day and not getting anything done.
[00:50:26] Speaker A: That. Or. Yeah. Or like, they're pushing cards around a notion and like.
And like, they need feedback or they need unblocking or they need whatever. But, like, none of that's actually happening. Yeah, totally. It's funny. I completely agree. I feel like when you're remote, you actually might need more structure maybe than. But the structure looks different. I think it looks different than if you were all in an office.
And it's like the, like, what's the digital etiquette and like the digital culture of the company. And then also, how do. How does work get done? Like, what are your work streams look like? And yeah, for whatever reason, it's just not a very. You know, we have a whole episode about Ops. But, like, I do find, like, when companies get stuck, a lot of it comes down to how they're Operating and like what choices are they making and what trade offs are they making every time they make those choices?
And then too like how are they prioritizing what's important and what's not?
And I think that it's funny I'm saying this just as much for myself because like I'm like damn, I gotta go and realign some things on my team on the CMO side.
So this episode isn't just for listeners, it's also for me as well.
[00:51:27] Speaker B: Yeah, I mean, doesn't mean it's easy.
[00:51:29] Speaker A: No, absolutely not. No, it's, it's hard. It's hard as hell. And then, and then like, and then two like it's. People can misinterpret too like what you say or like what you're asking for and then you gotta like, you know, that's part of being a leader I think. Like you gotta show them and then hopefully it shakes out okay. But yeah, so the Buffer story is cool. I.
Maybe we can link to the talk if it's live. Yeah, it might not be yet.
[00:51:52] Speaker B: Maybe by time this, this goes live. So we'll check it out.
[00:51:56] Speaker A: Yeah, his story is pretty cool like in terms of overcoming the, the decline. But it, it 100% had to do with a lot of what we just discussed just at different scales and, and I think with more complexity because like you know, a 20 million dollar company, the like the volume of customers that you have. It. Yeah, like it just looks like the scale does look different.
And I'm actually not sure if Buffer has like any additional products or like if they have like any acquisitions under their belt. Like if they've acquired companies. I know for Moz, which I can say this publicly because like Rand said it publicly, but when Random stepped down to CEO, like he had grown it to about 50 million in ARR. And by that point I want to say that they had actually they had made a few acquisitions of other products but they were, they were in a growth stall like for a while and, and I joined the board years later and I remember part like one of my big missions was like we really need to address this growth stall cuz otherwise like it's just gonna be hard to do anything. But unironically we actually ended up getting acquired. So it, it worked out in that way, but maybe not in the way of like it worked out in that we got acquired, but maybe not in the way of us having like a super impressive multiplier of like return for investors or what have you. Rand actually calls it a massive Failure. Not that, like, sorry, not that I was a failure. More like Moz's acquisition was not successful. And.
And like, he's right. It. It did not pay back investors the amount that they needed to have been paid back. But what a growth stall looked like there wasn't really any different than anything that we've discussed. It's.
You're probably churning more than you're adding on top of net new, and maybe expansion is fine, but, like, it's just not enough to counteract the turn that you're seeing.
And that's what causes a plateau.
And usually even at that scale, like, it. It requires a very deep dive of what's happening and not just from the growth performance side, but also from the op side. And, like, how all these teams are working together and how they're making decisions.
But, yeah, no, I mean, I think. I think it's. It's interesting, but it's also certainly overcomeable.
You can overcome a growth stall. You can overcome a growth plateau. Joel is proof that you can do that.
But also the companies that we work with, the ones that overcome their stall, usually it's because they.
There's a vulnerability, I think that they. That I think teams have to have of like, okay, how do we need to change and what do we need to change? And I think you have the right team if, if they're open and willing to do that and to try something different. But I think it starts with the founder and the CEO. I think the founder and the CEO has to be open to trying different things and maybe opening up their brain a little bit to, like, what's possible for them.
But, yeah, that's my perspective.
[00:54:57] Speaker B: Well, I do like a growth stall better than growth plateau.
[00:55:02] Speaker A: Yeah, I agree. I agree. I. I think I would typically say growth plateau, but I'm feeling like growth stall is the more common phrase.
[00:55:10] Speaker B: Yeah.
[00:55:11] Speaker A: Cool. Alrighty. Thanks again, Kim, for joining me. And if you are experiencing a growth stall, if you're listening and you would, like, help, there's. It is totally free to book a call with us, you know, ask your questions, chat with me. I'm an open book. I'm happy to tell you what needs to happen next. How should you approach it? How should. How did. How should you think about it?
And no pressure to, like, buy a service from us, but if something that you're experiencing and you need help, please, let's have a chat. Like, I'm so happy to.
So happy to help because I'd rather see you successful than not. And yeah, thanks again for listening. Bye, everyone.
Bye.
