Moving a company from the product-market fit stage into the growth stage is not an easy process, according to Andrew Graham, co-founder and CEO of Borrowell.
Speaking at the latest FinTechTO, Graham discussed how growth is so challenging for new businesses.
Graham said before companies try to scale, they focus on finding their product-market fit, which is when a company develops a product or service that users are willing to pay for. While he believes finding the product-market fit is a crucial step of the startup journey, Graham said companies don’t spend enough time discussing what happens afterward: growth.
“Scaling startups is like a pie-eating contest to be a part of a new pie-eating contest.”
During his presentation, Graham gave the example of how Borrowell moved from the product-market fit stage into the growth stage. Borrowell initially launched as a consumer lender, but when it became difficult to acquire customers, the company start providing credit scores for free. “We’re really excited about the fit we’ve found in the marketplace and the growth we’ve experienced,” said Graham.
Graham said there’s a misconception that once companies have found their product-market fit, they will naturally grow. This can’t be the case because companies need to re-adjust and shift their strategies when trying to scale. “…Big isn’t just a bigger version of small. Things that work at one size don’t just automatically work the same at a bigger scale,” said Graham.
When it comes to the challenges companies face when scaling, Graham said the challenges are typically related to technology, marketing, and people.
“Marketing works differently at scale than when you’re a new company,” said Graham, who explained that companies can’t always implement simple marketing strategies when trying to acquire thousands of customers.
“A four-person company is really different from a 40 person company, [which] is really different than a 400-person company,” said Graham. “To scale people, to scale a team, you have to put in different processes to make it possible for the people to communicate.”
To wrap up his presentation, Graham reminded attendees that success and growth doesn’t simply come from finding your product-market fit. “Going from product-market fit to scaling isn’t saying ‘Hey, look, we found product-market fit, all we have to do is get bigger,'” said Graham. “Scaling startups is like a pie-eating contest to be a part of a new pie-eating contest…Growth isn’t easy. Growth is a whole new set of problems, but obviously an essential thing for all of us as we build our businesses.”
Watch the full talk below:
The next FinTechTO takes place on July 23. Get your tickets here!