To describe something as “nonlinear” is to describe it by what it is not.
What is so attractive about Flipkart, Practo, FreshDesk, Ola, BookMyShow, Oyo – the new age companies? The answer is – their Non-linear Business Growth. This phenomenon of nonlinearity occurs when entrepreneurs exploit, explore & jump to hyper growth without having followed a strict path. Hacking growth is a systematic model to embrace impending changes and creating opportunities quickly by continuous experimental iterations to distil and scale up promising nonlinear business ideas.
Investors are programmed to find & fund nonlinear ideas.
Linear business models like IT services companies are easy to understand & correlate wherein the revenues growth is directly linked to headcount growth. For nonlinear business growth models, it is difficult to define a business theory as their outcomes are disproportional, arbitrary, and unpredictable. In a non-linear business, traction is everything, achieved by inorganic methods or growth hacking. Inorganic growth arises from mergers or takeovers rather than an increase in the company’s own business activity while growth hacking is a
In a nonlinear business, traction is everything, achieved by inorganic methods or growth hacking. Inorganic growth arises from mergers or takeovers rather than an increase in the company’s own business activity while growth hacking is a process of rapid experimentation across marketing channels and product development to identify the most effective, efficient ways to grow a business.
Either it works or it does not, methods do not matter, results do.
Related Article: Why Companies Are Not Startups
The word “growth hack” has become synonymous with witchcraft magic, while it’s all about experimental iterations to distil scale up ideas. Every startup differs from one other. It’s great to learn about nonlinear growth mentioned online but 90% of copy paste methods fails because these old hacks which worked for others do not last forever. Let’s first try to decode the process of how to build a non-linear business model with experimentation.
How To Build A Non-linear Business Model
- Identify if the problem you are solving with your product solution is need-to-have or nice-to-have. Need to have solutions are like painkiller business which quickly scales and gets most of the investor attention while nice-to-have solutions are like the vitamin business which means that they are optional, hence, will have a lot of lag time and efforts to scale.
- Re-imagine all the traditional assumptions, existing processes, marketing plans by asking the right questions for growth hack by solving complexities. Create a laundry list of target experiments from this exercise
- Identify a KPI metric, set a goal to decide the success or failure of your growth hack experiment but don’t count until there is something valuable to count.
- Finally, target a slice of your customer segment to validate the experiment for creating non-linear growth.
Fill in the below hypothesis statement before getting into any of the experimental iterations using above process.
We believe that [doing this/creating this experience/exploiting this channel] [for this customer segment] will achieve [this outcome]. We will know we are successful when we see [this signal from the market]
Jumping the curve is not for faint hearts, sane personalities; only people with irrational perseverance can create a non-linear business. Most successful founders’ KPI is when they are
Most successful founders’ KPI is when they are able to ship their product to customers on high velocity. Nonlinear business creation happens when capital investment achieves economies of scale to create disproportionate outputs.
Let me list down few startup ideas which helped create viral customer adoption for their nonlinear growth.
Startup Ideas That Went Viral
The first viral hack in 1996-97 which I had experienced was with Hotmail, at the bottom of every email sent by Hotmail: PS I love you, Get your free e-mail at Hotmail, and acquired millions of users. Another very similar hack was “Sent from my iPhone” helped Apple promote & sell again millions of devices at no extra marketing cost. Airbnb adopted guerrilla tactics by pushing their inventory on Craiglist to get traffic and it was successful till Craiglist engineers discovered & plugged the hole.
Over delivering to delight the customers, helps with customer attention and retention. Gmail, when launched in 2004 with big bang jump of 1GB mail storage which was a revolutionary pain killer solution. Users could now store emails forever. The existing mail boxes of 2MB to 10MB types by Yahoo or Hotmail looked dwarfed, it just blew the competition away.
HubSpot has been described as unique because it strives to provide its customers with its valuable content free. It has helped them establish their thought leadership & credibility making it the best-perceived marketing solution for SME companies.
The Starbucks card is a breakthrough loyalty reward programme which helps gives its user both pride and free offers. It created a community experience wit a specially designed personalised gold card that gives feel of belonging to an elite group, satisfying the emotional quotient which led to the creation of loyal customers following. Paypal disrupted with a friction-less way to checkout online, once the user signs up they started giving an incentive of $20 initially to activate users.
Microsoft found a workaround to sell software through partners by foregoing its linear obsession of selling by itself. It showed us the power of partnerships & distribution. and created an army of unpaid salesman with computer OEMs with their Microsoft Partner Programme to generate monopoly in the desktop computers market.
Word-of-mouth marketing with double sided referrals made Uber & Dropbox generate non-linear customer growth at the lowest cost.
Linear paths are well-defined textbook solutions that follow an order. The businesses that disrupted the decade old ways of doing things and turned it upside down have experienced non-linear growths. For
For an investor, it’s a perpetual activity to find that one in a million team whose ambitions to grow the idea in a non-linear way and dominate market segments. Non-linear ideas become successful after massive scale like social networks, messaging, e-commerce, gaming etc. have seen a huge amount of venture capital investments. Venture capital is not a prerequisite for hyper growth as many statistics have shown that 90% of companies bootstrap their way to success. It’s rightly said that “you can’t scale what you don’t start” so take a courageous decision to follow big dreams.
Go big or Go home.
[This post by Sanjay Mehta first appeared on LinkedIn and has been reproduced with permission.]