If you’ve been part of the Drift community for a while now, you’ve probably (definitely) noticed that we use the word “hypergrowth” quite a bit around here.
It’s the name of our conference happening in Boston this September (HYPERGROWTH), it’s the name of the book we self-published (HYPERGROWTH: How the Customer-Driven Model Is Revolutionizing the Way Businesses Build Products, Teams, & Brands), and it’s also a general concept that we write about on the Drift blog.
But with all the times we’ve mentioned it, we’ve yet to provide an adequate definition for hypergrowth.
So in this post, we’re going to answer the question once and for all: What is hypergrowth? And we’re also going to share examples of companies that have achieved hypergrowth, as well as tips for helping your company get there.
According to legend (and the internet), the term “hypergrowth” first appeared in the April 2008 issue of the Harvard Business Review, which defined it as “the steep part of the S-curve that most young markets and industries experience at some point, where the winners get sorted from the losers.”
At Drift, we refer to that “steep part of the S-curve” as the Hypergrowth Curve. You can visualize it as a massive wave — this insanely high wall of water.
The companies that achieve hypergrowth are able to ride up and over that wave. It might be a bumpy ride, but they’re able to adapt and move quickly enough to continue onward.
Most companies, however, get wiped out. (Or they see the wave off in the distance and decide they’d be better off changing course.) That’s how “the winners get sorted from the losers,” to quote the HBR definition.
The World Economic Forum, meanwhile, has its own definition for hypergrowth, one that gives more context around the conditions that make hypergrowth possible:
During the past decade, as technological convergence has moved progressively forward, rapidly rising companies have astonished the global public with their ability to expand and scale at a pace that was previously unknown. From this phenomenon, the term “hypergrowth” was coined.
So, what rate of growth does a company need to hit in order to qualify as a hypergrowth company?
The World Economic Forum says companies need to have a compound annual growth rate (CAGR) of greater than 40%.
Translation: Achieving hypergrowth means maintaining a 40%+ average annual growth rate for more than one year.
In contrast, “rapid growth” companies are defined as having a CAGR of between 20% and 40%, while “normal growth” companies have CAGRs of less than 20%.
Of course, these technical definitions provide useful benchmarks. But in order to understand hypergrowth from a tactical perspective, we recommend thinking about it in three stages.
The 3 Stages of Hypergrowth
1. The Edison Stage
The first stage you encounter along the Hypergrowth Curve is the Edison Stage.
To quote Drift CEO David Cancel:
This stage of business is defined by invention. It’s the stage Edison went through when he was creating 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?
And this is really the phase where patents come into play, where invention comes into play, and this is the first phase of a market.
Example: When Salesforce came to market, bringing on-premise software into the cloud.
2. The Model T Stage
The next stage of the Hypergrowth Curve is the Model T stage. To quote David:
The Model T stage, just like the name implies, is when Henry Ford took something that had been previously invented, which was the automobile, and figured out how to bring it to the masses.
This stage is about building factories. And it’s about operational moats that you build in your business.
While in the Edison stage you’re still finding early adopters and building your tribe, in the Model T stage you tribe goes mass market.
Example: When WordPress brought CMS and blogging to the masses
3. The P&G Stage
When you’re in the Model T stage, it’s still relatively easy to standout in your niche. You might have 10 competitors or so, so there’s low competition for attention.
But in order to transition into the final stage of the Hypergrowth Curve, you’ll need to change your approach. Because in the P&G Stage, you might be dealing with upwards of 100 competitors.
As David explained:
In the third stage we cross the chasm into a global audience.
This is the stage we (Drift) are in now, and we call it the P&G (a.k.a. Proctor & Gamble) 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.
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?”
Ultimately, there are two ways to excel in the third and final stage of hypergrowth:
- By becoming a top contender in the overall category (example: MailChimp with email)
- By creating a micro-niche that you can then dominate (example: Seventh Generation with organic/green laundry detergent)
“Those are the two ways to win in this world,” David explained. “And disproportionate results go to the winners.”
Examples of Hypergrowth Companies
While we already touched on some examples of hypergrowth companies in the previous section, I wanted to flesh out two more examples in a bit more detail.
First, Slack, which went from $0 to a nearly $4 billion valuation in less than four years. (P.S. check out our piece on Slack’s growth strategy)
Second — one I already mentioned — MailChimp, which grew its user base from 85,000 to 1.2 million in less than four years.
Let’s dive in:
In 2014, the messaging platform Slack officially launched, boasting 16 thousand active users.
By the end of 2014, they had 285 thousand active users — an increase of just over 1,680%. (And 73 thousand of those users were paid.)
Slack’s valuation at the time: $1.12 billion.
By 2015, Slack had gone from 285 thousand active users to 1 million active users — an increase of just over 250%. (And 300 thousand of those users were paid, which put the growth rate of Slack’s paid users at more than 310%.)
Slack’s valuation at the time: $2.8 billion.
In 2016, Slack crossed the 2 million active user mark. That’s 100% growth year-over-year growth. (And 675 thousand of those users were paid, which translates to 125% growth.)
Slack’s valuation at the time: $3.8 billion.
This is one of the most clear-cut examples of hypergrowth in recent history. But Slack is by no means the only SaaS company with a history of extraordinary growth.
While MailChimp was never able to post the types of growth numbers that Slack put up, they were still a pioneer in the SaaS space, and certainly attained hypergrowth status.
Consider this: In September of 2009, MailChimp had 85 thousand users.
By September 2010, that number had swelled to 450 thousand, which translates to nearly 430% year-over-year growth.
During that year, they were adding more than 30 thousand new free users and 4 thousand new paying customers each month.
And at the same time, MailChimp’s profit (yes, profit, not revenue), grew 650%.
Flash forward to February 2012, and MailChimp’s user base had grown from 450 thousand to 1.2 million, which means they had grown 167% since September 2010.
So, how were MailChimp and Slack and other hypergrowth companies able to achieve this type of growth?
Of course, the contributing factors vary from company to company. Slack, for example, had the benefit of having an experienced founding team. MailChimp, meanwhile, struck it big with their fun and quirky branding, which would set the bar for every SaaS company to follow.
But after studying these hypergrowth companies, it became clear that there was one thread tying them all together — one key ingredient that would help them make it over the hypergrowth wave.
The Secret to Achieving Hypergrowth
MailChimp co-founder and CEO Ben Chestnut told the New York Times that his company was successful because it had “a proximity to its customers that its competitors lacked.”
He elaborated that because MailChimp “was itself a small business, it understood what those businesses wanted out of their marketing tools. Its offerings were cheaper, it added features more quickly, and it allowed greater customizations to fit customers’ needs.”
Slack’s CEO Stewart Butterfield, meanwhile, once shared these words of wisdom with his team:
… even the best slogans, ads, landing pages, PR campaigns, etc., will fall down if they are not supported by the experience people have when they hit our site, when they sign up for an account, when they first begin using the product and when they start using it day in, day out.
The common thread here? Being customer-driven.
By listening to the needs and concerns of your customers, by optimizing for their happiness and their success and adapting to their changing preferences…that’s how you achieve hypergrowth.
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Of course, becoming a customer-driven company is easier said than done.
As David explained in the book HYPERGROWTH:
Every company in the world will tell you they are customer-driven. They’ll believe in the principle. They’ll even have framed posters on the wall about it. “Solve for the customer.”
But after spending 20 years in my career building and leading SaaS companies, I’ve learned that none of that means anything unless you actually make the structural decisions to ensure it.
When I rebuilt the product team at HubSpot back in 2011, I wanted to see if we could get beyond slogans and mantras to structure it in a way that intrinsically placed the customer ahead of everything else.
I made a few decisions — in form, process, and culture — that were designed to safeguard the team against misdirection and ensure that customers remained central.
For the full story of how you can use the customer-driven approach to achieve hypergrowth for your business, download the book for free: HYPERGROWTH: How the Customer-Driven Model Is Revolutionizing the Way Businesses Build Products, Teams, & Brands.
About the HYPERGROWTH Conference
So now that you have a basic understanding of what hypergrowth is as a concept, here’s a quick overview of what our HYPERGROWTH conference — happening this September — is all about.
HYPERGROWTH is a one-day event on Monday September 25th in Boston. We’ll be overlooking the city from 33 stories up at the State Room in the financial district downtown.
Speakers include Olympic gold medalist and entrepreneur Nastia Liukin, November Project founder Brogan Graham, plus 11 sales and marketing leaders including Cybereason CMO (and former HubSpot CMO) Mike Volpe and ClassPass CMO Joanna Lord.
3 Things You Can Expect From HYPERGROWTH
- It will feel more like a party than a tech conference. We’re scrapping the traditional 45 minute keynotes in favor of 15 minute features that will leave you energized and inspired.
- You will learn something new. You’re guaranteed to learn something new at HYPERGROWTH — but it won’t be from all of the usual suspects that speak at tech conferences. Were inviting leaders from the health, fitness, and food worlds in addition to business leaders.
- You will leave with at least one lasting memory. We want it to be something that will help change the trajectory of your business or your own personal growth in 2017.
That’s our mission, and we hope that you’ll be there in person to be a part of it on September 25th.