Starting a business and creating an eCommerce website are your first steps in the journey from start-up to supersize. But what comes next? In this article, we explore the key phases and obstacles to prepare for to ensure hypergrowth for your business and overcome common challenges.
For more on what it takes to build and grow a global technology company, tune into Ready for Takeoff by Wix.
What is hypergrowth?
Hypergrowth is a term initiated in a 2008 Harvard Business Review article by Alexander V. Izosimov, CEO of VimpelCom, to describe his company’s growth in the Russian cell phone market. Izosimov defines hypergrowth 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.”
Particularly during the last decade, expedited digital transformation, accessible capital and new emerging global markets have allowed companies to explode at an unprecedented pace and scale.
Stages of hypergrowth
Hypergrowth companies tend to follow three key business growth stages:
01. The Edison stage
What it is: Named after Thomas Edison, this is the invention stage, where companies define the best business model and product fit. This stage is about continually testing and asking, “Can we actually build this thing and how?”
Real life example: Two best friends started making candles in their kitchen for fun. They decided to build a website on Wix called Coal and Canary and started posting the candles on social media. Once stores began asking for products and were directed to the site, the pair realized they had a business and product fit and focused on their online store sales.
Using website analytics and strategic email marketing campaigns, they created additional demand. Today, Coal and Canary has a growing staff of 20+, produces 1,000 hand-poured candles a day and brings in over $2 million in revenue.
02. The Model T stage
What it is: Henry Ford took a previous invention: the automobile, and brought it to the masses. This stage defines how to best scale the business, increase operational efficiency, fine-tune corporate identity and move from niche to mass market.
For Henry Ford, it was building more factories, for Wix, website templates advanced the company to the next growth stage. When it comes to SaaS, Wix brought website creation to the masses and focused on the importance of making website ownership easy, accessible, and professional.
Capitalizing on the maturation of the web and an escalating demand for web design in 2013, TechCrunch reported, “The company’s user base grew from 6.5 million at the end of 2010 to 28.2 million at the end of 2012, representing a 108 percent compounded annual growth rate.”
03. The P&G stage
The final stage is called P&G (a.k.a. Proctor & Gamble), in this stage, it’s all about investing in your brand. P&G has taken a big market share and become a household name.
For a business, it’s now about differentiation and developing sustainable brand preferences. The product has entered the key stage where a clear layer of management leads to constant product innovation.
The video communications platform Zoom has become synonymous with its function, just like Google is with looking something up and Uber for catching a serviced ride.
Zoom started its successful hypergrowth already almost a decade ago, growing from 3 million users in 2013 to 100 million users by 2015.
When COVID-19 took the world and job market by storm, their technology further scaled to help businesses continue running their business online and have finally entered the P&G stage.
Key contributors to Zoom’s hypergrowth are its highly customer-driven approach, with a differentiated product offering and has heavily invested in building a strong global brand through business development.
Common challenges of hypergrowth companies
Hypergrowth businesses focus on growth above all else and might lack attention to factors aside from top line revenue, meaning that profitability may only follow at later stages. Here are some small business challenges to prepare for in hypergrowth:
System infrastructure breakdown
After a certain point, systems and operations are prone to break down. Systems that worked with 10 employees are pushed to the limits with 50 and become a major hindrance with 1,000. It’s critical to plan how to best expand a company from the bottom up, with a good HR plan and task distribution across departments.
According to Nir Yuz, vice president of user experience, Wix circumvented this with its guild-based matrix structure. Yuz describes “guilds” as shared service organizations within Wix that cut across teams to share resources and insights to maintain consistency and scale work across shared disciplines, like design, writing and UX. Because it leads to better relationships where there would often be silos, it allows for collaboration and creates better products for users, too.
Startup and entrepreneurship mentality is to work extremely hard. This “always on” culture can easily become toxic when working overtime, leading to avoidable mistakes and unnecessary stress and anxiety. Try to maintain a healthy work life culture for your business and lead as an example to other employees.
With over 25 years of experience in software, Aviran Mordo, vice president of engineering at Wix believes that you can prevent burnout by giving autonomy to your team and letting them learn through mistakes. This culture can turn into really big wins. “We don't punish people for mistakes. We put some safeguards and we learn from it,” he says.
Rob Goodman, executive producer at Wix and host of Ready for Takeoff, says that a culture of being open with mistakes allows for not only a support system to kick in and fix the error, but also a chance for the entire team to learn from the process.
Another way to maintain a healthy work culture is to practice vision setting, or communicating how people's contributions help achieve a larger vision. It helps create efficiency because it sets clear expectations on what to focus on.
Miki Baram, general manager at Wix, currently leads over 100 people across four groups at Wix. “If I want every employee to be the owner of their tasks,” she says, “they really need to know where we're going.”
Baram believes that by setting strong visions for your team and company, employee motivation can substantially increase. “People want to be part of a greater thing than small tasks.”
Runaway marketing costs
As a company grows, it needs to funnel more money and resources toward marketing. While this could cause customer acquisition costs to skyrocket, you can manage with a strong business plan and marketing plan.
For tech-based businesses, users unlock everything for your business, states David Schwartz, Wix’s vice president of product. “The paradigm is that if our users succeed, we will too. We don't look at anything but working every day to make sure that Wix succeeds with its users.”
In start-ups, this mentality is being user obsessed, or getting to know your users, your customers, and showing up each day at work for their success. This mindset can help translate into a great product.