If you’re building a business (or even a career) but growth is slowing, this essay from Eugene Wei is a must-read. It’s a dense read however so if you’re short on time, here’s a summary of key learnings I took from the masterpiece.
Eugene uses Amazon as a case on how to unlock growth when progress hits a plateau. I’ve reused that example below alongside 4 key questions you should ask your self when growth goes flat.
(1) Is there a large opportunity with room to grow into?
Amazon’s initial market in book sales was worth $25bn. And unlike the music industry (which was dominated by 6 major record companies) the book business was fragmented with 4,200 U.S. publishers and did not have any “800-pound gorillas” on the publishing or distribution side to get in the way of Amazon’s growth.
(2) Is the adoption gradient favourable?
In other words can the above opportunity be realised in good time? And are there positive tailwinds? For Amazon, internet traffic was doubling every year and coupled with strong customer satisfaction (almost half of sales were repeat orders!), Amazon’s monthly revenues accelerated to 34% month-on-month growth within 2 years of launch.
(3) Are there invisible asymptotes?
If both (1) and (2) are good but you’re starting to plateau, then it’s time to investigate what ‘invisible asymptotes’ might be holding you back. I prefer to think of asymptotes as ceilings but in maths terms, it’s a straight line towards which a growth curve converges.
At some point all growth hits a horizontal asymptote. An end to growth is often very natural. But in other cases, there’s clearly more potential to be realised and you must “flush out” these asymptotes before you can unlock further growth.
(4) Can you eliminate the asymptotes?
In Amazon’s case, and as Eugene recalls, something big was holding back growth. And to identify what that thing was, they did two things: (a) they introduced pop-up surveys at the end of each order asking why a customer didn’t buy more often from Amazon and (b) they hired an independent market research firm to ask why non-Amazon users had never shopped from the website.
This research converged on a single major obstacle: shipping fees! People really hate paying for shipping and to solve this, Amazon initially tried the Super Saver Shipping offer (buy items worth > $25 and you get free shipping). But this had the adverse effect of reducing order frequency since people would hold off using Amazon until they had $25 worth of goods to order.
Next came Amazon Prime, which today is immensely successful and actually increases order frequency! Eugene posits that Amazon’s new asymptote is shipping speed (next day and same day delivery will get people to buy more) and I agree that this should unlock another layer of growth for the business and ecommerce in general.
Your Invisible Asymptotes
We all hit a ceiling of sorts in our pursuits. Plateaus are entirely normal. Sometimes there’s no sizeable opportunity to grow into or the winds are blowing against us. And even when these two points are in our favour, sometimes there are far too many asymptotes to realistically overcome. In these cases you must be intellectually honest and consider other pursuits.
But in situations where it’s clear that a large opportunity awaits us, and where the winds are blowing in our favour, these are the moments when new layers of growth can be unlocked. This requires seeking accurate feedback, targeted action and experimentation, as well as the courage to occasionally break the status quo for new leaps to be made.
Eugene’s essay provides more tactical insights from a startup perspective on this topic so if this is a realm of interest, be sure to grab a coffee and head over to his website to read the full blog post!
