For this episode of Secrets for Scaling, we spoke with Matt Munson, Co-Founder and CEO of Twenty20, a marketplace for stock photography that doesn’t suck. The company has seen great success with millions in revenue and a clear path to profitability, but not without their fair share of roadblocks and lessons learned. They initially grew too fast to scale and aren’t afraid to share their story.
In the episode, you’ll learn about Twenty20’s unique road to product-market fit. How they found traction and raised money, how they burnt through it, lessons learned along the way, and how they corrected course towards the sustainable and scalable business they are today.
The common theme you’ll find throughout is the need to set a foundation with systems and processes to grow sustainably into a scalable business. Listen to the full episode here:
Top of funnel growth is great, but only if you’re retaining those users. You’ll attract users with higher lifetime value if you ask yourself, “What will this product grow into that will add long-term value to our user base?” as well as “What’s our thesis for building a longer-term, sustainable business?”
You have to talk to your customers. To develop that thesis, you have to understand your users’ pain points and problems.
Self-imposed pressure to grow can be detrimental. Matt admits that his own, self-imposed pressure as the founder to scale fast hurt the company in the long-run. They grew from 10 to 35 salespeople in just four months, and from 10-20 customers to 100 in less than six. Though their sales people were hitting and exceeding targets, sales eventually plateaued. Their sales bookings dropped by 70% within a month and their burn rate doubled, squeezing their runway from quasi-infinite to about six months. Their system wasn’t scalable.
Invest in sales systems and processes early on. To scale, you need systems in place - and that takes time. It takes thinking about foundation, not only scale. Twenty20 (like many other companies in similar positions) did not have the systems in place to grow from 10 to 50+ people in just a few months.
Invest in leadership. When the company was growing so quickly, they put people into leadership positions who didn’t have experience managing. They under-resourced their sales leader and team – they underinvested in the necessary training and guidelines.
Sometimes you need to slow down in order to grow fast. Matt illustrated the analogy of boxers training slowly in order to strike fast. The startup community often fails to talk about the need to build a foundation and mirror blind spots. When you look at the past, the things that didn’t work are always the thing that came from the side view and got you where you least expected it. Things like culture issues, failing to see important trends, etc. Slow down so you don’t miss big blind spots (also known as Survivorship Bias) and future opportunities.
Specializing parts of the funnel is effective to a certain extent. When their acquisition funnel was working, their growth team tested a variety of channels and would focus on the ones that worked. And their sales team focused on leads from the channels that worked best.
Invest in the diversification of leads channels. Their growth team was focused only on channels that had shown early signal of success, rather than channels that had potential to scale. When their two top-performing channels started to break, it impacted the entire business and directly impacted the bottomline. Never stop testing.
Hire smart, inexperienced people. Twenty20 found that hiring smart, educated people with no dogma and a high willingness to learn was much more effective than trying to hire highly experienced sales people in their industry.
Create headspace, clarity, and wellness for your team. You have an entire team of people making big decisions. You need to give them the space they need to think clearly rather than burning them out. Learn quickly, but slow down and look for opportunities on the horizon you may not be seeing in the mist. Try “green, yellow, red” check-ins to identify personal and professional roadblocks in moving their work forward.
Simplify the things that matter and test on them early. It’s easy to forget the need to test early and often. Talk about the need for sustainable growth with your team and encourage your team to strip down their to-dos to the one or two things they really need to focus on.
Have an accountability list and set KPIs. Twenty20 breaks down a list of everything that needs to be done to keep the business afloat and moving forward with who’s responsible for what (i.e. directing customer development call organization, making sure wifi is working, etc.). They also identify key performance indicators to measure the health of the business and assign a leader to each, with the performance data available to everyone. This keeps the team aligned and working towards the same goals.
Stress and depression impacts everyone in high influence roles. First, know that you are not alone. Open up the conversation to the people around you. Your courage will allow others to do the same and will allow you to feel less alone. Therapy also gives a mirror on your life, allowing you to check in on how you’re doing and spot issues you’re simply not seeing. Read more of Matt’s thoughts on the subject here.
The startup community needs to build real, human sustainability into our companies and the ecosystem. We have an opportunity to have a bigger world impact by not allowing our people to suffer from anxiety, depression, or loneliness. If we can find a way to reduce, normalize, and get people talking about it, we’ll all be better for it. Startups will become a place for self learning and growth with a positive world impact.