Revenue is the worst metric a growth team can focus on.

Simon Krokhmal • June 19, 2024

Decomposing the growth formula


Revenue might seem like the most obvious metric for a growth team to focus on. After all, it’s the lifeblood of any business. However, focusing solely on revenue can lead to misleading conclusions and misguided strategies. Revenue as a metric fails to capture the nuances of user behavior, product engagement, and long-term growth potential. This myopic focus can also obscure the underlying factors that contribute to sustainable growth, leading teams to optimize for short-term gains at the expense of long-term success.


Revenue is a lagging indicator. It reflects the result of actions taken in the past, rather than providing real-time insights into current user behavior or product performance. By the time changes in revenue become apparent, it might be too late to address underlying issues or capitalize on emerging opportunities. Growth teams need more immediate feedback to iterate quickly and effectively.


An exclusive focus on revenue can encourage counterproductive behaviors. For example, teams might prioritize high-revenue customers, even if their overall engagement with the product is low or their likelihood of churn is high. This can lead to a skewed understanding of product-market fit and obscure the needs of a broader user base. Similarly, short-term revenue boosts—such as those from aggressive sales tactics or heavy discounting—can create unsustainable growth patterns that are difficult to maintain.


What Metrics Should Growth Teams Focus On Instead?


Given the limitations of revenue as a growth metric, what should growth teams focus on instead? A more holistic approach involves examining metrics that provide deeper insights into user behavior, engagement, and retention. These metrics can be grouped into three main categories: acquisition, activation, and retention.


Acquisition Metrics: These metrics measure how effectively a product attracts new users. Key metrics include the number of new sign-ups, cost per acquisition (CPA), and the conversion rate from visitors to sign-ups. Acquisition metrics help growth teams understand the effectiveness of their marketing efforts and identify the most promising channels for attracting new users. This is where Product teams that focus on virality shine! understanding the key efforts that ultimately lead to viral acquisition channels and fundamentally change the equation around acquisition cost and profitability.


Activation Metrics: Activation refers to the process of getting new users to experience the core value of the product. Metrics in this category include the percentage of new users who complete key onboarding steps, time to first value (how quickly users derive value from the product), and engagement rates during the initial period of use. Activation metrics are crucial for identifying friction points in the user journey and ensuring that new users become active users.


Retention Metrics: Retention metrics measure how well a product keeps users over time. Key metrics include the retention rate (percentage of users who continue using the product after a certain period), churn rate (percentage of users who stop using the product), and lifetime value (LTV) of a customer. High retention indicates a strong product-market fit and a loyal user base, both of which are essential for sustainable growth.


How Can Growth Teams Use These Metrics to Drive Strategy?


While as silly as it may sound, it comes down to simple math and setting up the Growth formula.


Here is an example of a simplified growth formula for Dropbox:


Monthly revenue = (New acquired users) x (Activation Rate) x (Subscription Rate) x (Monthly cost) + (Existing Existing subscribers) x (1 - Churn rate) x (Monthly cost)


by simply setting up this formula, you can start seeing which one of the levers will have the most potential and which would be a futile exercise of growth experiments


in Airbnb’s case, the growth strategy highlighted the importance of retention metrics. The company’s growth team discovered that users who completed their first booking were much more likely to become repeat customers. To enhance retention, Airbnb focused on ensuring that new users had a seamless and satisfying first booking experience. This included improving the search functionality, offering personalized recommendations, and providing robust customer support. By prioritizing the first booking experience, Airbnb increased user retention and fostered long-term loyalty, which translated into sustained revenue growth.


What Are the Long-Term Benefits of This Approach?


Adopting a metrics-driven approach that goes beyond revenue offers several long-term benefits for growth teams and the businesses they support.


Sustainable Growth: By focusing on metrics relevant to your growth formula, growth teams can build a solid foundation for sustainable growth. This approach ensures that new users are consistently attracted, effectively onboarded, and retained over time, creating a virtuous cycle that supports long-term success.


Better Resource Allocation: A more nuanced understanding of growth metrics enables teams to allocate resources more effectively. Instead of chasing short-term revenue spikes, teams can invest in strategies that drive meaningful engagement and retention, leading to more efficient use of marketing and development budgets.


Enhanced Product Development: Growth metrics provide valuable feedback on how users interact with the product. This information can inform product development efforts, helping teams prioritize features and improvements that enhance user satisfaction and drive growth. By aligning product development with user needs and behaviors, companies can create products that better serve their target audience and foster long-term loyalty.


Improved Decision-Making: A focus on holistic growth metrics leads to better decision-making. Teams can base their strategies on data-driven insights rather than gut feelings or assumptions. This leads to more informed and effective decisions that drive growth and improve overall business performance.



Revenue, while important, is not the most effective metric for growth teams to focus on. By decomposing the growth formula and prioritizing acquisition, activation, and retention metrics, growth teams can gain deeper insights into user behavior and product performance. This approach enables them to drive sustainable growth, allocate resources more efficiently, and make better-informed decisions. Real-world examples from companies like Slack, Dropbox, and Airbnb illustrate the power of focusing on these metrics to achieve long-term success. By moving beyond revenue and embracing a holistic view of growth, teams can build stronger, more resilient businesses that thrive in the long run.


November 13, 2024
Assembling the right team is critical to any project’s success, especially for startups with ambitious growth targets and tight budgets. Lineup Ventures brings expertise in outstaffing , a solution that connects companies with top talent while reducing overall development costs by 40-60% through offshore sourcing. With the added advantage of a U.S.-based local partner , Lineup offers streamlined communication, quality control, and project oversight. Here’s how Lineup Ventures finds, evaluates, and secures talent to maximize performance, cost-efficiency, and local support for sustainable, high-impact participation. 1. Comprehensive Talent Sourcing The first step in Lineup Ventures’ outstaffing process is finding the best candidates who meet the technical and cultural requirements of the project. By leveraging a network of industry contacts, specialized job platforms, and a focus on offshore talent pools, Lineup identifies high-caliber candidates who deliver technical expertise at competitive rates. The presence of a U.S.-based partner ensures seamless communication and alignment with local business standards. Core Sourcing Strategies Include: Global Talent Pools : Tapping into cost-effective offshore regions for top-quality talent, significantly reducing expenses. Professional Networks : Utilizing industry contacts to source reliable, experienced talent with proven track records. U.S. Partner Advantage : The U.S.-based local partner ensures that client requirements, feedback, and quality standards are closely monitored and consistently met. 2. Internal Technical Evaluation Once candidates are sourced, they undergo a rigorous technical assessment conducted by Lineup’s internal team of engineers and subject matter experts. This step ensures that each candidate meets the project’s technical demands, maintaining high-quality standards while benefiting from offshore cost savings. With a local U.S. partner managing oversight, Lineup guarantees that all assessments align with client expectations and industry standards. Technical Evaluation Process: Skill-Based Testing : Candidates are tested on coding and problem-solving skills, ensuring technical competency. Project-Focused Interviews : Tailored technical interviews confirm that candidates can handle project complexities. Technical Simulation : Candidates complete simulated tasks reflective of real project challenges, ensuring readiness. 3. HR and Cultural Evaluation Technical skills alone do not guarantee success. Lineup’s HR evaluation process ensures that candidates are culturally aligned with the startup and are committed to long-term engagement. The presence of a U.S.-based partner further supports clear communication and adaptation to U.S. business culture, facilitating smoother collaboration across remote and offshore teams. HR and Cultural Fit Process: Behavioral Interviews : Assessing adaptability, problem-solving, and communication skills to ensure fit with both remote and agile work environments. Core Values Alignment : Verifying that candidates align with the startup’s mission, ensuring sustainable engagement. U.S. Partner Advantage : The local partner helps bridge cultural and communication gaps, enhancing collaboration between the offshore team and the U.S.-based client. 4. Comprehensive Onboarding and Engagement Strategy  The onboarding process is essential for productivity and long-term engagement. Lineup Ventures collaborates closely with the hiring startup to create a structured onboarding experience, with the U.S. partner ensuring a seamless integration of offshore and local efforts for optimal alignment and performance. Onboarding and Engagement Process: Clear Role Definition : Lineup helps clarify responsibilities and expectations, with the U.S. partner ensuring alignment with project goals and requirements. Structured Onboarding Plan : Tailored onboarding introduces new hires to tools, processes, and team members, creating a smooth transition into the role. Regular Check-Ins : The U.S. partner facilitates ongoing feedback sessions, ensuring offshore team members feel engaged and aligned with U.S. standards and client expectations. 5. Long-Term Talent Management and Continuous Support Lineup Ventures’ outstaffing model includes ongoing support and development , with a local U.S. partner providing additional oversight to ensure both the candidate and company benefit from the relationship. This model enables flexible scaling, helping startups maintain performance without the higher costs associated with in-house resources. Long-Term Engagement Strategy: Performance Reviews and Professional Development : Regular assessments ensure that talent grows with the project’s needs, supported by feedback from both the offshore team and the U.S. partner. Conflict Resolution : The U.S. partner serves as an intermediary to address issues swiftly and professionally, maintaining a positive and productive relationship. Scalability : Outstaffed teams are structured to grow with the startup, allowing easy scaling as business needs evolve while keeping in-house costs low. With over 14 years of experience in building high-performing development teams, Lineup Ventures combines the cost-saving advantages of offshore development with the assurance of a U.S.-based local partner . This unique structure not only reduces development costs by 40-60% but also ensures quality, clear communication, and alignment with local standards. Through comprehensive sourcing, technical and HR evaluations, and continuous support, Lineup assembles teams that deliver technical excellence, cost savings, and long-term value. For startups looking to maximize budget efficiency and build a resilient, high-performing team, Lineup Ventures offers the ideal solution. Ready to build a cost-efficient, growth-ready team with the added advantage of U.S.-based support? Connect with Lineup Ventures to learn how our offshore outstaffing solutions can drive your startup’s success.
By Simon Krokhmal August 2, 2024
Growth teams play a pivotal role in identifying opportunities for expansion and implementing strategies to exploit them. Unlike traditional marketing or product teams, growth teams focus on rapid experimentation across various aspects of the business to find scalable and repeatable growth tactics. Establishing a growth team is essential for driving laser focused efforts, and overall company expansion. Using John Roberts’ SPARC framework—Strategy, People, Architecture, Routines, and Culture—provides a structured approach to building a high-performing growth team. This guide will walk you through the necessary steps to establish an effective growth team within the SPARC framework, ensuring your organization is set up for sustained growth. How Does Strategy Define Your Growth Team’s Purpose? A well-defined strategy is the cornerstone of any successful growth team, providing clear direction and aligning efforts with the company’s overarching goals. The strategy shapes the purpose of the growth team by setting specific objectives and prioritizing initiatives that maximize impact. Here’s how strategy defines the growth team’s purpose: Setting clear and achievable goals: The first step in defining your growth team's strategy is to establish clear, specific, and measurable objectives. These objectives should align with your company’s long-term vision and business goals. For example, if your company aims to expand its user base, a key objective might be to increase user sign-ups by 25% over the next six months. By setting precise targets, the growth team has a clear focus and can align their efforts towards achieving these goals. Clear objectives provide the team with a sense of purpose and direction. They serve as a benchmark for success, allowing the team to measure progress and adjust strategies as needed. Additionally, well-defined objectives help ensure that the growth team’s efforts are aligned with the broader company strategy, fostering coherence and unity across the organization. Ensuring Relevance and Feasibility It’s crucial that the objectives are not only relevant to the company’s goals but also achievable with the resources at hand. This requires a thorough assessment of current capabilities and potential barriers. Ensuring the team has the tools and support necessary to meet these objectives is essential for maintaining momentum and motivation. This might involve conducting a gap analysis to identify areas where additional resources or training are needed. By aligning objectives with the team’s capacity, the likelihood of success is significantly increased. Measuring Progress Effectively Once objectives are set, the next step is to establish metrics to measure progress. This involves selecting Key Performance Indicators (KPIs) that accurately reflect the success of the initiatives. Regular monitoring and reporting on these KPIs help in making data-driven decisions and adjustments as needed. For instance, if the goal is to increase user engagement, KPIs might include daily active users, session duration, and retention rates. Consistent tracking allows for timely interventions and course corrections, ensuring the team stays on track to meet its goals. What Skill Sets Are Essential for a Growth Team? Identifying the right people to execute the strategy involves understanding the necessary skill sets and addressing any gaps. A successful growth team is typically composed of a mix of talents, including data analysts, marketers, product managers, and engineers. Data Analysis and Interpretation Data analysts play a critical role in interpreting the vast amounts of data generated by growth initiatives. Their ability to extract actionable insights from data helps in making informed decisions and optimizing strategies. They analyze trends, user behavior, and market conditions to provide a clear picture of what’s working and what isn’t. By translating complex data into understandable metrics, they empower the team to make strategic adjustments that drive growth. Marketing and Customer Acquisition Marketers bring creativity and customer insight to the team. They are responsible for devising campaigns that attract and retain users. Their understanding of market trends and consumer behavior is invaluable for crafting effective growth strategies. Marketers utilize various channels such as social media, email, and content marketing to reach potential customers. They also work on branding and messaging to ensure that the product resonates with the target audience, driving both acquisition and retention. Product Management and Engineering Product managers and engineers ensure that the technical aspects of growth strategies are executed seamlessly. Product managers coordinate the efforts of various team members and ensure alignment with the overall strategy, while engineers implement the necessary technical solutions. They work closely to develop features that enhance user experience and address pain points. Engineers bring these features to life through coding and system design, ensuring that the product is both functional and scalable. Bridging Skill Gaps Once the required skills are identified, it’s important to address any gaps. This could involve hiring new talent, providing training for existing team members, or leveraging external consultants. Ensuring that the team has a well-rounded skill set is crucial for the successful execution of growth strategies. Regular skill assessments and professional development opportunities can help in keeping the team updated with the latest industry trends and technologies. By proactively managing skill gaps, the team can maintain a competitive edge. How Does Organizational Architecture Influence Success? The organizational structure and tools used by the growth team can significantly impact its effectiveness. A well-defined architecture facilitates smooth communication and efficient workflow. Structuring for Collaboration A flat organizational structure often works best for growth teams, promoting collaboration and quick decision-making. This structure minimizes bureaucracy and allows team members to work closely together, fostering a sense of ownership and accountability. By eliminating hierarchical barriers, team members can share ideas freely and respond to challenges swiftly. This collaborative environment encourages innovation and ensures that the team can adapt to changes quickly. Selecting the Right Tools The tools used by the team are equally important. From project management software like Asana or Trello to data analytics platforms like Google Analytics or Mixpanel, selecting the right tools can streamline processes and enhance productivity. These tools should be chosen based on the specific needs of the team and the objectives they aim to achieve. Effective tools not only facilitate task management and communication but also provide valuable insights through data analysis. Regularly evaluating and updating these tools can ensure they remain effective and relevant. More selecting your tech growth stack is here Creating an Agile Environment An agile environment supports rapid iteration and continuous improvement. Implementing agile methodologies, such as Scrum or Kanban, helps in managing tasks efficiently and adapting quickly to changes. This flexibility is crucial for responding to new insights and market shifts. Agile practices emphasize regular feedback, iterative progress, and a focus on delivering value. By embracing an agile mindset, the team can remain adaptable and resilient in the face of evolving challenges. What Routines Foster Productivity and Innovation? Daily routines and rituals are vital for maintaining productivity and fostering innovation within the growth team. These routines help in planning work, running ideation sessions, keeping stakeholders informed, soliciting feedback, and maintaining alignment. Planning and Prioritization Effective planning involves setting clear priorities and allocating resources accordingly. Daily stand-up meetings can help in reviewing progress, addressing any roadblocks, and ensuring that everyone is on the same page. This regular check-in fosters accountability and keeps the team focused on their objectives. Additionally, sprint planning sessions can help in breaking down larger goals into manageable tasks, making it easier to track progress and make necessary adjustments. Ideation and Brainstorming Sessions Regular ideation sessions are crucial for generating new ideas and innovative solutions. These sessions should be structured to encourage creativity and open dialogue. Techniques such as mind mapping, brainstorming, and SWOT analysis can be used to explore different perspectives and identify potential opportunities. Creating a safe space where team members feel comfortable sharing their ideas without fear of criticism can significantly boost creativity. Regularly scheduling these sessions ensures that the team consistently generates fresh ideas to fuel growth. Stakeholder Communication and Feedback Keeping stakeholders in the loop is essential for maintaining alignment and securing buy-in for growth initiatives. Regular updates and transparent communication help in building trust and ensuring that stakeholders are aware of the progress and any challenges faced by the team. Additionally, soliciting feedback from stakeholders provides valuable insights and helps in refining strategies. Effective stakeholder communication can involve regular reports, meetings, and presentations to ensure that everyone is aligned and working towards common goals. What Cultural Pillars Support Growth and Innovation? The culture of a growth team defines its values and behaviors, which in turn influence its success. Establishing strong cultural pillars promotes a positive and productive environment. Promoting Ownership and Accountability Encouraging team members to take ownership of their tasks and be accountable for their outcomes fosters a sense of responsibility and commitment. This culture of accountability drives high performance and ensures that everyone is contributing to the team’s success. By recognizing and rewarding ownership, teams can create a sense of pride and motivation among members. This also encourages proactive problem-solving and continuous improvement. Encouraging Continuous Learning A growth mindset is essential for a successful growth team. Encouraging continuous learning and development helps team members stay updated with the latest trends and best practices. Providing opportunities for training, attending workshops, and participating in conferences can enhance the team’s capabilities and drive innovation. By promoting a culture of learning, teams can remain adaptable and open to new ideas. Regularly updating skill sets and knowledge ensures that the team remains competitive and innovative. Fostering Collaboration and Inclusivity A collaborative and inclusive culture ensures that all team members feel valued and are encouraged to share their ideas. Promoting diversity within the team brings different perspectives and enhances creativity. Collaboration tools and regular team-building activities can help in fostering a strong sense of unity and teamwork. By celebrating diverse ideas and creating an inclusive environment, teams can leverage the strengths of each member. This leads to more innovative solutions and a stronger, more cohesive team dynamic. Building a growth team with a SPARC involves a strategic approach that integrates key elements: Strategy, People, Architecture, Routines, and Culture. By setting clear objectives, assembling the right skill sets, establishing an effective organizational structure, fostering productive routines, and cultivating a positive culture, organizations can create a dynamic environment that drives growth and innovation. Embracing the SPARC framework can help your organization build a growth team that is well-equipped to navigate the challenges and opportunities of today’s competitive landscape.
By Simon Krokhmal July 26, 2024
For digital products, growth isn’t just about acquiring users—it's about understanding them, validating your strategies, and taking decisive actions that drive engagement and retention. A well-chosen growth tech stack is the backbone of this process, empowering product growth teams to harness data, experiment with confidence, and execute strategies that propel their products forward. But with countless tools available, how do you ensure you're building a tech stack that truly supports your growth ambitions? The key lies in adopting a structured, three-bucket approach: Learn, Validate, and Act. This framework not only simplifies the selection process but also ensures that each tool in your stack serves a distinct and critical purpose. In the Learn bucket, tools focus on gathering and analyzing data to provide deep insights into user behavior and market trends. These are the eyes and ears of your growth team, helping you understand what drives your users and where potential opportunities lie. Moving to the Validate bucket, the emphasis shifts to experimentation and testing. Here, tools enable you to test hypotheses, run A/B tests, and ensure that your strategies are grounded in evidence rather than guesswork. This is where your growth team can experiment in a controlled environment, validating ideas before committing significant resources. Finally, the Act bucket is all about execution. This is where your growth initiatives come to life through marketing automation, customer engagement, and CRM tools. These tools help you implement your strategies, reach your users effectively, and nurture relationships that drive long-term growth. By categorizing your tools into these three essential buckets—Learn, Validate, and Act—you create a cohesive and powerful tech stack that not only aligns with your growth goals but also enhances your team's efficiency and effectiveness. Dive in to discover how you can build a robust growth tech stack that empowers your team to achieve sustained product growth.
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