Key to success: everyone wishes to know what it is the for their business. Sometimes we have to stop and listen, listen to others that did it right and might have a few important words to say to help us find our way.
Key to succes: An interview by Adrian Moreno with David Arnoux Head of Growth/Co-founder Growth Tribe
1. MY BUSINESS VISION IS “LIKE A SERIES OF BETS”.
I like to use this mental model. I see Business as a series of bets, with associated risks and rewards (key to success?). Your business evolves within a complex adaptive system (complex = many internal & external variables + adaptive = these variables are always moving) meaning that the outcomes of these bets are always unpredictable. Because of this unpredictability, a successful business will try to place as many bets as possible (both quality and quantity) but also as fast as possible. The only way to place good bets in the face of unpredictability is to de-risk them little by little rather than placing large big-bang bets. It’s a basic rule of probabilistic thinking.
The way we apply this daily at Growth Tribe is by embedding rapid experimentation into everything we do. Pre-testing campaigns, products, features, recruitment strategies, sales funnels etc. Once these experiments are placed it’s up to us to analyze the feedback loops coming from these experiments. We then kill what’s not working and double down on what works. Being wrong might hurt you a bit, but being slow will ultimately lead to your demise.
2. MY MOST IMPORTANT DAILY ACTION IS THE “TWO HOURS OF READING OR PODCASTING”.
I do every day. It allowed me to keep developing a deep and wide understanding of the world. It’s the best way for me to sharpen my intuition, discover secrets others don’t see and spot patterns. It also allows me to live a fulfilling life where I’m continuously learning. One of our values at Growth Tribe is to always be learning and always be teaching. What better feeling than to be learning and expanding your view of the world.
3. PLEASE MENTION WHAT IS THE MOST IMPORTANT METRIC FOR YOU TO GROW A BUSINESS?
The most important metrics to grow a business are usually extremely contextual so it’s difficult to answer across the board. For example, it depends on what strategy you are pursuing, a company in blitzscaling mode will try to grab market share regardless of cost, whereas a bootstrapped company will have to focus on its unit economics.
But let’s focus on companies that do want to turn a profit and not just grab market share as fast as possible regardless of cost.
For these types of businesses, the 2 most important are: 1. Customer Acquisition Cost (CAC) which is the cost to acquire a customer and 2. Customer Lifetime Value which is total revenue you expect to get from a customer during their lifetime using your product or service.
Typically we like to calculate CLTV using gross margin rather than revenue. You can’t run a business unless you’re making more from your customers than it costs to acquire them. Some rules of thumb are that CLTV should be at least (I said at least!) 2x or 3x CAC and that it should take less than a year to recuperate the CAC. If not, you’re going to have cash flow issues.
Key to success? With David Arnoux of Growth Tribe
Interview by Adrian Moreno
COO & Head of Growth