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What is hypergrowth and the secret to achieving it in a startup or a company? The best kept secrets revealed in achieving hypergrowth.
Hypergrowth is a dream for many investors and entrepreneurs. Who wouldn’t like rapid, high speed, exponential growth that shines like a unicorn. There is a need for a unique capacity to manage and experience this surge of growth called hypergrowth. This unicorn rearing is also known as Hypergrowth. Here is all you need to know about hypergrowth- challenges, strategies that can propel hypergrowth and more.
Hypergrowth is a phase of rapid expansion where companies experience a compound annual growth rate or CAGR of 40 % or higher. First coined by Alexander V. Izosimov in 2008 for an article in Harvard Business Review, hypergrowth means ‘the steep part of the S-curve that young industries experience that sets them from losers.’
In the product-market fit, hypergrowth occurs at Stage 4. Hypergrowth is essentially driven by market demand. This means that growth can occur always, but only if there is market demand- there will be hypergrowth. Companies on a hypergrowth wave can move quickly and adapt to continue. To quote the HBR definition, ‘the winners get sorted from the losers’ on that curve.
According to the World Economic Forum, hypergrowth is coined in a different manner. “During the past decade, as technological convergence has moved progressively forward, rapidly rising companies have astonished the global public with their ability to expand and scale at a pace that was previously unknown. From this phenomenon, the term “hypergrowth” was coined.”
So to make things simpler, take a look at this table below.
Normal Growth CompaniesCAGR is less than 20%Rapid Growth CompaniesCAGR is between 20% and 40%Hyper Growth CompaniesCAGR is more than 40%
Also known as blitzscaling, hypergrowth has three main components-
Here are some strategies that have helped fastest-growing companies fuel hypergrowth. As per he World Economic Forum, here are what 200 high-growth businesses prioritise for hypergrowth.
Hypergrowth is driven by market demand as mentioned. So only an innovative service or product can create this increase. It may create a whole new market segment altogether. This is also known as product-led growth– where companies rely on product usage and features to drive customer acquisition and retention.
For example: Slack is a highly innovative product that has changed internal collaboration and made it intuitive for teams globally. The easy joining process also make their revenues grow from $0 to $4B in 4 years mostly through word of mouth.
Another aspect or strategy that drives hypergrowth is customer centricity. This is by actively listening, incorporating customer feedback and more into product development. This feedback has increased the chances of hypergrowth. Use data and metrics available to make the best of customer information.
Some metrics that can help track this include-
We will discuss more about customer success and hypergrowth later.
As per the WEF survey hypergrowth companies need to scale their businesses. A 35% of their challenge comes from scaling businesses. For example: Uber till 2013 had a cumbersome process for registering drivers online. Drivers has to visit the local office and apply to be a part of the company. This was made scalable with a web portal for signing in of new drivers. This helped expand internationally and redesign to fuel growth.
For a company a team believing in them is the biggest thing. In case of any event, if the team believes in you chances of productivity and being engaged are more. This shows that engaging your team is important in expansion and growth. Increased employee retention is one of the drivers for hypergrowth.
Hypergrowth companies need to focus on having a rapid response to change. This means they need agile, lean processes that are simple and scalable in terms of operations. This agility impacts key growth drivers like operations, technology, customers, partnerships, finance, and talent. Being agile means focusing on changes for important milestones and navigating landscapes.
Stakeholder management is another important aspect. Hypergrowth companies need to develop great relationships with all stakeholders such as investors, board, partners, employees and more. Synchronizing these people and openly communicating can help utilize their experiences for growth.
Hypergrowth companies must have some innovative technology if they are not creating something new. They need to have disruptions that transform industries and realize undeveloped opportunities for hypergrowth. They need to have long-term vision and funding to connect visible tech platforms to the product to improve the people, process part of growth.
The general notion is that there are three stages to a hyper growth. However, HubSpot has included a fourth stage called market saturation. The three recognised steps in hypergrowth include-
Another terminology by Nikhyl Singhal terms it as-
This is the first stage along the hypergrowth curve. Here the business is trying to see if its actually possible to build this product or achieve this result. The emphasis is on product development and project management. You need to know if its possible to bring this into reality.
The second stage is the Model T stage. This is where you check the product/market fit and ascertain how to bring it to the masses. For example: When WordPress saw the feasibility in bring blogging to the masses. This is the stage where you will have to spend some time. You need to examine your strategy based on resources and teams.
In this stage, you are dealing with a global audience. You need to deal with competition, scale the product, innovate it further, introduce new products to support that growth. It is also important to become an overall top category contender and also create a micro-niche that will help you dominate a specific segment. An example of this: Zoom has more than 200 million meeting participants in a single day. With COVID-19, Zoom has become a household name.
For any company while growing is important, there can exist many problems that occur. Some of the bottlenecks that companies in a hypergrowth phase face include the ones below. According to the World Economic Forum, here are some challenges of hypergrowth companies.
The biggest problem faced by hypergrowth companies is scaling. Nearly 35% hypergrowth companies face problems with their scaling.
Nearly 4% of hypergrowth companies face the problem of transformation.
Expanding is another problem or challenge hypergrowth companies face. Nearly 30 percent of companies face the problem of expansion.
Close to 22% of companies face a challenge with start-up or founding members. This means some members may not be aligned with the growth as others.
9% of hypergrowth companies face challenges with sustaining the growth phase. It’s not easy to handle such growth and increase in profits.
The top priorities of hypergrowth companies are below.
Hypergrowth is a market-driven demand. A good innovative product an increase and create a new market altogether. As per OpenView Partners, “Companies with a PLG strategy rely on product features and usage as their primary drivers of customer acquisition, retention, and expansion. It’s through this strategy that companies are able to grow faster and with less cash.”
You need to carefully analyse customer data, actively listen, incorporate customer feedback, and then achieve hypergrowth. It is a top priority for companies as it keeps the business higher on a growth curve.
Growth is possible when the priority is scaling the business. One needs to succeed at scale and that is critical to achieving and sustaining hypergrowth.
Companies in a hypergrowth phase have important tools like culture and mission. These are important to keep the team engaged, involved, and productive. They help in increased retention, faster hiring, higher productivity, and increased innovation.
Zoom has now become a household name. The growth can be attributed to COVID-19 when over 200 million participate every single day. Zoom is customer-driven and bases heavily on customer feedback. They also spent on well-meant advertising, product building, and more.
Stripe is commonly used by Amazon, Uber, Lyft, Shopify and more to process payments. With a simple, borderless program, it has become a strong line for businesses to grow in their digital transformation. Stripe kept their customers close and constantly exceeded their expectations by offering an immersive customer experience.
Hyper growth in startups happens due to a single thread connecting them all. All the hyper growth companies aim to make customers happy. The key to the success of Zoom, Zappier and many more can be attributed to the strong focus on customer support and customer success.40
By listening to customer concerns, creating products for their happiness, optimising for their happiness and adapting to their requirements- you can achieve hyper growth. The secret key for hypergrowth success is ensuring that customer satisfaction and customer success remains central. Hypergrowth also comes with huge risks and challenges. By strategically handling processes, you need to scale your systems and culture to meet hypergrowth.
Kruthan Appanna is a Customer Success Analyst with 5 years of experience. Passionate about leveraging data-driven insights to drive customer satisfaction and retention. Skilled in building strong client relationships and providing strategic solutions.
Published May 11, 2021, Updated June 07, 2023
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