Growth pyramid
The Growth Pyramid (previously called The Startup Pyramid and The Startup Growth Pyramid) is a model for product evolution from discovering a market fit to growth. It provides guidelines and milestones that a product needs to achieve to achieve significant growth.
The Growth Pyramid was originally defined by Sean Ellis, based on common patterns he identified while working at Dropbox, LogMeIn, Uproar and several other high-growth companies. It is most commonly shown with 3 levels, although the model evolved significantly over time, and the most recent version published by Ellis has 5 levels (see the section on variants below).
Evolving from product-market fit
The model is notable for mostly dealing with the evolution after a product achieves the product/market fit. Ellis warns against rush into optimizing for growth before a product achieves a market fit. By measuring early traction, Ellis suggests checking if more than 40% of the users would be disappointed if a product disappeared from the market. If not, then optimizing for growth is still too early.
Achieving product/market fit requires at least 40% of users saying they would be “very disappointed” without your product. Admittedly this threshold is a bit arbitrary, but I defined it after comparing results across nearly 50 startups. Those that struggle for traction are always under 40%, while most that gain strong traction exceed 40%.
– Sean Ellis
Ellis then recommends identifying the benefits described by the users who would be very disappointed without the product, then focusing on highlighting and exploiting that, and consolidating the business model and operations to support growth. The pyramid model helps to identify the steps to take next, and “race up the pyramid” to accelerate growth.
Variants of the Growth Pyramid
The Growth Pyramid evolved over time, shifting focus from startup work to general product growth, and reflecting the trends that emerged meanwhile in the product management community, such as observability and product experimentation, and the impact on organizational culture.
2009: pre-scale steps
In the original 2009 blog post, Ellis listed 5 steps for what was then known as “The Startup Pyramid”:
Based on his earlier research, Ellis suggested that effectively executing pre-scale steps “improves the conversion rate to transactions by 5x or more”. There are 3 pre-scale steps in the model after product-market fit:
- Promise involves highlighting the benefits critical for the users in the market segment where the product discovered the fit. It’s common for products to evolve during the search for a market fit, and try addressing lots of different groups of users or customers. After the market fit, it should be clear which market segment is the most promising, so it’s important to re-focus marketing materials and the product experience on that.
- Economics involves developing a business model that allows the company to profitably acquire users at scale. Many products (especially those funded by venture capital investors) can afford to lose money on servicing and acquiring early customers, but this is usually not economically viable to continue into explosive growth (notable counter-examples exist, of course, but unless you can persuade investors to burn money for you, it’s recommended to sort out the business model before growth).
- Optimize involves experimenting with different customer acquisition processes to find one that is scalable and repeatable.
2013: Transition to growth and unfair advantage
In 2013, Ellis updated the blog post to simplify the pyramid into just 3 steps, and started calling it “The Startup Growth Pyramid”.
In effect, this version just simplified the visuals, and the three “pre-scale steps” from the 2009 version just got merged into “Transition to growth”.
A slightly more significant change was included in the Lean Analytics book the same year, where the authors Yoskovitz and Croll further rename the three levels:
- Product/Market fit: decide what you sell to whom, and prove it
- Stack the odds: find a defensible unfair advantage and tweak it
- Scale growth: step on the gas in new markets, products and channels
The Lean Analytics variant is interesting because it talks about focusing on a “defensible unfair advantage”. Although this was not explicitly mentioned in the original pyramid, it is potentially an interesting extra step to consider in transition to growth. The defensible unfair advantage could be in the “promise” part (you can offer some unique data or expertise that competitors can’t copy easily), the economics part (you can offer the service significantly cheaper than everyone else) or the customer acquisition part (your organic search performance is through the roof and competitors can’t easily achieve the same level of domain authority), or something potentially unrelated to Ellis’ three original steps (patents/competitive barrier to entry or similar).
2019: Metrics and organizational changes
In 2019, Ellis published a revised version of the pyramid, switching back to 5 levels but with a different focus, and dropping the “startup” from the name. The most recent iteration of the pyramid focuses a lot on observability and organizational patterns, not just on the product.
The levels in the 2019 variant are:
- Product Market Fit
- Instrument for Growth & Define North Star Metric
- Growth Team, Process & Organized Learnings
- Align Team & Testing Around High Impact Opportunities
- Company-wide Growth Culture & Mindset
The “promise” part of the original pyramid turned into Defining the “North Star Metric” that helps to “track cumulative value delivered across a growing customer base”. This metric is important because it reflects the promise the product makes to the market, and according to Ellis, it is also a much more sustainable growth indicator than user interactions such as registrations and downloads, or lagging business indicators such as revenue. (In the Value Exchange Loop terminology, this metric should track the value delivered to the market).
Ellis specifically calls out instrumenting the product with observability features that can help track and understand growth. This helps to avoid unintentionally breaking the core product promise or the growth engine later on when fine-tuning and accelerating the growth process. Products can achieve a market fit without strong instrumentation and observability capabilities, but that kind of infrastructure becomes crucial for further growth.
The third milestone involves building a team that can execute the later growth process. According to Ellis, “Your goal here is just to build a rhythm and habit of testing”. Effectively, this step builds the internal organizational capability to run experiments at scale. The goal is to start making tests and other growth activities cheaper, faster and more efficient, before actually trying to accelerate growth. Ellis suggests that a good indicator for such capability is being able to run 2-3 tests per week. (Ron Kohavi provides detailed practical advice on how to do that in Trustworthy Online Controlled Experiments).
The fourth milestone is to identify the highest impact opportunities and ensure that the growth team has the resources, organizational and management support and capability to test around those opportunities. Effectively this removes the obstacles to growth experimentation at scale.
The fifth step is to expand the culture and mindset of experiments beyond just the growth team, and get others involved for more impact.
Learn more about the Growth pyramid
- The Growth Pyramid Revisited by Sean Ellis (2018)
- The Startup Pyramid by Sean Ellis
- Lean Analytics: Use Data to Build a Better Startup Faster, ISBN 978-1098168186, by Alistair Croll, Benjamin Yoskovitz
- Milestones to Startup Success by Sean Ellis
Related and complementary tools to the Growth pyramid
Next article: Guardrail metrics