Why consumer startups should obsess over their Resting Growth Rate (RGR) with Kent Bennett - Ep 5

Key Takeaways
Consumer earthquake products turn their customers into their best marketers and advocates. This is the most important growth engine for a consumer startup.
While some companies use paid advertising to fill their leaky bucket, consumer earthquakes focus on building a product that people love so much that their own customers drive organic growth through social media, word-of-mouth referrals.
Here's the most important growth test: Without any paid marketing, do you still grow? We call this unpaid growth rate the “resting growth rate” (RGR) and it’s the best long-term predictor of efficient growth.
RGR is typically stable as a percent growth rate over time, and thus a positive RGR can drive compounding/exponential growth and help a company saturate a market without needing to burn insane amounts on paid marketing.
With a positive RGR, returns on paid marketing are much more efficient. Every customer acquired with paid marketing will turn around and drive more organic growth.
Beware the paid marketing treadmill. If your consumer startup depends on paid marketing for growth, then as time goes on you’ll need to increase spend on paid marketing to keep growing and as you scale the marginal cost of acquisition will increase making the problem worse over time.
Kent Bennett on Consumer Earthquake Startups
Episode 1: Consumer startups are earthquakes not just unicorns
Episode 2: How to build a truly great product to power a consumer earthquake
Episode 3: The most important metric for consumer startups (and why it isn’t churn)
Episode 4: How to calculate Customer Lifetime Value (LTV) for consumer startups and what it really means
Episode 5: Why consumer startups should obsess over their Resting Growth Rate (RGR)
Episode 6: Four core moats of long-term defensibility for consumer startups
Full article: bvp.com/atlas/c...
Get to know Kent Bennett: bit.ly/kentbennett
Subscribe to Bessemer’s Atlas: bit.ly/subscrib...

[@randyschwaggins]

Ur the expert but those huge growth rate companies you mention also ran mkt share/revenue models that paid no attention to profit margin. This may work in some circumstances but it can lead to companies that have secured huge amounts of funding but are never profitable. Now we are in a rising interest rate environment...startups need to follow a profit based model and that means initial growth cannot be at the 1000% per annum level...and investors need to accept that.

[@ChrizzeeB]

Yes, yes, organic is cheaper and more exponential than paid...
The how - with concrete examples and ideas would've been interesting