https://blog.growthhackers.com/how-to-build-a-growth-model-part-1-9870d78e67f8
When I was hired as PM Growth at GrowthHackers.com, one of my first few tasks was to create a growth model for the business.
With my past experience and training, I was familiar with concepts such as Lifetime value modeling, financial forecasting modeling, and even mathematical modeling. But I really wasn’t sure what a growth model was.
As I began to read a lot and develop my understanding around it, I realized the concept of a growth model is both an old and a new one. It has a lot of similarities and connections to what’s traditionally called a “business model”, but companies and teams now focus much more specifically on growth and take a much more data-driven and experimental approach.
At its core, a growth model boils down to a way to conceptualize and summarize your business in a simple equation, which allows you to think about growth in a holistic and structured way.
“Any business can be explained using a mathematical equation”
Andy Johns, VP Growth at Wealthfront, formerly PM growth at Quora & Facebook
“What is the one equation that describes our business?”
Tomasz Tunguz, Partner at Redpoint Ventures, formerly PM at Google
Here is my version:
“A growth model is an equation that tells you what are the different variables in your business and how they work together and translate into growth.”
When you build a mathematical model, you need the following components:
The same applies to a growth model.
I will share a few examples below to give you a visualized view of what a growth model should look like.