Reverse Engineering Your Startup’s Success

chalkboard2.jpg

Who can forget gems like these word problems from 3rd grade math class?

Q: Jack walked from Santa Clara to Palo Alto. It took 1 hour 25 minutes to walk from Santa Clara to Los Altos. Then it took 25 minutes to walk from Los Altos to Palo Alto. He arrived in Palo Alto at 2:45 P.M. At what time did he leave Santa Clara?

It was during those classes that our mathematics teachers taught us how to work backwards through the problem.

A: You can work backwards from the time Jack reached Palo Alto. Subtract the time it took to walk from Los Altos to Palo Alto. Then subtract the time it took to walk from Santa Clara to Los Altos.

Working backwards is one of the most important skills founders and startups employ because it’s a technique to reverse engineer success. It means planting a flag in the ground and asking, “How do we get there with what assets and constraints we have?” This is true for growth, marketing, fund raising, hiring, financial planning, management and many other functions of startups.

At last week’s Growth Hacking conference Eliot Schmuckler, responsible for growth at LinkedIn and now VP of Product & Growth at Wealthfront presented his techniques for driving growth. First, he defines the right growth goal, a single most important number.

Second, he determines the growth drivers by working backwards from his goal. How many users does he need when? Which growth channels will provide what fraction of his users? Under which circumstances can his funnels grow to meet the desired targets for growth? How must his team ramp growth to accomplish the goal?

Coincidentally, I met a head of marketing candidate for a portfolio company last week. When I asked him about his marketing methodology, he said, “I measure gross margin by cohort and work backwards from there.” He was embodying Schmuckler’s advice.

Some of my recent posts like Hiring Your Start up’s First Salesperson and The Most Important Principle of Fund Raising work backwards from constraints to make an argument about how best to think about fund raising and when to start building a sales team.

Working backwards isn’t always the best technique. Agile product engineering and management favor iterative development and tend to avoid longer term planning which can be particularly valuable when discovering product market fit and iterating quickly.

But working backwards does work well in cases when longer term plans are required. By identifying goals and constraints we can find reverse engineer solutions within those parameters.

07 May 2013

Y

Read this next: