The Lean StartUp - 10 Grow

Eric Ries refers to the process that startups use to obtain sustainable growth as 'the engine of growth'. Sustainable growth, he asserts, is designated by the rule that recognises that "New customers come from the actions of past customers". Therefore, past customers can propel sustainable growth by 4 central ways:

1. Word of mouth. This can only occur when customers are satisfied. 

2. The use of the product by existing customers influences other customers to also use it.  

3. Funded advertising and marketing. This capital should only be invested from revenue from customers and hence, the more customers, the more funded advertising can occur which can propel sustainable growth. 

4. By the existing customers using the product consistently and repeatedly. 

These have the effect of going through the Build-Measure-Learn feedback loop (discussed in previous Chapters) much faster which is the essence of Lean StartUp and thus, the company can grow faster. 

There are also 3 types of engines of growth:

1. The Sticky Engine of Growth. This occurs when the company manages to retain the existing customers. To clarify, when the rate of new customers exceeds the rate of not retaining the existing customers. 

2. The Viral Engine of Growth. This occurs when the company goes viral by one way or another and therefore, the new customers coming in increases rapidly which drives growth. For instance, Ries uses the example of the company 'Hotmail'. After going viral, the company within weeks saw millions of customers signing up for their services. 

3. The Paid Engine of Growth. This depends on the increase of revenue from each customer or reducing the customer acquisition cost. Both would increase the margins of the company which would drive growth. To validate, if it was cheaper for a company to acquire a customer (e.g. 0$ from word of mouth instead of 5$ from paid advertising) this would mean more capital remains with the company which can be reinvested in i.e a better product and hence, bringing more customers and more growth. 

Lastly, a company's engine of growth will likely run out of gas at some point in their lifespan and therefore, the author points out that it is necessary for the company to find new ways to drive sustainable growth. This is in line with previous statements on this blog that a company getting complacent is a massive mistake. Therefore, as consumer demands change, the company must adapt with it which brings us to the next chapter.