Hypergrowth playbook: 11 tactics shared by the world’s fastest growing companies
Learning from the most disruptive and fastest growing companies on the planet is valuable for all businesses at any stage or size.
What do companies such as Amazon, Microsoft, Facebook, Apple, Alphabet (Google), Netflix, Shopify, Salesforce, Adobe, Spotify, Tesla, Xero, Atlassian, Tencent, Pin Duo Duo and Alibaba have in common? These largely technology-based companies are among the only companies on the planet that have seen consistent double-digit revenue growth over the last five years.
Through COVID, these companies are not just surviving, but thriving, reaching all-time-high market valuations. Some say these companies are now priced for perfection, but investors continue to own and buy shares in these companies because they are seen to be the most resilient and best positioned to strengthen post-crisis and continue to dominate their markets, changing the way we work, create, connect, shop and play.
Learning from the most disruptive and fastest growing companies on the planet is valuable for all businesses at any stage or size.
These hypergrowth global companies have 11 key characteristics. So which will you test to improve your business?
The 11 key characteristics of hypergrowth companies
Inspiring founders
Many of these companies have been founded by leaders who are visionary, adaptive, curious, creative, and composed.
Steve Jobs of Apple, Elon Musk of Tesla, Jeff Bezos of Amazon, Jack Ma of Alibaba, Marc Benioff of Salesforce, and Mike Cannon-Brookes and Scott Farquhar of Atlassian have galvanised their organisations to focus on their purpose, customers, products, invention and to deliver value to all stakeholders.
Visionary storytellers with access to almost unlimited capital
These companies have clear purposes, well-defined cultures, strong political influence and are thought leaders. Their leaders create clarity out of complexity and communicate their vision with compelling narratives and storytelling.
Jeff Bezos’ legendary annual letters to shareholders promises customer obsession and returns over the long term, with profitability reinvested into future growth rather than returned to shareholders as dividends. Apple, Facebook and Google hold annual product and developer conferences to set the agenda and to align the ecosystem to deliver their solutions to customers.
Deliver beautiful user experiences
These companies deliver unique and better product experiences. They are focused on solving a customer problem in ways that are faster, easier and cheaper.
Google search is simple, functional, contextual, predictive and free. Amazon’s payment experience is seamless. Apple’s product set up is easy and intuitive.
Products get better with usage through AI
By leveraging AI, Netflix, Bytedance’s TikTok and Facebook recommend relevant personalised content based upon previous interactions. As a result, the more you use the product and the more it learns about your interests, the better it gets in recommending solutions — which, in turn, drives usage and loyalty in a self-reinforcing cycle.
Vertically integrated
These companies largely control the value chain from strategy, design, development, distribution, payment and the ongoing customer relationship.
They tend to have a direct personalised relationship with their customer. They own the customer relationship and the data that gets created throughout the entire customer journey to consistently iterate to improve the customer experience.
Netflix invests billions on original content for streaming, Apple owns its own store network to support discovery, learning and service, while Amazon spends billions on faster fulfilment.
High active usage with intense customer love
These companies understand and measure the drivers of revenue including choices around acquisition, activation, retention, referral and resurrection. Many have deep daily engagement with a high proportion of frequent users who rely on the product or service every day.
Tencent’s ecosystem is so wide it features news, social, e-commerce, entertainment, payments and cloud solutions to capture more share of time, interactions and wallet.
Tesla receives deep love from their owners contributing to stratospheric market valuations, which has Tesla worth more than all other listed car manufacturers.
Recurring revenue model
Amazon has been able to generate 150 million Amazon Prime members who pay a monthly subscription fee for faster delivery, lower prices and video content. Importantly, Amazon Prime members are worth more than twice as much as non-Prime customers in annual revenue.
Microsoft, Spotify, Shopify, Adobe, Salesforce, Xero and Atlassian have developed software-as-a-service business models with recurring revenues and low levels of attrition on renewal.
Subscription-based revenue models are attracting higher market valuation multiples when attrition is low and lifetime value is high.
Positive unit economics and scale at marginal cost
As revenues from more and existing users scale, costs go down per unit leveraging fixed costs.
These companies have used their positive unit economics to deliver high levels of liquidity and strong balance sheets. They scale at almost no incremental cost which drives incredible profitability.
Dominate a category (become almost unregulated monopolies)
These companies dominate a category that they have often created.
Google dominates search, Facebook dominates social and Microsoft dominates enterprise software.
As a collective, these customers have incredible market power. Their customers become highly reliant on their products and services and there are few substitutes.
They also tend to have few customers accounting for a major proportion of revenue, so they have fragmented customers and are price makers.
Global reach and lower tax
These companies typically have wide global reach to attract, retain and improve active usage among hundreds of millions of users which creates enormous scale and network effects.
They also tend to pay lower levels of taxation than existing players as a result of their reinvestment in R&D and selected use of international tax evasion practices.
Because corporate tax is based on profits, not revenues, Amazon has paid a fraction of the tax that Walmart has contributed over the last 20 years, instead reinvesting to fuel growth.
Talent accelerator and equity rewards
These companies attract the very best global talent. Young leaders gravitate to these businesses to learn and develop to accelerate their careers.
These companies have well defined cultures, high employee engagement, very competitive rewards and strong development programs.
The rewards in these companies, designed to attract and retain the best talent, include generous long-term equity for tenure (e.g. restricted stock units) which can create life-changing wealth for the best talent.
