We haven’t really talked about this much despite it being one of the top things we help teams overcome.
Growth stalls.
A growth stall is when you’re growing extremely slowly or not growing at all. Net new MRR is basically being neutralized by the churn you’re getting every month. Maybe you’re getting 1-2% growth month over month. Some companies we’ve worked with have only grown 2% in the whole year.
We’ve worked with over 100 companies at this point. We’ve seen a lot of growth stalls. And what’s really interesting is there are common patterns – where the stall is happening, why it’s happening, and what ARR number it’s happening at.
The three breakpoints
The most common growth stall points in the growth journey are three specific milestones.
$1 million ARR
It’s extremely common to get to a million and then completely stall.
Usually it’s because there’s an overfocus on customer acquisition but an underfocus on everything else: core ICP, go-to-market strategy, product. Sometimes this can get extended to the next milestone, three to five million. But usually at a million, you’re stuck because you’re overly focused on marketing and not enough on the other levers for growth.
By a million, you should have a solid understanding of your acquisition channels. What actually gets you more customers. What activities will take you beyond. But at a million, that’s not always clear. Is it SEO? Ads? Email list building? Conferences? All of that is hyper dependent on your market and budget.
A million is tricky because if you don’t have that scalable channel and you’re not thinking about the other growth levers, it’s really hard to break past a million. Getting to 2 million feels really hard.
$3-5 million ARR
This could be three, four, or five million. But there’s a break point here where you can reach a stall.
If you’re stuck at three to five million, you probably have a solid understanding of marketing and customer acquisition. So we need to look elsewhere—usually it’s something internally amiss. Operationally. Team structure. Leadership.
There’s a company stuck at 4 million. They’ve been here for a while. What’s preventing them?
First, their team structure. They’ve got experienced marketers who are amazing. But there’s no marketing leader. The organization is very flat. If it’s the founder managing everyone, they’re not going to be able to manage everyone effectively. And that’s assuming the founder is a good manager.
If you have more than one person on the marketing team, it might be time to think about who’s going to be the head of marketing. Who’s going to be responsible for the performance of the function. The same is true for product.
Are you still the right person to lead product?
Sometimes the founder is the right person because they’re the most dialed into the customer. But a lot of the time, they’re not. They’ve been running product the way they know. They’ve never seen an expert come in and do it.
At three to five million, there’s usually no person in charge of UX design or product management. No one’s really using product analytics to identify sticky problems that fundamentally unlock growth. If you’re treating your product function like order taking, you’re leaving the most critical part of growth on the table.
This company at 4 million also suffers from massive technical debt. The product is really hard to build new things on top of. This creates a huge ripple effect. Technical debt means analytics debt. Data debt. There’s no way for the growth team to get the data they need to understand user behavior.
This creates a self-fulfilling prophecy.
They do things without information. Even if they implement certain things, they wouldn’t know if it made a positive or negative impact. You’re literally feeling your way in the dark. Is this a growth opportunity? Don’t know. But I guess we’ll try it.
This team is super experienced. But they don’t have what they need to do their best work. There’s a ceiling they can see through but can’t break.
$10 million ARR
This one is more elusive. Some companies get stuck here, but a lot don’t. It’s hard to study because there are so few bootstrapped companies that reach 10 million ARR.
If you’re lucky enough to get to 10 million, what needs to happen next is you need to start thinking strategically about product, market expansion, and go-to-market in a way you might not have had to before.
If you’re stuck at the 10 million mark, you’re either in one camp or the other. Either you might need to do more product innovation, or you have extremely strong product-market fit but you’ve lost focus on your ICP and need to refocus.
Those are two different games to play.
The other growth levers
If you’re trying to get to 10 million, you have to pull more than just the marketing lever. Not only is it one of the least efficient ways to grow, but it’s more expensive than it’s ever been.
Where we start looking:
Activation: How are we doing on the activation side?
Retention: Not just short-term or monthly revenue retention, but long-term retention. Are we keeping customers longer than 12 months?
Pricing and monetization: Are we refocusing on our ICP? Do we have the right pricing model for those people?
Internal operations and process: Your product development process can be a contributing factor to slow growth. If you’re not looking at product as a growth lever, if you’re just checking boxes to reach feature parity, you’re leaving a huge thing on the table. We’ve seen many companies chase feature parity to their detriment.
Go-to-market strategy: Who’s on the growth team? What’s the strategy?
With a growth stall, it’s probably more than one thing happening. You really got to dig into each of those.
This is really hard to do if you’ve never seen what a high-performing growth team looks like. You’ve got to surround yourself with people who have experienced growth stalls and come out of them. Surrounding yourself with experts is infinitely more effective than trying to kick around by yourself.
How to know what’s causing your stall
Usually at a million, you can look under the hood and see it really quickly. It’s the obvious stuff. Activation. Pricing. Sometimes poor NRR, though it’s rare to get to a million with terrible NRR.
As a refresher: anything less than 80% at 12 months net revenue retention, you’re going to have a bad time.
At three to five million, it’s usually more than the obvious stuff. It’s operational. Leadership-driven.
Part of the job is getting really critical about:
- How’s team structure?
- How do they make decisions?
- What are they tracking and measuring?
- Who’s responsible for what?
- On the product side, who decides what goes on the roadmap?
- What research are you doing on the user side?
Based on how those motions work, we’re asking sales performance questions. Talking to support. Talking to customer success. Talking to engineering.
It won’t be shocking, but it might be surprising to find there’s a lot of conflicting perspectives. The company I was talking about—customer support is like, we’re losing people who want features. But the founder is like, we don’t need to build more features. Everyone’s happy.
That’s the kind of misalignment you might see.
The stuck loop
Another pattern: companies that create anti-growth loops. Things that keep them stuck.
There’s a company at 5 million with a completely flat organization. 30 or 40 individual contributors and two founders. Those two founders do all the check-ins. They have daily scrums where they have 30 meetings in a day.
This is an operational nightmare. Those two founders are the bottleneck for everything. They’re responsible for making decisions across every single part of the business. That would make sense if they were experts in everything, but they’re not. And even if they were, there’s not enough time in the day.
These founders are constantly in panic mode. Because they’re so stressed and busy all the time, they can’t even entertain expanding the product—which would solve a lot of their problems. Their stuck loop is how they’re structured. That’s impacting their decisions around growth, product expansion, and pricing.
If they never expand the product, they’ll never be able to charge more. That will forever keep their LTVs low. That’s a problem.
What it takes to overcome a stall
If the founder is self-aware enough, they could pause everything and have conversations with everyone individually. They could unearth a lot of this.
Where it’s tricky: does your team trust you enough to tell you the truth?
Most leaders have bias toward what they think is the thing. It’s so easy to create self-fulfilling prophecies in your own organization. The founder of one of the companies I talked about fundamentally believes growth isn’t going to come from product. But customer support is like, we’re losing customers because we’re not growing the product.
The customer support team might never feel empowered to tell the founder CEO they have a fundamental bias. But that’s easy for someone like me. My job does not depend on appeasing someone’s ego. My job is to help troubleshoot growth and overcome the growth stall.
A lot of CEOs and founders forget they hold a particular spot in everyone’s minds. You might not actually ever get the reality because of how people perceive you.
The Buffer story
Buffer overcame a really big growth plateau. Their ARR dropped 20% over four years to 17 million. Joel persisted in leading Buffer to new all-time highs. Buffer’s ARR now sits at 22.3 million.
They had a hyper-focus on churn. What that means: pausing every project and getting every team aligned on this one problem.
I crave that type of leadership so much. I think so many leaders today just operate in status quo. I’m guilty of this too sometimes. I crave the leadership of pause everything because nothing else matters until we fix churn.
A lot of teams are in free fall or in a stall. They’re like, oh well, we can just continue operating and maybe something will happen and it’ll get fixed. Or they add random projects that make everyone frenetic. You’re still not really addressing the problem.
Usually what it requires is to pause every project and actually address the problem. Get hypercritical about what’s on everyone’s plates. Does this make sense? And if not, toss it. This is now the new priority.
Joel and his leaders were like, what is Buffer actually good at? They did a go-to-market realignment. Who is it the best for? Let’s look at the product roadmap and clear out anything that’s not for those people. Let’s look at go-to-market and customer acquisition and clear out anything that’s not for those people.
That type of refocusing and realignment is so critical. It takes a lot of guts. But it also takes exercising leadership—using the power of leadership to make a fundamental change in the business.
That’s the kind of leadership you have to have about a growth stall. You can’t just sit and add more projects and hope that works. You might have to pause things. Throw certain things completely out. Refactor everyone’s brains about what needs to happen in the business.
There’s a term for that no one likes: change management. Transformation. That’s the shit people don’t like to do. But it’s what’s necessary.
The myth of “we’re too small”
There’s this belief that just because you’re a small team means you won’t experience these problems. I’ve heard this from founders: well, we’re small, so we don’t really need change management.
I actually take the opposite. You’ve got 10 people on your team. Those people should be pretty deeply aligned. There’s no excuse to not have people aligned on priorities, goals, and expectations.
When companies get stuck, a lot of it comes down to how they’re operating, what choices they’re making, and how they’re prioritizing what’s important and what’s not.
So where are you stuck? And more importantly, are you willing to pause everything to actually address the problem?
This is something we help with at DemandMaven. If you’re experiencing a growth stall and you’re not sure where the blockers are, let’s talk: https://demandmaven.io/contact/
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