The 90/10 Growth Rule
- Difficulty
- Moderate
- Time to result
- ~months to results
- Steps
- 6
- Confidence
- —
A mental model drawn from watching PayPal from the inside: roughly 90% of all growth came from about five things, even though the company tried hundreds of things, launched dozens of products and wasted money on campaigns that didn't work. That waste didn't matter because they were printing money. A startup with twelve months of runway and a million in the bank has no such luxury. So the operating rule is: assume 90% of your growth will come from 10% of what you do, and find that 10% as fast as possible. The method is to study how comparable businesses actually grew, generate a wide menu of candidates, rank them by likely impact, test cheaply, and then concentrate everything behind the few that move the number.
Origin
Extracted from Deep Dive with Ali Abdaal
How to run it
- 1
Assume the distribution is extreme
Start from the premise that 90% of your growth will come from around 10% of what you do — a sharper version of the 80/20 principle. Your job is not to do many things well; it is to find the few things that matter before the money runs out.
- 2
Study how comparable businesses actually grew
Read the great startup case studies. In every one you find the same pattern: Dropbox had a viral product-led referral loop, Canva had roughly 750,000 landing pages plus an optimised self-serve onboarding experience. Identify which of those engine types could plausibly apply to you.
Pro tip Look for two-part engines — an acquisition mechanism plus a conversion mechanism that makes new users successful immediately.
- 3
Write the full menu of candidate levers
For a given product line and revenue goal, list the menu of things you could possibly do. Breadth matters here — the winning lever is often somewhere unglamorous like integrations, distribution partners, or a process nobody thinks of as growth.
- 4
Rank by likely impact against your runway
Score the menu against how much of the growth model each item could move and how fast you'd know. With limited runway you cannot behave like a company with 24,000 employees spending five billion a year on stuff.
Watch out Copying the tactics of a company that can afford to waste money is how startups burn their runway on things that were never load-bearing.
- 5
Test cheaply and cut fast
Whittle the menu down to the three or four things that could actually deliver the goal, testing quickly rather than committing years. Kill anything that doesn't move the number.
- 6
Concentrate everything behind the winners
Once you've identified the small set that works, pour resources into it rather than spreading effort across the long tail of ideas that produced almost nothing.
In the wild
Looking back at his time at PayPal, roughly 90% of all growth came from about five things. Early on, before he joined, PayPal got onto eBay — they wrote a bot to bid on eBay items, pretending to be a buyer and asking whether the seller would accept PayPal, and sellers said yes. eBay became a huge early growth engine. Then they reached out to web developers, because those were the people implementing e-commerce. Then they realised most e-commerce sites were built on platforms — early Shopify-type businesses — so they reached out to the shopping carts and hosting companies and got pre-integrated. International expansion and a few more, but really not many.
→ Five levers accounted for roughly 90% of growth, out of hundreds of things tried.
Canva runs roughly 750,000 landing pages targeting search terms like award certificate template, birthday card template and social media post design. People Google those things and land on Canva — that's part one. Part two is an incredibly optimised self-serve onboarding experience, so a user with no Photoshop experience can get into the tool and be successful right away. The acquisition engine and the activation engine work as a pair: the landing pages would be worthless if new users bounced, and the onboarding would be underused without the search surface feeding it.
→ A two-part engine that compounds search demand into activated users.
Common mistakes
Spending like a company that prints money
PayPal could try hundreds of things, launch dozens of products and waste money on failed campaigns because the core business was so profitable it didn't matter. With twelve months of runway you get a handful of shots, so the search for the 10% has to be deliberate and fast.
Assuming growth means doing more things
Volume of activity feels like progress and hides the fact that almost none of it is contributing. The goal is to identify and concentrate, not to accumulate initiatives.
From the transcript
“I look back at my time at PayPal and I realized like 90% of all of our growth came from like five things”
“if you assume that 90% of your growth is going to come from 10% of the stuff you do you've got to find that 10%…”
“if you're a little startup and you've got 12 months a Runway and a million bucks in the bank you don't have that luxury”
From the episode
How I’m Scaling My Business from 7 to 8 Figures