Picture two companies. They share the same fundamentals, same market, same starting capital. Five years in, one has built a solid business: steady revenue growth, approaching profitability, a happy customer base. The other is on pace to be the fastest-growing company the category has ever seen.

The usual explanations don't hold up here. Product-market fit doesn't explain it, because both companies have it. Luck could play a role. But only up to a point.

Something else is going on. An X-factor of some kind. Or, as we like to call it, a growth catalyst.

Foundations explain a lot, but not the outliers

A strong foundation, which we usually talk about as alignment across your Foundational Five, explains why you grow. The ease/difficulty in which you'll grow. It doesn't explain why a few companies grow at a completely different order of magnitude.

That's where growth catalysts come in: structural or situational advantages that wrap around your foundation and accelerate everything they touch. They help to explain how two companies with similar fundamentals end up in totally different places, and why a rare few end up setting growth records.

Catalysts split into two buckets:

• Flywheels are self-reinforcing. Each turn makes the next one cheaper or faster, so growth compounds instead of flattening out.
• Boosters aren't self-reinforcing. They give you a real edge, but lack the defensibility of a flywheel.

We went deep on flywheels a few months back in Growth Newsletter #307, so I won't run it all back here. The short version: they're the big enchilada of growth catalysts. The biggest growth driver of them all. But they're also rare and require enormous investments to get spinning. Boosters, on the other hand, tend to be more accessible.

The boosters worth looking for

Market boosters. Being early to a market before it's obvious.

The most common version is an underserved market. Nobody's serving a group of people well, you show up, and for a while you're the only real option.

The catch with market boosters is the expiration date. The moment competitors clock the same shift, things get crowded quickly.

An underserved market catalyst is no different. Yes, it may be a catalyst today, but it's not inherently defensible. If others rush in once they realize your insight, then your catalyst is going to be diminished, if not entirely wiped out.

The next market catalyst is regulatory or cultural shifts. For example, spotting a regulatory change that opens up a market that used to be closed. Very similar to the underserved catalyst in that you are, at least for some moment of time, playing in a blue ocean.

Product boosters. When distribution is built into the natural usage of the product.

The most common version is user-generated content, or what I'd more broadly call user-generated artifacts. Notion is the classic case. Users built templates, published them, and did the marketing for free. Templates were onboarding, content, and a small switching cost for whoever made them, all at once.

Real quick, it's worth clarifying why this is a booster and not a flywheel: The core product doesn't get better as more people join. Only the distribution does. i.e. product-led growth and network effects are not one and the same.

Then there's IRL virality, which people forget about because there's no share button involved. Lime scooters, for example. People saw them around their city, saw other people riding them, and asked what they were. The product did the advertising by existing in public.

Model boosters. These emerge when your business model lets you offer something rivals can't afford to match. One of the most well-known (and effective) is being the only player in a market with a free offer.

Take Robinhood. Every other broker charged ~$5 a trade because they had branches, brokers and legacy infrastructure to support. Robinhood's model didn't, so it could run at zero and still make money. For years, that was their edge. Until it wasn't. In late 2019 Schwab went to zero, and within days basically the entire industry followed.

That's boosters for ya: high impact, low defensibility. Free only counts as a catalyst when you're the only one offering it. The moment a rival matches your model, the edge is gone.

Brand boosters. This is where it gets fun. These live in how people see you: a story or a stance a competitor can't copy without hurting itself.

Dollar Shave Club versus Gillette is textbook. DSC built a cheap, irreverent, direct-to-consumer subscription. Gillette held off from copying it for years, because matching that price would have torched their premium positioning and matching that model would have damaged their relationships with retailers.

Then they watched DSC take enough market share that they caved anyway. Gillette launched its own subscription club in 2015, then cut blade prices around 12% in 2017, the first legit price cut in the company's history. And it hurt. The cuts dragged on sales, and P&G eventually wrote down Gillette by $8 billion.

That's counter-positioning working exactly as designed. The incumbent is stuck both ways: damaged if they don't respond, damaged if they do. To capture it, build the thing your incumbent can't match without hurting itself.

Founder story and category creation live in this same bucket. A known founder buys trust nobody else can fake. Owning a brand-new category buys you your own little monopoly, at least until someone else rides your coattails.

Channel boosters. These are the most underrated of the bunch, and they're not really about being first to TikTok. That's the small version. The big ones:

A whole new distribution platform emerging. The internet created search and banner ads. Mobile created social ads. Right now it's LLMs, and that window is open while you're reading this. The companies that figure out how to get found inside AI answers over the next two years will look, in hindsight, like the ones who figured out SEO in 2005.

AI search is unusual because it's two things at once. It's a fundamentally new distribution platform. But it also looks like one of the rare channels that compounds: the position you build now gets harder for a competitor to take from you later, the same way early SEO positions did. That combination is why we've been putting real weight behind it, and it's the whole reason we built Saturation, our AI search agency.

Platform and ecosystem access. Third parties build on top of you and bring their audiences with them. e.g. Shopify's App Store.

Exclusive audience access. You own a large audience you can reach whenever you want, or you have privileged access to a market that's closed to most operators.

An ignored or under-executed channel. Sometimes a space that looks like a red ocean begins to look pretty juicy when you realize the incumbents are all duking it out on the same channel when there's another way to reach the same market.

Company boosters. An elite founding team. Privileged network access (usually because of said founding team). And access to outsized capital. Those are the biggies. Not exactly things you can just snap your fingers and create. But they are catalysts. And if they're present in your company, leveraging them should be a focal point of your growth strategy.

Where to start

There's a lot written about engineering catalysts and moats into your company, and our advice here is simpler than that.

Every company has its own DNA. That's what the Foundational Five is really for. Your market, product, brand, model and channel constrain each other, and together they set the limits on what's viable at the strategy and execution layer. Catalysts work the same way. Given your DNA, only a handful will ever be available to you, and no amount of wanting one changes that.

So don't start by building. Start by assessing.

And when you find a candidate, check the conditions before you get excited. A free tier isn't a catalyst if two competitors already have one. An underserved market isn't a catalyst if you're the third one to notice. An under-executed channel is only a catalyst if you have the expertise to outexecute.

Maybe you have an existing booster. A founder with a sizable social following, for example. But is your growth strategy built to fully leverage it? We see plenty of "influencer" founders who go months at a time neglecting their sole advantage because they're so focused on building the rest of the business. If you have a catalyst and it isn't the cornerstone of your strategy, it's time to reset.

Most founders come up empty on that first pass. Completely normal. The bigger question is what comes next: what would have to fundamentally change for a catalyst to exist a year from now?

Wrapping up

Great fundamentals get you into the game. A catalyst is why some companies break out and stop playing the same game as everyone else.

(I know, cheesy ending. Couldn't help myself.)

If you have any questions about identifying or leveraging catalysts for your company, shoot us a note. Otherwise, that's all for today!