How to Achieve and Sustain Hockey Stick Growth?

How to Achieve and Sustain Hockey Stick Growth? | Business Management | Emeritus

Facebook, or rather, its parent organization Meta, connects billions of people and collects billions of dollars annually in revenue. Things were not always like this. The conglomerate that Meta is today, in fact, began as a startup. Many other successful corporations today, such as Netflix or Apple, have a similar explosive growth story. Whereas their success stories might be inspiring, this isn’t always the case. A report on the success rate of newly founded businesses or startups shows that 1 out of 10 new organizations close their operation within the first year. And in the long run, almost 9 out of 10 end up in failure. Hence, to succeed in the long run, organizations need to ensure sustained growth over the course of time. For that, business owners need to have a strategy in place. This blog post discusses one such growth strategy— hockey stick growth.  

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What is Hockey Stick Growth?

A. Definition

The phrase hockey stick growth signifies a specific manner or pattern of business growth. In particular, it is a line-chart pattern that depicts rapid growth after a phase of stable and linear growth. Initially, the progress is sluggish, hence the linearity or relative stability. However, this is swiftly followed by an abrupt and substantial boost in performance. This particular pattern resembles the shape of a hockey stick, hence the term. This growth pattern has also earned the moniker ‘J curve’ owing to its resemblance with the English alphabet J. 

B. Different Stages of Hockey Stick Growth

1. Blade Years

The blade years signify the early phase of business where growth is linear. This is because it represents the time when a company makes its base strategies and begins to enter the market gradually. These years are crucial for establishing a sturdy foundation and refining business plans. For instance, this duration involves trying different techniques, identifying the market preferences/requirements, and building primary products or services through trial and error to quickly expand ahead. Additionally, this phase might also witness short-term failures. 

2. Growth Inflection Point

This is the point when growth starts to really take off. According to the standard lexicon of a hockey stick business plan, this point is typically termed the inflection point. For instance, it is a time when data or revenue begins to rise swiftly and sharply. The steep upward curve of growth signifies the transition from the phase of linearity to fast or exponential expansion. And this represents an important change in business dynamics. ​​It often results from a successful product launch, a strategic partnership, or market conditions favoring the business’s offerings. Hence, this point becomes significant as it sets the direction for the future growth of the company.

3. Surging Growth

Following the inflection point, there is a vigorous phase of growth characterized by a rapid and nearly vertical rise. The phase of surging is the most noticeable and striking, as data on the chart shows an upward trend in a straight diagonal line. During this phase, businesses often experience a rapid increase in the J curve. For instance, this might result from a sudden surge in customer acquisition, significant revenue increases, and enhanced market exposure. However, toward the final phase of this upward surge, the steep climb might begin to turn again into a more linear trend. This is when it becomes important for companies to focus on maintaining energy and managing resources effectively so as to maintain steady growth.

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5 Companies That Have Achieved Hockey Stick Growth: Case Studies

In the world of startups, many successful companies exhibit hockey stick growth. Below are the case studies of five such successful organizations.

1. Airbnb

Airbnb was founded in 2008 by three entrepreneurs—Brian Chesky, Nathan Blecharczyk, and Joe Gebbia. In the early days, Airbnb faced tough challenges as its weekly revenue was just $200 in 2009. However, the founders decided to make some radical changes which ultimately led the organization toward massive growth over a period of time. As a part of this strategy shift, Airbnb integrated B2B and SaaS solutions, a crucial move that streamlined their operations and scaled their services globally. Subsequently, this integration facilitated rapid and efficient property listings and bookings, enhancing user experiences significantly. Moreover, partnerships with various tech providers diversified the company’s offerings. It also helped secure its platform against competitors. 

Furthermore, adopting SaaS tools automated essential operations like payments and customer support, enhancing operational efficiency and user satisfaction. Ultimately, this tech-driven strategy saved Airbnb from early financial struggles and propelled it into unprecedented growth. For example, from $200 a week in 2009,  it earned 0.4 billion in 2014 and $4.8 billion in 2019. According to the latest report, in 2023, Airbnb’s total revenue was $9.917 billion, a sharp 40.17% increase compared to 2021. Airbnb exemplifies the classic J curve growth, making it emblematic of a successful hockey stick business plan.  

2. Netflix

The second case study example for J curve growth features the streaming giant Netflix. Reed Hastings and Marc Randolph launched Netflix in 1997 as a DVD rental service with less than 1,000 titles available for rent. In 1999, it initiated the subscription-based business model, which led to immediate success. The years from 1997 to 2000 are considered to be Netflix’s blade years as it was still figuring out business plans and models. In 2000, it earned  $41,237,464 in revenue, which was a sharp 607% growth in comparison to 1999. Hence, the year 2000 marks its inflection point. Despite certain losses, Netflix has since exhibited steady growth in terms of business and revenue. Its annual revenue was $1,670 billion in 2009, and this rose to $33,720 billion in 2023, marking a sharp and steady upward surge. Thus, Netflix provides another example of a successful hockey stick growth. 

3. Amazon

Another brand that embodies J curve growth is e-commerce giant Amazon. Established in 1995 by Jeff Bezos, Amazon was initially an online bookstore. From 1994 to 1997, Amazon navigated through its blade years, focusing heavily on infrastructure and market expansion but only experiencing losses. In 1997, it earned $173,154,541 in revenue, marking a sharp 864% growth from the previous year, establishing it as the inflection point. Despite the early financial struggles, Amazon has grown exponentially in its business and revenue. Its expansion into multiple product categories and the introduction of Amazon Marketplace in 2000 catalyzed further growth. Its annual revenue exceeded $1 billion by 2001, demonstrating a significant and steady upward surge. According to Statista, Amazon currently captures 37.6% of the entire US e-commerce market. Thus, the organization makes a perfect case for hockey stick business growth. 

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 4. Facebook

As mentioned right at the beginning, Facebook is yet another inspiring example of hockey stick growth? Mark Zuckerberg launched Facebook on February 4, 2004, as a platform for Harvard students and alumni to connect. From 2004 to 2006, which are considered Facebook’s blade years, the platform expanded to include other universities and introduced key features, yet it was embroiled in legal challenges and had not yet turned a profit. In 2006, it earned $46,568,879 in revenue, marking a sharp 417% growth from the previous year and establishing its growth inflection point. In 2010, Facebook’s annual yearly revenue reached $1.97 billion, ultimately reaching $117.92 billion in 2021, marking a sharp surge. Even though Facebook’s hockey stick growth witnessed a pause in 2019, it remains a great example of a hockey stick business growth. 

5. Groupon

This final example for J curve growth is Groupon. This deal-of-the-day service captured market attention and consumer interest rapidly between 2010 and 2011, experiencing a classic hockey stick growth pattern characterized by a sudden and sharp rise in revenue and market presence. During these blade years, Groupon expanded aggressively, leveraging its novel coupon-based business model to attract users and merchants. Since 2011, its revenue has seen a dramatic increase, marking its growth inflection point. In 2011, its annual revenue was $312.95 million, but in 2016, it was  $3.013 billion, which marked a steady upward growth pattern characteristic of a J curve growth. However, Groupon also serves as a cautionary tale because, owing to its failure to meet certain challenges, it witnessed a sharp decline in business after 2016. 

Can the J Curve Growth be Sustainable Over Time?

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The post-inflection point in a J curve growth pattern could slow down. This can happen because of factors such as reaching market saturation or running into problems related to operations at a bigger scale. Also, the demands and trends of the market and consumer behavior can change over time, which can make it tough for companies to keep going smoothly. The failure to address these elements and the lack of flexibility and foresight can lead to an organization’s decline. This is precisely what happened with Groupon. 

Hence, to make your startup’s J curve growth sustainable, it is necessary to keep on innovating and adjusting to new situations in the market. Moreover, to sustain the J curve growth, startups should efficiently manage resources and continue providing good product quality while transitioning from rapid growth to stable expansion. Strategic planning and flexibility are non-negotiable for supporting continuous expansion, which makes them essential for sustaining the growth pattern. 

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Whether you are inclined to start your own business or want to help the organization that you are a part of achieve success, knowing the various business growth patterns can be highly valuable. The hockey stick growth pattern as one such example. To explore this in further detail and learn about various aspects of starting and running a successful business, consider joining Emeritus’ business management courses and give your career a boost. 

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About the Author

Content Writer, Emeritus Blog
Sanmit is unraveling the mysteries of Literature and Gender Studies by day and creating digital content for startups by night. With accolades and publications that span continents, he's the reliable literary guide you want on your team. When he's not weaving words, you'll find him lost in the realms of music, cinema, and the boundless world of books.
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