Grow by stacking S-Curves

Today, we dive into how products, markets, and channels grow and saturate.

And how to keep the growth going rather than stalling out.

Let's dive in

– Neal

Insight from Casey Winters.

Most startups fail because of bad ideas.

The rest?

Well, in startups, growth solves all problems.

Low cash reserves? Growth means you get more revenue and can raise money easier.
Hate your cofounder? Growth makes it easier to ignore. The real fights happen during the hard times.
No systems or processes? Growth lets you throw more resources at it
Struggling to hire top talent? Growth makes you more attractive to top-tier candidates

So, the rest fail because they either never crack a consistent growth channel or they run out of room to grow because they failed to adapt before they hit the ceiling on their current channel, market, or product.

That’s what happens when companies ride one growth curve too long:

Markets get saturated
The competition heats up and copies what their doing well
Customer acquisition gets harder
Momentum dies

Smart companies prevent this by mastering S-curve growth—a structured way to expand into new products, new growth channels, and new markets before hitting a ceiling.

Here’s how to do it.

First, what's an S-Curve

Most famously, the adoption of new technologies follows the S-Curve:

The Pace of Technology Adoption is Speeding Up — Source: https://hbr.org/2013/11/the-pace-of-technology-adoption-is-speeding-up

Notice that they all follow a similar S-shape (with some momentary dips). And how they're generally accelerating.

What's missing from that graph is AI, which was around for decades and was slowly, slowly getting increased adoption. Then ChatGPT came out, and suddenly, everyone was talking about and using AI.

So AI had a decades long ramp up, and then an extremely violent adoption.

How S-Curves work

Every product, channel, or market follows an S-curve:

Slow Start: Early traction is hard. You’re figuring out positioning, messaging, features, form factor, UX, etc.
Hypergrowth: You find a repeatable customer acquisition loop, and growth accelerates. In products, typically, it happens with some "killer app" moment like when ChatGPT was released.
Saturation: Channels become expensive, competitors catch up, there's fewer and fewer remaining "potential users," and growth slows.

The mistake many startups make?

Waiting until Stage 3 (Saturation) to launch a new growth curve.

At that point, it’s often too late.

How to sequence growth

The best startups layer new S-curves before the first one flattens.

Again there are three types of S-Curves a company is fighting with:

Product
Market
Acquisition channel

The slightly confusing part is that Product and Market are a little muddied.

A new product can enter a new market (Mac vs iPhone), or it can be the same market just with a much better form factor (Netflix DVDs vs Streaming).

Let's dive into each.

In terms of products, think:

Uber: UberX → Uber Pool → UberEats → Freight
Amazon: Books → ecommerce → AWS/Prime Video/Music/Medical
Telsa: Luxury (S and X) → Mid-range (3 and Y) → Solar → Trucks (Cybertruck) → Economy (upcoming) → Semis → Autonomous (Cybercab) → Home Robots (Optimus)
Apple: Macs → Macbook → iPhone → iPad → Watch → Airpods → Airtags → Vision
Airbnb: Homes → Experiences → ???

Note: Many of these expansions were larger (or more profitable) opportunities than their earlier products (iPhone, Macbook, AWS, Model Y), but some of them were expansions were smaller opportunities (Watch, Airpods, Experiences).

Sometimes it's obvious that it's a bigger or smaller opportunity, and other times it's a gamble. For example, things like Apple Vision, Uber Freight, and Tesla's upcoming products like Semi, Cybercab, and Optimus are either going to be big winners or not—time will tell.

Also note: Unless Airbnb can find its next S-Curve, it may lose its dominance and stop growing due to saturation, competition, and regulation. Experiences is a small portion of their revenue currently.

In terms of markets, think:

Expanding into new markets can be done by opening the same product to more people or creating a new product that targets a different market (for example, Amazon AWS was a totally different market than those buying books)

Slack: Developers → Startups → Enterprises
PayPal: eBay payments → Peer-to-peer payments → B2B → Crypto
Shopify: Small businesses → Enterprise → Retail POS (new product)
Square: Small business payments → Enterprise solutions → Consumer banking (Cash App) → Crypto

In terms of growth channels, think:

Dropbox: Paid ads → Referral program → B2B partnerships
HubSpot: Content → Sales-led growth → Community-driven growth
TikTok: Organic viral loops → Influencer partnerships → Paid advertising

For primary growth channels, reference Lenny's Racecar Growth Framework's "Growth Engine" section:

Source: https://www.lennysnewsletter.com/p/the-racecar-growth-frameworkexpanded

Everything else (Kickstarts, Fuel, Lubricants, Turbo boosts) help with conversions or to kickstart growth, but only the Growth Engines are likely to produce these S-Curves.

Note: For each new product and market a company creates, they also create separate S-Curves for growth channels.

For example, Square could saturate the market on Meta Ads for small business payments, then launch the Cash App, and massively open up Meta Ads again with the consumer market.

Here’s how to sequence your growth properly:

#1. Find your next S-Curve early

Identify adjacent customer needs. What else do your existing users struggle with? Ex: Canva started with social media graphics, then expanded into presentations and video.
Alternatively, look for new growth channels. Ex: Dropbox shifted from paid ads to referral-based growth to sales.
Or explore new markets. Ex: Stripe expanded from startups to enterprise payments to government integrations to crypto payments.

#2. Expand through existing distribution

Ideally, your new product, channel, or market can leverage your existing user base. Either through product-led growth or through broadcast marketing (email + social).
- Slack grew through developers, to internal teams, then expanded into enterprise sales.
You can also layer in new marketing channels—e.g., Facebook ads → influencer partnerships → outbound sales.

#3. Test without disrupting core growth

Avoid derailing your primary revenue stream in case the expansion is unsuccessful.
Start with small tests or pre-sales (MVPs, beta launches, new ad channels) to validate before scaling.

#4. Time it before growth slows

If you wait until CAC rises or retention drops, you’re already behind.
Launch your next S-curve during your peak growth period.

Takeaway

If your startup is still finding traction, again, use the Kickstarts, Turbo boosts, etc to help get your first Growth Engine going. Here they are again: