8 minutes

Allocating Capital is Easy

Deciding on how, when, and where to spend resources is essential for all businesses. Any little slip can cost you months of progress, trust between stakeholders could be lost, and missed opportunities might never come back.

You need to find out which channels, markets, or products are the most efficient for you. And which of them you can scale up.

Getting an overview is an important first step. Thankfully, there are simple ways for you to do this.

Let me introduce a particularly helpful box.

What’s in the (Grow-)Box?

Toni’s Growbox looks like this:

Toni’s Growbox – Scalability/Efficiency Model

If it seems familiar, it’s because it probably is. 

Maybe you’ve come across the Boston Consulting Group Matrix? It’s a planning framework that was developed by Bruce Henderson at the Boston Consulting Group (BCG) back in the 1970’s.

Their matrix looks like this:

Boston Consulting Group Matrix

They’re a little similar, right?

The BCG Matrix has historically been used by large organizations with diverse portfolios to evaluate the state of their products and services. It’s used to map out offers according to their Market Growth and Relative Market Share.

Just like the Berkshire Hathaways of the world, you can use it to identify potential growth yourself.

You just have to adapt it to suit your needs first. Like Toni did.

Boxing Like A Heavyweight

Toni’s Growbox (fancier)

Toni’s model – his Growbox – is a two-by-two plot graph with two axes. One axis representing Efficiency (measured as CAC Payback) and the other Scalability. Naturally, the higher the efficiency and scalability, the better.

The reason why you want to differentiate these two dimensions is simple: some really efficient channels or markets simply can’t be scaled up. And some really high-growth alternatives are just way too inefficient for you to spend on.

Plotting your initiatives like this is an easy way to help everyone see where investments should go.

So, let’s get into the details. 

In the example above, I’ve plotted marketing channels into the four quadrants. The Stars are the top performers, the Cash Cows are trusted and stable, the Dogs are underperforming, and the Question Mark requires consideration, as they represent uncertain growth potential and could end up as either Stars or Dogs, based on their efficiency once matured.

Plotting out channels like this quickly shows how current investments are doing and where there’s room to grow. Is it possible to increase Google search, and would that be efficient? Is it wiser to use those resources trying to improve my SDRs instead? Or, should I put more emphasis on paid social?

Looking at the four categories in a product life cycle model, they become even clearer. Your Question Marks still have their undetermined potential, the Stars are growing strong, Cash Cows are matured and plateauing out, and your Dogs are declining and you should consider putting them down.

Channel or Market life cycle model

If you want to make the picture slightly more complex, you can also introduce different sizes to your plotted bubbles – indicating the current size of the channel. This will help you understand the impact of growing that particular channel or market over another. 

Just map out your intended markets in the same quadrants, categorize them as Dogs, Stars, Cows, and Question Marks, and you get the same, immediate overview.

Toni’s Growbox with Markets

Domesticating Dogs and Cows

Now that you’ve plotted, it’s time to put your plan into action. 


As your Stars represent initiatives with both high efficiency and high scalability, your strategy should be to invest heavily and take advantage of their potential. The problem will be that as the more you invest, the less efficiency that channel/market will have – let’s call that Toni’s Law, for simplicity’s sake. Invest too much, too fast, and you can turn that brightly shining Star into an enigmatic Question Mark, as you no longer can be sure that your investment will generate enough value for you.

So, in order to make sure your Star stays a Star, you will also need to deploy efficiency improvements. In other words, the Stars will not only demand a lion’s share of your money, but most of the brain power in your organization too. You will likely end up spending more than half of your resources on your stars. And that’s a good thing – it’s worth it.

Cash Cows

Your Cows are well-established and represent stable cash flow in low-growth markets. It might not sound exciting, but on the other hand they should require little investment and can be trusted to still generate cash.

You can think of your Google search as your Cash Cow when viewing it through the channel lens. You can just leave it be, of course, and let it generate leads for you in peace. Or, you could up your spending. But allocating those extra funds would probably not give you much in return.

What you should be doing is to find out where you could cut costs while having as little impact as possible. If you can find and free up resources to spend elsewhere, without changing how your Cows perform, you’ve wrangled them better than most. And that cash can then be re-deployed to your Stars.


These have low scalability and efficiency, and will generate little value for you. They don’t require significant resources from you, but they also yield low returns. This makes them inefficient in terms of spending any time or resources to try to get them to perform.

You need to decide if it’s worth taking a chance on them. Can you improve on the cost per lead or conversion rates, for example? If you can’t, or if your Dogs don’t complement or enhance the rest of your plans, you should consider divesting to avoid tying up resources. In short: reduce what you spend on them and improve quickly, or call the dog pound.

There is a caveat here, as you might operate with channels that won’t get any attribution in your data. For example, that out-of-home advertising you did on the 101 (the tech highway in the Bay Area), or your cab campaign in NYC (btw, those are cheaper than you think), won’t suddenly pop up as high-yield channels in your CRM.

Question Marks

Your Question Marks have potential, but suffer from uncertain efficiency. You just don’t know enough about them yet. If you’re starting up a new channel or trying to get foothold on a new market – that would be your Question Marks.

As you can’t rely on their efficiency, and slightly tweaking the allocated numbers won’t give you the answers you need, you’ll need to figure out what your Question Marks are – almost like a product market fit. This is important work, as the Question Marks also represent your future growth – they will become your new Stars once your current ones have plateaued.

A good example of this is Zoom. During COVID, everyone and their aunts jumped onto the software, it instantly exploded, and a videoconferencing Star was born. But the meteoric rise of their product also exhausted their planned roadmap and all their projected S curves. They were plateauing and needed new ways to grow. Enter Zoom Webinars and Zoom Events, and Zoom Connected Conference rooms and Zoom Appointment Schedulers – aka. Zoom Question Marks. Their initiatives paid off, business continued to boom, and the search for their next Star could begin.

With the right investment case, your Question Marks can become your Stars, but you should also be prepared for them to turn into Dogs if they fail to gain traction. The best way to treat your Question Marks is to invest carefully, focus on efficiency gains, and then invest aggressively when you get there.

In the ‘Growth at all Costs’ era Question Marks typically got insane amounts of investments, as it was argued that more investments will help drive efficiency-improvements. Only in some very rare cases this proved to be the case.

Model Behavior – for Retention and Acquisition

The Growbox is a way to quickly analyze resource allocation based on scalability and efficiency, and it works equally well whether you’re looking at acquisition or retention.

However, like all models and matrices, the Growbox won’t give you all the answers. It’s just a first step towards making better decisions. The model has problems with oversimplification, limited focus on market share, and perhaps a lack of truly actionable guidance.

To make better decisions, you should always look to complement the Growbox model with other strategic analysis tools – perhaps even Growblocks?

Now, Enter the Matrix

Something as sensitive as capital allocation can be made easy. Force yourself to categorize your offer and you get a better overview and understanding of how you should distribute your resources. Mapping out your allocation this way in a model is a tremendous help for planning and testing strategies, both in the short-term and long.

There’s a Revenue Formula episode on this exact theme, where Toni and Mikkel dive deeper. Listen to it here:

See you later, allocator!