Demystifying Growth

I didn’t have much to talk about this week. Or the last week. Which is a nice little excuse, to write about a topic that’s at best fascinating and at worst scary.

I came across this tweet storm from Andrew Chen this week. It encapsulates everything that’s wrong about growth hacking. Or the perceived notion of it.

Do read the thread. In short SEO, Newsletters, Facebook Ads etc are not growth hacking. They are well known and established online marketing channels. Growth Hacking is exactly opposite to what’s already established.

The promise of growth hacking is that you figure out a way to grow your business from an unexpected place. It’s about cracking a new distribution channel. The whole idea is predicated on novelty. If you already know something it’s probably not growth hacking. Some examples of growth hacking include Instagram using Facebook sign in, Airbnb hacking Craigslist API to put their home listings and Trump using blunt tweets to become free world’s most powerful man. The last one is a jab but not totally. It’s a still a hack. A hack no one saw coming.

The whole process is also product dependent. Twitter or Google sign-in was probably not a good fit for Instagram. Facebook might not have been the perfect platform to think of if you want to organically find people looking to rent an apartment. And Trump posting nasty images on Instagram were less likely to work. Sure Instagram might have used Twitter for something later on. Airbnb definitely uses Facebook Ads. And Trump might have an Instagram account. But that’s not how they hacked their growth. If it has already been worked out it’s no longer a hack. What Sean Ellis and Andrew Chen prophesied was a mindset. And not a proven set of tips and tricks.

I am not saying you should not look what has already been done. Just don’t try to copy it. For the most part, it won’t work. And that’s where most of the frustrations with online marketing aka content marketing are coming from.

Growth > Growth Hacking

Good news is growth hacking is not the only way. Actually, it’s not even a good long-term strategy. It’s a great way to gain initial traction. But that traction needs to be captured and sustained. And then built upon. For that, you need to focus on growth and not necessarily growth hacking. And growth, as Andrew Chen argues in the tweet storm, is more of a system then a hack. It involves teams from every part of the company rather than a couple of growth hackers sitting in a corner. And thinking of next magic trick.

In simple terms, growth means increasing your customers or revenue per customer. But it’s not so easy. Especially for startups who are in “growth” phase and not necessarily making any money. What that often means is that they are increasing the pool of potential customers before experimenting with any monetization strategy. This is especially true for advertising businesses. Advertising works best at scale, hence the Google/Facebook duopoly. Things are a bit simpler when you have customers paying you directly. In that case, it’s mostly about how many customers you have multiplied by the lifetime value of your average customer.

Growth used to be a product distribution challenge. More efficient your distribution the more opportunities for growth you had. For most online businesses, though, product distribution is a solved problem. By virtue of being on the Internet, you are everywhere. This does not make any easy to grow your business. The leverage you have because of the Internet is also available to your competitors. Hence the most challenging aspect of an online business is not to start one but growing one. This is after once 1) you have something valuable to offer and 2) you know there is a market for what you are offering.

There is a quote in traditional marketing i.e. half of your marketing efforts always fail. The problem is to figure out which half. Radio, newspapers, and TV offered no quantifiable ways to judge your marketing efforts. Most of your work was to be effective at guessing. Things are slightly different on the Internet. You can have a better idea of what’s not working. The problem however remains is to figure out why they are not working. Was it the wrong platform? Wrong target audience? Or is it something wrong with the product itself. This last one is a particularly brutal discovery to come to. It takes you back to the drawing board and is normally a reset button.

You can’t separate growth from your product. It has to be a part of the product development process. Focusing on the design and engineering is easy in the sense that things are in your control albeit hardware products. But unless market analysis and how your product will reach the people its supposed to reach is not part of the discussion, you are not exactly building a product. The good news is marketing online is not a Wild West as it once was. This essay from Andrew Chen will give you a useful framework to wrap your head around it.