The Risks of Growth Hacking and How to Build Authentic Sustainable Growth

It has been a couple years since I wrote the first post on growth hacking.  The term didn’t gain much popularity until Andrew Chen wrote this post back in April of this year.

Online Marketing Redefined

Some people love the term “growth hacker” and some hate it. The term is not important. What is important is that people are tuning into the fact that traditional marketing techniques are often not very effective for driving growth in online businesses.

When I first started advising startups on growth a few years ago, most startup founders asked for help with driving awareness.  I wrote this blog post in response: Awareness Building is a Waste of Startup Resources.

Occasionally I’d connect with the in-house marketing person at a startup and see a plan that looked like a template from a Marketing 101 text book.  That’s not surprising since most marketing job descriptions for startups also looked like they came out of a Marketing 101 text book.

Today people are realizing that the best startups have approached growth in a very different way.  There are now over 450 active openings for growth hackers listed on SimplyHired.com alone. Two years ago, most of these job descriptions would have been for traditional marketers. It’s very exciting to see this revolutionary change in the way online startups think about growth.  And it’s not surprising that more established online businesses are beginning to adopt these approaches as well.

Evolving Definition of Growth Hacker

I recommend that people don’t get caught up on the term “growth hacker” or even a specific definition for it.  Focus instead on the concepts behind it. The fastest growing companies on the Internet have a growth focus rather than a marketing focus.  Try to understand how businesses like Facebook, Twitter, Dropbox, Linkedin, Eventbrite and Groupon are driving growth and you’ll begin to understand the meaning of “growth hacker.”

I also recommend that you Google the term “growth hacker” and read the articles. Not everybody agrees on the exact definition, but most of the articles contain gold. The alternative is to read 1000s of pages in marketing text books, which will give you very few insights about how to drive growth in an online business.

Stay Authentic to Value Delivered

The best growth hackers are constantly testing and tweaking new growth hacks.  During this process it is easy to lose sight of the big picture.  When this happens, growth eventually falls off a cliff.

Sustainable growth programs are built on a core understanding of the value of your solution in the minds of your most passionate customers.  Your drive to develop growth hacks should be based on a burning desire to get this “must have” experience into the hands of more and more of the right customers.  Growth hacks built from this frame of mind are the ones that build large sustainable businesses.

Fully grasping your must have experience isn’t easy.  The presentation below is a step-by-step guide for uncovering your must have experience and calibrating your messaging and flows to that experience.  The process should put you in the right frame of mind to build sustainable growth programs.

Update Oct 2013 - If you want inspiration for developing effective growth hacks and would like to engage with other growth hackers, check out our new project at GrowthHackers.com.

8 thoughts on “The Risks of Growth Hacking and How to Build Authentic Sustainable Growth

  1. I am working on an online marketplace for services where the website revenue is a % of seller side earnings.

    Though, conventionally speaking, buyers are the customers. USP of the website is high quality of sellers….so we can attract the buyers. Hence, our focus after the concept stage has been entirely on the seller side of the marketplace.

    I would really like to hear your views on the subject or if you can point me to some credible work on the topic.

  2. Hey Sean, great post

    Wondering if I could speak to you privately about some challenges I’m facing currently. Our platform is closed, requiring manual approval for access at this time while we work closely with a select group of partners. This makes it hard to implement these tactics, or at least it is a more involved process. Would love to hear how I can get some of the MHX learnings done without a “live” marketing funnel.

    Tyler

  3. Sean, I like your comment that the fastest growing companies have a “growth focus” rather than a “marketing focus”. I see a lot of companies treating marketing as a separate function, focused on promoting the core experience, but without much ability to add growth hack style elements into the experience itself. Growth and go-to-market strategies are so important that they should be on the top agenda of the founder.

    Cool to see your micro life cycle model for online conversations that would typically only happen in a sales context.

  4. Sean,

    Ecellent and needed post. I think you’d be doing a great service to everyone if you could follow up with another post focused on the underlying, more important question:

    How do we pay a growth hacker?

    I’ve almost hired a couple of growth hackers over the last couple of years and the compensation model has been a challenge. Flat out % on incremental revenue? % per subscriber per month?

    Could you shed some light on this?

    Many thanks.

  5. Thanks for the comment Tom. I’m pretty excited about the potential of online conversations tailored to the lifecycle stage of a user.

  6. Hey Stephen T, I plan to write a post on compensating a growth hacker, but here is my quick recommendation for a candidate that you feel very strongly about…

    For a startup that has product/market fit, your upside in the business is now based on your ability to drive sustainable growth. I’d recommend that the growth hacker is the last big equity position that you hire. The ideal person should have an entrepreneurial risk tolerance. Anyone can say that they do, but the following offer will weed out anyone who doesn’t (don’t make the offer binding, just see where they gravitate toward).

    Offer a choice of packages (Silicon Valley rates)
    $60K/Y and 4% options (with cliff & 4 years vesting)
    $75K/Y and 3% options (with cliff & 4 years vesting)
    $140K/Y and 1% options (with cliff & 4 years vesting)

    Be wary of anyone who picks the high cash and lower equity package.

  7. Hey Sean, thanks for this post. This is actually the first time I’ve heard the term “growth hacker”. The idea, however, are solid and I will definitely be looking further into it. With the example companies you’ve mentioned, it’s clear that with a focus on growth, marketing essentially takes care of itself.