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.

Find a Growth Hacker for Your Startup

Once startups are ready to scale, their biggest challenge is often hiring someone capable of leading the growth charge.   A marketer with the right talents and approach can kick some serious ass once product-market fit and an efficient conversion/monetization process have been proven.

But the problem is that most startups try to hire for skills and experience that are irrelevant, while failing to focus on the essential few skills.  Typical job descriptions are often laden with generic but seemingly necessary requirements like an ability to establish a strategic marketing plan to achieve corporate objectives, build and manage the marketing team, manage outside vendors, etc.

Generally speaking, the job requirements/skills mentioned above are not paramount for startups in or before the early growth phase.

After product-market fit and an efficient conversion process, the next critical step is finding scalable, repeatable and sustainable ways to grow the business.  If you can’t do this, nothing else really matters. So rather than hiring a VP Marketing with all of the previously mentioned prerequisites, I recommend hiring or appointing a growth hacker.

What is a Growth Hacker?

A growth hacker is a person whose true north is growth.  Everything they do is scrutinized by its potential impact on scalable growth.  Is positioning important?  Only if a case can be made that it is important for driving sustainable growth (FWIW, a case can generally be made).

The good news is that when you strip away everything that doesn’t have a direct impact on growth, a growth hacker should be easier to hire than a VP Marketing (or maybe an insider already has the needed skills).  I’ve met great growth hackers with engineering backgrounds and others with sales backgrounds.

The common characteristic seems to be an ability to take responsibility for growth and an entrepreneurial drive (it’s risky taking that responsibility).  The right growth hacker will have a burning desire to connect your target market with your must have solution.  They must have the creativity to figure out unique ways of driving growth in addition to testing/evolving the techniques proven by other companies.

An effective growth hacker also needs to be disciplined to follow a process of prioritizing ideas (their own and others in the company), testing the ideas, and being analytical enough to know which tested growth drivers to keep and which ones to cut.  The faster this process can be repeated, the more likely they’ll find scalable, repeatable ways to grow the business.

When VP Marketing?

Not all growth hackers can or should evolve into VPs of marketing.  A VP marketing needs to be able to help shape the overall company strategy, build and manage a marketing team and coordinate outside vendors among many other responsibilities.  Some growth hackers will be great at this, while others will be bored out of their minds.  The important thing to note is that without some proven scalable, sustainable ways of growing the business, these things will not matter.

Are You A Growth Hacker?

Some of my favorite conversations are those I have with fellow growth hackers.  Last week in San Francisco, I had breakfast with three fantastic growth hackers and we traded insights that benefited each of us (don’t bother asking me for names to try to recruit them, two are CEOs and the other is VP User Growth at a very hot company).

I’m a big proponent of establishing and building a broader community of growth hackers.  The problem is that not all people are cut out to be growth hackers.   If you think you are a growth hacker, please post a link to your LinkedIn profile below so other growth hackers in your area can connect.

Update Oct 2013 – If you want to get inspired to develop effective growth hacks and engage with other growth hackers, check out our new project at GrowthHackers.com.

Founders Make the Best Startup Marketing Leaders

CEOs often ask for my advice on the ideal candidate profile to lead their ongoing customer growth efforts once we’ve completed the key steps to unlocking growth. You would think that after running marketing at two startups through IPO filings that I could easily answer that question. But I’ve struggled to define the ideal profile of a successful startup marketing leader. After many course corrections, I finally believe I have it figured out. But to really understand the ideal profile, it is important to comprehend why the role is so challenging.

Based on anecdotal evidence, I’d guess that 90% of startup marketing leaders don’t work out. This corresponds to the overwhelming majority of startups falling short of expectations of founders and early investors. When a startup falls short of expectations, the startup marketing leader is the first to go. Even those fortunate enough to gain early user traction still face the uphill battle of finding cost effective ways to acquire users at scale. And if they do succeed, then startups are often tempted to hire a “next level marketer” to replace them.

A successful startup marketing leader must be undaunted by these risks and believe they uniquely have what it takes to succeed. That sounds a lot like the profile of most startup founders. So it’s not surprising that the best startup marketers are entrepreneurs at the core. Entrepreneurs are willing to take the risk and are generally tenacious enough to uncover the channels necessary to drive long-term growth.

I came to this conclusion after finding the common thread between myself and the two most effective people I’ve met at uncovering growth channels. One is still CEO of his company but has done more to drive customer adoption with a fraction of his time than most startup marketers do with undivided attention. The other highly effective startup marketer is a founder that transitioned to leading marketing. They share a persistent desire to connect their innovative solutions with the people that really need them. After implementing critical tracking systems and an efficient customer acquisition process, they are now relentless about experimenting with channels until they find things that work.

Contrast this to a typical marketer, who is generally more focused on marketing activities than marketing results. Most of these activities do nothing to move the needle on the business, but make the marketer feel good because they are working hard.

It may be tempting for a startup CEO to read this and think that aggressive targets can steer the marketer in the right direction. I don’t think that will work. Effective marketing leaders will challenge themselves by pushing the boundaries of the startup’s growth potential. The CEO should be a partner in this process rather than setting arbitrary unrealistic goals. If you don’t have confidence in your marketing leader, the founding CEO should micromanage the process by being an active participant in channel brainstorming sessions and challenging the marketer to ensure tests have been implmented to perfection. Once you have created a product that people really want, most of the remaining company risk and upside lies in your ability to aggressively drive customer adoption. This is not something a CEO should abdicate to the marketer until they’ve demonstrated a relentless drive to uncover profitable customer acquisition channels.

The CEO can also facilitate channel discovery by ensuring that the marketing leader gets the tracking systems they need to execute marketing efficiently. Of course the marketer should be able to make a case for why these resources are important.

What about successful startups that had an initial marketing leader with a more traditional background? First, there is nothing wrong with a traditional marketing background if at the core the marketer is entrepreneurial. Second, the marketer does not always deserve credit for strong user growth. Sometimes great products really do market themselves. My experience with Dropbox certainly supports this assertion. Also, I recently spoke to the former VP Marketing at a company that sold for billions and he agreed that his most important growth contribution was not getting in the way of the viral growth engine.

Of course the risk in hiring an entrepreneur to lead your marketing is that they’ll eventually leave to start their own company. Agree that this is an acceptable outcome if they are willing to give you at least a couple years.

Finally, only the marketing leader needs to be entrepreneurial. In my experience, it is not an essential characteristic for the rest of the marketing team.