Startups live and die by their ability to drive customer acquisition growth. Of course many startups are doomed to failure and can’t grow because they never reach product/market fit. But even with product/market fit, traction is tough. Startups are under extreme resource constraints and need to figure out how to break through the noise to let their target customers know they have a superior solution for a critical problem.
Breaking through the noise is very difficult when well-entrenched companies have the resources to dominate traditional channels. The best a startup can hope for in traditional channels is to siphon off a few early adopters that are always on the look out for the latest emerging solutions.
This resource-constrained desperation is exactly the scenario that Malcolm Gladwell suggests leads underdogs to extreme innovation.
Desperation Leads to Innovation
For meaningful growth, startups must completely change the rules of traditional channels or innovate outside of those growth channels. They are too desperate and disadvantaged to adapt to the old rules of marketing. They have to dig deep creatively, and relentlessly test new ideas. If they don’t figure it out quickly, they will go out of business.
Some people would just call this marketing. I call it growth hacking. And the best growth hacks take advantage of the unique opportunities available in a connected world where digital experiences can spread rapidly. Since most growth ideas fail, it becomes critical to test a lot of them. The faster you can hack together an idea, the sooner you can start testing it for some signs of life.
Growth hackers don’t have time to waste around a white board strategizing marketing plans. They are desperately testing trying to find something that works.
It was in this face of desperation that I was part of the team that invented the first viral embeddable widget. We were a lightly funded online game company in the mid 1990s competing against the number one advertiser on the entire Internet – Sony Online Games. Not only did they spend more money on banners than anyone else, they blanketed their television assets with promotion. You couldn’t watch Jeopardy or Wheel of Fortune on TV without knowing that they offered the game play experience online for cash prizes. And those shows had massive audiences.
At Uproar, we tried to spend on banner advertising, but even with obsessive optimization it was clear we would never catch them playing by their rules. That’s when we decided to widgetize parts of our game play experience and make them free for any website. We even offered to pay an affiliate bounty to those websites where people started the game and eventually played on our site. These games spread virally to 40,000 websites. Within a couple of years we were beating the 800-pound gorilla and had become the worldwide leader in online games (we were acquired by Vivendi Universal in 2001 who quickly killed the viral widget program).
Stories like this have been replicated in every startup that I helped build, from LogMeIn to Dropbox and Lookout. You can also see similar patterns in the early days of almost any massively successful company to emerge in recent years.
How Traditional Marketers Have Reacted To Growth Hacking
The majority of traditional marketers like to say “that’s exactly what I’ve been doing – that’s just marketing.” But rarely do I see any of them having a track record of building truly innovative, rule changing programs for driving growth. Most just don’t have the need or motivation to change the rules or innovate new channels. Unlike startups, big companies are rarely a magnet for risk takers who like to innovate.
However, some marketers at traditional companies and agencies have looked at the unprecedented growth rates that come out of emerging startups and have said: “Awesome! How can I build an innovative growth team in my organization and achieve similar transformative growth results?” I don’t know the answer, but I’m certain that it is the right question for any large marketing team or agency. Large companies have always looked for ways to improve their ability to innovate like startups (recently many have embraced lean startup principles). I’m not surprised that the smart ones are now looking to replicate the innovative growth discovery approaches of successful startups.
Growth hacking was born out of startups, but it is something that every smart marketer should embrace.