Speaker 1: What I would say is that most companies fail with growth hacking. That's unfortunate, but it's the reality. Most digital marketers today are clever enough to know, I need to do a lot of testing. The problem with it though, everyone else has gotten very smart at that too. If everyone's testing everything and optimizing on return on investment, Facebook and Google and all of these other platforms are making it bidding. Anytime someone gets good at these things, the prices keep going up. Now it's harder and harder to find a profitable way to get people to the website. And so they get frustrated, so then they stop trying to run experiments in the product, wanna run all their experiments on Facebook or on Google or something external, and then it's not growth hacking anymore. Then they're just doing marketing. But I don't think it's because they have a hard time coming up with a hypothesis or a hard time coming up with the right test idea. I think it's because... Hi, I'm Sean Ellis. I am the author of Hacking Growth. I'm also the person who coined the term growth hacking, which has become pretty well known around the world over the last 12 years, I think, or 13 years since I came up with the term. What I'm really good at is getting people to use good product when I'm responsible for growing them. I did that for a number of years, and that's when I went to Dropbox. I joined Dropbox. Dropbox was less than 10 employees at the time. Dropbox became the fastest SaaS company to reach a billion dollars in revenue, so faster than any company before it. Soon after I left, Dropbox was when I coined the term growth hacking, but really the techniques that I had used to grow these companies were the techniques that are really what we talk about when we say growth hacking today. I also did a interim VP growth role with Eventbrite, also reached a billion dollars valuation. Right after Eventbrite, I went to Lookout. I also reached a billion dollar valuation. I really think my strength is growing great companies, and so you can read a book, but when you actually try to do it, it's really hard, so I do a lot of workshops. That's a lot of what my focus is these days. So in the first company, I told you I started in sales when they said, you know, we want you to do this, and we'll make you the marketing guy. I never took marketing in school. I don't know what I'm doing, so then I decided I would go back to school and take some classes in marketing, and so I went to New York University, did really well, got an A in the class, and then I went back and tried to do it, and I was really bad at it after the class. The class kind of broke me, made me think about it. The old way of doing marketing, I became too kind of academic, and so it was a very, like I had to, like, okay, get that out of my head now and go back to it, so that was kind of the first time I realized, like, my approach is a little bit different than how they teach marketing, but then I just kind of forgot about it, and I was just focused on how do we grow these businesses? How do we do our very best to grow these businesses? I moved to Silicon Valley in 2007. I also had a lot of venture capitalists who were introducing me to founders. They said, can you help this founder? They're really having trouble growing, and so I said, sure, and then I would sit down with the founder, and the first thing they would say is, we really need your help to build awareness. I've never focused on building awareness. I want them to actually use the product, and so for me, it was like, how do I get them to sign up for the product, to use the product, get value from the product, pay me money for the product, and then I take that money to get more customers and create something that's much more sustainable? So it's kind of this missed idea from the founders that they needed to build awareness. Yeah, just in general, that's when I started to recognize that my approach was different, and so coming up with the idea of calling it growth hacking, we need to stop calling this marketing because I define growth hacking as a scientific approach to figuring out how to grow the business, our testing and analyzing across all of the levers of growth from acquisition to activation, retention, and monetization. Most powerful lever of any of them, activation is like the most important one that I would generally focus on. It's the first one that I focus on when I work with a company. Engagement and retention, there's essentially what you're doing is what brings someone back again and again to come in and use the product, and so of course, the most powerful thing to bring people back is a great first experience, which is actually the activation. So the biggest driver of retention engagement is a great activation step in the customer acquisition process. Then you can still be tactical about what are the prompts, what do I do to bring someone back, and then how do I make sure that every time they come back and use the product that they're even more likely to come back and use it again the next time, and how do I get them to actually invest something into the product, so maybe do a little bit of customization that makes it a little bit more valuable each time and makes them feel like they have some ownership around that experience. And what I would say is that most companies fail with growth hacking. That's unfortunate, but it's the reality, but I don't think it's because they have a hard time coming up with a hypothesis or a hard time coming up with the right test idea. Growth is cross-functional. Growth is something that requires a product team to work with a marketing team, to work with engineers, to work with designers, to work with data people. Most companies aren't organized that way. As they get bigger, companies essentially have more and more specialist teams that become separated. That's what causes growth hacking not to work in most businesses. Most digital marketers today are clever enough to know I need to do a lot of testing. The problem with it though, everyone else has gotten very smart at that too. If everyone's testing everything and optimizing on return on investment, Facebook and Google and all of these other platforms are making it bidding. Anytime someone gets good at these things, the prices keep going up. Now it's harder and harder to find a profitable way to get people to the website. And so the only way to really be competitive on acquisition is to actually focus on the entire customer journey. And so this is where growth hacking then becomes. So marketing is more, how do I just get them to come in? Growth hacking starts to look at how do I get them to come in? How do I convert them? How do I give them a great experience once they come in? How do I get them to come back a lot more often? How do I get them to tell their friends? What's the right way to get money from them? And these are all areas that you can test. So growth hacking is gonna cover a lot more. And it turns out that probably the product team does more with growth hacking than even the marketing team because there's a lot of opportunities within the product to improve the value of the customer and retain the customer. But half of their energy is spent trying to convince the product team to run an experiment that's inside the products. They get frustrated, so then they stop trying to run experiments in the product. And so then they wanna run all their experiments on Facebook or on Google or something external and then it's not growth hacking anymore. Then they're just doing marketing. And so the main point of why I believe companies fail with this is because they can't get these different teams agreeing on how to work together effectively. Once you get the teams working together, then some of the other challenges become important challenges. So how do you identify what the best opportunities are? How do you come up with the good ideas? How do you prioritize between those ideas? The biggest thing is that commitment to testing and the ability to test anywhere in the business that can accelerate growth is the part where most people get stuck. Maybe the brand design side of things that feels like all this testing is gonna make our website ugly or our product ugly. It could be the product side that said, oh man, these growth hackers, they're gonna come in and start making our product awful because trying to trick people to do things. But that's a perception thing. The best growth hacks are not things that trick people. They're finding where people get confused in the product today and finding a way to make it easier and simpler for them. It's about improving the customer experience around the things that matter. When you build something, initially you're building it maybe based on some best practices, but a lot of times it's a guess. It's a guess that this is gonna be what's gonna work the best. And sometimes you did a pretty good guess, but a lot of times it takes a lot of people going through there to realize like, no, this is actually very confusing and we need to understand why it's confusing. So with a lot of usability testing and serving and the more that you can diagnose the problem, then you come up with ideas. Maybe if we tried it this way, maybe if we tried it that way, and those new additional things can make a huge difference. So there's a great quote from Amazon's founder, former CEO, where he said, our success in Amazon is a function of how many experiments we run per day, per month, per year. And so volume of experiments really starts to matter. And when we talk about the growth hacking process, it starts with analysis. And so that's really the first analysis I'm doing is more of a qualitative analysis of who loves the product and why do they love it. So the first thing that I do when I've validated product market fit is I figure out why do I have product market fit? Because if I don't understand why I have product market fit, then I'm not gonna be able to grow very well. Let's say I think that people love the product for this reason, but they really love it for this reason. All of my advertisements, all of my messaging is pushing them to do something with a product that it's bad at doing. Then I'm probably not gonna keep those people. It's really important if you have product market fit to understand what is the main benefit that those must-have users are having. So it's really hard to improve something you don't understand. So that's where the analysis starts. Then you start to say, okay, I have ideas to improve the situation. And so that's the next step is to generate some ideas. The next step is to actually prioritize which of those ideas you want to test first. Then you start to run the tests and you analyze the results. And it's just that repeating process of you need to try a lot of ideas to figure out what's gonna work and what's not gonna work. And so one of the most important things in growth hacking is just running a lot of tests, a high velocity of tests. I'm gonna emphasize that over and over because it's really important. What we realized was that nobody knew consistently what was gonna be the best. And so the only way to figure out what was the best was just to test a lot of things. A great analogy is one that comes from the sports world where you have, there's a quote from a hockey player, Wayne Gretzky, that essentially says, you miss every shot that you don't take. But that also applies to soccer or football as they call it in most of the world. But essentially, if you only take one shot, maybe you make it. But if you take 10 shots in a game or 50 shots in a game, you're much more likely to win because every shot is an opportunity to score. And it's the same thing with testing. Every test you run is an opportunity to define that one big test that ultimately is a lot more successful than everything else that you do. And so it's a mistake often when teams are obsessed on trying to run one perfect test. They get so excited about an idea that they only wanna focus on one. It's much better to make sure that every week we're running three different tests every single week or five different tests every single week. Depending on the size of the company, you just don't know which one's gonna be the one that ends up being super high impact and making a big difference in the growth of the business. I think the most important part, you can't grow something that people don't really like when they try it. And so in the startup world, we call that product market fit. A lot of times I'll tell people I got lucky and they'll say, oh, you're just being humble. No, it really is. Like if you give me something to grow and nobody likes that product, I will fail every time. What I focused on was we need to get people to experience the product in the right way. If people don't like the product, all you can do is get really good at getting people to try the product and then they disappear. What we call product market fit, when someone tries the product, they enjoy the product, they keep using the product. So if you can't retain customers, you can't grow. So it's really validating that you have product market fit is really critical before you get obsessive on growth hacking and trying to grow the business. For me, picking product market fit became really important. So I came up with a question that really helped me, which was, I asked users on the product, how would you feel if you couldn't use this product anymore? I only asked people who had really used the product. So they've come in, they've used it, hopefully the right way, and even more than once. But then it's a random sample of people who've used the product more than once. Hopefully recently, when I asked that question, if say 5% of the people said that they'd be very disappointed without it, that's not enough. I'm not gonna be able to grow that business, was really what I told myself. Eventually I had run that question across hundreds of companies. So ones that I worked with and ones that I didn't work with. And what I found is that about 40% of the users said they would be very disappointed without the product. Those companies were generally successful to some level, whether I worked with them or not. That question, a good leading indicator of product market fit. The obviously more important thing is if people keep using the product. And so that's what we call a retention cohort. If you get 100 people who start using the product, and after 30 days, zero of them are still using the product, you do not have product market fit. But you're not gonna have all 100 of them using the product, that would be nearly impossible. And so usually what happens is 100 people start using the product, one week later it's down to 70, and then down to 60, then down to 50. If it keeps going to zero, you don't have product market fit. But if it goes down to 50, and then those 50 keep using it over the long term, now you have a signal that for half those people, it was something that was so valuable they keep using it, that's product market fit and you can grow that. So yeah, we call that a retention cohort that plateaus. So it essentially runs parallel to the x-axis at some number. It depends on the business. So some businesses like Calm, the meditation app, they plateau only at about 5% of the users because they have to develop a habit of doing meditation, which is hard for people, where Instagram plateaus at more like a 50 or 60%. Part of it too, Instagram is free and Calm costs money, so that's another reason why people might stop using it. So it's less important where it plateaus, but if it always goes to zero, eventually you're not growing, you're just replacing. You're replacing the original people who signed up. And so for a while you can grow, but eventually you're gonna flatten out. And so product market fit is something that you can quantify. For me, the best company for me to work on is one that has all the signs of product market fit, but no growth yet. Because the minute that it has growth is when the investors say, wow, this will be valuable and they start pouring money into it. What I want is if I see the signs of product market fit and it doesn't have the growth yet, that stock is still very cheap. And so I get my stock options and then I can make good money off of that. If I come in later, like once the company's already growing really fast, they of course won't give me very much stock. So for me, one of the important things is trying to pick after product market fit, but before growth. One of the biggest impacts of growth hacking on the culture of a business is that everyone becomes less arrogant. If they used to think they had the answers and tests keep revealing that they're wrong a big part of the time, they stop being so insistent that they have the right answer and they start being curious about what is the right answer. And that to me creates a much better culture where business starts, people start working together to find the right answers in the business and they work together more humbly. There's less arguments about my opinion versus your opinion and more cooperation and how do we actually uncover the truth. Thank you.