In this series titled “Defining a growth hacker”, I am exploring the meaning and practical application of growth hacking through a number of interviews with prominent growth hackers. This is the second post the series, which outlines the ways growth hacking changed marketing. You can find the first post, “Defining A Growth Hacker: Three Common Characteristics,” here.
The Internet has been the most disruptive vehicle in modern memory, changing everything from the way we buy shoes to the way we connect with friends. The profession of marketing has no less transformed over the last two decades. As social platform adoption became prolific, growth hacking spawned and changed the way startups thought about marketing and growth. With an emphasis on data, product, and being “lean”, growth hackers are challenging the underlying assumptions of marketing.
Danielle Morrill, co-founder of Referly, says “The best growth hackers are questioning marketing as we know it today, because the online tactics that were once the territory of a select few are now table stakes.” Metrics, scalability, lean, and iteration used to be words that came from a product team. With growth hacking, the best marketers sound like product gurus and software engineers.
Growth hackers are disrupting marketing in five ways: reimaging marketing spending, engineering virality as a core strategy, exploring new channels, pushing traditional limits of marketing, and product-based marketing strategy.
Growth first, budgets second
Growth hacking is typically learned and implemented out of necessity with no set marketing budget but rather a simple passion to grow. While traditional marketing involves spending on predetermined channels, growth hackers have no preconceived notions of the channel or the necessity of marketing spending for growth. Experimentation, discovery, and innovation are at the heart of a growth hacker’s marketing strategy. Michael Birch, co-founder of Bebo and early growth hacker, explains why: “Budgets make people lazy. They begin to think in traditional terms and don’t innovate.” When a marketer has a budget, they’re tempted to spend it or lose it.
Instead of looking to spend a budget, a growth hacker looks for arbitrage. “Blake Commagere founder of MediaSpike, says that growth hackers look for channels with the greatest potential but “don’t make a false choice between free channels or paid channels. A growth hacker’s job is to depress acquisition cost. As a startup, you are playing a game of arbitrage on the value of acquiring a user vs. their LTV.”
Utilizing paid channels is dependent on the product and market. Not all channels are created equal. Ivan Kirigin, worked on growth at Dropbox before his current startup, says, “Some products lend themselves to certain channels of growth. If you make a lot of money per user, you can use paid acquisition channels. If your product involves sharing at its core, virality will matter and you should focus on optimizing it.”
Spending is not the focus. Leveraging every channel is not important. Only free users are not always optimal for company goals. What is vital is the highest return. Sean Ellis, founder of Qualaroo, “Growth hackers are not completely against spending money to drive growth – but they insist on maximizing arbitrage opportunities rather than spending to a fixed budget.”
“Going viral” to a traditional marketer is unpredictable, but growth hackers live viral day-in and day-out. Michael Birch says, “Viral marketing is at the heart of growth hacking.” Growth hackers take a very measured and iterative approach to virality that is engineered into the product. “Growth hacking is often tied closely to viral customer acquisition, because the best growth hackers can ‘engineer’ viral growth,” says Jesse Farmer, co-founder of Everlane. An attitude of testing towards an optimized frontier creates a deliberate and repeatable acquisition channel. Just as a software engineer builds technology in a logical flow, a growth hacker uses data to build (“bakes in”) growth into a product. A growth hacker’s process is diligent, thoughtful, and purposeful. Traditional marketing skills do not lead to this engineering perspective on virality. A product goes viral through baking in growth mechanics – it is hardly ever random.
Beyond the normal
Growth hacking differs from traditional marketing in that it actively pursues new channels and reimagines existing channels. Danielle Morrill says, “Normal channels aren’t enough anymore, they’re a commodity. Growth hacking is about constantly running new experiments to discover new channels for distribution. Traditional marketers are applying a set of predetermined tactics that worked for the offline world to the online world.” Growth hackers are searching to find the single advantage that will leave their competition in the dust. Danielle continues, “Growth hackers are looking for unfair advantages to exploit while the rest of the world catches up.” They are constantly researching and testing channels to discover fresh ways to push metrics. A growth hacker believes that hockey-stick-like acceleration comes from the exploration of uncommon and underutilized channels. Relying on pre-set channels usually does not engender incredible growth with a positive arbitrage.
Pushing the limit
From the desire to scratch their exploration itch, growth hackers are willing to get quite close to SPAM-land. “Growth hacking can get into a ‘grey area’ of marketing. Typically, a growth hacker is trying to push to do things differently and sometimes you get your hand slapped,” says Matt Humphrey, co-founder of HomeRun. The rise of social networking has provided a ready harvest of users through APIs available to creative tactics.
To be an effective harvester, a growth hacker will optimize to the greatest degree possible, despite the rules. “Terms of service are secondary for most growth hackers,” says Dan Martell, founder of Clarity. The focus is growth, not playing nice with rules. However, not every growth hack is a wise move. Over- optimization can result in a misleading user experience and user back lash or a “bad growth hack”. The line between phishing and ease-of-use is a fine one.
Top to bottom
Traditionally, marketing is viewed as a company’s promotional arm. It is distinct from product and development. Growth hackers see product as the chief channel for growth. Greg Tseng, co-founder of Tagged and growth hacker, says “Traditionally, marketing has focused on external methods to attract users and gain momentum around a product. Growth hacking takes a more internal approach by merging creative and technical abilities to create user-growth mechanisms within the product itself.”
Growth hackers are deep into product. To successfully engineer growth, growth hackers must have a holistic view of the business and synthesis of a product manager and data-driven marketer. Jim Young, co-founder of Hot or Not and founder of Perceptual Networks, says, “Growth hackers view the whole business, from the top to the bottom, as an experiment. They need to be able to tinker with everything.” From outbound messaging to user experience, a top to street-level understanding of the business is critical for a growth hacker to be successful.
With inception of growth hacking, marketing is redefining itself. The well-known marketing joke, “Half of my marketing budget is a waste; I just don’t know which half” is no longer a vexatious rule of thumb. Today, it is simply unacceptable. Mike Greenfield, 500 Startups Growth Hacker-In-Residence and co-founder of Circle of Moms, says, “Marketing is becoming more measurable and iterative. As that happens, data and technical skills grow more important. The buzz around growth hacking reflects a realization of what’s possible as marketing shifts.” Just as the lean startup movement has taken hold as common practice, marketing is getting a lean makeover by growth hackers.
The next post in this series will explore the importance of product to growth and how growth hackers view product.