Monday, September 24, 2012

Growth Hacking Checklist

“My biggest surprise was when we launched the Facebook app and it didn’t go viral”
-Startup CEO quote

“The month after we decided to stop all marketing and put the product on auto-pilot was our biggest month ever”
-Startup engineer quote

Ok – what could anyone possibly say about Growth-Hacking that hasn’t already been said? What with high-profile startup bloggers Sean Ellis & Andrew Chen kicking things off, backed up by solid 30under30 prospects like Danielle Morrill, an honest to goodness GHIR at writing exceptional posts at Numerate Choir, a board on Quora and now even a multi-part series on Techcrunch .

I believe this discussion has come up and has been sustained by the fact that most startups are not thoughtful about their marketing, but the successful ones are.

Most startups rush into too many ‘standard’ marketing activities, and then only dabble in their consistent execution over time. This is very natural human behavior that successful companies and marketers must guard against. The psychology and results of this kind of unsuccessful marketing is exactly analogous to the many ways in which retail investors lose money in the stock market: short attention spans, emotional and irrational decision-making, and always an insufficient edge on the market.

Startups, please consider the entire attention and resource budget that you have allocated to marketing and distribution, audit all of your marketing activities against the qualities in this six-point checklist, then double-down on your most effective activities and prune the mediocre ones.

Marketing/Distribution/Growth-hacking Checklist:

Is this leveraged?
Just like you hope to establish a profitable business model for your company, you want to get more out of a marketing activity than you put in.
Content marketing? If your name isn’t KissMetrics, your own marketing team cannot hope to generate the velocity and volume of content and interaction that a community like Onstartups (Hubspot) or YouMoz (SEOmoz) can.
Building on Facebook? SocialCam saw a short window open in the Open Graph API that let them passively inject video links into your friends’ newsfeeds. A brace of competitors quickly copied this distribution leverage, but SocialCam went one better by overlaying the platform leverage of popular Youtube videos on top the existing Facebook platform leverage to create the CDO-Squared of distribution. Competitors were left pushing videos created by their own small user-base into the newsfeed until Facebook turned down the volume on that Open Graph channel.

Is this sustainable?
When Facebook detuned its Open Graph channel, all of the social video crowd were caught out and now require a re-think. Even SocialCam selling for $60M is a far cry from being one of the fastest growing companies of all time a few short months before.
Skype, on the other hand, shows that a company can ride virality for ten years and counting all the way up past 700M users with wholly-owned user relationships through multiple acquisitions and hairy legal wrangling. This is largely the result of network effects being at the product’s intrinsic core, and not hitching the company’s fortunes on an unreliable third-party social platform.
Like Skype, Dropbox’s famous referral scheme fits neatly in with its core product interaction: sharing documents across devices. Is your company counting on a referral program to drive a product that isn’t frequently referred?

Is this core to the product, brand and business model?
A product doesn’t need to be a core communication utility or social network to build a long-term sustainable leveraged growth machine.
Surveymonkey has done just that to the tune of $1B valued on business fundamentals. Surveymonkey’s business model aligns its own goals with those of its customers. While even passionate Dropbox customers might prefer to pay less for the service, Surveymonkey customers would like nothing better than to pay Surveymonkey more money, because it would mean that they had a bigger email list to market to.
Zappo’s isn’t even a company that helps one party send email to another, but their primary marketing tactic was a counter-intuitive growth hack as good as any other. Free shipping and returns let Zappo’s wage asymmetric warfare against incumbent shoe sellers. By taking on this additional cost structure, Zappo’s did not have to outbid competitors for scarce ad inventory and could grow by word-of-mouth instead.  In other words, you need to have a clear and concrete reason for people to retweet or like, not just the buttons to do so.

Is there a unique insight or special edge that we have?
The harsh light of ad-buying and paid customer acquisition illustrates this issue clearly.
Whaleshark Media is a roll-up of many of the largest online coupon and affiliate sites on the web. By virtue of scale, Whaleshark can negotiate the best affiliate payouts from affiliate networks and merchants. In some cases this means that Whaleshark sites can offer coupons with larger discounts than smaller competing deal sites. This also means that Whaleshark can spend more on paid advertising than a smaller site and still be right-side up. If you are competing with this kind of structural advantage, you had better be sure that you have a different advantage that outweighs this.
Similarly, Instagram’s unique insight and competitive advantage was pure craft and design. Other mobile photo apps had the same features, but were obviously less well crafted so there was no reason to use them. In effect, other photo apps brought knives to Instagram’s gun fight. This is the simplest point, but also one of the most important. As a hypothetical, if your web startup is launching a mobile app and you don’t invest enough for the fit and finish to rival other successful apps, the rising tide of mobile will not automatically lift your boat.

Is this measurable and able to be optimized and evolved over time?
One-time arbitrage opportunities and market insights tend to disappear quickly as competitors catch up and consumers get over-supplied. The path forward from success is continued optimization.
One of Zynga’s main competitive advantages over other social game publisher is its ability to cross-promote a new game to the audience of its older games. This advantage helps Zynga get new titles to scale before older game titles start to lose the interest of their players. Since games tend to go out of style relatively quickly and the Facebook platform ecosystem is always changing, Zynga needs to keep measuring and tweaking the promotion strategy and mechanics for each new game. Without measurement and improvement, Zynga would not have been able to sustain its string of hit social games. is a very large web property that spends millions of dollars each month on paid search. Like many companies, their initial SEM cost is not initially profitable based on first transactions. Whitepages’s search spend only goes into the black if some new customers acquired via search marketing return for a second monetization event without a second paid click.  Without measuring and optimizing for retention, one of Whitepages primary customer acquisition channels would be entirely closed off and the company would be much less viable.

If this works, will it lead to success?
One of my favorite thought exercises for growth-hacking and marketing is to ask what future success looks like for the company, and then work backwards to assess whether a particular marketing activity can credibly get the company there. For example, if your company has raised high single digit millions in venture money or more, you should be thinking about marketing activities that, if everything goes right, could build a business worth $100M or more. Small-bore marketing activities are the single biggest mistake that I see startup marketers make. Ad buying provides an excellent example. For most online businesses, it’s not credible to believe any amount of ad inventory will get your company to $100M. If you are tacking on a basic social media strategy of blogging, Tweeting, Facebook page updates and ‘share this’ buttons, it’s highly unlikely that this effort will contribute to building a large and special business.

In the day to day cut and thrust of startup operations, please take a more than usually critical eye to all of your marketing and growth strategies and spend your scarce time on activities that are leveraged, sustainable, and core to your product promise and function.

Like this? Email me at mathewgjohnson ‘AT’ gmail, or find me at or Twitter @matjohnson 

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