Growth and Selling versus Growths and Swelling

For those of you that might have missed my writing, I’ll have some good news about proper published stuff (!) for you soon hopefully. In the meantime:

I bought Eric Ries’ excellent “Lean Startup” a while ago after following its development on his startuplessonslearned site. In it he discusses the concept of “vanity” metrics. These are measures you as an entrepreneur use to convince yourself (and others) that the business is headed in the right direction. These, unlike “actionable” metrics, present a distorted view of your enterprise, and thereby offer up distracting or mistaken paths to head down. These paths suck time and resources away from what could make the business successful and can ultimately lead to its demise. This all seems perfectly logical. Look at the wrong criteria > make the wrong choice > fail. The key, then, is identifying which criteria are the actionable ones, and which the distractions.

One of the most oft-cited examples of the vanity metric is page views or monthly average uniques (MAUs) sometimes colloquially just called eyeballs. These are a count of how many people are visiting a site. Where that site’s primary goal is volume of views to generate revenue from adverts, this would clearly be a desirable *actionable* metric (which has spawned the terms “listicle” and “clickbait”). By contrast, outside of businesses with a revenue model solely down to serving ads, what do all those visits actually generate? If you’re selling direct to the public, be it shoes, cakes or second-hand cars, all those eyeballs mean precisely zilch if not one of them buys anything. There has to be a conversion from a view to a purchase. There are books, businesses and conferences all devoted to the subject of “conversion rate optimisation” — the art of moving a viewer along the sales process to becoming a customer.

I realise that at this point I’m probably not saying anything particularly unusual, surprising or revelatory. These concepts have been around for more than a few years. Substantially younger than that is the concept of “Growth Hacking”. On first pass, it seems to be a fragment of traditional Marketing, something hived off specifically to fit to the needs of the rapid-growth startup culture of Silicon Valley, where the emphasis in “Next Big Thing” is often “Big”. Recently, one of Growth Hacking’s leading thinkers and proponents published this as a guest post on his site:http://andrewchen.co/2014/08/14/early-traction-how-to-go-from-zero-to-150000-email-subscribers-guest-post/. James Clark (@ronin_jim) does a neat takedown on it here: www.roninjim.com/2014/08/growth-hacking-0-to-150000-useless-chancers/. The counter-argument posted on Twitter was that extra attention to the business (given that the product was good) would generate sales. That the incentive to visit was merely the hook, a PR move designed to pull in those to be converted to paying customers. Then it becomes a case of ROI and @ronin_jim correctly asserts that unfortunately those bribed to browse do not the most valuable customers make.

This set me to thinking about the nature of growth itself. We talk about scaling businesses, we celebrate those organisations that have been successful, and seek to do so on a larger canvas by accepting investment. The issue with that is that the growth has become so intertwined with the idea of success, so crucial to the notion of progress that it’s been misapprehended as the end in itself. I’m not going to argue that all rapid growth is bad, I don’t believe that’s the case. What I will say is that in order for that growth to be positive, it needs to be sustainable and directed.

Without sustainability, the growth sucks in resources, expectations and time only to burn through them before necessarily dying back. There have been several high profile examples of this recently – Groupon, whose rapid expansion and collapse may have taken the whole group purchasing segment with it, and Fab who were so determined to stop competition/cloning that they charged across geographical markets with little regard as to whether they could maintain the push.

Growth hacking seems to be characteristic of the other kind of bad growth – growth without direction. The business processes of assessing an opportunity, building, testing fit, promoting etc. are all known and established. Indeed, refining them for the startup’s use is at the core of Ries’ build > measure > learn loop. Conspicuously absent is the process that says charge headlong for growth at any cost. Initially, I thought that the bribery example above demonstrated that this type of growth hack was misnamed. That rather than growing, these businesses were swelling. The more I thought about this process sucking in the vitality of the whole without pause or purpose, the more I realised (in typical dramatic fashion) that the name was apt. This was growth as a *growth*.

Now before we get all hysterical and John-is-calling-Growth-Hacking-cancer-y, that’s not exactly what I’m saying. Any process consuming resources to swell at the detriment of the whole is unhealthy, and needs remedial treatment (possibly including excision). It’s unfortunate that in the case of Growth Hacking, it’s so obviously the case because that’s it’s core purpose.

I often get annoyed when people use “marketing” when they mean “promotion” or “advertising”. They’re certainly in the mix, but they’re far from the whole. It’s a mistake that’s made so frequently, and commonly it seems like it’s been accepted as a consensual truth. That consensual truth seems to be at the root of Growth Hacking, a function that so misunderstands the purpose of promotion it treats it as a goal to be achieved.