An Introduction to Growth

Over the past few months I was lucky enough to participate in a course on growth, taught by two leaders in the field, Andrew Chen (Head of Supply Growth at Uber) and Brian Balfour (VP Growth at Hubspot). The amount of learning was almost overwhelming, but I thought I would try to sum up a few of my key takeaways from the course.

What exactly is all this talk about Growth?

Growth can be typically described as the combination marketing, product and engineering. Today’s most successful startups have learned that in order to experience explosive growth, these teams need to work together. Growth is achieved through perfectly optimized marketing, driving people to perfectly optimized landing pages, that convert to new-users who go through a perfectly optimized onboarding process. Each step of this process represents an opportunity to significantly increase the growth factor. 10’s, 100’s, even 1,000’s of A/B tests improve the efficiency of each stage of the funnel. For a really good introduction, read Brian’s essay Growth vs. Marketing vs. Product.

Growth Models

A growth model is a model that maps each interaction you users have with your product. Most growth models take the form of some kind of loop. Essentially what you want to figure out is your growth factor. For example, if you have 1,000 users, and every 1 in 5 users brings in a new users, you essentially have a viral factor of 0.2 (1/5). With a 0.2 viral factor, these 1,000 users will eventually top out at 1,250. If you play around with this a little, you will see that viral factors above 0.5 can become very powerful.

For more on calculating viral factors, here’s a good post by Rahul Vohra.

Funnels

To understand your growth model, you need to understand the funnel by which you acquire new users or customers. A good way to learn about your funnel is to create a user journey map. Ultimately, growth has a lot to do with optimizing the conversion rate at each step of the funnel. Another important thing to take note of is the user’s intention at each stage of the funnel, as this will directly relate to the type of tactics you will use (more on this later).

Loops

As seen in the growth models section above, growth is all about virality and loops. Content loops, SEO loops, paid loops (example above). Although there is certainly aspects of growth that are linear, to experience explosive growth, there generally needs to be some sort of loop(s) involved. Essentially, what loops accomplish is the ability to stretch every conversion, or dollar spent as far as possible. The higher the viral factor, the more you can stretch this.

Channels

Channels are essentially where people can find you — where you gain and grow your users or customers. This could be through social media networks, app stores, or something as simple as google search. An example of channels is how PayPal grew on the backs of eBay (before being acquired by eBay). Essentially, eBay was the channel in which people found out about PayPal, and eventually became users. A few takeaways that I found particularly interesting in the growth course was Andrew’s theory on the law of shitty clickthroughs and Brian’s “Efficient Channel Hypothesis”. (For the finance gurus out there) Essentially what these theories mean is that as channels become more and more crowded, they become harder to grow on top of and more expensive. I highly recommend reading Andrew’s post if you’re interested in learning more about this.

Retention & Engagement

The final, and easily one of the most important aspects to think of when thinking about your growth model is to consider retention. Even if you have a crazy viral factor, if the majority of these new users are churning after a short while, all is lost. This is precisely why more and more we see companies spending a considerable amount of effort into an effective onboarding process, in efforts to get users getting maximum value from their experience as early on as possible. If you’re interested in learning more about onboarding and what the latest trends are, I highly recommend visiting UserOnboard.