Growth vs. Engagement

This post compiles the answers to the “growth vs. engagement” question I asked my Silo network. Instead of simply listing the different points of view, the post below describes what we learned from the conversations with fellow founders and investors on Silo who were kind enough to share their own take on the answer to this question.

First off, it’s important to separate engagement and retention. Engagement is the measure of how active a user is when coming to the site or app. Retention is how often the user comes back. All great sites have high retention, but not all have high engagement. Google is a good example. There’s a great writeup on this on Andrew Chen’s blog here.

Retention is critical to building a lasting product. Without retention, it is impossible to grow. Adding users to an application where more users churn than join, is the equivalent of a leaky bucket. Users added on the top will simply leak from the bottom. Empty growth without retention will cause you to experience the dreaded shark fin (branchout’s meteoric rise and fall is a fairly recent example)

How is retention created? Simple. When users are smiling :)

When your users’ appreciation of the core product value is greater than the annoyances and lack of polish, they will want to come back again. and again and again. They will also tell their friends, which is where “good” growth comes from (measured by NPS: net promoter score).

Chamath Palihapitiya gave a great talk explaining how Facebook got its first million users, and gave some tips: “What I want to hear about is the three most difficult and hard problems that any consumer product has to deal with. How to get people on the front door? How to get them to an “Aha” moment as quickly as possible? And then how do you deliver core product value as often as possible? After all of that is said and done only then can you propose to me how you are going to get people to get more people. That single decision about not even allowing the conversation to revolve around this last thing in my opinion was the most important thing that we did.”

Most startups don’t need to be concerned with growth at all. As Andrew Chen points out here: “figure out the critical flows in your site, like signing up and sharing, and what factors turn users into successful and active ones. Now start optimizing for that, starting with a few people working on a small number of A/B tests at a time. Based on how that goes, you can ramp it up over time.”

The challenge for social networks like Silo is that growth and engagement go hand in hand. Without enough users who are connected to each other, there will be little or no engagement. As Net Jacobson, co-founder of SparkLabs Global Ventures commented in his reply to my Silo ask: “Without growth — no engagement. Without engagement the product/service will fade away”.

That said, you don't need to have millions of users to work on engagement. There’s an interesting answer on Quora on this topic: “It’s a little-known secret that a number of the major social platforms plateaued at about 50k to 100k users for up to a year before finding their mojo. e.g. Snapchat received early angel funding at <100k users precisely because their engagement metrics were stellar, even if their user growth was not. Once they nailed engagement, they set about finding their network effects and the rest is history.”

Many thanks to all of you who've taken the time to help us sort through this complex issue. If you have any questions for me, please don't hesitate to let me know!

Here are some other useful articles on this topic:

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