10 Important Points About Growth by Brian Balfour
To get started, it is kind of important to understand that there is an aspect that fascinates every hacker: seeking knowledge. As a matter of fact, don’t be surprised if you see them browsing crazily for every blog posts available online, willing to fulfill their ultimate desire to understand any particular topic. The machines, Google and other digital actors have drastically changed our learning experience, and hackers have perfectly understood how to take advantage of this new reality. Driven by this passion to learn and discover more and more about what stimulates them, the hackers genuinely developed huge capabilities that help them find patterns than no one can quite reveal. Ultimately, understanding the architecture of a system and how it operates is the most effective way to identify breaches and take advantage of them. Believe me, this mindset can be an unfair advantage over your competitors.
Let me tell you what the real hack is: to never get lost in this age of information. If you want to specialize in one area, I am going to share with you a practice that I use every day: find one of the top players in the industry and browse his/ her articles from the first to the last one (Again, from the first to the last and not vice versa :)). By doing so, it will allow you to see the evolution of his/ her thinking over the years and consequently learn a huge amount of concepts within just few weeks. This is my practice, this is my weapon, and you just need to use it wisely to see the benefits of it.
To give you some examples, if I would really want to go deep on the startup and venture capital industries, I would certainly eat up all Paul Graham and Mark Suster’s essays (which I did). If I would want to master the scraping tactics, I would definitely take a deep insight at each article of Mikhail Shilov or Igor Savinkin on Scraping.pro (which you should do).
And from this perspective, if you are hoping to learn more about the art of getting new users, do you know who is one of the best experts of that? Brian Balfour, VP of Growth at HubSpot, who shares all his discoveries on a monthly basis through his blog Coelevate. For another reference, please take a look at James Currier’s presentations, you will be amazed!
“ Now, you will certainly guess how I did write this pretty stuffed article. It was done after two nights of intensive reading of dozens of his blog posts. Be ready, I am very excited to share with you the 10 most important points that caught my attention about his vision of growth. ”
#1. Focus on one acquisition channel at a time.
A common mistake that entrepreneurs make when developing their acquisition strategy is to focus for a long time on a variety of channels. Being in an early-stage and having few resources, they end up delivering a mediocre performance. So, as the saying goes: you have to focus. What I recommend, especially during a traction phase, is to experiment new channels and try to find a steady stream of users. But once you find the one that provides that efficient stream, stick to it until saturation.
Keep in mind that in terms of acquisition, no channel is similar to the other (Trust me, you will never find two channels with the same performance). Also, remember that most large companies get 80% of their growth from one or two channels. Do you want to hear some examples? The virality of the expansion of Facebook (or LinkedIn for that matter) came mainly from email invitations. Later, when Facebook turned out to be successful and became a channel by itself, Zinga immediately took advantage of this huge user base via different mechanisms and viral advertising stratagems. On the other side, HubSpot did the same thing and focused its efforts on content marketing strategies in order to obtain leads as well as an organic growth (mainly via search engines and social networks).
“Once you find the channel that provides the steady stream, don’t be tempted by adding another one to the mix. Use it deeply, optimize it and above all, keep learning.”
— Brian Balfour, VP of Growth at Hubspot
Achieving significant results require unstinting commitment. Do not underestimate the efforts required for testing and optimizing a single acquisition channel. Focus all your energy and time on that and do not fall into the trap of adding another one. That is said, it is always easier to expand on something that is already working rather than trying new channels that you know nothing about. Take the risk on new channels only if you have reached a state of saturation. Focus ultimately wins.
As you may know, there are different phases that any product goes through. The first phase consists of getting its first users and by the same occasion learning more about its audience to consequently iterate and improve the service. The second one is more oriented profit, where it is primordial to have enough users in order to start knocking on the door of profitability. For the third step, the objective is to improve your profits, scale your marketing channels and create a real profitable business. (It is also important to understand that what may have worked out during the traction phase does not necessarily mean that it can reproduce the same results in the growth phase)
# 2. Growth is mainly a series of successful experiments (the backlog).
You have probably set up a roadmap for designing your product (using Trello and issues on Github…) but let me ask you this question, have you seriously considered a plan to find a scalable and profitable acquisition channel?
Even though the term may sound glamorous, remember that “the silver bullet” doesn’t exist in the growth hacking world. Do not waste your time browsing the innumerous articles promising you the “magic tricks”. Thus, a startup must have a vision in order to persist in the long run. What I mean by that is that growth is nothing more than a series of rigorous and continuous attempts. What works for some probably will not work for others. Your audience is different. Your product is different. Your user experience is different. To make it easy, your business model is simply different.
Nevertheless, much of the logic behind trying and experiencing during the traction phase is to identify opportunities that will produce the greatest return on investment (ROI), even though they have a short life span (the doors open and close creating various opportunities especially concerning the acquisition paid). Never forget that your main goal in the early stages of your startup is to learn and grow as fast as possible despite your limited resources.
As Brian Balfour suggests, take everything that you read as an inspiration and not as a prescription. Brainstorm, write and prioritize your ideas in your backlog (make sure that it is accessible to your team as well). Design your document experiences including the main objective, details about its implementation, the results and discoveries that you noticed. The goal is to automate your most effective experiences as much as possible. And when this process turns out to get complicated, keep a playbook up to date (a document that explains precisely the step by step actions required to perform the experience).
Generally speaking, it happens quite often that the growth team fails in its first attempts. But keep in mind that your most successful experiences will result from the learning process acquired during your previous fails. This is why it is particularly important to devote time in order to analyze your findings in your experiences documents (as well as your discoveries). And again, make sure that everyone has access to this data.
“The true failure is to conduct experiences and don’t learn anything from them, whether it is about your product, your audience or the improvement of your growth process.”
— Brian Balfour, VP of Growth at Hubspot
If you are a regular player of the famous strategy board game, Risk, you know how it is so important to win small battles. Yes, growth is like playing Risk, it is the succession of successful moves that can lead to the final victory.
“ Another important point, you need to be honest with yourself concerning the result of your experiences. Don’t think that because it has previously worked out for someone else, it should also work for you. So, don’t be afraid to follow your gut, always test and check your assumptions. For this is the only way to learn more about your audience and product. ”
Learn more here about managing a growth process in a startup early-stage.
#3. Do things that don’t scale.
There is an important question that we need to ask ourselves continuously, it concerns the energy required for the deployment of an experience. Your first users are always the hardest to get. Firstly, because you have to continually iterate on your product as they are experiencing frictions and misunderstanding of the product value. Secondly, because you do not have necessarily a clear idea about your target (I am talking about this segment that you can effectively activate and get returning). Unfortunately, it is still very common to see startup founders hesitating to run an experiment during an early-stage phase, mainly because it could not scale in the near future. Between you and me, this is an unfounded argument. The real questions that we need to ask are: can this experience be sufficiently effective to acquire my first users? Can this experience afford me to collect the necessary data to conduct an accurate iteration of my product?
There is nothing more important than knowing its users. Have a clear idea of the main attributes that characterize your power users (both about who they are but also on the sequence of actions that they have performed to make them active). That is why it is essential to have an existing first base. Gather a small group of addicts; analyze their behaviors as well as their use of your product (Mixpanel, Google Analytics, Facebook Analytics, Hotjar…). And if necessary, push hardly to get this segment of users (be aggressive) by doing things manually and that don’t necessarily scale.
#4. Overcoming the problem of the egg and the hen.
To run your business in any marketplace is always difficult. Firstly, you need to get two distinct types of users (the providers and the consumers). Secondly, because you need to constantly get the balance between supply and demand. Also, enlarging one side of the marketplace does not necessarily mean you will succeed to get the same result for the other one. Happily, that was not the case for Etsy or LeBonCoin. Your work will be kind of doubled and the entire quality of your performance is closely linked to your strategy to overcome the egg and the hen problem. Due to this, it may be legitimate for you to wonder from where you should start.
What must be understood is that the answer is very intuitive: success is always in the creation of value for your first group of customers. If you have read l’Âge de la Multitude, then you will understand that before becoming a platform (or a marketplace), you must build an application that answers a specific problem. In other words, start focusing first on the providers. Find a way to reach them and convince them to offer their services. For instance, Envato in its early-stage hired freelancers to perform its first flash products (same thing for Uber and its drivers). I also remember a story about the beginning of Homejoy: Adora Cheung, CEO and Co-Founder of Homejoy Inc, who made the maid work by herself for her first clients. Besides sounding that this is a great way to learn about the product and its users, she successfully hacked an important part of the marketplace. So what? Do not be afraid to use your strengths when starting to build your product. Also keep in mind that making a useful product does not necessarily mean that customers will quickly embrace it. Pay attention to the details and make sure to do an excellent work on the offer.
“I would say that all marketplaces over history, with the possible exception of raw materials, got started by focusing on the offer.”
— Micha Kaufman, CEO at Fiverr
Another extremely important strategic point to consider is to voluntarily decrease the size of your target audience in order to make it easier to get density. We can illustrate that by taking the example of LinkedIn and its initial focus on Silicon Valley’s professionals. The goal planned was to more easily get density to its network. Mutually, MySpace has also succeeded to get an initial traction by focusing primarily on the music industry. Dating websites have also understood the main point of this tactic and experiment that on various niches: sugar daddies, cougars, those who vote left/right and so on…
“ Note also that marketplaces have the ability to acquire an enormous advantage when they reach critical mass. By gaining greater liquidity, they are able to: activate, retain, and monetize users more efficiently. And that’s the whole purpose of any startup: it is about creating a monopoly. ”
# 5. Paying for users is fine.
As I said earlier in this article, using advertising tactics to acquire users can turn out to be very wise. To gain performance, the main point is to determine the customer lifetime value (CLV) in order to deduct a relevant price for an activation cost. Remember that all acquisition channels have a cost, either in terms of money or time. Also, setting up content strategies will take out a lot of your energy and may require months of efforts before producing the first significant results while doing guest posts and some targeted podcast apparitions may lead to a better ROI on the short run. In the early stages of your startup, the speed of learning is the most essential thing to keep in mind. This is what you should focus on and what must guide your actions. Would you prefer waiting several months to get the same conclusions while you can get them in a few days by using a different channel (even a paid one)?
“There is a big difference between using Facebook Ads to test a product/market fit on one side and developing an acquisition strategy to get profits on the other.”
— Oussama Ammar, Co-Founder at TheFamily
In this regard, I recently had a discussion with an entrepreneur about paid user acquisition strategies. I enumerated that it become increasingly difficult to obtain a huge impact through Adwords (and sooner Facebook Ads) without assiduous and steady focus. Then, this entrepreneur shared with me an interesting reality: the actors that he noticed obtaining an outstanding performance on this game were those who launched hundreds of different ads at the same time (whether on targeting, the long tail, visual impact or copying). Their goal is to determine very quickly the ads having no effect and abandon them immediately, so that they can capitalize on the most effective ones. In a sense, the similarities with the gold rush are not so different. Looking to find the little nuggets among the stones.
# 6. The native ads are an effective weapon for mobile companies first.
There is two indicators that we look at closely when conducting advertising campaigns: CTR and CPC (or better CPA). There was a time when we could see small promotional banners appearing at the bottom of our smartphones screens. Having no significant impact for advertisers, they finished by having a tragic dead and being replaced by a new much more powerful way to spread a message, particularly in the mobile environment: native ads.
Facebook was among the first to integrate this new way of ads in its newsfeed. This new way of advertising, directly integrated into the core visual of the user experience, has allowed to make a fantastic increase in terms of clickthroughs. Giving a sure visibility to the message, native ads can make you get an excellent performance if your targeting plan is well done. New actors are ramping up their own native ad formats. Other actors have started to implement this new type of advertisement through their service and should be considered very seriously such as: Instagram, Pinterest, Snapchat…
“ Native ad networks such as NamoMedia, NativeX, and TripleLift are enabling publishers to add native ads more easily to their content. ”
# 7. You do not need an enormous number of tools to start.
We would imagine that the growth hacker uses a large number of tools to execute his/ her experiments. Well, this can at some point be true. With knowledge and experience, the growth hacker knows which are the best solutions to his/ her experiments. But remember that in most cases, all what you need in order to test an acquisition channel is: Google Analytics, Mixpanel and a well-maintained spreadsheet. Without any doubt, those three tools are more than enough for you and will keep your overhead at a minimum.
“ I was recently at Facebook London Headquarter to discover the recent updates of their new products. A significant part of their efforts is oriented on promoting Facebook Analytics. The tool is very interesting if you want to learn about your users. Moreover, Facebook Analytics offers a great solution for your lookalike audiences. I would definitely recommend it with Mixpanel or Google Analytics. ”
#8. Before a product/market fit, always optimize on a macro level.
During the early stages of your startup, it is important to A/ B test your assumptions in a drastic fashion. Do not fall into the trap of testing the color of your buttons or choosing the font of your paragraph. Test what is important, your messages (value proposition) and the way in which you have organized / presented the different sections of your page. Please remember, that it is common to produce couple of A/ B tests before finding one that produces a significant performance. Especially if you are looking for a real game changer. And keep in mind that all what we have discussed improves gradually. Thus, we perform a macro optimization (where there is large differences in terms of the performance) and then we refine gradually to get more into details. As a rule of thumb, we test the forest (big ideas) first and then the trees (your different landing strategies), branches (titles, subtitles…) and finally we come to test the leaves (color of the buttons…).
“ For those seeking an effective solution to quickly perform A/ B testing, take a look at Optimizely. This is my favorite tool. What is great is that you don’t need to know how to code in order to use it. ”
# 9. Accelerate growth without retention is just a waste of time.
Yes, it is always possible to hide your retention problems by making a clever acquisition. But with a low retention, the end of your product is inevitable. What you are capable of doing in terms of acquisition is often closely linked to the performance of your other metrics at those specific parts of the funnel: activation, retention, referral and revenue. Remember that keeping a user twice longer is equivalent to somehow doubling your lifetime value (this is especially true in the case of an SaaS product).
“Advertising is by essence a pure competition of business models. It is a battle between you and your competitors on who can afford to pay the more to acquire these users.”
— Gagan Biyani, Founder at Growth Hackers Conferences
One of the main differences between marketing and growth lies in this holistic vision of the funnel. It comes easily by understanding that growth is influenced by more aspects than just getting new users. Improving your activation, your retention, your referral or your revenues will radically impact your growth. This is why this latter is so closely bounded to the product, and consequently it shows the importance of setting objectives for each silo’s funnel.
As a rule of thumb, the more you move forward into the funnel, the more your product would be difficult to be copied and reproduced. You can buy the acquisition but you can never buy retention, referral or force your users to pay for your services.
“ I like to say that every metric that you use as KPI must have an influence over your retention. In fact, extremely important indicators to measure can be for example your daily and monthly active users (e.g., Facebook communicates mainly on them). These data are very important (given the fact that you are clever enough to define what makes a user an active one) to gauge the value of our content and the progress that we accomplish week after week. You have to find what makes an authentic growth for your startup and be clear with your team about what you need to optimize. At Sidekick for example, all experiments are intended to increase directly or indirectly the number of weekly active users (an active user is someone who has at least made a tracking action for an email or planned to send a message). Analyze your retention graphics on Mixpanel and take a look at what makes a user come back and uses your solution. ”
# 10. With the emergence of new channels of acquisition, new businesses/ opportunities emerge.
Facebook is focusing right now on transforming Messenger into a platform. Developers and startup founders will be able to use all their creativity to find new ways of using Messenger and trying by the same occasion to distribute their applications through its millions of users. Indeed, with the emergence of this new acquisition channel, new companies will appear as Zynga did few years ago.
With the advent of the Oculus Rift in a large majority of households, the emergence of the Internet of things, the possible triumph of connected watches, all those cases represent potential opportunities to explore new strategies and take advantage of those new waves. Because to succeed and to stay at the top, sometimes you need to embrace the adventure and take more risks than others.
“ Note that the cost of getting a new channel is often very cheap at the beginning (and here resides the main advantage). So do not neglect this aspect and take time to analyze them deeply. But remember to stay focus (see point #1). ”
It is in our human nature to feel that if you build the right product, your users will come running to you. However, without a real well thought acquisition strategy, you may find yourself in possession of an empty product. And this is one of the reasons why it is crucial to learn from excellent marketers who produce online content (Noah Kagan, Andrew Chen, Rand Fishkin…). The realm of digital marketing is changing extremely fast. This is why I believe that you will never learn all these tactics in a classroom. You have to constantly rethink things over and over, learn from your experiences as well as from the experts. This is the unique and only path that represents the fastlane.
The world and the new acquisition channels are continually creating opportunities for those that have the flexibility and the risk profile to take advantage early. Change in the marketing environment is evolving very quickly. So, I will finish by what Brian Balfour said: Adapt or die.
