EE2019: “Riding the tiger” with Giphy’s Alex Chung
We have been fortunate to have Alex Chung continuously support the mission of Extreme Entrepreneurs. Alex, the guru of pop culture, is the co-founder and CEO of Giphy (a Lightspeed portfolio company), which has seen a high-speed growth ride in a short period. He is a serial entrepreneur and a pioneering thinker on consumer and new age media. At EE2019 masterclass, we engaged with him on creating processes and hiring people to unlock growth. We have captured key takeaways from the session here.
Experiment with multiple ideas to land on a successful one
“There are two types of founders: 1. Who have an idea and will run behind it to make it successful 2. Who don’t know if an idea will work and will undertake multiple experiments to find the right one. If you’re type 1, then your chances of failure are high”, said Alex. You can have a perfect idea but if the market conditions don’t support it, the startup will not survive. To give an example, Alex started a social networking startup in 1999 but stopped working on it as the idea wasn’t picking up. He re-started working on it in 2006 but couldn’t compete against Facebook. He finally sold it to Google in 2010 when the timing was right. Having started up 12 times before landing on Giphy, Alex emphasised on experimenting with multiple ideas rather than forcing 1 ‘perfect’ idea to be successful. It was the boom in messaging and internet adoption that supported Giphy’s growth.
Owning the user vs owning user behaviour
“If you have to own either restaurant or food, choose food. People will get bored of a restaurant, but they’ll still need to eat”, advised Alex. You can’t survive against well capitalised players in the market if you’re trying to own the user. Giphy understood that launching a messaging app would be very challenging. Even if they created a differentiated product, stealing features would not be difficult for the likes of Whatsapp and Facebook. Therefore Giphy created a new behaviour of sharing GIFs on the existing channels of communication. Once you create a lock-in with a large user-base, eventually you will be able to re-direct them to your own platform. Similar strategy was followed by Netflix– it initially started with renting DVDs online and eventually built the streaming behaviour, killing the DVD market.
Track the 10x KPI for your startup
Using Paul Graham’s definition– “Startup is anything that is exponentially growing”, Alex shared that a “10x year-on-year growth on one KPI” is a sign of growth for an early stage startup. This focus was the basis of Giphy’s growth from 300k to 3Mn users in 3 years. To ensure that growth is along the right path, it is critical to have clarity on the most needle moving KPI for your startup. Drawing a framework, Alex shared that you can either select a product KPI or a revenue KPI in early days but it’s important to have clarity on the path to scale both over time. Giphy understood that achieving 10x growth in revenue will not be feasible in early days and hence focussed on growing users. When growth in product-KPI starts peaking, you’ll know it’s time to switch on revenue growth.
In early days– Hire from close circles; Hire Generalists
It’s critical that your initial hires, including co-founder, are from your close circles. These are the people you could trust to stand by you through highs and more importantly lows. Also, it’s important to ensure that the first 25–30 hires are generalists rather than specialists. You don’t need people who are best in their field but people who can be moulded as per the fast changing and uncertain demands of a startup in early days. The number 1 quality test at Giphy was whether the person will be able to communicate with people across the team. On the topic of hiring, Alex also candidly shared how he doesn’t believe in hiring growth hackers– “Entire company needs to come together to achieve growth, 1 person cannot do it”. At Giphy, it was the brainstorming sessions with the entire team that discovered interesting growth hacks.
To achieve non-linear growth, go where the user already is
On asking about Alex’s strategy to unlock exponential growth, he said, “You can either get your users or go where the users already exist.” The latter is likely to bring non-linear growth. If you have a much better or cheaper product then you need to be in places where users are present. Giphy’s strategy of partnering with existing messaging apps lies on the same framework.
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