What I Learnt about Growth
So I spent the last few weeks trying to dig deeper and unpack what this thing called growth is. Aren’t all businesses about growth anyway? So how this “growth” thing any different or even new?
There is a lot stuff by the Reforge group which conducts popular workshops on the topic. Besides that I also read/watched some stuff by Casey Winters and James Currier.
After a while, with this massive amount of information swimming in my head, I wanted a place to write it all down and crytalise everything I learnt so far, hence this blog post.
I have to caveat that the content below is heavily weighted towards stuff put out by Brian Balfour and none of this is my personal experience but what I’ve learnt about the topic from articles and YouTube videos.
So here goes.
What is Growth?
First of all, what even is growth? It’s such a vague term that I suspect a large part of conversations regarding growth is actually defining what it is.
As far as internet lore is able to confirm, the first “growth” team came out of Facebook in 2008 when Chamath Palihapitiya created the team that helped the Facebook userbase take off like a fucking rocket. It’s also where they came up with the famous “7 friends in first 10 days” metric that users need to hit to prevent them from leaving the platform.
To distill everything I’ve read down in my own words; growth is about getting your product in the hands of as many users as possible and while also ensuring that they stick around.
Or as Casey Winters puts it more succinctly:
“Connecting more people to the existing value that’s already been created”
Why Do Growth?
Why do you need to spin up this new team to try to grow the user base?
Wouldn’t a great product just take off organically through word of mouth or virality?
Well, here’s what some smart folks have to say:
“Poor distribution — not product — is the number one cause of failure.” — Peter Thiel
“The best product doesn’t always win. The one everyone uses wins” — Andrew Bosworth
The biggest risk to a product’s success in this day and age is not whether it can be built or if it’s great but whether it can get into the hands of its intended user-base.
And so for something as important as distribution, you don’t want to leave it in hands of fate after building a great product but actually want a team to make sure that it happens.
Further reading: https://www.reforge.com/blog/growth-wins
When Do You Do Growth?
I’m sure most people already know this but you only step on the growth accelerator after you know you have Product-Market Fit (PMF). But the tricky thing is how do you know you have it?
Here are some helpful articles to help you figure that out:
What Are Growth Teams For, and What Do They Work On?
The Never Ending Road To Product Market Fit - Brian Balfour
And here are some key indicators:
- Qualitative Data: Ask your users. Use surveys, NPS scoring etc to get a sense of whether they are happy and would recommend your product to others
- Quantitative Data: Are your users engaged with your product and are they performing actions that provides them with value? Are your users sticking around? Is your retention curve flattening?
How Do You “Do” Growth?
The Process
The first thing that was made pretty clear to me as I absorbed all the materials out there was that growth has nothing to do with tactics but everything to do with process.
Sounds boring but it makes sense.
You will run experiments and fail a lot. Without a process to keep you going and ensuring that you are learning from the failures, it’s going to be tough to sustain it long enough to bear successful results.
Tactics are borne out of processes and while it may be tempting to just copy a “growth hack” and hope it works for you too, there are just too many variables to account for that could make it backfire.
Brian Balfour goes pretty deep into the way his growth team works in this video. Super useful to watch if you’re looking to build out some processes for growth.
Basically after deciding on an area to work on and setting tangible targets using OKRs, they go through a process of brainstorming, prioritization, implementing and systemizing experiments learnings intended to move towards their goal.
A key part of this process is analyzing the results of experiments and asking themselves why they failed or succeeded. That information feeds into other experiment ideas or becomes a playbook/gets systemized if successful.
During quarterly reviews, they take the time to zoom out and look at whether their success/failure ratios are improving over time, whether their hypotheses getting more accurate and also look to improve their experiment throughputs.
The Areas
Now that you have a process, what growth areas can you apply it to?
Here’s the fun part, there are tonnes!
At this point you may ask, how is a growth team different from a product team. Casey Winters again succinctly sums it up as:
The key difference is growth teams don’t create value, they work to make sure the customer experience value that’s already created.
But the main KPIs that they drive fall under these 3 categories.
- Retention/Engagement: New User Experience, Onboarding, Email
- Acquisition: Product-Channel fit, SEO, Performance Marketing
- Monetization: Pricing, Model-Channel fit
The Model
A growth model is basically how you think your product is growing. A popular framework that a lot of companies use is AARRR and it’s not wrong but there is a more compelling model. Loops.
Enter Growth Loops
Most successful companies today have a few growth loops that help accelerate them to the size they are today.
Common examples of growth loops are the ones from Pinterest and Linkedin.
Here’s an analysis of Superhuman’s growth loops.
Frameworks here are just different lenses of looking at a thing. The thing itself is still the same but after putting on a different lens, you start to see the parts you’ve missed before.
And once you can identify parts of a loop, you can optimize them to strengthen it. Even if you don’t see them, you start thinking about how you can build them.
Loops are great because they compound. The output of a cohort of user makes it easier for you to acquire the next and the virtuous cycle repeats. In this age of saturated ad platforms driving up customer acquisition costs, loops can be a powerful differentiator.
User Psychology
User behaviour basically encompasses everything growth tries to influence and to understand why the users do the thing the things they do, we need to tap into their pyschology.
Understanding why users act the way they do help you form accurate hypotheses so you’re able to increase your success rate and derive accurate learnings from experimental results.
A framework that I came across for mapping out how users make decisions is ELMR which stands for Emotion, Logic, Motivation, Reward.
A decision start with an emotion and logic is used to rationalize it. Users then need gentle nudges in the form of motivation. For example, social proof, scarcity etc. Lastly, they receive the reward for their decision. Was it what they expected to get out of it? Were they delighted or disappointed?
Being able to map out a user’s flow across these stages helps you know what levers you can use to get them to the next stage.
Further reading: https://www.reforge.com/blog/growth-system
Summing it all up
Growth is about getting your product in the hands of as many users as possible and while also ensuring that they stick around by realizing the value of your product.
This is done by utilizing a process of scientific experimentation mostly in the areas of retention, engagement, acquisition and monetization through the lens of user psychology and a model of how your product grows.
Next up I plan to explore or attempt to recognise the growth models of apps and services that I regularly use!