My highlights from Hacking growth by Morgan Brown and Sean Ellis

Introduction

• As Facebook’s vice president of growth Alex Schultz puts it: “If you’re pushing code once every two weeks and your competitor is pushing code every week, just after two months that competitor will have done 10 times as many tests as you. That competitor will have learned 10 times, an order of magnitude more about their product [than you].”

Part 1: the method

Chapter 1: Building Growth teams

The who:

• The marketing group of BitTorrent to hire a dedicated product marketing manager (PMM) to help stoke acquisitions

• The PMM works with the product team on driving growth throughout the rest of the funnel (including user retention and monetization strategies) rather than being restricted to just efforts at the very top of the funnel.

• In every case, a growth team needs a leader, who is like a battalion commander, with her boots on the ground, both managing the team and participating actively in the idea generation and experimentation process.

• Growth teams should bring together staff who have a deep understanding of the strategy and business goals, those with the expertise to conduct data analysis, and those with the engineering chops to implement changes in the design, functionality, or marketing of the product and program experiments to test those changes.

• Growth teams consist of: Growth lead, Product manager, Software engineers, Marketing specialists, Data analysts, Product designers.

• The growth lead sets the course for experimentation as well as the tempo of experiments to be run, and monitors whether or not the team is meeting their goals.

• Growth teams should generally convene once a week, and the growth lead should run those meetings (which we’ll offer guidance on how to do shortly).

• A good product manager is the CEO of the product.

• In general product managers oversee how the product and its various features are brought to life.

• At larger companies, there may be multiple levels of staff within product management, from product manager, director of product management, VP of product management, or chief product officer.

• Software engineers should be part of the ideation process.

 

The HOW:

 

The process is a continuous cycle comprising four key steps: (1) data analysis and insight gathering; (2) idea generation; (3) experiment prioritization; and (4) running the experiments, and then circles back to the analyze step to review results and decide the next steps.

 

 

WHO DOES WHAT:

Close collaboration among all team members, such as the creation of a new product feature, which should involve cross-functional agreement about how it will be designed and implemented, how it will be messaged or delivered to customers, and how its success will be measured.

 

EXECUTIVE SPONSORSHIP REQUIRED:

• Growth teams must be worked into the organizational reporting structure of a company with total clarity about to whom the growth lead reports.

• It is imperative that a high-level executive is given responsibility for the team, in order to assure that the team has the authority to cross the bounds of the established departmental responsibilities.

• Growth cannot be a side project.

• At start-ups, if the founder or CEO isn’t personally leading the growth efforts directly, then the team or teams should report directly to him or her.

• Mike Schroepfer, Facebook’s CTO, told Fast Company: “I have one hand in the day-to-day and one hand in the future. It’s a little bit crazy-making at times, but it’s important that our core business continues to do well. Because that is what allows us to aggressively invest in these longer-term things.”

• Rascoff ( CEO of Zillow) has rallied the whole company around the growth mission by establishing a focus for growth efforts that he calls Zillow’s “Play,” a recurring nine-to-twelve-month growth initiative that the entire company aligns around.

 

THE REPORTING STRUCTURES FOR TEAMS :

There are two common reporting structures for growth teams: THE PRODUCT-LED MODEL and THE INDEPENDENT-LED MODEL.

 

 

MELDING MINDS AND DISMISSING LORE:

• It’s not unusual for someone setting up a growth team for the first time within a company to encounter some initial resistance.

• Setting up a growth team, or set of teams, will involve either a significant realignment of personnel and reporting structures or a rededication of some of people’s time and shifting of their responsibilities, either in an ongoing capacity or for the duration of a specific growth mission.

• Growth teams can ease these tensions if they are managed correctly and if the whole team is incentivized, and rewarded, for achieving shared goals that create meaningful results for the company.

• Many growth team members have described how enthusiasm for the method built not only within their teams but all around their companies as they began to see the method working, and leading to impressive gains.

 

TEAMS EVOLVE:

• As companies grow and evolve, so should their growth teams.

• One cautionary note is that it’s vital not to outsource the core responsibility for growth.

• The fact is, growth is too important to delegate, and consultants often lack the organizational authority, time, or intrinsic motivation to get the hard work done that results in sustainable growth.

Chapter 3: Identifying your growth levers

• Even truly great products that are loved by a core group of early adopters will almost surely fail without a well-focused effort to vigorously drive growth.

• Most freemium product conversion rates is around 1%

• The Everpix tragedy demonstrates the importance of focusing not just on growth but on the right levers of growth at the right time.

 

HACKING YOUR GROWTH STRATEGY:

• Growth hacking is not about throwing ideas against the wall as fast as you can to see what sticks, it’s about applying rapid experimentation to find and then optimize the most promising areas of opportunity.

• In the early phase of growth, you want to craft a strategy for running the experiments that will have the greatest impact on growth in the least amount of time.

 

• Running lots and lots of tests of small changes, like button colors, isn’t the way to start practicing the growth hacking process. Instead, small teams must focus on those tests that promise to have the highest potential for impact first.

 

 

THE METRICS THAT MATTER:

• The fundamental growth equation (FGE) is a simple formula that represents all of the key factors that will combine to drive your growth; This equation is different for every product or business.

• Inman News's FGE: (WEBSITE TRAFFIC × EMAIL CONVERSION RATE × ACTIVE USER RATE × CONVERSION TO PAID SUBSCRIBER) + RETAINED SUBSCRIBERS + RESURRECTED SUBSCRIBERS = SUBSCRIBER REVENUE GROWTH

• eBay's FGE: NUMBER OF SELLERS LISTING ITEMS × NUMBER OF LISTED ITEMS × NUMBER OF BUYERS × NUMBER OF SUCCESSFUL TRANSACTIONS = GROSS MERCHANDISE VOLUME GROWTH

• For Facebook, the amount of items being shared by users and the time spent looking through the News Feed are key factors.

• The metrics that appear in Google’s default dashboards aren’t necessarily the most important for your growth.

• Reducing the complexity of your business operations down to a basic formula is immensely helpful in allowing the growth team to focus on the right signals in this vast sea of data noise.

• Yet for some businesses, like Facebook, for example, daily active users is a hugely important metric because (a) as you may know from experience there is virtually no (or at least an alarmingly high) limit to the number of times one can visit Facebook in a single day; and (b) its advertising-based revenue model is premised on having lots of users who spend considerable time on the site. A metric that means nothing for one company, in other words, may be another’s core growth lever.

 

CHOOSING A NORTH STAR

• To hone your growth equation and narrow your focus, it’s best to choose one, key metric of ultimate success that all growth activity is geared toward.

• WhatsApp’s North Star was the number of messages sent, rather than, say, daily active users, because even if a user is active with the app every day, but is only sending one message, it’s unlikely that WhatsApp is their preferred choice for communicating with their network.

• The North Star may change over time as the company grows and initial goals are achieved.

 

ILLUMINATING THE BEST BETS

• Facebook’s original growth team lead, Chamath Palihapitiya, wisely cautioned in one talk, “If you can’t be extremely clinical and extremely unemotionally detached from the thing that you’re building, you will make these massive mistakes and things won’t grow because you don’t understand what’s happened.”

• US World War II commander General George Patton said, “A good plan violently executed now is better than a perfect plan tomorrow.”

 

THE DATA IMPERATIVE

• Much as an airplane can’t fly without instruments providing information about altitude, air pressure, and wind speed constantly being monitored, without the right data at your fingertips, your growth team will be flying blind.

 

IT’S NOT ALL ABOUT THE NUMBERS

• Even the most sophisticated analysis can really only tell you definitively what users are doing, not why they’re behaving that way.

• Other issues that are holding people back from avidly using your product can be much more difficult to understand, and figuring out the why behind what’s going on requires conducting some user surveys or interviews, or both.

• While the practice of talking to users in the early development stage of testing a prototype has become widespread, at far too many start-ups and established companies, it falls by the wayside once the product has been launched. Continuing to tap this vital resource as you move into the high-tempo experimentation process is extremely important, as the feedback garnered leads the way to many of the most powerful experiments you can run.

 

 

DESIGN ACCESSIBLE REPORTING

• After all, even if you’ve looked at all the right metrics and crunched all the right numbers, if no one on the team (outside of the data analysts) can understand your findings, they are unlikely to result in meaningful action.

• We are huge fans of dashboards because (a) they help focus team members’ attention on key trends or metrics; and (b) they allow you to share findings with the whole company, which encourages more participation in the growth effort.

• For one, metrics should be presented as ratios rather than static numbers. For example, reporting on the total number of users acquired is static and tells you little, but new users acquired per day or week is much better, because it can be compared with previous time periods to see if the rate is rising or falling.

 

 

PUTTING IT ALL TOGETHER

• Cohort analysis is dividing your customers or users into distinctive groups by a common trait. For Twitter, a basic division of users might be by the month they joined the service. This can be determined fairly effortlessly, but with a large and detailed data cache, you’d be able to create much more refined cohorts, such as people who look at Twitter up to five times a day but never tweet, people who tweet only on weekends, people who add ten or more new followers a week, and so forth.

• By actually picking up the phone and calling people, the team can learn exactly what is going on

 

Part 2: the growth hacking playbook

Hacking acquisition

Chapter 5: the hacking acquisition

Introduction

• making acquisition efforts as cost effective as possible is always good business, and all companies should always be striving to spark strong word of mouth in order to reduce the expense of acquiring new customers.

• The first phase of work in scaling up your acquisition of customers should be devoted to achieving two additional types of fit: language/market fit, which is how well the way you describe the benefits of your product resonates with your target audience, and channel/product fit, which describes how effective the marketing channels are that you’ve selected to reach your intended audience with your product, such as paid search advertising or viral, or content, marketing. In this chapter we’ll show you how to use the growth hack

CRAFTING A COMPELLING MESSAGE

• With so little time to impress people, it is imperative that they understand almost immediately how your product can benefit them.

• The human response to language is highly emotional, and largely subconscious.

• Writing marketing copy is not an exact science. This is why growth hacking is designed to bring the rigor of scientific experimentation to the creative process. What this means is that you don’t need to be a marketing savant like Jobs to get language/market fit right; the growth hacking process will get you there.

• Now one of the largest media sites on the Web, Upworthy grew at a lightning-fast clip, thanks in large part to their dedication to seeking language/market fit for every story they publish—their genius is in repackaging content they find on the Web with headlines so catchy they often go immediately viral. But it’s not that Upworthy’s editors are necessarily the most naturally brilliant or creative; their brilliance is that they don’t leave creativity up to chance. Instead, they hack it. The process of selecting headlines begins with a staffer writing at least 25 different possible headlines for each story. Out of these 25, a curator chooses a handful of favorites, and then the managing editor green-lights a set of those for testing. And their testing method couldn’t be simpler. The only tools necessary are Facebook, Bitly (a free online site that generates trackable URLs for Web content), and an old-fashioned timer. Here’s how they do it.
• They pick two promising headlines for the same story and give each its own Bitly URL. Next, they segment their Facebook fans to find two cities with similar demographics and populations, such as one group of people in Minneapolis and another in Milwaukee, and they share one Bitly link with each group. Then they simply set a timer and wait, tallying the clicks and shares that roll in. When the time is up, the headline with the most clicks and reshares wins

• Adopt the language that your customers are using to describe your product and its benefits in social media posts and in online reviews.

START SMALL

• “store your photos online” vs “Share Your Photos Online.”
• The test took almost no time to implement and the results were instant and staggering. The change of one word, from “store” to “share,” completely altered users’ perceptions of what the product was and how they should use it.

• “Find a Date,” vs “Help People Find a Date,”

• The service added 29 million users within 8 months of making the single change.

LANGUAGE FIT HELPS HONE YOUR PRODUCT, NOT JUST YOUR BRANDING

FINDING CHANNEL FIT IS NOT LIKE PORTFOLIO MANAGEMENT

• Marketers commonly make the mistake of believing that diversifying efforts across a wide variety of channels is best for growth. As a result, they spread resources too thin and don’t focus enough on optimizing one or a couple of the channels likely to be most effective.

• As Peter Thiel, cofounder of PayPal, Palantir, and the first outside investor in Facebook, tells start-up founders, “It is very likely that one channel is optimal. Most businesses actually get zero distribution channels to work. Poor distribution—not product—is the number one cause of failure. If you can get even a single distribution channel to work, you have great business. If you try for several but don’t nail one, you’re finished.”

• Experimenting through the growth hacking process allows you to discover your optimal channel or two relatively quickly, ideally before your competition does.

NARROWING THE FIELD

• There are two phases in which to home in on your best channels: discovery and optimization.

THE THREE CATEGORIES OF CHANNELS

 

THE LEADING TYPES OF CONTENT MARKETING

MAKING A FIRST CUT

• Aatif Awan, the Vice President of Growth & International Products at LinkedIn, who helped take the company from 100 million users to more than 400 million, created this handy chart of types of user behavior that you can use as a guide in making these decisions.

 

EXPERIMENTING TO GET CHANNEL/PRODUCT FIT

• Cost—how much you expect to have to spend to run the experiment in question.

• Targeting—how easy it is to reach your intended audience and how specific you can be in whom your experiment reaches.

• Control—how much control you have over the experiment. Can you make changes to the experiment once it’s live? Can you stop it easily or adjust it if it’s not going well?

• Input time—how much time it will take the team to launch the experiment. Filming a television ad, for example, has a much longer input time than setting up a Facebook ad.

• Output time—how long it will take to get results out of the experiment once it’s live. For example, search engine optimization experiments or social media may have longer output times than a radio ad does.

• Scale—how large an audience can you reach with the experiment? Television has a much larger scale than advertising on topical blogs.

PRIORITIZING DISTRIBUTION CHANNELS

• We score each channel the growth team proposes for testing on a scale of 1 to 10, with 10 being the best possible score and 1 being the least favorable score (note that lower cost, input, and output time will receive higher, not lower, numbers, since low cost and input and output times are obviously more favorable).