Podcast Summary
Building a growth team: The right time and direction: Companies with strong product market fit and retention, ideally around 15-20 team members and 2 product managers, should consider building a growth team for significant growth acceleration. Early investment in a growth team, like by Slack, can lead to improved retention and industry benchmarking.
Companies should consider building a growth team when they have strong product market fit and retention, ideally around the time they have 15 to 20 team members and at least two product managers. However, it's never too late to invest in a growth team as long as you recognize the benefits and have formed the team in the right direction. Companies that hire growth teams early, like Slack, have seen significant growth acceleration. It's crucial to understand retention and benchmark it against industry peers to determine if a growth team is necessary. For example, a social network should aim for long-term retention of 50% or more, while an on-demand delivery company may only need 20 to 30%. The frequency of retention measurement also depends on the industry. Companies with less than 20% retention should pay attention regardless of their industry.
Understanding User Retention for Startups: Startups need to track user retention from the beginning for product value and investor confidence. Retention periods vary, so focus on return visitors or engagement metrics for travel-related businesses. Hire growth team members with curiosity and a low ego to analyze results and adapt approaches.
For startups, tracking and understanding user retention from the very beginning is crucial for both attracting investors and building a valuable product. Retention is a measure of the value users derive from a product, and it's essential for everyone involved, regardless of the specific role or team. When defining the retention period, it's important to consider the nature of the business and the industry. For instance, travel-related businesses might have a lower velocity of use, making retention predictions more challenging. In such cases, focusing on return visitors or other engagement metrics can help build confidence for investors. The personality and discipline of the first growth team hire are crucial. Curiosity is essential, as team members should be eager to analyze experiment results and understand how metrics are evolving. A low ego is also necessary, as team members will need to be open to trying various approaches and accepting that not all ideas will succeed. Ultimately, retention is a vital aspect of building a successful product, and understanding it from the start can help founders navigate challenges and attract the right investors.
Former founders often start growth teams as data-savvy engineers: Companies prefer former founders for growth PM roles due to their grit, data-savvy skills, and ability to handle failure.
Building a successful growth team often starts with an engineer who is data-savvy and comfortable with experimentation. Former founders are commonly found in these roles due to their grit and ability to handle failure. Companies often look for this mindset within their existing product managers before hiring externally. The growth PM role requires a deep understanding of data and the ability to identify what drives each metric, making data-driven decision-making essential. Internal PMs are often the first choice due to the social capital they bring to the growth team, allowing for more effective collaboration with other teams.
Hiring the Right Product Manager for a Growth Team: Assessing internal social capital, growth mindset, and CEO endorsement are crucial for hiring a successful PM. Use real use cases, trials, or shorter interviews to assess cognitive ability, job fit, and collaboration skills.
Hiring the right product manager (PM) for a growth team is crucial for a company's success. Internal social capital and a growth mindset are essential qualities for PMs, but not all teams have these qualities. Endorsement from senior leadership, especially the CEO, is essential to ensure the new hire's success. During the hiring process, it's important to assess both cognitive ability and the candidate's ability to do the job. Airbnb used a real use case approach, asking candidates to solve a growth problem, which provided a better understanding of their capabilities than traditional interviews. While some companies offer trial periods, others prefer shorter interviews to assess personality, thought process, and collaboration skills. Ultimately, the hiring process should be tailored to the specific needs and resources of each company.
Assessing growth team hires from larger companies: Focus on organic growth channels, experiment with paid marketing, and assess potential hires' problem-solving abilities through interviews.
While it may be easier for founders to hire growth team members from larger companies today, it's crucial to assess their problem-solving abilities and creativity within the context of your specific business. Growth teams from social networks or e-commerce companies may not have the same expertise in growing your unique product. Additionally, relying solely on paid marketing as a growth strategy too early can lead to uncertainty about user retention and long-term success. Instead, focus on organic channels and experimenting with paid marketing on a smaller scale before making it a primary growth strategy. The interview process, including asking potential hires to present solutions to your unique problems, can provide valuable insights into their ability to think creatively and effectively contribute to your team.
Measuring the success of paid marketing: Focus on incrementality, experimentation, and accurate metric tracking to ensure high ROI and maintain comparable user value in new cohorts
While paid marketing can be a quick way to acquire users, it's only effective if the return on investment is high enough to sustain further spending. Measuring the success of paid marketing efforts requires a strong focus on incrementality, experimentation, and accurate metric tracking. Neglecting these aspects can lead to wasted resources and misguided strategies. Additionally, for free products, marketing efforts may not yield valuable insights. Remember, the key to successful paid marketing lies in understanding your customer lifetime value and ensuring that new user cohorts maintain comparable value to previous ones.
Focusing on a few key channels for growth: Billion-dollar companies prioritize Facebook and Google for online marketing success. Effective data communication can shift a culture towards data-driven decision making.
Focusing on a few key channels rather than spreading resources thin across multiple channels is crucial for success in online marketing. Two channels, Facebook and Google, account for the majority of growth in online marketing for billion-dollar companies. For employees looking to prioritize data in a company that isn't data-driven, effective communication of data through regular reports and updates to leadership can help shift the culture towards data-driven decision making. Balancing data and intuition is important, but ignoring data completely can be detrimental. Additionally, ensuring that data is being tracked and made accessible to leadership is a necessary first step.
Identifying Key Drivers of Growth with Data: To grow a business, gather and analyze data to identify key drivers, present solutions backed by evidence, and adapt strategies for international expansion.
Data is crucial for understanding and driving growth in a company. Confusing correlation and causation can lead to incorrect assumptions about what is truly contributing to a company's success. To identify the key drivers of growth, it's essential to gather and analyze data. Instead of just exposing problems, it's more effective to present solutions backed by data. For instance, if you're struggling to get buy-in for an idea within your company, run experiments to prove its value. Additionally, a product lead for growth is responsible for managing product managers focused on driving growth across different areas, acting as a crack manager. When expanding internationally, companies like Airbnb that have a global network effect already have hosts and bookings in place, making entry into new markets easier. However, most companies don't have this advantage, so their strategies will need to adapt accordingly. Overall, leveraging data to inform decisions and focusing on solutions is key to driving growth.
Expanding internationally: Translation, product gaps, and user research: Translation improves user experience and SEO, addressing product gaps is crucial, and user research is vital to understand cultural differences
Expanding a business internationally requires careful consideration and adaptation to local markets. Translation is a crucial first step, as it improves user experience and SEO. Product gaps, or issues specific to certain countries, should also be addressed. However, it's essential not to underestimate the importance of user research and being on the ground to understand cultural differences that might impact product usage. For instance, Instagram's experience in the Middle East highlights the need to understand local nuances that might not be apparent from data alone. While significant cultural shifts might not be the norm, small tweaks or changes in product design can help bridge the gap and make the product more acceptable in new markets.
Understanding unique challenges and opportunities in each market: To grow a product internationally, identify strategies from initial market success and adapt to unique challenges in each market, addressing product gaps, exploring different growth sources, and ensuring effective localization.
Growing a product internationally requires a deep understanding of the unique challenges and opportunities in each market. It's not enough to blame cultural differences or lack of popularity of certain platforms for lackluster growth. Instead, it's crucial to identify the root causes of growth in the initial market and apply those strategies in new markets. This may involve addressing product gaps, exploring different growth sources, and ensuring effective localization. It's also important to note that being an expert in one market does not guarantee success in others, and a multifaceted approach is often necessary. In summary, growing a product internationally requires a systematic approach and a willingness to adapt to the unique challenges of each market.
Understanding the role of a growth team in international growth for different types of businesses: B2C and B2B businesses have unique growth strategies. For B2C, the approach can differ based on product type. B2B companies can be categorized into consumerized enterprise or sales-focused. A local growth team may not be necessary for all businesses, but it can depend on the specific context.
The approach to international growth and the role of a growth team can vary greatly depending on the nature of the business, whether it's B2C or B2B. For B2C companies, the growth strategy can differ significantly based on the type of product, with consumer startups often requiring a different growth approach than social networks or travel companies. In contrast, B2B companies can be categorized into different buckets, such as those with consumerized enterprise products or those that rely on sales. For the latter, the focus may be on securing large enterprise contracts from the outset, requiring a significant investment in sales efforts. Facebook is an example of a company that scaled internationally with a growth team primarily based in San Francisco, despite having a large user base outside the US. However, the need for a local growth team can depend on the specific context, as the experience and compounding effects of growth may be smaller if the team is not located in the growth hub. Ultimately, it's crucial for businesses to understand where they fit in the growth spectrum and adjust their strategies accordingly, whether that means investing in a growth team or focusing on sales. The principles of growth accounting, such as activation and retention, can be applied to both consumer and enterprise solutions.
Automating sales process with growth teams and identifying product-channel fit: Growth teams can automate early outreach and personalized messaging, but human interaction is still needed for the close. Product-channel fit is crucial for companies to focus on channels they can control for increased growth impact.
Understanding the role of growth teams and automation in the sales process, as well as identifying the right product-channel fit, are crucial elements for companies looking to grow effectively. Growth teams can help automate early outreach and personalized messaging, but the level of involvement required in the actual close still necessitates human interaction. Product-channel fit is essential for companies to discover how people find and use their product, allowing them to focus their efforts on channels they can influence and control. By determining the right channel, companies can increase their impact on their growth and sales processes.
Focusing on word of mouth marketing in the early stages of a startup: Prioritize bottom of the funnel metrics and conduct opportunity assessments for growth in the first and second years of a startup
In the early stages of a startup, if you have a product that is cool, easy, and convenient, your users will naturally generate word of mouth marketing for you. This was seen with companies like Uber, Lyft, and Monzo Bank, which all relied on their unique offerings to spark curiosity and conversation. However, as a startup grows, it's important to prioritize metrics for growth, starting with analyzing the funnel and identifying the most important steps. The number of metrics to focus on can depend on the company's data-driven culture, but in the first and second years, the bottom of the funnel should be a priority. Additionally, startups should consider conducting an opportunity assessment to determine the potential impact, likelihood of success, and effort required for new initiatives.
Reducing Churn and Re-Engaging Dropped Off Users: Word of mouth plays a crucial role in growth for unique or radical products. Prioritize re-engaging dropped off users to build trust and encourage new users to try the product.
Focusing on reducing churn and re-engaging users who have dropped off before completing a transaction is crucial for growth. This is particularly important for companies with unique or radical products, where word of mouth plays a significant role in user acquisition. Airbnb, for instance, grew primarily through word of mouth due to its unusual concept. However, as the brand became more established, paid marketing, referrals, and SEO also became essential channels. In the early stages, performance marketing was critical for acquiring users who were actively searching for travel online. While the total investment in various marketing channels for travel companies can be substantial, the importance of word of mouth cannot be overstated, as it helps build trust and encourages new users to try the product. Companies should prioritize understanding why users are leaving and find ways to bring them back, as they already have some level of familiarity with the service or product.
Effective Word of Mouth Marketing for Startups: Startups need strong product-market fit for word of mouth success. Key moments in customer journey are effective for word of mouth. Tie experiences to brand on social media. Have a 10x better product and leverage influencers for growth.
Strong product-market fit is crucial for startups to thrive, and word of mouth marketing can significantly contribute to their success. Airbnb, for instance, benefited greatly from word of mouth due to its unique product offering that people wanted to talk about. There are key moments in the customer journey where word of mouth is most effective, such as before, during, and after a trip. However, tying these experiences back to the brand on social media can be challenging but effective, as seen with Nike's use of watermarked photos. Ultimately, having a product that is 10x better than the competition and leveraging influencers can help e-commerce companies differentiate themselves and scale through word of mouth marketing.
Leveraging personal brand and relationships for business growth: Investing in personal brand and relationships can help businesses expand their reach and potentially double their audience in a few years
Building a strong personal brand and resonating with an audience beyond performance marketing can significantly help in growing a competitive business. Soylent's founder, Rob, is a great example of this, as he leveraged his blog following to launch his product successfully. Another strategy is to optimize relationships with existing users and their networks, as Airbnb did by capturing the identities of friends traveling together and reaching out to potential users who might not have otherwise used the service. By investing time in these areas, businesses can expand their reach and potentially even double their audience in a few years.
