How to grow your business

I’ve been interviewing for a couple of positions as a ~growth manager here in Berlin and abroad so I thought I’d do some brushing up.

I started here – with a lecture by Chamath Palhapitaya who was the growth lead at Facebook fairly early on. He’s got a very distinct, assertive style but his insights are spot on.

Key takeaways:

  • Focus on core product value, don’t just optimize for virality score (k). Does your product have value for your target demographic?
  • If your product is useless and you come up with some way to game people into sharing it, your new user numbers will spike but you’ll also lose users just as quickly (in addition to losing face)
  • Use the test/measure/try loop to continuously seek out what works
  • Virality is just getting people in the door, you need to focus on activating those people, engaging them and then getting them to share as an intrinsic part of the experience
  • Don’t let egos get in the way. Disconnect hypotheses about what is occurring/what will work from the people behind them

Something I would add – user acquisition is more expensive than ever unless you bake it into your (awesome) product experience. Millions of college kids saying “Facebook me” is the cheapest acquisition channel ever.

Acquisition channels from cheapest to most expensive:

  • WOM (Word of Mouth)
  • Virality (baked into product), often referred to as k
  • PR (cheap initially, diminishing returns, – SIDE RANT: startups are stupid and want to be in TechCrunch although none of their users will find them there. TechCrunch is for when you’re looking to build hype to raise money or BDev but that’s about it. Focus PR on where your ideal user gets his info)
  • Paid (TV, billboards, Facebook, AdWords blablabla and the list goes on)

Paying for installs is ridiculously expensive these days because the app economy is going crazy and anybody with a marketing budget and zero knowledge can set up an AdWords campaign. But the first three scale really well – if you build sustainable growth into a great product or build good relationships with journos (like this guy) then you can get great returns on your marketing budget.

Be careful with paid marketing – you better know how much a user is worth before you blow your marketing budget on Facebook ads. That’s why Rocket/funded German startups spend so much money on advertising – they’ve run the numbers every which way and they know they’ll make the money back (and more).

Here is the spreadsheet Delivery Hero uses to calculate their max Customer Acquisition Cost  (Spoiler, DH can spend up to 41 EUR on acquiring a customer and STILL MAKE MONEY! That should help make sense of why Rocket Internet bought 30% of Delivery Hero for half a BILLION dollars).

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