Growth hacking does not involve an axe or a stretcher, but a healthy lack of common sense in getting the growth you want from a business without spending too much money. To sum it up in a single line:
Growth hacking is leveraging other people’s networks for your own benefit.
However, more than that, growth hacking is only possible with a culture of experimentation, so you need to be both a good thief and a good scientist.
This isn’t Buzzfeed, but here are 8 actual principles you can follow to grow your startup, learning from a legacy of clever startups before you.
1. What’s yours is mine. [stealing networks]
Let’s start with Airbnb, the largest sharing marketplace for short term stays, and home of the world’s most famous growth-hack. They had a big chicken and egg problem, they needed property owners to post on Airbnb, but they couldn’t get them to do that without renters already on the platform. At the time, Craigslist was where the action took place, and Airbnb wanted to steal it. Here’s where they got smart, instead of getting people to abandon Craigslist, they simply told people they would automatically post to Craigslist any properties they list on Airbnb, giving owners maximum exposure. They rigged up a clever bit of software to do this without Craigslist’s permission, and suddenly many of the properties on Craigslist simply became links to Airbnb. Eventually people started going to Airbnb directly to save a step, and by then it was too late for Craigslist to do anything about it.
Instagram did the same thing, they let users cross-post to other photo sharing sites automatically to give the first users on their platform some value before the social network took off. But there are other ways to steal a network, Tinder, for example, targeted sororities, a tight-knit group of social and attractive women, who they got on-board by throwing Tinder parties on campus. By the end of the party, most of the women were on the app, then Tinder would simply go next door to the brother fraternity, and point out to the guys, that all the girls they like are already on the app. From there, word-of-mouth spread the platform across campus like wild-fire. Social people are cool, who knew?
It’s also possible to do this by giving people a voice. Etsy, today’s marketplace for hand-made goods, noticed that there was a large community of feminist, anti-consumerist crafters that hated using eBay to sell their stuff. Etsy effectively created a platform tailored to this group, and the adoption was immediate. The social movement would push their friends onto the platform, as well as do their own shopping, and marketing.
Word of warning, Etsy eventually needed to grow more, and to do this they chose to break one of the foundational principles upon which their product was built, the handmade part. They did away with the requirement for the goods to be handmade, but tried to keep the sprit of the Etsy brand by focusing on the creative and the unique. It worked out for them, so the bonus lesson is if you must sell your soul to grow, pretend you didn’t.
2. Take their breath away. [stealing business by model]
Sometimes the right choice is to not compete in the first place. Red Hat, a company that develops and supports an open-source Linux server software, realized that instead of trying to sell to management, they should just give their product to the people in IT directly. They also quickly realized that the reason companies pay for expensive licenses for server software, was not because it worked well, but because it was well supported and documented. Managers could always pick up the phone and yell at someone to fix the issue, with free stuff, no such luxury. If that’s all the managers care about, why not charge for that, and only that? Red Hat decided to ride the wave of open-source software1 and gave the product away for free, which gave IT professionals the control they wanted, and simply charged for support and documentation. How do you compete with free?
Buzzfeed, a trendy news and listicle dispenser, also took a clever approach to their business model. Instead of forcing users to visit their website to consume content, they realized that they could produce ‘native’ advertising for their clients that looks like content, and syndicate it across all platforms. This way Buzzfeed doesn’t need to care if users consume on Buzzfeed.com, or on their Facebook page, or even on Youtube, just that the biggest number of people see the content anywhere.
Big companies do this too. For example, Apple sells hardware, and gives away all their software, while Microsoft, sells software and didn’t traditionally care about hardware. When Windows costs $300 to update, and Office costs another $200, users start to see the appeal of free upgrades, and free office software on Mac. 2
3. Steal a spot in line. [don’t shift the paradigm]
Entrepreneurs are always taking about changing the way things are done, a new paradigm shift! Turns out, not always necessary. When Spotify was entering the market, they realized that music was commoditized a long time ago, and that piracy was just a symptom. People were used to free music, because why pay for it when there are so many options? They took this existing way of doing things, and basically made it legal. For a few bucks a month, you get to join a club where you still get ‘free’ music but without the guilt and the DMCA notices.3
Red Hat was also good at doing this, they would fit themselves and their product within the existing IT framework of how things were done, and when push came to shove, everyone already using the product pushed their management to pay for it.
4. Greed is good. [give free stuff]
Not a shocker, people love free stuff. The obvious doesn’t even need to be mentioned, freemium models, where someone tries a Slack, uses it for free, loves it, and pays for it to get a few extra features, is a well-known staple today. New Relic, a software monitoring company, famously spent twice as much as their competitors on marketing, and gave away anything they could think of just to get people to try their product. This worked because their product was good and they knew it.
Wonder why eBay beat all emerging ecommerce marketplaces in their day? They gave away free money. You’d open an account, refer a friend, and if the friend opens an account, you get cash. They spent $60M on this, literally the opposite of cheap, but on a unit level, this was the cheapest cost of customer acquisition they could’ve dreamed about. More recently Tangerine, discount online banking brand, did exactly this too, free money when you join, more free money when your friends join. It doesn’t even have to be money, Dropbox gave away free storage space for referring friends. But there’s a right way and a wrong way to do this, this worked for eBay, Tangerine, and Dropbox, because what they gave out encouraged the use of their platform, on eBay you buy, on Tangerine you save, and on Dropbox, you store. TD Bank, just to name an example, handed out free iPads to people to open accounts, this just encouraged people to think of clever ways to get a free iPad and not to save their money with TD.
Free stuff doesn’t have to be stuff, Hubspot, the now famous marketing platform, got their early traction4 by offering a free website tester, which gave useful insights and pointed out problems website owners didn’t even know existed. When you’re the one pointing out a problem, it’s easier to convince someone you also know the solution. Provide value, then when they want more, ask for money. Google did this too, search was the value, advertising was the price.
5. Take their rep. [tag everything]
This one’s an easy one. When people interact, slap your sticker on it. Hotmail did this by putting a Hotmail signature at the bottom of every email, people are naturally curious, and were happy to discover trendy, and free, online email. If you have an iPhone, it does this too. You’ll see “Sent from my iPhone” at the bottom of every message, at least if you don’t change the signature. The most successful use of this, however, is clearly Facebook. Whenever people would mention someone, or post an image, Facebook would ask for an email so that they could tell people they were “mentioned” on Facebook. It’s not hard to see how people driven by curiosity were the first to adopt Facebook and make it big.
6. Your time? My time. [make everything shareable]
People love to share, especially if it relates to their identity. People also like to be recognized by others, that’s partly why we love to collaborate and share our work. Buzzfeed is great at this. All Buzzfeed content must be easily digestible, easily shareable, and must hit the right triggers to get people to want to share. This is the reason Buzzfeed has a network of followers and avid readers that don’t even visit their site, but also happen to be twice as numerous as those that do. If you give people a reason to share, and make it easy, they will. This is free, take advantage of it.
Others like GitHub follow the same principle. They made it possible for developers to easily share code and collaborate, which is traditionally a massive challenge, but something developers always wanted to do more of. GitHub made it their business, and were rewarded for it.
7. All the cool kids are doing it. [find influencers, make ambassadors]
This principle is well understood today, and is much more popular than ever before. Nevertheless, finding and tackling influencers is an important tool in any smart entrepreneur’s toolkit, and should never be ignored. Puma was one of the first to figure out that if you gave free products to tastemakers5 and to anyone influential in targeted niche groups, you’d sell more stuff. More recently, Nasty Gal, a trendy women’s clothing brand, and Daniel Wellington, cheap Chinese watches branded with an expensive logo and sold a premium, built up their businesses mostly through the help of influencers by getting their buy-in either through identity building or by simply giving them free stuff. Today, bigger firms like Red Hat and even Desjardins6 took this tactic further by turning influencers into their ambassadors by promoting them and in turn giving them a voice to talk about how good the Red Hat or Desjardin product/company is.
8. Bank without money [if you don’t have it, invent it]
How do you attract someone to your party when there’s no one home? Simple, you put up cardboard cutouts of people, and pretend there’s a good time to be had.7 When Reddit, a social link sharing site, first launched, they needed users to up-vote, comment, and submit links. Again, chicken and egg, you need content to attract users, and you need users to bring content. The Reddit crew pulled a Home Alone and made hundreds of fake accounts, and everyone at the company spent their free time posting to the site, commenting, and up-voting. People would show up, notice signs of life, and stick around, eventually getting big enough to sustain itself without the need for the Reddit team to be both Harry and Sally.
Amazon, for example, wanted reviews for all their products, so they started giving our products in exchange for reviews. Not organic in the least, but got enough people reviewing that others started doing it for free.
Linkedin took an extra step and simply pretended that everyone was on the platform to begin with. They did this by scrapping data and creating profiles for anyone they found, where users then had the choice to ‘claim’ their profile and bring it up to date. People are okay when nothing is written about them, people are not okay when something incorrect, however small, is written about them. While it worked for Linkedin, be smart about this, I’ve met a startup that did the same, and got in a lot of trouble on the supply side of their marketplace. It took them a lot of work to make things right, and rebuild good relationships with suppliers.
Hope you found this interesting and useful. If you want to read more about the startups I mentioned, there’s a great resource over at GrowthHackers where they dive deep and try to dissect startup growth journeys.
When I get a chance, I’ll dive deeper into the scientist part of this equation, after all, it’s one thing to follow these principles, it’s another to create a startup culture where you can discover them.
Don’t sweat it, you’re a little bit smarter now. Stick around, more to come.
- See: Free and unsupported
- Don’t want to start a war, but Macs are sexy, just not with the dongles.
- I would download a car if I could.
- Long live
- Anyone who determines current trends, basically anyone popular or entertaining
- Credit union (effectively a bank)
- But only if you borrow from the Home Alone book of things normal people do.