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Why The Haters Are Wrong About Growth Hacking

If your startup doesn't practice growth hacking you'll never know extraordinary growth.
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There's an article making the rounds in tech circles titled "Growth Hacking is Bull" written by Muhammad Saleem. I'd like to make the case that the article is wrong.

I'd strongly encourage you to read it. I actually really enjoyed many of the points Muhammad made about marketing in general and I found myself nodding through the entirety of the article except for its core premise.

He believes that the term "growth hacking" is misleading and potentially dangerous and in stead endorses good old fashioned online marketing techniques. Avoid the spin, stay heads down and deliver the goods.

I believe growth hacking is about all of this. Plus. It's about looking out for and catching the next major marketing wave before others have grokked it. Here's why …

What is Muhammad's Argument?

In essence Muhammad thinks the "growth hacking" is a charlatan term for online marketing that consists of a bunch of everyday tasks that all online businesses should be doing: SEO, SEM, Content Marketing, Social Media, Referral Marketing, etc.

His quick to suggest this is all a slight-of-hand, trickery dreamed up by marketing bullshitters is quite clever if misguided

"How many legs does a dog have if you call the tail a leg? Four. Calling a tail a leg doesn't make it a leg."

I laughed as I did at much of his rant. He even used some terminology near and dear to my heart

"Growth hacking perpetuates this myth that you can magically achieve hockey-stick growth by using short-term 'hacks.'"

I have always encouraged teams to think about growth as daily blocking-and-tackling rather than a dark art. Please read my post on this, "Why You Should Stop Trying to Catch Lightning in a Bottle."

So while I agree with Muhammad that online marketing needs to be a holistic program that is integrated with the entirety of your business and that it's not one specific "hack" that brings you to success from some super-genius nerd locked in a closet who knows some dark-art magic growth formula, I think he's misguided to rail against the entirety of the "growth hacker" mentality.

In short his argument seems to boil down to, "Look at me and my peers. We've been doing this online marketing stuff for years and we know what we're doing. Please don't try to invent some new marketing term for what we do and pretend you're smart. We were here first."

[Not following me on Twitter? Please do so here for future blog posts.]

Where Does the Term Growth Hacking Come From?

The father of "Growth Hacking" appears to be Sean Ellis who wrote this widely read post, "Find a Growth Hacker for your Startup.Sean is somebody widely respected in Silicon Valley (although he now lives in SoCal) for having helped many early-stage companies go through major growth periods by quantitatively testing features with audiences to help diagnose what led to growth.  His early experience was at LogMeIn and then he went on to help Xobni, DropBox, LookOut and EventBrite to name a few companies I'm sure you've heard of.

In his maiden post on the topic he wrote,

"After product-market fit and an efficient conversion process, the next critical step is finding scalable, repeatable and sustainable ways to grow the business.  If you can't do this, nothing else really matters.

So rather than hiring a VP Marketing [to establish a strategic marketing plan, build and manage the marketing team, manage outside vendors, etc.] I recommend hiring or appointing a growth hacker."

He advocates for people who test all channels, use quantitative methods and commit to growth as one's "true north."

Sean later went on to found the community GrowthHackers.com amongst other businesses. If you read the comments section of Muhammad's original post you can see Sean's response to his post.

Why do I Like the term Growth Hacking?

So why exactly do I like the term Growth Hacking and what it engenders?

For starters it brings a mindset to startups that not all of them have innately.  What Muhammad takes for granted is that every company that starts out immediately knows what he has learned over many years - that marketing is a long, hard slog of continually investing in repeatable, testable channels.

And if there is a term for that which helps entrepreneurs stay focused on these good and true objectives then I'm all for it. It's slightly easier than telling every first-time entrepreneur to make sure to have a banner on the wall that reads, "remember to do your SEO, SEM, content marketing, social media, referral marketing strategies on a daily basis and with quantitative rigor."

Whenever I work with early-stage teams I have discussions about the meat & potatoes of online marketing. We go through case studies like how Mint.com & Magento drove large audiences through great content marketing strategies. I tell people that they need to blog about their industry to drive customers and not blog to their egos to drive their peer group to their blogs.

We spend a lot of time trying to get people focused on building products that have viral components and why that has to be measured and constantly tested. We review the old tried and true strategies from the days of Hotmail putting a tagline with a link at the bottom of every email to the more modern cases of Airbnb driving traffic through Craigslist, Zynga through Facebook and DropBox through incentivizing referral marketing behaviors.

But I still believe Sean Ellis was right. Growth hacking is a mentality that a company needs to be committed to. I have seen many teams pour tons of money, time and effort into PR strategies without thinking about how product tweaks could drive more consumption, more retention and more referrals.

What I mostly see are companies trying yesterday's playbook trying to drive extra-ordinary performance today. This. Doesn't. Work.

Why?

For me growth hacking is not only about the meat and potatoes stuff but about continually testing new channels for growth. See the Internet and now the mobile ecosystems are one, big competitive playground where globally some of the smartest minds are focused on how to make money by driving user growth better, faster and cheaper than others.

If you are early in a platform (Zynga to Facebook, AngryBirds to iOS, Maker Studios to YouTube) you catch a major marketing wave where acquiring customers and growing revenue is exponential. At that period of time you have a huge marketing advantage due to insights in performance in that channel and your growth allows you to continue to invest at rates that new entrants cannot because they don't have your scale. Success begets success.

This is precisely why the best online marketers I've ever met will never tell you their secrets and what is performing well for them. They'll gladly tell you last year's playbook. See the minute that others figure out that you're acquiring customers for 37 cents / user while over on Facebook they're paying 1.75 they'll flock to your channel with marketing budgets and tech prowess. The more the supply of dollars spent in your channel the higher the cost-to-acquire new customers.

Traders call this "arb" (arbitrage) and anyone who knows anything about arb knows that it only lasts for short periods of time until others discover the game and you must go in search of your next cost-effective channel.

It's why some companies are testing whether building applications on KIK might lead to better customers acquisition. It's why when there is a big push by a vendor like Microsoft to get into the mobile ecosystem there are always a few companies building early apps hoping to catch that next major wave.

Just as documented in this awesome film "Riding Giants," when Jeff Clark first discovered Mavericks (one of the most famous and dangerous surfing spots in the world) he surfed it for years without telling anybody. When you find your wave you ride it alone for as long as you can until others discover it.

If your startup isn't committed to growth hacking you'll never find extra-ordinary growth. You can catch ordinary waves like everybody else and pay the same prices, compete for the same limited user groups and slug it out for attention. Well, you have to do that, too.

Me? I endorse the growth hacking culture on teams. Assigning technically savvy marketers to not only help find new growth channels for the business but to be deeply embedded into the design of your product, testing features, usage, referrals and retention. If this isn't part of your culture on your product & marketing teams I can assure you it is on one of your competitors.

So please read Muhammad's post because it drives home many of the important online marketing lessons everybody needs to remember. But ignore his rant and hack on.

Last updated: Jan 14, 2014

MARK SUSTER | Columnist

Mark Suster is a two-time entrepreneur who has gone to "the dark side" of venture capital. He joined GRP Partners in 2007 as a general partner after selling his company to Salesforce.com. He focuses on early-stage technology companies. You can find him on Twitter @msuster.




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