I’ve discovered magic.
It’s not a David Blaine endurance challenge or superhuman feat. It’s not a new take on sawing someone in half. And it’s not an easy-to-duplicate levitation trick that I posted on YouTube.
No, this is real magic. And when used properly, you’ll be able to take the smallest thing in the world and make it gigantic.
I have a business plan for it too.
I’m going to sell it at scale. I’ll bottle my magic, slap a label on it, draw attention to the zero calories and near-to-zero effort. The best part? It works for anyone who has the money to buy it.
Do you believe me?
Here’s a better question: do you want to believe me?
Of course you don’t believe me. These promises are absurd. So why are so many smart people buying the growth hacking myth? Why is it becoming common wisdom that there’s a shortcut to hard work and a healthy dose of luck, and if you just know the secret then you can avoid the years it takes to grow your business?
Because it would be nice if it were true.
But the real truth is that growth hacking – while a wonderfully brilliant idea – is actually a series of one-time-only tactics and approaches to growing a business. As Ryan Holliday points out, “once someone discovers a growth hack, it’s too late.” Andrew Chen has a very appropriate name for this. And every marketer who knows what they’re doing simply calls this “life.”
In other words, once you find a growth hack, you can never use it again. One and done. Finito.
And yet I talk to some of the smartest people around and they’re convinced that there’s a predictable way to cheaply, exponentially grow their businesses. The only problem? There’s a required condition that no one else recognizes the growth hack and therefore it provides a sustainable competitive advantage in marketing and sales.
As you’ll see, this just isn’t possible. And you’ll also see that some of the shining examples of growth hacking just aren’t enough on their own to build a business.
The Origins of Growth Hacking
The term “growth hacking” was originated by Sean Ellis in a blog post.
He didn’t mean that there was some magical fix to marketing and sales for companies with crappy products. Nope, that wasn’t it at all.
He meant something totally different:
A growth hacker is someone whose true north is growth.
But let’s be honest: what he identified had been around for a long time. The goal of all marketing is to achieve growth in some observable way.
Typically “growth hacking” is a reference to virality in a product and “thinking outside the box,” but is a bit more broadly applicable to any customer acquisition that is faster and/or cheaper than the prevailing wisdom of the market. The problem, of course, with the definition is that growth means different things to different people. Do you want to grow traffic, leads, and revenue? Or is profit the growth you’re after? Or do you want to grow your annual subscribers, and therefore reduce your churn and customer satisfaction?
In many cases, growth hacking is a formalized term that describes a combination of trial-and-error, tried-and-true tractics, plus a healthy dose of luck, all disguised as a repeatable process.
Perhaps the biggest problem with growth hacking is you won’t know it even if it works. There’s no agreed-upon benchmark for growth hacking, and even if it had a formal definition, job description, and professional certification, you probably would discount the results of its implementation unless they were geometrically compounded for 6 or more months.
Others describe growth hacking as a combination of coding and marketing – the killer combo in today’s digital marketing landscape. And it’s true: people with this combined skill set will have an advantage in understanding what’s technologically possible and implementing it faster. Of course, it’s dirt-cheap to get coding help so I doubt this is the best definition.
Maybe this means that “growth hacker” is a term reserved for only the best marketers in the world. Not those in the top 1%. Those in the top 0.1% or 0.01%. They – like anyone else in this statistical tier – are likely to outperform their peers by many orders of magnitude. So they’re not twice as good or ten times as good as their peers, they’re hundreds of times better than their peers.
But that’s not what people mean when they say the term “growth hackers.”
How do I know? Simple. Because of the number of businesses hiring growth hackers. If a business were truly looking for the top 0.1% of marketers, would the Growth Hacker be subordinated to a CMO, as they are on many org charts?
Would they be available for a price equal to 1/100th of their value to even a $15M company, assuming they could double the company in a year?
Nope, I doubt it. That person is way more valuable than $150k/year. In fact, if someone could predictably double a business, they could command their own price on the market and would never have to look for a job.
So what do people mean when they describe “growth hackers” now?
Dan Martell described “growth hacking” as a mindset – a way people approach marketing. This mindset is exactly the same as direct response or performance marketing: take a methodical approach to marketing efforts and demonstrate the impact of each campaign. In other words, use the scientific method to test hypotheses. Find things that work, then start over to look for things that work even better.
If this is the case, it makes sense that companies are seeking to fill growth hacker positions from $60k to $120k on average.
The Shining Examples
There are a few commonly cited examples that have come to define growth hacking, and provide the mythological backdrop that I’ve described here. This article outlines six additional examples of growth hacking.
The most well-publicized examples of growth hacking have one thing in common: the products were free to use and were mostly pretty damn good in their own right, and had very limited competition at the time of the successful growth hack.
The actual tactics that led to these growth hacking success stories fit in just a few categories that have been used in marketing since the beginning of time:
- Take advantage of referrals
- Use existing channels that already have traffic
- Make it easy for people to share
Here are the three most commonly-cited growth hacking examples, in a nutshell.
Hotmail and the Case of Mixed-Use Real Estate
There was a time when email wasn’t free. If you’re under 30, it’s nearly impossible to imagine. But it wasn’t all that long ago.
Jack Smith and Sabeer Bhatia saw an opportunity to build a free, web-based email service that was loaded with useful features. The only problem was that they needed a ton of users…and fast.
Rather than spending money on marketing, they added a line at the end of every email: “Get Your Free Email at Hotmail” with a hyperlink to a signup page.
It was ingenious, and within two years Hotmail was acquired by Microsoft for an estimated $400 million.
Why it worked so well for Hotmail: at the time, most email services were extremely limited and/or came with a monthly contract (think AOL). And since people were willing to accept a mandatory signature in exchange for free, feature-rich email, Hotmail users helped promote the service.
What’s left out of the story: this wouldn’t work now because of the number of alternative email providers in the market. It’s also important to note that Hotmail has never generated revenue in any meaningful way, and certainly has never generated a profit. Whatever the original intent of Hotmail, it was only a success for the founders due to acquisition. With their model, it was impossible to build a standalone business.
Dropbox and the Case of Friendly Giving (and Receiving)
Floppy disks. CD-ROMs. Thumb drives. Oh my.
These things were all necessary to transport files from one computer to another. Having a filing system that was always in sync was limited to businesses with their own server infrastructure.
Enter Dropbox, an elegant solution to the portability of files. The only problem was that people weren’t looking for it. The product was so new and different to the average person that it was really expensive to market.
Led by Sean Ellis (the guy who coined the term “growth hacker”), they used word-of-mouth referrals, supplemented by a little freebie incentive. Similar to Hotmail’s “get your free email account,” Dropbox went a step further by offering additional free storage for the referrer.
This allowed Dropbox to grow immensely in a really short time period and become a “unicorn” – a private company valued at over $1 billion.
Why it worked so well for Dropbox: the additional free storage was an unprecedented offer. Dropbox reached millions of people because the product worked well, was user friendly, and there wasn’t another service that came close to it at the time. Soon other players entered the market, also offering free storage, which made Dropbox’s offer completely obsolete. It’s unclear how much revenue Dropbox generates, and it’s very unlikely they’re profitable.
What’s left out of the story: most of the users generated with the referral system were pretty useless to Dropbox the business, but meant a lot to Dropbox the brand. Famously, about 99% of Dropbox users may not pay a dime and they get the majority of their paid subscriptions from business users. While a large competitor – Box.com – had a successful Initial Public Offering, Dropbox is still a private company. They’re a household name with a business that is decidedly B2B, and they’re weak on Enterprise solutions compared to their more established competitors. Their voracious appetite for capital has left them in a difficult place that even a new growth hack couldn’t resolve.
Airbnb and the Case of Stolen Free Stuff
Airbnb was a couch surfing site for frat dudes and hippies. These were humble beginnings indeed.
Their first challenge was to build a marketplace with adequate supply. But why would anyone post with Airbnb, a relatively new site with no reputation and very little traffic?
Enter the Craigslist hack. Airbnb let all people posting on their site instantly publish the same listing to Craigslist. That accomplished two things: it gave a wider audience to the listing and therefore an additional incentive to list on Airbnb; and it sent Craigslist traffic back to Airbnb (because there was a link to the site in the syndicated listing).
Next, they went a step deeper in the direction of black hat. Airbnb set up a program that would email posters on Craigslist and ask them to post on Airbnb as well. The email appeared to be personal, and did a wondrous job of quickly building the supply side of Airbnb’s marketplace.
Of course Craigslist promptly shut this down when they figured it out, but it still let Airbnb piggy back on the immense traffic generator that is Craigslist.
Why it worked for Airbnb: they needed market awareness quick, and Craigslist already had the infrastructure and traffic to generate that awareness. This acted as an accelerant for Airbnb’s growth, and allowed them to quickly multiply the size of their reachable market. It’s also important to note that Airbnb is the only business on this list that made money in their growth hacking phase (because they’re a marketplace and take a percentage of transactions).
What’s left out of the story: Airbnb faces tons of challenges with their crowdsourced approach to their marketplace. One of the biggest challenges is having quality photos. So they send photographers to properties to take professional photos to enhance the quality of listings on the site, which they found makes a listing twice as likely to be booked. This couldn’t be farther from their growth hacks because it takes a lot of people power, but it effectively increases the perceived value of the inventory on the site. Growth ain’t easy.
The Past and Future of Growth Hacking
If growth hacking is simply a mindset of building growth mechanisms into your product, it’s been done for years.
Take Avon, Almay, Cutco, MonaVie, or Mary Kay. You may know this business model as multi-level marketing (MLM), but it certainly had an important component of growth hacking and virality. Each of these businesses had the three main components needed for an effective growth hack:
- Take advantage of referrals
- Use existing channels that already have traffic
- Make it easy for people to share
In the case of MLM, they used small communities as traffic sources to generate referrals, and made their product easy to share with catalogues and hosted meetings. They even gave out free samples of their products, just like Dropbox and Hotmail. I’m not saying Dropbox, Hotmail, Airbnb, or any other example of growth hacking is equivalent to MLM. Far from it.
What I’m saying is good products and good marketing lead to success. The magic is in the combination of the two. But marketing alone can’t sustain a company.
The tactics used by these companies have been used in similar ways for at least a hundred years, and the talented marketers behind these campaigns identified a tactic that hadn’t been applied to a business like theirs, or in rare cases a brand new tactic. This process is as repeatable as anything that requires luck, opportunity, and exceptional skill: not very.
So basically, we only call them “growth hacks” because they worked.