Ever wonder how successful tech companies like Facebook or Dropbox grew to multi-billion dollar businesses? It is a tough thing to do and many have failed attempting to do so.
Many people think the secret to wealth and growth is, “If you build it, they will come.”
That doesn’t work… according to Ryan Holiday. Ryan is a growth hacker. He has worked for publicly traded companies, starting in his mid-20’s. He’s responsible for best-selling books including those by Tim Ferriss and Tucker Max. And he’s well-versed in the world of digital media.
Ryan believes you will hear nothing but crickets without the right growth strategy, even if you have a great product.
I read his book Trust me, I’m Lying: Confessions of a Media Manipulator, which reveals the underground world of media manipulation and engineered virality (the worst parts of the internet – think political websites and big viral blogs).
He wrote a second book called Growth Hacker Marketing, which is a more vanilla book that details how tech companies have growth hacked their way to success. Here’s what I learned from the book that was useful.
Contents
You Need Product Market Fit (PMF)
Product market fit is when your customers actually want to buy your product and when your product actually delivers incredible value.
Most entrepreneurs wannabe’s delude themselves by being over optimistic and arrogant. They think their product is so awesome. But in reality, no one would ever pay for it, let alone use it.
According to the tech legend Marc Andreessen, you need to achieve product market fit. This happens when there is great market demand because your product is actually desired.
“Lots of startups fail before product/market fit ever happens. My contention, in fact, is that they fail because they never get to product/market fit.” – Marc Andreessen
Therefore, he says most, if not all of your time, should be focused on achieving PMF as a start-up.
Be brutally honest with yourself. Does your product suck? If so, it’s okay. Listen and interview you market and find out what they care about solving and make a product around that. By doing so, you will slowly move towards PMF.
You Can’t Growth Hack A Horrible Product
Ryan says marketing is just an extended form of sales. It is making people aware of a product and selling it.
However, the best growth hacking can only be done when the product is truly remarkable. If you have a trash product, it won’t catch on.
You’re simply building up hype and driving leads to a product that under-delivers. Never do this. If you do, you have a leaky bucket. You’re putting all this effort into getting people and then they’ll be leaving once they find out how horrible things actually are.
Iterate until you achieve PMF
Keep getting feedback from people until you achieve product market fit (PMF).
Successful products in the tech world never operated in a vacuum. They kept sending out surveys for suggestions. They kept improving and throwing away things they didn’t like.
Here are some examples:
- Mark Zuckerberg has said numerous times that Facebook had to pivot many times to get things right.
- Instagram started out completely differently. The photo sharing feature was a small part of the app. They monitored user interaction and relaunched it focusing on just the photo element.
- Many best-selling books were launched only after the authors had run blogs for years and got a ton of feedback from their audience. They focused topics and writing style based on their most shared and most commented blog posts.
- Elon Musk said that PayPal started as this very convoluted, complicated banking service. The internet money sending part was the easiest part of PayPal. When they saw that most of the customers only cared for the money transfer part, they made that the theme of everything. It was much easier for everyone.
Use A Reward-based Referral Strategy. Make The RewardValuable Though
A great way that a lot of companies growth hacked their way to tech stardom was through referrals and invitations.
But make sure you make the referral system valuable to the referral.
We only share or refer something if it sucks. And mediocre free products do not work well either because they have been beaten to death. Stop with the free hats, pens, and mints.
Dropbox is the prime example of doing things right.
They started off spending a ton on internet advertisements. But they ended up paying over $200 per subscribing customer. That’s horrible!
Then, they decided to give part of their service away free based on how many people you referred to sign up. They let you get as much storage as people you referred. I know this well because I was part of this. I got around 15GB of free space from sharing on social media alone.
Through this strategy, they exploded their business growth. Tons of influencers shared their service to get free space.
Make Sure Your Reward Is Something People Actually Care About Though
Think of the incentive referral program. I see it all over the place on websites from Restaurant.com to GrubHub. You basically get a free meal or coupon if you get a certain number of people to sign up.
As a consumer, I think it’s failed because the product/service itself is mediocre and I don’t want to share or pressure people into something like that. So I’m not going to.
I do not want to tweet out anything for a “$15 off a $50 purchase” coupon or even a “$15 credit for a referral”. Why? Because I have tried out Restaurant.com’s restaurants and the selection is mediocre at best.
Your reward has to be something people actually care about. People clearly cared about Dropbox’s free space. 20 GB of free online space was no joke back on those days.
Honestly, it’s not even mediocre. I would say it’s slightly above average. But it shouldn’t be something I have to jam down people’s throats and lose part of their friendship for recommending a somewhat decent product.
It should be something so incredibly awesome that I naturally become an evangelist and want to share it. But, of course, that’s much easier said in theory than done.
Growth Hacking Requires Creativity
Ryan says that fresh, new growth hacking ideas get worn out over time and become ineffective. You have to stay on your toes and think of new ways of using old concepts.
Here are some examples of what tech companies did to successfully growth hack:
- Uber gave free rides to high-profile businessmen at tech convention events when they started on. They even gave free barbecue delivery. They found a high density area of relevant people and gave away their valuable service free to get exposure.
- The founder of Reddit populated the entire site with fake accounts, fake comments, and links (that he added) to make it look interesting. Eventually, it worked and hit critical mass.
- PayPal noticed that most of its transactions were coming from eBay users. They partnered with a company in a parallel industry that had high quality prospects and it exploded their customer base.
- Groupon, Living Social, and Dropbox used a incentive referral system. They gave away some of their service free for every referral that converted into a sale.
- Zynga and Spotify leveraged Facebook’s audience by building their platform into Facebook.
Use A Social Media Log-In Instead of a “Sign Up”
Neil Patel, one of the top online marketers, said in a speech that one of his best growth hacking wins was using one-option log in rather than an email sign up for people who wanted to try out, use, or buy his software. Also, by changing the words from “Sign Up” to “Log In”, he increased the conversation rate even more.
People do not like signing up or giving away their emails, but they do like logging in with a service they trust like Google, Facebook, or LinkedIn. Neil said that he’s tested this on many web-based companies and all of them have seen increased results from using it. He suggests testing out which service will work best (Facebook, Google, etc.).
Conclusion and My Book Review
I think some of the points he says are pretty solid. I definitely liked this better than his other book, Trust Me, I’m Lying.
It was very short, but concise. And I really liked that about it.
Some of his points are rather new. And the businesses he points to are all tech businesses, which makes them rather new. I prefer timeless advice and strategies because you don’t know if this advice really holds through until decades later.
Having said that, I believe that his point that product matters just as much as marketing is already timeless. I’ve heard billionaires say this too.
No one’s ever gotten to the billionaire level by selling ice to Eskimos. They don’t want ice.
You definitely don’t want to do things the old way. Ryan makes a point that buying banner or billboard ads and praying for success doesn’t work anymore (as illustrated by the Dropbox story).
One point I didn’t agree with was his whole idea that virality can be engineered. He seemed to imply that everything, or at least most things, that goes viral are engineered rather than happen by accident.
I disagree. I’ve seen dozens of YouTube videos go viral on a monthly basis that are clearly not “engineered” in any way. How do I know? I don’t 100% do But it’s partially because of the sheer amount I see. The videos are clearly made just for fun and I often learn the backstory of the creators, and they’re pretty honest about it.
And nowadays, viral to me doesn’t mean 1 million views. It means at least 10 million. So it’s not easy. Casey Neistat gets 1 million+ views per daily upload on YouTube. But he considers something with 10 million+ going viral. He’s done this several times, but he has said himself that he doesn’t know why those specific videos went viral. He’s humble enough to say that.
I think there’s a healthy medium between understanding that it can be engineered, but it won’t always be.
I discovered that some of the most seen viral ads in the world were first spread through paid media and an organized team, like Kobe vs. Messi and Poo Pourri.
Ryan concludes with a big point: It’s not about the technique. It’s about having the right mindset. There’s numerous techniques that can bring you to success.
What did you find valuable about this that you can take action on right now?
