This is the second post in a four post series co-written by Brian Balfour, Casey Winters, and Kevin Kwok. Subscribe here to get the rest of the series. To go deeper on this concepts, join us for one of our upcoming fall programs - Growth Series, Deep Dive: Retention + Engagement, or Deep Dive: Growth Loops + Models.
Founder/CEO @ Reforge. Former VP Growth @ HubSpot.
Growth Advisor, Former Pinterest, Grubhub.
Former Greylock Ventures.
Let's travel back in time to 2007. Facebook is at 50 million monthly active users, growing at a rate to hit about 300 million monthly active users by 2012.
Chamath Palihapitiya (now Founder at Social Capital) recalls in a Recode Decode podcast a conversation with then-new COO Sheryl Sandberg.
Sheryl: “What do you want to focus on?”
Chamath: “I'm going to change the product, do some SEO and SEM, apply some algorithms, etc.”
Sheryl: “What do you call that?”
Chamath: “I don't know, I call that Growth. You know, we're going to try and grow. I'll be the head of growing stuff.”
There you have it, the first Growth Team was born. Facebook's MAU growth changed trajectory. Rather than finishing 2012 with 300 million MAU's, they reached 1 billion MAU's.
Was that team 100% responsible for that growth? Of course not. But they played a big part, and as a result almost every high-growth company in tech established their own growth teams including LinkedIn, Pinterest, Uber, SurveyMonkey, Airbnb, Slack, and more.
Since then, the term “Growth” has been slapped onto everything. Growth marketing, growth hacking, growth engineering, growth product, blah blah blah. It has created a ton of confusion and negative biases. Every week we get questions like, “What is the difference between product and growth team? Growth marketing vs. marketing? Isn't growth just a bunch of local optimization? WTF is growth?”
The term has taken on so many different meanings that it ultimately creates more friction and obscures what we should really be focusing on.
Whatever your opinion is towards the term, throw it away for a second. The term does not matter. The important thing is to realize that all those high-growth companies embraced what we talked about in the first post in this series - Growth wins. The game has changed.
To review how the game has changed, we explained four things:
- Distribution has become more competitive and expensive.
- The lifecycle of channels/tactics has accelerated.
- The accessibility of data has increased and costs have decreased.
- The lines between product/engineering/marketing/sales have blurred.
So, what do we do about it? The first step is that we need to approach our growth strategy with the same discipline, effort, and investment as we do in our product strategy. That means building a system towards growth that embraces these changes and is:
This system involves three high-level areas, and as the game has changed, so have these areas, which we will break down in more detail:
- “Growth Product”
- “Growth Process”
- “Growth Team”
Growth Product: The Forgotten Areas Of Product
In Growth Wins, we talked about how the lines between product/marketing/eng/sales have blurred:
Data, technology, and product play a much larger role in outcomes like acquisition, retention, and new sales. The lines have blurred, but most of orgs are still in silos.
Areas like new user experience, retention, optimizing monetization flows, tech infrastructure behind acquisition and communication channels (i.e. email/push/paid), and more have a massive and direct impact on overall growth of a product. All of these areas require product/eng skills to move the needle in a meaningful way.
We call these the forgotten areas of product because these areas previously have been ignored, abandoned, avoided or at best received a fraction of the resources because they didn't fit into what most product teams see as their primary purpose and output - new core product features.
Casey Winters (former Growth Lead at Pinterest/Grubhub) separates these areas in his definition of Growth:
Most product teams are built to create or improve the core value provided to customers. Growth is connecting more people to the existing value.
There are times in a product's life that new feature development is the biggest growth lever, but too often this becomes the default thinking and teams never shift out of this. Building a discipline around the areas of product, retention, engagement, and monetization that incorporates the right mixture of skill sets is the first part of the system.
Growth Process: Hypothesis-Driven Experimentation
Every team has a process to solve the problems they are tasked with. Design Thinking, Agile, Waterfall, Campaign Planning, etc are all different tools to solve different problems.
In Growth Wins, we talked about how the accessibility of data has massively increased:
With the slew of data tools, data has become cheaper and more accessible. More people in the org have data at their fingertips especially those working on growth initiatives. We are at the tip of the iceberg on new methods of personalization, machine learning, and deeper insights via data to drive growth.
This is important, because it has made a new process much more available. One that is ideally suited to solve growth-related problems.
Steven Dupree (former VP @ SoFi and LogMeIn) has the simplest explanation of this process. He calls it the “Scientific Method applied to KPI's.”
The basic steps of this process are:
- Build a growth model that helps you identify the most impactful variables/levers around acquisition, retention, engagement and monetization.
- Understand the psychology of users behind those variables/levers.
- Develop hypothesis-driven experiments informed by your growth model and user psychology.
- Apply the learnings back to your growth model and user psychology to get better over time.
Some have been doing this for years and will scream, “This isn't new!” It isn't. But the process has become available to everyone with the massive increase in accessibility to data and infrastructure required to run this process effectively.
Steven's description is great, because just like in Science, it isn't all data or all intuition/creativity. You have to combine both to have the biggest breakthroughs. The important thing is that the process is designed to drive towards the truth of what actually works, not what we think works.
The truth is vitally important. The more we know about our product/channels/users, the easier it is to create things that drive growth.
While this has been labeled “growth process” this approach shouldn't be constrained to a single functional area. It can, and should, be learned by all functional areas of marketing, product, eng, design, sales. The key is matching this process/tool to the right set of problems.
Growth Team: Cross Functional Teams
We have seen a lot of companies try to establish growth teams. The starting point for that is almost always, “What should the structure for the growth team be? Where should it live in the org?” This is approaching the problem backwards.
The first step is defining the problems/areas that have the biggest impact on Growth, and working your way backwards to the team needed to execute effectively. When you do that and combine it with the Growth Process, you quickly realize that to execute effectively you need a cross functional team with a mix of eng, product, data, design, marketing, and sales skills. The mix will depend on the problem area.
When we say cross functional teams, these are NOT teams that have weekly stand up meetings. These are teams that:
- Sit together.
- Share the same metric/goal.
- Are running the same process.
- Are rewarded by the same things.
Unfortunately, growth problems are typically thought about from a function first perspective. When you think about it from a function first perspective, the question changes from “What has the biggest impact on growth?” to “What is the most impactful thing I can do given the skill sets available to me in my function?” The most impactful areas either never emerge or are constrained on what can be solved because only one function is represented.
If you are establishing a growth team, we have five tips:
- Find One Problem - Find a single problem that could help drive growth. Typically this is a neglected area at the company (see above). Don't try to own all of growth. It is too wide and broad and will spread the team thin.
- Evolution, Not A Revolution - Respect the culture and principles that made the company successful so far. Evolve from those principles, don't re-write them.
- Expect Failure - Seek quick wins, but expect the team will fail early and often. Give them enough time to work through it.
- Communicate The Wins - Use the experiment wins as a carrot to display how you are approaching the problems. Change and resources gravitate towards those that have wins.
- Don't Call It A Growth Team - Some have the perception that they don't need to worry about growth since there is a team that owns that. Some feel they aren't getting the credit they deserve because “everyone contributes to growth.” Or one of the many negative biases around the term creep in. What to do instead? Don't call them growth. Name the teams by the problems/missions they are solving for - New User Experience, Lifecycle Team, etc.
What Does The Future Hold?
It isn't clear. Parts of us wish we could kill the term “growth” because it creates more friction and confusion to solving for these important changes. Killing the term is unlikely, but what hopefully happens is:
- “Growth Product” just becomes a part of “good product.”
- Understanding/using “Growth Process” is just being a good product/marketer/eng/etc.
- Cross functional teams are the norm, not silos
Developing a systematic, deterministic, repeatable, and sustainable system towards growth is one step in embracing how the game has changed. But there are some other key pieces:
- In the third post in this series we'll talk about how the funnel framework was a good starting point, but we need to move beyond it. Funnels do not represent how software companies actually grow. We'll introduce a new framework that better describes how the top companies grow.
- In the fourth post in this series we'll talk about the new tool/skill every practitioner needs to properly do things like set goals, prioritize, and make investments... the Growth Model.
Subscribe here to receive the rest of the posts in the series. If you or your team are practitioners with 3+ years of experience, check out one of our upcoming Fall Programs:
- Growth Series - A comprehensive program on how to construct and operate a repeatable, predictable, and sustainable growth machine. Created and hosted by Brian Balfour (former HubSpot) and Andrew Chen (Andreesen Horowitz and former Uber).
- Retention + Engagement Deep Dive - A deep dive on how to measure, analyze, and improve retention and engagement. Created and hosted by Casey Winters (former Pinterest/Grubhub), Shaun Clowes (Metromile and former Atlassian), Brian Balfour (former HubSpot) and Andrew Chen (Andreesen Horowitz and former Uber).
- Growth Loops + Models Deep Dive - One of the most impactful frontier topics, this program dives deep on establishing compounding, defensible growth loops and how to model them quantitatively. Created and hosted by Casey Winters (former Pinterest/Grubhub), Brian Balfour (former HubSpot) and Kevin Kwok (former Greylock Ventures).