During the third lecture from the Stanford CS183 course, How to Start a Startup, Paul Graham said, "Whenever you hear anyone talk about 'growth hacks,' just mentally translate it in your mind into 'bullshit'."
I went trawling around the Internet looking for everything that's ever been said about PayPal's referral program- interviews with Peter Thiel, Elon Musk, David Sacks and others. Quora questions and answers from people who witnessed the whole thing.
Here's all of that information, presented in an orderly fashion for your perusal. I've listed out all the sources so you can look through them yourself! I spent hours trawling through everything so that nobody else will ever have to. :-)
The short answer is: PayPal used to literally pay people to refer their friends. They'd deposit money directly into people's PayPal's accounts, and you could literally withdraw the money and spend it if you wanted to. And that was worth the ROI for PayPal. (They reduced the incentives and made it harder over time as they
The important point to note is, of course, that PayPal raised a lot of money and were burning it at an incredible rate. As Peter Thiel said:
It felt like things were working and not working at the same time; 7 to 10% daily growth and 100 million users was good. No revenues and an exponentially growing cost structure were not. Things felt a little unstable. PayPal needed buzz so it could raise more capital and continue on. (Ultimately, this worked out. That does not mean it’s the best way to run a company. Indeed, it probably isn’t.)”
This pretty much sums up my reaction to every controversial article on growth hacking, regardless of whether it's for or against it. I thought I'd write it up here rather than reinvent the wheel every time I comment.
Emerson Spartz dropped out of school at age 12 to homeschool himself and launch the #1 Harry Potter site in the world. He was managing a team of a mix of 120 paid and volunteer employees at age 12. Today he launches a new site every month. He has some interesting perspectives on virality and how emotion is really the impetus for it.
This article by Danielle Morrill, CEO of Mattermark, is "A self-examination guide for Seed and Series A startups" that goes deep into what "burn" means and how to be intellectually honest with yourself (and investors/stakeholders) about your real, current burn.
This also spurred other founders and startup execs to weigh in with their (self-disclosed/calculated/guessed) burn rates.
On Monday, Facebook will roll out a rebuilt ad platform, called Atlas, that will allow marketers to tap its detailed knowledge of its users to direct ads to those people on thousands of other websites and mobile apps.
"For example, if PepsiCo, one of the first advertisers to sign on to the service, wanted to reach college age men with ads for its Mountain Dew Baja Blast, it could use Atlas to identify several million of those potential customers and show each of them a dozen ads for the soft drink on game apps, sports and video sites. Atlas would also provide Pepsi with information to help it assess which ads were the most effective."