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AMA w/Eric Ries & Sean Ellis: The intersection of Lean Startup and Growth Hacking
AMA: I’m Eric Ries, the author of The Lean Startup. Ask me anything!
While I'm waiting for questions to come in, I thought I'd share a few words about why I'm excited to do this AMA. Sean and I go way back; he and I met when "lean startup" and "growth hacking" were both obscure phrases that almost nobody knew about. At the time, Sean was the experienced blogger, consultant and startup expert, I was just a newcomer. He welcomed me and gave me a lot of sage advice without which I don't think I would be where I am today.
It's been awesome to watch what he's accomplished along with the whole Growth Hackers community. I'm very happy to see more engagement between our two worlds.
Thanks @ericries . I've revisited your writings many times since becoming a founder a few years ago. There is so much noise and unpredictability when founding a startup... It's been super helpful to have guidance in how to navigate and embrace the uncertainty.
@ericries your "build-measure-learn feedback loop" & @sean your idea of "high tempo testing" both seem to revolve around speed as critical lever in achieving growth.
In either case, do you believe there is a threshold of how fast you can sustainably grow? Or do you think businesses and innovators will always find new ways to pick up the pace in their growth strategies? What signs should one look out for to know when they're growing too fast?
And as a follow up, is there a time when stopping growth altogether is necessary?
If growth is properly defined, I don't think you can do it "too fast" - the problem with a high-growth cancer is not how fast it grows (although that is bad) but that the growth is cancerous in the first place! Business growth that doesn't obey the "law of sustainable growth" that I mentioned above is cancerous, IMO.
Now, your question talks about "speed of growth" but I think it's really referring to "operational tempo" or how fast we as a team are working on new experiments. And in that category, there is such a thing as optimal tempo, and therefore such a thing as working too fast.
The rule is that in the long term you can't trade quality for speed. So if you're "going fast" by cutting corners, eventually the defects pile up and slow you down. Use a root cause analysis tool like Five Whys to act as a speed regulator to find optimum tempo.
Very interesting. And great question Logan.
The cancerous analogy is interesting. How can one's team identify the cancer before it's too late (or before you start).
The hard part about a cancer is the degree of difficulty there is in finding it.
That's true in biology because we have imperfect information about each cell. Not true in business - we have (or can have if we are motivated) almost perfect information about each customer.
So ask yourself, how much of our current growth is being powered by the actions of past customers? If the answer is "almost all of it" then you're on a path to sustainable growth. If not, look out.
I like to think of sustainable growth as being measured in units of utility delivered. If you are delivering a ton of utility to people you are generally building an engine for more future growth. The fastest growing companies almost always have word of mouth as their biggest driver of growth, and WOM is a function of the units of utility you are delivering.
Growth becomes unsustainable when people are focused on vanity metrics. At LogMeIn, I remember on VC praising me on the 1000s of signups we were driving every day (in the early days). In my heart I knew most of these people never used the product and so were getting negative utility (they wasted their time with no benefit). If we had focused on the vanity metric of registered users, it would have been unsustainable. So instead our team tried to figure out how to drive more utility and stopped working on the external channels for a few months while we focused on optimizing conversions to actual product usage. Once we did that, our real growth accelerated significantly.
To me, the best teams are focused on growth for the right reasons. They aren't moving a metric for a metric's sake. Rather they are realizing that they have a solution to people's pain and they want to solve that pain for as many people as possible. They may also realize that if they don't solve the problem, someone else will be a "fast follower" and beat them to the untapped markets. This article is a great example of how three brother's in Germany become billionaires doing just that https://growthhackers.com/germanys-samwer-brothers-to-become-billionaires-with-rocket-internet-ipo/ .
Well said Sean. I've always believed that it's much better to have a few people who love your product rather than many who merely like it.
Hi @ericries thanks for doing this AMA.
From your experience working with companies, how do the best growth teams/marketing leads/etc. participate in the lean startup process - particularly in the area of discovering the distribution channels for new products?
It goes something like this:
growth : sales/marketing :: product : engineering/design
that is, just as "product" is a discipline designed to take a holistic view about whether the whole experience we are building for customers has value, growth is a holistic function that takes the raw material of sales and marketing and makes sure it is service the whole engine of growth.
Now, that might make it sound like product and growth are separate silos and should not interact. But this is the opposite of how the best companies operate, in my experience. You want both sides of the house to be cross-functional, that is growth people on the product team and product people on the growth team (maybe not in equal numbers, but at least represented).
The huge advantage of organizing this way is that now you can use the same process on both teams: MVPs, hypothesis testing, customer development, etc. It's just that each team is tackling a different hypothesis.
Hi @ericries! I am so happy to see you here because you missed my question from another AMA. :)
Here it is:
What do you consider to be the three best "unfair advantages" for building a community associated with or built by a startup, and why? (For example, how Qualaroo built GrowthHackers.com.)
I would ALSO love your thoughts, @Sean! <3
Interestingly I'm not sure there is an unfair advantage for companies building a community. For the first year of GrowthHackers, I had to play a balancing act of working on Qualaroo and GrowthHackers. I now have a GM managing Qualaroo and I'm able to fully immerse myself in GrowthHackers. It is a passion project for me, so you can imagine that in my mind I've been able to stop working and spend all my time doing something that is really enjoyable.
I think my unfair advantage for building GrowthHackers was more based on things I had before Qualaroo. I already had a decent blog following and twitter following. So with this "tribe" I could seed the community past the hardest stage.
One advantage Qualaroo probably gives us with GrowthHackers is the funding to pay a team to build and manage it. Communities take time to evolve, so in the beginning aren't very monetizable. Being able to pay the salaries for a few people during the first year was very helpful. The Wattpad story demonstrates the challenge of building a community in the early days and paying salaries. After the first year they only had a few hundred users per month and the founders needed to find alternative sources of income. Today they have 40 million monthly active users. Definitely recommend reading that story https://growthhackers.com/this-entrepreneur-raised-70-million-by-ignoring-some-popular-startup-advice-inc-com/ .
@sean I've thought about it a lot and I was totally thinking that you and @morganb were the unfair advantages at GH. Where else can you go to access growth hacking experts? This is the place. It's really interesting to me how communities grow.
How much of a personal platform do you think that @rrhoover had before launching Product Hunt? He almost seems like a counter example of how to build a strong community.
Well, he had a mailing list with people like @hnshah on it (from what I recall) who were immediately enthusiastic, so he had some form of a network. I'm thinking more and more that network is such an important factor in communities. What do you think? (In general.)
Definitely, if you have a network the seeding the community is really just about moving your network to a new platform. If you have to build it from scratch it's really difficult.
For example, my network started when I started blogging. Despite running marketing from launch to IPO filings at two companies, I was not known in a community beyond people directly involved in the companies (employees and VCs). So I blogged to essentially nobody for the first year. The main value I got from blogging was organizing my thinking around various topics. But after a while people started reading it and word spread. Once I had a decent following on my blog, I started getting invited to speak at events. This helped me get more blog readers and Twitter followers. It was a very slow process though that happened over a couple years.
GrowthHackers launched five years after I started building a following. Trying to do it from a cold start would have been very difficult if not impossible.
Part of my goal for GrowthHackers was to give other marketers and growth engineers a platform so they would be able to build a reputation among peers much more easily and quickly than I did.
Sean's the better one to answer this question - the meteoric rise of GH.com seems like the ultimate case study. In general, I believe community building requires 1) product/market fit and 2) honesty and transparency about why you're building it.
Thanks, Eric! While those things are certainly important, I'm super interested in more of the "unfair advantages" that are associated with building an awesome community. :) Just to specify, for @Sean.
Thanks for doing this AMA @ericries!
Andrew Chen references your blog where you started writing anonymously about startups. What were some of the reasons you chose to write anonymously initially?
you'll probably laugh, but at the time it was considered extremely uncool to be blogging about Silicon Valley insider secrets. Several people told me blogging would be a career killer for me. When word got out that I was blogging, the people I was working with urged me to stop (they were really stressed about it). I was frankly scared.
Funny you say that. I started blogging right after I left LogMeIn and their legal department asked me to remove all mentions of LogMeIn. Today companies are much more comfortable with their names being included in blog posts. In fact many look at it as a recruiting opportunity - for example @jwegan from Pinterest has a lot of liberty to blog about the growth team's role at Pinterest and even did an AMA on GrowthHackers about it. A few years ago that would have been unthinkable.
Agreed. Huge change in the ecosystem, and for the better. Ironically, it's actually a return to Silicon Valley's roots. For those that want to learn more about the transparency between firms in the early days, check out the book Regional Advantage.
You know, after I hit "submit" I remembered one other thing. At the time I was first writing (I literally tapped out my first post on a Treo in a starbucks parking lot on legendary Sand Hill Road), I was a very well credentialed person. I had an excellent resume, had gone to great schools, etc. And many of my advisors urged me to play that up in everything I did, whether that be speaking at conferences, pitching VCs, etc. But I've always found that the emphasis on credentials and background is a little bit anti-meritocratic and I really liked the idea that on my blog people would engage with my ideas directly, without knowing my background or what I looked like.
In retrospect, it made it a lot easier to see that I had product/market fit.
Thanks Eric - that's a great point of view.
I'm curious to know what recent examples of products/startups you regard as a great "execution" of sustainable growth?
I'm most impressed with the companies that have pioneered the concept of the growth team. These are companies like Facebook, LinkedIn and Twitter. They have growth teams that generally sit inside the product organization and run high velocity testing across growth levers like engagement, retention, resurrection, referral... They have built a very sustainable process for driving growth that is no longer dependent on the unicorn growth hacker who has to come up with all the ideas and manage and analyze all the tests. They've basically set up an assembly line for growth that isn't overly dependent on any one person. In addition to managing a growth process these teams tend to evangelize a growth culture across the full company.
There are now several startups that have emulated this approach. Here's a list of some of them https://growthhackers.com/questions/ask-gh-what-are-the-companies-with-over-100-employees-that-have-growth-teams/
these are A+++ resources
I think a lot about WhatsApp, just because the founder was unusually honest about all the so-called best practices he didn't follow. I don't have any special inside information there, just an admirer from afar.
Agree WhatsApp is a great one. It's one of the several growth studies that we've done if you want more details on it. Slack is another one that is very impressive https://growthhackers.com/companies/
Fantastic study of Slack. Hadn't seen that, although I've heard plenty about their amazing growth.
Hi Eric! Thanks for doing this AMA!
Question related to hiring / learning - What are some skills, projects, or traits that you believe can make a growth hacker unique and more desirable during the hiring process?
GH and LS are a little bit similar in that what's important is that you use the concepts to get results, NOT that you spout the jargon at people. Because both movements are relatively new, odds are that you will be trying to get a job at a place that does not already subscribe to the method.
In that case, don't go on and on about this great new idea called growth hacking! Instead, focus on the amazing results you've been able to achieve using GH techniques in some other project.
Now, if you've never actually done GH on a project, fix that first. If you can do it in your current job, great. If not, go find a project to do it on. Could be something personal that you're working on, or go adopt a nonprofit or an open source project (lord knows they need the growth help).
To me, what makes it hard to hire most marketing-type people is that they are extremely vague about how the work they do every day drives results. They can talk about successful campaigns they have worked on, but there's very little proof that the stories of "we did X" actually have a causal connection to "then Y happened." To me, Growth Hacking is the antidote to this problem: you can use high-tempo testing to prove prove prove that the work you personally do has a direct effect on the metrics.
Great advice Eric!
Hi Guys, I'm interested in your thoughts about the tactical vs strategic nature of Lean and Growth Hacking. With Agile Software Development and your methodologies there seems to be a renewed focus on prioritizing the shorter term attainable goals, but sometimes at the expense of up-front strategic planning. How do you think about these tendencies? What is the role of critical thinking?
This is the paradox at the heart of this debate: short-term accountability leads to long-term waterfall projects. And short-term rapid experimentation requires a long-term vision and patience. This is at the heart of why startups can kick the @$#% of much larger public companies.
Explaining why this is so is probably more than I can do in this little text box. But I think if you look around you'll see the pattern in a lot of places.
There's no science without a hypothesis. There's no way to do lean or GH without a strategy. So if you don't know what your strategy is, you're in real trouble. That said, too many teams spend way too much time at the whiteboard making up strategy (I used to do this) and procrastinating testing.
It seems to me that the balancing act is really tough. I've seen agile teams focus so much on customer delight that they miss strategic market opportunities as well. I'm wondering if there's a way to interject more thinking around what do our learnings mean strategically to our market. Not to the point of analysis paralysis but beyond the strict customer happiness, because maybe they they are thinking too much in the box.
Interestingly I had a similar conversation with the head of growth at a company earlier this week. There was a perception that "growth initiatives" weren't strategic enough and questions about a multi year plan.
While I'm not sure I'd plan years in advance, to me growth strategy is about picking areas of focus and then experimenting within that area of focus. The area of focus might be that you need to shift resources to retention before scaling acquisition or it might be that you need to figure out how to seed smaller cities in your rollout across the country. Or even that you need to target these types of customers in order to move on to the next time of customer. In all cases, achieving the objective will require hypotheses around how you will be able to achieve the objectives and experiments to validate/refine those hypotheses.
Thanks everyone for the awesome questions. I need to sign off for now. I will try and check back in later to see if I can answer a few more! Thanks again Sean for making this happen. Much appreciated!
Welcome @ericries ! Excited to do this AMA with you. I'll start with a pretty broad question. What do you think is the most important difference between growth hacking and lean startup?
From very early on, lean startup has emphasized two coequal parts of any startup or business strategy: the value hypothesis and the growth hypothesis. And if you look at the written material on lean startup, like my book for example, you'll find almost equal attention paid to both areas.
And yet, if you look at the wider attention that is paid to lean startup, it is heavily weighted towards "value hypothesis" activities. So I think the biggest difference is one of emphasis, and I'm glad that the GH community exists to give the "growth hypothesis" the attention it deserves.
I'm curious to learn how many of the key growth concepts that have their origins in lean startup, like "engines of growth" "innovation accounting" "engagement loops" are well known in the GH community and if there are new concepts that we should be re-importing back into the lean startup community.
Thank Eric. That makes a lot of sense. There is a ton of misinformation about both terms, so it's a great reminder that "growth hypothesis" is an important part of lean startup. I have generally thought of lean startup as being about making something growable and growth hacking as the process of actually growing it. But from your answer it sounds like "the process of growing it" is also part of the lean startup.
As for overlap, both are very hypothesis and test driven. I've recently embraced the concept of high tempo testing for growth hacking as I believe the only way to know if something will work is to test it. And the more test you run, the more likely you'll discover highly impactful ways to grow something. I published a study on Monday about how we've used high tempo testing to grow GrowthHackers.com https://growthhackers.com/companies/high-tempo-testing-revives-growthhackers-com-growth/
With "growth hacking" being a thing now for a minute.
Is it fair to qualify that explosive growth within a short-time span will always be preferred vs. the steady sustainable spikes of growth within the course of any start-up timeline?
Would be nice to hear @ericries or @sean 's thoughts.
I prefer steady, sustainable explosive growth:) I think that describes all of the early companies with growth teams such as Facebook, Uber, Twitter and LinkedIn. While Dropbox didn't have a growth team for a long time, it also describes Dropbox. My answer to this question explains why I think the right type of growth (measured in units of utility delivered) is always sustainable https://growthhackers.com/questions/ama-weric-ries-sean-ellis-intersection-lean-startup-growth-hacking/#comment-30439 .
Thank you @sean , I read that comment earlier and had to lament over the fact, many of the start-ups I was involved with were infatuated with numbers vs. the actual utility of the growth engagement representative within an organization.
Lots of times people stress so much about big numbers, when in actuality it remains as superficial and hollow in the substance of users who really care about the core product or service on the pedestal. An example of this, would be the explosiveness of MySpace vs. the User Growth in Facebook/Instagram and detriment it holds to the future of crowdsourcing user acquisition.
100% this. @ericries you really hit the nail on the head and put a point on something that has always felt as "missing" from the lean startup discussion.
Growth is part of a Lean Canvas, but most of the discussion online has ignored the growth hypothesis and over-indexed on "value hypothesis" -- maybe this is due to the product-centric thinking of Silicon Valley -- a remnant of the "build it and they'll come" mentality, but I think it was the pre-condition that led to the growth hacking movement because people were missing that part of the lean startup approach.
Hi @ericries @sean
Now that you are using Kickstarter, how do you guys view the potential of crowdfunding as an alternate method of getting seed funding for software and app focused startups?
I love it. There is no better source of funding on the planet than revenue from customers.
TO BE CLEAR: I'm not saying VC or angel funding is bad, and there are plenty of companies that do both crowdfunding and VC.
Thanks for the answer!
I am somewhat hesitant to try it because it seems that an app based company is very disadvantaged compared to a hardware based company because there is nothing unique that can be tangibly tied to the reward structure.
For example Tiny Hearts' Next Keyboard is supposedly the most funded app on Kickstarter, yet they only raised $65k, which is pennies compared to $20 million raised by Pebble Time.
$ raised is the ultimate vanity metric. if you're product costs $1000 then your numbers will be naturally quite inflated compared to a product that costs $5.
Would you say that lean marketing equals growth hacking, or is growth hacking a subset of lean marketing?
I asked Sean Ellis the same question a few weeks ago, and he kindly replied to my email, saying that "if [he] had to make up a definition, it would probably be pretty close to growth hacking, which is just experiment driven marketing."
In my opinion, not all lean marketers can become growth hackers. Only a small few have what it takes. What are your thoughts?
You know, I appreciate the spirit of your question, but I don't think I'm going to answer it. I'm just not that interested in the semantics of what's a subset of what. I'm sure out there somewhere is someone with a really strong opinion that "lean marketing" means X and "growth hacking" means Y and therefore one is bigger/better/stronger than the other. But I am not one of those people.
I encourage all the companies I work with to make these concepts their own, even if that means changing the terminology or borrowing from multiple sources. Getting results is the most important thing.
Can I steal this answer for future questions?
I am curious about your current definition of MVP. Especially when so many products like the Apple Watch look anything but minimal.
How does an MVP work in the phase of a competitive landscape?
It's really always been the same: the smallest version of a product that is necessary to start the learning process. A lot of companies do a lot of their MVPs behind closed doors without the press in attendance (smart) and in many cases the MVP is actually the sales brochure, not the product itself (also smart). Apple does a great job of both.
@ericries reading your answer about Kickstarter made me think of other products that are helping entrepreneurs get their ideas off the ground.
In particular, what are your thoughts on Product Hunt and how entrepreneurs could/should be using the platform?
I'm a huge PH fan. I was recently checking the metrics, and PH was responsible for almost 10% of the total backers to my campaign - far more than any press or magazine outlet. I think the key is to cultivate that community and be a good citizen. And, of course, be ready to growth hack your way to #1 when you do finally launch there.
Love this open discussion! Been absorbing your education and find myself overwhelmed with ideas to try and test. When you are a one person team at the start, how do you decide where to start? For those of us who have a trickle of visitors and no real metrics or KPI's, what would you do?
It's hard to answer this question in the abstract, because the details of what you need to learn matter.
But in general you can't go too wrong with this: find one customer, serve them well, then try to repeat with another customer. When you've gotten really good at helping one customer at a time, try two at a time. As you grow (manually), you'll eventually get to the point where you don't have enough time to serve all the customers yourself. Then you'll be in a really good position to grow your team or your technology or both.
Excellent advice :) That's where we have been for a while. Should probably keep working on the basics before we try to implement any of these more advanced techniques.
There is a great post by Paul Graham on "Do Things That Don't Scale" that was posted by @anujadhiya on GH the very first day we launched it. https://growthhackers.com/do-things-that-dont-scale/
One of the all-time classics.
In response to Dave's question how do you add people to your team with low capital at this beginning stage? How do you minimize the "risk factor."
If you can't convince someone to work with you for equity, how are you going to convince customers to take a risk on your product? I think it's a basic entrepreneurial skill that you need to have.
To both @ericries and @seanellis - what books/blogs do you recommend to most quickly have up-to-date expertise on lean startup and growth hacking?
I think it's hard for anyone to blog about growth hacking and consistently provide content that's worth reading. Some of the content around process is pretty evergreen, so it doesn't need to be that timely. @jwegan 's blog falls into that category http://jwegan.com/ . For earlier stage growth, I have a lot of evergreen content on my startup-marketing.com blog.
For content about specific ways to grow leveraging rapidly evolving platforms like Facebook or the iOS App Store, I recommend monitoring lots of different blogs. GrowthHackers.com does that for you since the community curates the best content for across 100s of blogs.
If you want to do a deep dive on a specific platform, then I recommend the "must read" tagged articles on our topic pages. For example, here's the must read articles for Instagram https://growthhackers.com/topic/instagram/?ref=topic-menu&t=must-read
Hope this helps. Eric can provide better guidance for lean startup articles.
Hello @sean and @ericries, thanks for this AMA.
I was wondering if you have read the Traction book by Gabriel Weinberg (@yegg).
Will you considerer his view of the growth of the product, the lean equivalent to the product development? If so, how will you deploit a marketing strategy for a product which is not 100% defined?
Haven't read it yet, but it's on my list.
Hi Eric, big fan & longtime evangelist of The Lean Startup. My question is, what's the most effective way to implement Lean processes in an established company where most current revenue comes from retaining subscriptions? How do I push management to spend more time experimenting & validating our learning about our customers, than the "build it and they will come" mentality?
Both GH and LS are unknown concepts to 99% of business leaders in my country. If you only had 15 minutes, how would you describe the advantages of
the build-measure-learn cycle vs. traditional management,
growth hacking vs. traditional marketing?
Would you rather use
lots of data to prove the viability of the new methods,
or talk mostly about the theories,
or try to find points where you can connect the new ideas with the traditional ones (so they understand it more easily)?
Thanks for doing this @sean and @ericries !
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