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Reforge by Brian Balfour - 1y ago

This is the third post in a four post series co-written by Brian Balfour, Casey Winters, Kevin Kwok, and Andrew Chen. 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.

Brian Balfour
Founder/CEO @ Reforge. Former VP Growth @ HubSpot.

Casey Winters
Growth Advisor, Former Pinterest, Grubhub. 

Kevin Kwok
Former Greylock Ventures. 

Andrew Chen   Partner @ Andreesen Horowitz

The AARRR funnel framework has been the dominant guiding framework to metrics, goal setting, and strategic growth conversations. Funnels were a good starting point but do not accurately represent how the fastest growing products grow. It is time to move past the funnel framework and focus on Growth Loops.

This is the third post in a four post series. In the previous posts in the series we went through three important points. Growth wins, the game has changed, and to adapt we need a system of product, process, and team.

This system is just the beginning. We need new frameworks and tools to think about how products grow that incorporate these changes to growth and the lessons we've learned.

The Most Important Question Your Team Should Be Able To Answer

One thing we ask participants in Reforge Programs is to go around their company and ask five different people to whiteboard the answer to a seemingly simple question: How does your product grow?

This seems like a simple question. But what everyone inevitably finds is one or more things:

  1. Everyone has a different answer
  2. The answer represents only one piece of the puzzle
  3. The answer talks about the output of $$$, but not the inputs of usage

This is a BIG problem. If everyone has a different or incomplete picture of how the product grows, then you can't have apples to apples discussions about priorities, metrics, goals, or strategy. This leads to a few things:

  • People focused on different things
  • The teams moving in opposite directions
  • People not on the same page with CEO/exec team/others as to what is most important

“How does your product grow?” is simply the most important question to be able to answer. Growing is the entire reason why products and companies exist (especially in venture backed startups). Companies that continually grow also provide the largest positive outcomes. More importantly, personally in your career if you drive growth at your company, you are rewarded vs others who do not drive growth.

So, what is the best way to answer this question?

Funnels Are Not The Answer

One of the common answers to “How does your product grow?” is a picture of a funnel. The funnel AARRR framework was originally created by Dave McClure. It was a great starting point. It helped me and millions of others level up their game. But the framework is now > 11 years old and since then we've learned a lot about how the fastest software products grow.

The biggest thing we've learned is that the funnel framework is too micro of a view in order to answer “How does your product grow?” It helps explain a specific step within a Growth Loop, but misses the larger picture of the loop itself. When the funnel is applied at the company level and used to explain how a product grows, it leads to a few common issues:

Funnels Create Strategic Silos

When building a new product, the most common approach we see is to “build a great product” and then test a lot of different channels to see what works. This is exactly the wrong way to approach it. This treats product strategy and acquisition strategy in silos. In larger more developed products, you see this silo'd strategic planning as well. Typically the product team goes off and plans their product strategy and then marketing goes off and creates the acquisition strategy.

This silo'd strategic thinking is the cause for most distribution failures. Product Channel Fit tells us why. We commonly forget that we do not control the rules of the channels. The channels control the rules. As a result, we have to mold our product to fit the channels, not the other way around.

To make it worse, we also tend to treat our monetization strategy in a third silo. But, we know due to Channel Model Fit, our monetization model enables or disables certain channels.

Product, channels, and monetization need to be thought about together. They are interlinked. But the funnel framework leads a lot of teams to treat these as silo'd layers.

Funnels Create Functional Silos

It is common for companies to structure teams by layers of the funnel. Marketing owns acquisition. Product owns retention. Sales (if B2B) owns revenue. Then each one of those teams is given a metric that corresponds to that layer of the funnel.

The problem is that the teams then optimize at the expense of each other in order to reach their silo'd goal. Marketing brings in low quality users/leads at top of funnel to hit their goal, but that tanks retention or further down funnel metrics. All sorts of checks and balances get put in place over time to try and fix this which ends up complicating the understanding and goal setting of the metrics.

Funnels Operate In One Direction

Funnels operate in one direction. Put more in at the top, get more out at the bottom. There is no concept of how to reinvest what comes out at the bottom to get more at the top to continue to feed growth over time. In other words, no compounding effect. This means we have to keep putting more into the top to get more at the bottom. More money, more people, more tactics, more channels, more, more, more. This is unsustainable. Understanding the connection of how you reinvest to get more growth changes the way you think about where to focus and what to invest in (more on that below).

What is a framework that represents how the fastest companies grow? One that combines product, channels, and monetization into one system? One that looks for compounding growth vs linear growth?

Growth Loops
"Compound interest is man's greatest invention." - Einstein

The fastest growing products are better represented as a system of loops, not funnels. Loops are closed systems where the inputs through some process generates more of an output that can be reinvested in the input. There are growth loops that serve different value creation including new users, returning users, defensibility, or efficiency.

Here are a couple examples:

Pinterest

The driving force behind Pinterest's growth is the following loop:

  1. User signs up (or returns)
  2. They activate you on the product with specific/relevant content
  3. You save new content or repin existing content which gives Pinterest quality signals
  4. Pinterest distributes the quality content to search engines
  5. A user finds the content via search engines and either signs up/returns (see step 1)

Credit: Casey Winters - https://caseyaccidental.com/what-are-growth-teams-for-and-what-do-they-work-on/

SurveyMonkey

One of the driving forces of SurveyMonkey's growth is the following loop:

  1. New user signs up
  2. % creates a survey
  3. % send that survey to others
  4. As people finish the survey they see a Survey Monkey landing page
  5. % of those sign up over time repeating step 1

These are two of over 20 growth loops we've identified in our research for the Growth Models Deep Dive program that drive acquisition, retention, defensibility, efficiency, or a combination. Those that understand them and organize their product/teams around them will be the ones who create the most value. There are two primary reason why Growth Loops are the key to the fastest growing products.

Loops Provide Sustainable Compounding Growth

Loops force you to answer “How does one cohort of users lead to another another cohort of users?” You focus on how you reinvest the output of one cycle of the loop into the next cycle of the loop to get more output. This creates a compounding effect that is more sustainable.

Not all loops are created equally. You'll be tempted to draw a ton of loops for your product, but what that typically means is that you just have a ton of low powered loops that aren't sustainable. The fastest growing products are typically powered by 1- 2 major loops that transition over time. Measuring and understanding the power/health of your loops is critical to understanding where to focus.

Loops Are More Defensible

Loops combine how your product, channel, and monetization model work together in a single system rather than treating them as silos. As a result they end up being more specific to your product and company making them harder for others to replicate.

On the other hand, strategies and tactics that aren't specific to your product/user/model by definition can be replicated with ease by others. As they get copied, effectiveness decreases and always trends to zero requiring you to constantly invent new strategies and tactics. This is not sustainable over the long term.

Loops Change Everything

Once you start looking at things through the loop framework, you start to make very different set of decisions.

You Approach Growth From A Different Perspective

Once you start viewing things through loops, you stop approaching acquisition, product, and monetization in silos. It forces you to think about how the three work together in a system. You stop thinking about the never ending cycles of more tactics, more channels, more of everything just to keep filling the top of the funnel, and you start thinking about how what you are producing can be reinvested.

You Make Investment Decisions Differently

If you had two options, which one would you choose?

  • Initiative A: Output of the initiative gives you 500 new engaged users this week, but nothing after.
  • Initiative B: Output of the initiative gives you 20 new users in week one, 22 in week 2, etc (growing 10% WoW) for every week going forward.

We really hope you choose Initiative B. This highlights how you make investment decisions differently. Rather than looking for the short term bumps and sugar rushes, loops help you start looking for the things that will compound over time producing much better results over the long term.

You Organize and Goal Teams Differently

In the second post in the series, we talked about the larger need for Cross Functional teams as product, data, engineering, and design play a larger role in outcomes like acquisition, retention, and monetization. Loops as you can see above traverse typical functional lines. To enable and improve them you typically need every function represented working towards the same goal, the output of the loop. This helps the teams align and organize around the loop rather than by function and reduces the teams optimizing at the expense of each other as it will be reflected in the output of the loop.

Putting Loops Into Action

Understanding loops, how to measure them, and how to map them to your product is just the first step. It is a phenomenal qualitative tool to change the way you think about growing a product. But it is hard to represent all the individual levers and their effect on your metrics. You need to translate your loops into a quantitative growth model to help communicate, prioritize, make strategic bets, set goals, and drive your metrics roadmap. We'll talk about this in the next (and final) post of the series. Subscribe here to make sure you don't miss it.

Go deep on Growth Loops + Models in our upcoming fall program along with other experienced practitioners from Google, Facebook, Spotify, Adobe, HubSpot, and many more. We'll go through the properties that make a loop, detailed examples of 20+ growth loops, how to measure/analyze your loops, and how to build quantitative models.

--

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). 
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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.

Brian Balfour
Founder/CEO @ Reforge. Former VP Growth @ HubSpot.

Casey Winters
Growth Advisor, Former Pinterest, Grubhub. 

Kevin Kwok
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:

  1. Distribution has become more competitive and expensive.
  2. The lifecycle of channels/tactics has accelerated.
  3. The accessibility of data has increased and costs have decreased.
  4. 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:

  • Systematic
  • Deterministic
  • Repeatable
  • Sustainable

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:

  1. “Growth Product”
  2. “Growth Process”
  3. “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:

  1. Build a growth model that helps you identify the most impactful variables/levers around acquisition, retention, engagement and monetization.
  2. Understand the psychology of users behind those variables/levers.
  3. Develop hypothesis-driven experiments informed by your growth model and user psychology.
  4. 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:

  1. Sit together.
  2. Share the same metric/goal.
  3. Are running the same process.
  4. 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:

  1. 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.
  2. 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.
  3. Expect Failure - Seek quick wins, but expect the team will fail early and often. Give them enough time to work through it.
  4. 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.
  5. 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). 
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Reforge by Brian Balfour - 1y ago

This is the first post one 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.

Brian Balfour
Founder/CEO @ Reforge. Former VP Growth @ HubSpot.

Casey Winters
Growth Advisor, Former Pinterest, Grubhub. 

Kevin Kwok
Former Greylock Ventures. 

Growth wins.

Not growth at all costs, bad unit economics, dark patterns, spam your users, shark fin growth. But authentic growth built on a solid foundation of retention and engagement.

This advice isn't new:

“Poor distribution - not product - is the number one cause of failure.” - Peter Theil
“The best product doesn't always win. The one everyone uses wins” - Andrew Bosworth
“Most value creation takes place not at the startup phase, when new companies are formed but at the “scale-up” phase, when a select number of these companies grow at dizzying pace.” - Reid Hoffman

We've gone through three phases as a tech ecosystem. The early phase in the 90's was all about “Can it be built?” The main risk was technology risk. Mid 2000's we transitioned to the second phase, where the main question was “Can you build a great product?” Then the tools and technology got better and cheaper. Tech and product risk decreased, and distribution risk increased.

Let's make this clear. We aren't transitioning into the the third phase of distribution risk. We are in it!

Yet, it still seems we are stuck one phase behind. We've seen countless presentations, blog posts, Q&A's where the answer and guidance to every growth question seems to be “Build great product.”

The ecosystem is littered with deaths of great products because they never got distribution. One of many reasons is Product Channel Fit. These get overlooked though. Andrew Bosworth, VP @ Facebook has probably the best explanation for this:

“Later we all tell ourselves a story about why and how that product was really the best all along in an impressive display of survivorship bias.”

But let's think about it from the reverse direction. There are plenty of products that people consider “terrible products” that are $1 Billion companies. How many users of Salesforce have you met that proclaim they think Salesforce is a “great product?”

We aren't saying you shouldn't build a great product. Our point is that “build a great product” receives far more weight, discipline, and thinking then “build a great growth strategy.”

Why Growth Wins

It is worth digging into why growth wins. There are a lot of reasons why, but here are four:

Distribution = Defensibility = More Distribution

More distribution leads to more defensibility which leads to more distribution. There are two reasons for this.

From the company perspective, the more distribution you have, the more you can leverage it into other products and features to gain more distribution. You muscle competitors out of the market. Google has been doing this for years, but the more recent visceral example is Facebook copying Snapchat's features.

This is also true for B2B. HubSpot over recent years has used their stronghold of mid market customers in the marketing automation space and massive content presence to expand into the crowded but lucrative CRM, Sales Automation, and most recently Customer Support verticals.

We can also look at this from the user perspective.

“Habit and user expectation remains a stronger moat than people appreciate." - Ben Thompson

Habits are extremely hard to break. That goes for diets, a work out routine, and our use of various products. The switching costs of when a habit has been built are consistently underestimated.

One of the most defensible things you can have is a large distribution base that habitually uses your product.

Growth = Resources = More Growth

Between the three of us, we've sat in hundreds (maybe thousands) of company pitches across multiple VC firms. If there is one thing that trumps everything, it is growth. Growth very simply attracts capital and when applied well, creates more growth.

The same dynamic occurs with attracting top talent. The market for top talent has grown increasingly competitive with no end in sight. With more and more software startups to choose from, compensation aside, the best talent typically wants a few things:

  1. Validation that “it's working.”
  2. Opportunity for personal professional growth.
  3. To work with other talented people.

All of these stem from a product and company that is growing. Similar to capital, when applied directly more talent leads to more distribution and the cycle fuels itself.

This isn't just at a company level, it applies internally as well. Projects that are seen as growing or having a direct impact on growth have capital, attention, and people flow to them. If you want to position yourself well internally, find a way to to work on a project that is growing.

Growth = Learnings = More Growth

Teams that learn more about their users, product, and channel and apply those learnings win over the long run. The more users and engagement you have, the more experiments you can run, and the quicker you can get feedback to learn.

Growth = More Growth

The best companies are built on a system of compounding loops. The returns you get from these compounding loops are typically a function of the existing user base. Just like in finance, where you earn more interest dollars the larger the base principle is. We'll talk more about this concept in a future post, and have the Deep Dive: Growth Loops + Models program dedicated to it.

The Game Has ChangedDistribution Has Become More Competitive and Expensive

Distribution across every major channel has become more expensive.

On top of all these, we've seen salaries across all roles in technology companies including sales and marketing roles increase over the past few years which directly flows down to your fully loaded CAC. So what is going on here?

  1. The number of new major channels has decreased as we've seen consolidation.
  2. Those channels have tightened control in an effort to monetize.
  3. The number of companies that are competing in these channels has increased.

The three combined equal more competition and higher costs.

The Lifecycle Of Channels/Tactics Has Accelerated

In the Growth Series we touch on how every channel goes through a lifecycle of new, to golden age, to saturation and how to predict and plan your strategy around it. This lifecycle is evident at the macro level (channels) and the micro level (tactics):

Lifecycle of Channels.  Credit: James Currier

Lifecycle of Tactics


But the bigger point is that due to an increase and competition, the age of a lifecycle has decreased. As a result, every team needs to:

  1. Understand where they are in the lifecycle for their strategy.
  2. Expect more change and adapt more quickly.
  3. Move away from a collection of tactics, to thinking about growth in a more defensible way.
Increase In Accessibility Of Data

Let's rewind 10 years ago. If you wanted to implement a robust data and analytics solution you basically had three options:

  1. Google Analytics
  2. Double Click (and some other big enterprise solutions)
  3. Build Your Own

No matter the solution you were spending tons of money and/or ending up with an ineffective solution. Mixpanel, Segment, Amplitude, Heap, Looker, Chartbeat and many more hadn't been founded yet. Let's fast forward to today:

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. Yet, most companies are still stuck in the Data Wheel of Death.
 

The Blurring Lines Of Product/Engineering/Marketing/Sales

We use to have very clean lines between marketing, sales, and product. Customers experienced the product in that segmented way. But this is not how software and technology products spread from the customer's point of view.

Consider what a user might experience in a bottoms-up SaaS product like Slack or Dropbox, or some of the new players like Front, Airtable, Loom and Pipefy.

  1. A user is likely to first experience the product through some invite via collaboration feature.
  2. That user then signs on and experiences the product.
  3. They then go through an activation flow to create something themselves.
  4. They then hit an upsell in the product, schedule a call with a salesperson, and buy some seats.
  5. Then they roll it out to some people within the company.

It isn't just bottom-ups SaaS. It's all software companies. 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.

We see this in the Retention Series. A company needs to improve retention, they assign a marketer or two to own the metric, the marketer can only change some emails to drive the metric, so they get frustrated because they can't get product and engineering resources. This is a lose-lose situation for that employee and for the company.

Marketing/sales begging for product/eng resources, product/eng saying marketing/sales don't understand product, divides between product and growth teams. Whatever it is, it stems from the fact that all these lines are blurring and we need a different approach.

Growth Wins + The Game Has Changed = ????

We know that growth wins and we've seen major foundational changes. The combo of these two might feel like gloom and doom. That isn't the message at all. It just means we need to embrace the change and develop new frameworks and tools to approach the discipline. In the next few posts we are going to walk through:

  1. What a system towards growth that embraces these changes looks like. The term “Growth” has been slapped on everything causing mass confusion. We'll wipe the slate clean and talk about a foundational approach.
  2. Funnels are dead. 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.
  3. The new tool/skill every practitioner needs to know to properly do things like set goals, prioritize, and make investments... the Growth Model.

Sign up 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). 
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