What is Growth Hacking? Dec04

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What is Growth Hacking?

Ryan Holiday is the author of Growth Hacker Marketing: A Primer on the Future of PR, Marketing, and Advertising. This month he stopped in to Marketing Over Coffee (if you’d prefer to listen to the audio) to talk about his new book and his previous book, Trust Me, I’m Lying.

John:  Give us the elevator pitch on growth hacking. What’s the idea here?

Ryan:  The idea was one morning I was going about my day as a traditional marketer and I sit down, I read this article and the headline is, “Growth Hackers are the New VPs of Marketing.” I’m a VP of Marketing. I’m director of Marketing at American Apparel and I’ve never heard of a growth hacker. I have no idea what it is. But I look at the companies that growth hackers are responsible for – Groupon, Airbnb, DropBox, Facebook, Twitter – a handful of billion dollar brands that were built right in front of us in the last five years, and they didn’t do any traditional marketing. They used a strategy they call growth hacking.

I thought, “What does it mean that these people build billion dollar brands using none of the services that I provide or I pride myself in being good at? Maybe they’re better marketers than me.” I sat down to study what growth hacking is and how it works. The book is a result of those interviews, that research, and trying it myself.

John:  One interesting point – I was talking more about what it isn’t than what it is. Like you said, you were doing VP of Marketing so you have the book of business that you provided, but really it came down to stuff that was testable, tractable, scalable. That was a big three that you threw out there. Basically, the case studies, everything that you’re talking about in the book are people that have taken this minimalist approach. Is that right?

Ryan:  I think so. What growth hacking is at its essence is, let’s say you’re an engineer in the Silicon Valley. Your whole life is designed around rules and languages, and “what you see is what you get” sort of coding mentality – this right brain mentality. Don Draper is not a hero to them. That’s the opposite of what they do, but they still have things they have to promote and they still have to launch startups and get millions of users.

What I think they did right in front of us is basically re-invent marketing because they didn’t like the things that marketing held to be dear, and it turns out that the way of doing it that they came up with may in fact be more effective, more tractable, more efficient, and better than what people like me were trained to do.

lyingJohn:  That’s true. I noticed at the front of the book you quoted David Ogilvy. For folks that are into marketing, I’m sure that they get that whole idea. Even Ogilvy back in the day was like, “It’s all about sales and it’s about driving the numbers.” He was so huge on direct marketing as being where the future was. I think that’s because like everyone else, he had no idea of what was going to happen with the web and the fact that we’d be applying all this stuff in e-mail and where we go there. You really focus the argument because I think myself – and like yourself as a VP of Marketing – when we hear this growth hacking phrase we think it’s a buzz word. Finally, you put your finger right on it, which is the fact that it ties into product marketing because you have to have product fit for it to work.

The buzz word and the hatred came from the fact that I’ve seen all these people saying, “Oh yeah, what we really need is a growth hacker.” But you know with these companies, they’re never going to change the product. In fact, they would never be doing some of the stunts you talk about especially in “Trust Me, I’m Lying” of setting up fake profiles or really getting to the edge of marketing. They’re just way too conservative for that. It has a stigma and a buzz around it, but again, like I said, by hitting on product marketing you grab me immediately as you were right on the mark with that. So talk about that a little bit, about product fit and how that gets into it.

Ryan:  I think marketers see themselves as being only responsible for marketing. My job is to take your product once it’s finished and get attention for it. That’s how the relationship works. But growth hacking – often case, the designer who made the product is now responsible for launching it. That’s sort of the startup mentality.

There’s no job title. Everyone works. Everyone tries to make this thing a success. They came to it from the other side of the table and I think they were able to realize something that I experienced over the course of my marketing career too many times which is: you can’t market a broken product, and that often times the best marketing decision that you can make is a product development decision.
Instagram is an amazing example of this. It launches as a social network on a geolocation social network called Burbn that you happen to be able to add some photos with filters to. It turned out that that one tiny feature got the overwhelming response.

It wasn’t the social network that anyone liked. They liked this feature, and so they pivoted. They changed the entire company to zoom in on this one feature and that’s what made them a billion dollar company, not what their marketers did.
I think what a growth hacker does is instead of trying to do all this external stuff, what if the best marketing we can do is change, improve, and iterate our product until it has that explosive potential.

John:  You start with a product fit right there. In the book, you jumped to “step two is finding the growth hack,” which is what you’re talking about – finding the thing that makes it spark.

So there is no recipe for this. It’s interesting in that in the past you could just get a marketing professional and you’d be all set, whereas now you need somebody that understands the product and the audience and maybe can code around what needs to be done. It seems like it’s a lot more difficult to find people who can do this now, maybe you can talk about that.

Ryan:  I would say the old model was make a thing, hire a marketer or publicist to get attention for that thing, hope that it’s successful. Rinse and repeat until it is. But the growth hacker mindset I go through these steps in the book, it’s tweak and iterate your product until it has explosive potential. Instead of some major blow-the-doors-off blockbuster launch, it’s “How can we find the core early adopters for this product?”

Uber is a great example of a company that said, “We’re not going to launch nationwide. Let’s start small. Let’s start in San Francisco. Let’s launch it at south by southwest where we brand our core customers.” It’s, “how do you find a small contained group of people or a platform that you can use to bring those people in?”

Another great example of this is PayPal. They didn’t say, “How can we replace credit cards or become the dominant online payments platform?” They said, “A lot of people are using eBay to sell things. What if we insert ourselves into that transaction and add value?” They took advantage of that platform.

Upworthy is another great startup that’s doing millions and millions of pages because they figured out how to master Facebook and the Facebook feed. It’s all about figuring out the platform or the initial trick. By trick I don’t mean deceive people; I just mean the unexpected or unusual way to bring people through the front door.
From there, with your other things – if you’ve built in viral features like a good referral program – you have a way that encourages the network effect. So if your product is better, the more people use it. If you bring in people through a growth hack, then the product is going to get bigger virally because those people are going to want to bring more people in.

The final step that I talk about in the book is the idea of focus on retention rather than acquisition. It’s like saying, “I brought in 1000 people but only 100 of them signed up and became customers. What’s wrong with my landing page? What’s wrong with my product? Why are my users leaving? How do you improve or iterate and tweak the product until that problem goes away?” That four-step cycle is the way that growth hackers think about the world, and I think that’s so much more effective and efficient than just hoping that an article in the New York Times makes you a success, or hoping that ten New York articles in the New York Times will finally make you a success.

John:  They’re going to land TechCrunch and they’ll be great for the first month, and then dry up and go. It’s like any technology shift that people feel is threatening, but the reality is that if you’re doing this right now it’s going to tie you right into both customer service and product marketing and sales. It actually makes you a lot more valuable as a marketer in the mix here.

One question, a throwback. You were talking about at a certain scale, awareness and brand building makes sense, but the first year or two it’s a waste of money. I think there was a quote that was in the book talking about how it’s all about this acquisition and making that happen as a repeatable process. But do you ever feel now that there’s a point where brand awareness does make sense?

Ryan:  Yes, of course. I guess what I’m saying is so much of the marketing advice that people get and study is for whatever reason designed for really big companies. You read something like “The 22 Immutable Laws of Marketing,” which is a fantastic book and I definitely recommend it, it’s like giving you advice on how one airline beat out another airline. But that’s so far from the reality of where most of us live.
Even in my first book I’m talking about getting attention in doing marketing stunts. For a company that did $700 million in sales and has stores all over the world, it’s not hard for us to be newsworthy because we’re a big company.

But growth hacking is designed for a startup to go from zero users to 10 users to 100 to 100,000. It’s designed to take a project from nothing to something and that’s so much more similar, or more like the situation that most people come in to marketing are in. We’re trying to launch a restaurant, or a podcast, or a blog, or a book, or a startup. We’re trying to just get more attention for ourselves or our personal brand or whatever. We’re trying to go from nothing to something just like these startups are, although the startups try to do it on a much larger scale than we do, but I think their lessons and their innovations are what we should focus on because there’s a lot of value there.

John:  That’s funny. I’ve often said that the biggest mistake a lot of companies make is trying to ape Coca Cola or, like you said, an airline. That’s perfect. Those are not the decisions you need to be making. You’re playing in a different arena completely.

Ryan:  It’s totally apples and oranges, and yet I’m trying to launch this book or do this project and the thinking of the person that’s giving me advice was how to make Visa sales 2% larger, or how Johnson & Johnson can spin off one brand into another brand or whatever. It’s not like they think, “They spent $10 million. I should spend $10,000.” It’s not a matter of scale; it’s a fundamentally different approach. Whereas the startups think, “We’ve got to get people in the door. We didn’t exist yesterday and now we’re open for business. How do I get people to come?”

That’s what I wanted to write this book for. I wanted to take their lessons because look, Facebook went from zero users when it launched in 2004 or 2005, to a billion users in less than ten years. A billion users! That’s insane. And they did it without a marketing team. They had a growth team instead. I wanted this book to be the lessons from those growers and those growth teams. Growth hacking is the philosophy that came out of those experiments.

John:  It’s interesting, too. It’s a Penguin imprint. It’s actually a shorter book, a 50-page read. Is the book itself an experiment? Are you trying anything different with the marketing of this? How’s it all going?

Ryan:  My first book and actually I have another book with Penguin that comes out in May, both of those were sort of the traditionally published book. They’re 300 pages, they took a year to write, and then they took a year to publish after that. That’s how traditional book publishing is done.
But I didn’t want to sit down and write a book about growth hacking which is this thing that’s changing all the time, improving, new factors are introduced, and whatever. I didn’t want to go out into the woods for a year working on this thing. I wanted to get something out quickly. I wanted it to be short. I wanted people to be able to receive it digitally and not have to wait for a printer to spit back many tens of thousands of copies. So what we did with the book was we kept it short. We priced it cheaply, it’s $3. We got it out there fast. Hopefully, if we do do a paperback or if I do an expanded edition or something, I can improve based on their feedback and based on that reader feedback. That is very much the growth hacker mindset, for sure.

John:  That’s cool. Of course, we get the bonus that you were talking about “Trust Me, I’m Lying,” which had come out earlier. We’ve talked for years on this podcast about the way you make arguments, and the shades of meaning, and talking about the difference between persuasion versus manipulation, and that’s a very big deal. But basically, with this book, you just went right to the other side and said, “There’s a whole realm of dirty tricks and interesting things going on here,” and you’ve explained everything that goes on. It’s amazing to read some of the stuff that you’ve done.

The crazy part is I remember seeing some of that stuff that you did in American Apparel go down and now you get the back story on how it all happened and everything that went into that. But set it up for us first. Tell us where that book came from and what it’s done for you.

Ryan:  What I wanted to do in that book is being a marketer for a big, successful company and then a handful of other really controversial clients, that tends to be who I represent, I felt like I was not so much given access, but maybe when I wasn’t supposed to peek behind the curtain and I really saw how the media works, I saw how vicious, competitive, and unscrupulous it really was.

I’m not going to lie. The book is about how I took advantage of that system, thinking that all is fair in love and war, and how I benefited my clients accordingly, but it’s also understanding what the costs are of a media system that will print anything and publish anything and doesn’t care if they’re incorrect, where this self-interest rules the day rather than ethics or the truth.

The book is a very blunt, honest guide to operating in that environment. I wanted it to be a tell-all. I didn’t hold any of my secrets back. Anything that I had done that I thought other people could do or might want to do, I showed exactly how to do it. It was a tell-all, for sure. Naturally that was a big controversey both with marketers who didn’t want me to disclose this information and the media who is fairly embarrassed by a lot of the disclosures that I made.

John:  You never look at the Huffington Post the same way again.

Ryan:  The reality is I haven’t looked at the Huffington Post or Gawker or Business Insider the right way in many years because I’ve seen this stuff before. I just realized “Why am I the only one who was worrying about this? Why am I carrying this burden alone?” I wanted everyone to see it and I hoped that exposing this stuff would lead to some change. I’m not sure that that’s happened, but I feel like I did my duty blowing that whistle.

John:  I would agree. It’s just required reading for anybody in marketing if you’re dealing with a press rumor. You may never want to even be involved in any of this kind of stuff but you’ll greatly benefit from understanding what’s going on behind the scenes and why you are ignored, to be honest. That’s what you’re going to learn from that.
So that’s the books. How about what’s up in the future? What’s in your radar now that you’re looking at and what’s coming next?

Ryan:  I have a marketing company that represents authors and brands. We just worked with Marc Ecko who did a book and IBS Complex Media who we may be advising. I represent a variety of really interesting people that are eager to try new things. It’s going great.

I have another book with Penguin that comes out in May 2014 that will actually be about stoicism, the Roman philosophy. I try to write every day. I write for my site at www.RyanHoliday.net. I’m the media columnist for the New York Observer and I write for Thought Catalog. Those are all places you can check out my stuff if you want. I look forward to talking to everyone.

John:  That sounds great. Again, the book “Growth Hacker Marketing: A Primer on the Future of PR, Marketing and Advertising” is available on Amazon. And of course, “Trust Me, I’m Lying,” you can check that out there also. Ryan, thanks for stopping by and talking to us today.

Ryan:  Thanks for having me. This was great.