Dropbox’s Growth Guru Sean Ellis on What Everyone Misses About ‘Growth Hacking’

Sean Ellis, founder and CEO of GrowthHackers. Wikipedia

Growth Hacking is both a buzzword and a real thing, a phrase that poseurs throw around and a profession that is responsible for billions of dollars of wealth at some of the biggest companies in the world. I was first exposed to growth hacking in a wake-up call kind of article written by Andrew Chen called “Growth Hacker is the New VP [of] Marketing.” What’s a growth hacker? I’m a VP of Marketing (at the time at American Apparel). But there was no denying the success of the companies who were experimenting with these new tactics, who were focusing less on marketing and more on growth: Facebook, Twitter, Airbnb, Pinterest.

But Andrew wasn’t the one who coined the term ‘growth hacking’—that was Sean Ellis, an entrepreneur and investor who happened to be behind much of the early growth at a little company called Dropbox (conservatively worth $10 billion today) and Qualaroo. I met Sean while I was writing Growth Hacker Marketing and I used much of his advice on campaigns I ran for clients, for my firm, for my own work. He fundamentally changed how I approached what I do for a living. Now, some 7 years after starting this trend, Sean has written his own book on growth. I decided to reach out and ask for his thoughts on the secrets to growth, the effectiveness of media manipulation and the ethics of growth at any cost given the recent stories surrounding Uber.

Enjoy.

I’m guessing the question you get the most is: “What’s the best growth hack?” That completely misses the point of what growth hacking is about, right? How do you answer people who think that way?

Yes, I get that question often and it definitely misses the mark of what growth hacking is. My response is generally along the lines of “Growth hacking isn’t really about an individual silver bullet hack. It’s more about a process of uncovering effective ways to grow your unique business. It involves focused, rapid experimentation around the best growth opportunities for your business at any given time.  

Most people only look at the end results of the process, the outputs, and see “hacks” to try an replicate with their business. The more sensational the result, the more they spread (such as the Airbnb/Craigslist integration). So people get confused and look for outputs they can replicate, rather than looking at the process that led to the result and trying to mimic that. The power is in the process of rapid learning through experimentation, not in the individual hacks, which ultimately have limited shelf life and aren’t one-size-fits-all solutions.

My definition of growth hacking in Growth Hacker Marketing is “Anything that gets or keeps customers”—which brings in product design, marketing, PR, customer service, biz dev, direct response, data, in a sort of comprehensive approach. If it’s helping the company grow, that’s the job. Do you agree with that? What’s your definition?

I really like your definition and it does not conflict with my definition. I tend to focus on the process for finding things that get or keep customers. My specific definition is “a process of rapid experimentation across the full customer journey to accelerate customer and revenue growth.”  Because the customer journey crosses product design, marketing, PR, customer service, and biz dev, the process of experimentation is likely to involve each of these skillsets… And data is very important for determining if an experiment is driving the desired results.

I think the real secret is how all of these work together to find growth, as opposed to siloed thinking or approach in any one channel or part of the business. Facebook really pioneered this silo-leveling structure that brought together engineering, product design, digital marketing, data, UX, etc. to collaborate to find the biggest growth opportunities, no matter where they exist in the business. They blew up the notion that marketers could only work out in a specific channel where their efforts were detached from what product and engineering were doing. By bringing these disciplines together they could constantly focus on and experiment with what drove growth, whether that was building a new product or optimizing an existing one.

Today, the best growth organizations bring all these people together and unify them around a North Star metric, this one guiding light that defines growth for everyone, no matter where you sit in the business, from the departments mentioned above, to areas like customer support and legal, to get everyone thinking about how they contribute to the company’s growth. Zillow, which has grown like crazy to become perhaps the number one real estate brand in the US, has what it calls its “Play” which is a 12 month growth objective that the whole company rallies around. While this is an extreme example, you see this type of cohesion across teams at fast growing companies.  

What do you think of the companies who clearly grew too fast—your Groupon’s or Living Social which got millions and millions of users, only to see many of them abandon the service. What did they do wrong? What can marketers learn from their mistakes?

At the heart of all sustainably growing companies is a “must have” user experience. Part of what makes something “must have” is that the benefit cannot be easily found elsewhere. I believe the problem with businesses like Groupon or Living Social is that it’s pretty hard to differentiate them and nothing precludes an individual from using similar marketplaces. That makes any one service a nice-to-have. When something is a nice-to-have, it’s hard to sustainably grow it over time.

When you look at must-have products they all have little competition, or at least a window large enough to get to market as the must-have product for it’s category. Take Dropbox. When Drew Houston pitched Dropbox VC’s routinely asked them about the competitors already in the marketplace, which at the time were companies like Mozy and Carbonite. His response was, right and which one do you use? To which the VC’s had no answer. Dropbox went out and built that must-have product to lead the category.      

Related to that, some of the backlash about growth hacking is some of the black hat or grey hat stuff. Uber is clearly a company that has pushed ethical and legal boundaries. There’s also spamming, buying links, manipulative design, default opt-ins etc. Is the job growth at all costs? How do you balance ethics and nudging?

I personally haven’t had the temptation to do unethical tactics growing a business. Sustainable growth is about understanding the value people get from your product and helping people realize this value. Some of the best gains come from understanding friction that prevents people from experiencing value. These can include UX issues or concerns that aren’t addressed in copy. I’m willing to bet the Uber’s questionable tactics haven’t actually helped them that much. I think these questionable tactics are more a function of broader ethical issues at the company.  

Furthermore, these dark patterns or unethical tactics seem to fail far more than they succeed, and don’t lead to long-term growth. They create backlash, campaigns like #DeleteUber, regulatory fines like at Zenefits and more. I think there is an important red line between being laser focused and creative on growth and unethical or spammy. The best growth teams know where that line is and stay away from it, instead focusing on maximizing value for users.

For someone out there looking to get into growth hacking—they love building stuff, they are good with data, they can think outside the box, how do you suggest they get started? I always say it’s very hard to get training as a growth hacker so one of the best things you can do is go out and build your own stuff, get real hands on experience cheaply, which will make you more attractive to potential companies. What do you think about that?

I think developing the right skillset really depends on the size of company that you want to join.  If you want to join an early stage company to do growth hacking, I agree that it would be great training to just start building and growing your own stuff.  This will help develop the dynamic skills that are needed in an early stage company.  But if you are aspiring to join a bigger company in a growth role, you can work to build a specific skills set such as experiment analytics or rapid prototype design or you can work to develop cross functional growth management skills.  Essentially every growth team needs someone who understands the big picture process and can help the cross functional team work together to manage efforts against specific objectives.  

There’s the notion in job recruiting of hiring “t shaped” individuals, those that have deep expertise in one or two essential fields and then working knowledge and competency in adjacent fields. I think that the best growth people in later stage companies have this makeup, where they get how the different disciplines come together to find growth, they also have the depth to bring a differentiated area of expertise to a large organization. The best part about growth is that it comes from so many different parts of the business, so you get different skill sets who can lead growth or drive growth at companies. Strong growth leads come from product management, data analytics, engineering and marketing, so there are a bunch of areas that people can focus on and end up in a great position to work as a growth hacker.

One of the questions I hear from startups a lot is about media manipulation and PR as a growth hack. What do you think about publicity? I mean obviously here we are talking for a ‘traditional’ media outlet, so you can’t see them as being totally worthless, right? How does a growth hacker think about PR?

PR is definitely a lever of growth. The downside is that it can be difficult to find repeatable ways to drive press coverage. One of the things that most companies get wrong about press (or any channel) is to not build a process of experimentation and learning around it. Too many companies sit back, waiting for hits to come, which are (by definition) not repeatable or something you can count on. But there is a lot of upside in PR so it’s not a bad place to make some bets, especially when it’s done as a process to try to deliver repeatable wins and opportunity from it When I was at LogMeIn, our PR efforts yielded one of the best ROIs of anything in our marketing mix. Press as a source of customers has been a lot spottier in other companies since LogMeIn. But if I surveyed my customers and they told me that they find a lot of products in my category via press, I would definitely start to experiment with PR as a driver of growth.  

This is a bit off topic, but it goes back to what I mentioned above, that people look at outputs from other companies and assume that those are the things they need to be doing to grow. For example, Dropbox had a really strong PR program, and it could be easy to mistake their PR efforts as one of their core drivers of growth. But PR at Dropbox was about recruiting top engineering talent to build a very complex product, not about user growth. So people that look around and try to emulate other companies using the same tactics might be totally missing the mark. If you assumed that Dropbox grew from PR and tried to replicate it, you’d soon figure out that it wasn’t a consistent growth driver.

Last question—and this is one I get asked at my talks and I struggle with the perfect answer—growth hacking is pretty straightforward for B2C companies. How do you apply the framework to B2B businesses? I feel like there is a growth hacking book there by itself. But you’re the inventor of the term, I’m hoping you have some insight for us.

Growth hacking is important for both B2B and B2C. In both cases you have a customer journey that generally crosses multiple teams and a process of experimentation across that journey is important for driving customer and revenue growth. One important difference is that B2B usually has a lower volume of prospective users in the funnel so you generally can’t run as many lower funnel experiments. But B2B often supports just as many upper funnel experiments as B2C. For example, Hubspot is well known for running around 30 growth tests per week for its Sidekick product. Often B2B experiments will be to drive distribution for content or a free version of a product, and then additional experiments are needed to drive prospects from these funnels into the premium product funnel or to figure out how to turn new customers into long term users.

Beyond that, lots of growth efforts focus on discovering what behaviors and customer types turn into long term, successful users and then trying to adjust both customer acquisition and activation steps to drive more of those successful customers through the funnel resulting in additional growth. This can be everything from optimizing the new user experiences for B2B users, to pricing and plans for the product and more to find the optimal combinations.

Ryan Holiday is the best-selling author of Growth Hacker Marketing: A Primer on the Future of PR, Marketing, and Advertising. Ryan is an editor-at-large for the Observer, and you can subscribe to his posts via email. He lives in Austin, Texas.

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