Business growth

“Growth Hacker is the new VP of Marketing. Growth hackers are a hybrid of marketer and coder, one who looks at the traditional question of  ‘How do I get customers for my product’ and answers with A/B tests, landing pages, viral factor, email deliverability, and Open Graph. On top of this, they layer the discipline of direct marketing, with its emphasis on quantitative measurement, scenario modelling via spreadsheets, and a lot of database queries. If a startup is a pre-product/market fit, growth hackers can make sure virality is embedded at the core of a product. After product/market fit, they can help run up the score on what’s already working” – Andrew Chen , andrewchen.co

This post was published on Willix’s blog.

I have seen many novel ways for companies to generate their growth. Here are my top five:

1) Hotmail – “P.S. I love you. Get your free email at Hotmail”

One of the first web-based email systems, called “HoTMail” originally, was launched in July 1996 by Sabeer Bhatia and Jack Smith with an initial seed investment of US$300,000. Growth was very slow at the start as they were focused on conventional marketing strategies such as buying billboards and radio ads.

A few weeks after launch, they discovered a key insight: 80 percent of signups actually came from friend referrals. Tim Draper, one of their seed investors, then came up with an idea of putting a message at the bottom of every email sent using Hotmail – ‘PS: I love you. Get your free e-mail at Hotmail’

Bhatia at first feared that doing this would be unethical but finally agreed to do it but without “P.S. I Love You” part. The impact was almost instant – the growth curve took the shape of a hockey stick. They then started averaging 3,000 new users per day.

Fast forward six months, they reached the one million users mark, with two million users five weeks later. It was VERY viral. At one point, Bhatia sent a message using Hotmail to a friend in India and three weeks later Hotmail had registered 100,000 users there.

They had 12 million users in 18 months of inception (keep in mind that there were only 70 million Internet users at the time). Microsoft subsequently acquired the company for an alleged $400 million .


Image: Mattan Griffel

2) Airbnb – the Craigslist Auto-Post

The first rule of thumb of growth hacking is “The Law of Shitty Clickthroughs”. Be the first-to-market and you will get strong results and ROI because of its novelty and lack of competition. Over time, any marketing strategy will converge on a low ROI, i.e. shitty returns.

Airbnb did just this with its reasonably difficult integration into a big platform. There is no other better and cheaper way to generate your early user-growth than leveraging big third party platform like Craigslist with its tens of millions of users.

Airbnb provided a quick link to “post to craigslist” from your Airbnb listings and this was done seamlessly without ANY public Craiglist API. Conventional Marketers (read; non-programmers) would not be able to achieve this.

Any user then wishing to rent that property was required to create a Airbnb account. With millions of users looking to rent properties on Craigslist, this meant millions of signups for Airbnb.

Image: Andrew Chen

3) PayPal – AutoLink with eBay (pre-acquisition)

Similar to Airbnb, PayPal also generated their viral growth from a third party platform – eBay. The PayPal marketing team and their engineers set out working on an automatic auction logo insertion tool for eBay sellers, in the early 2000s.

Named AutoLink – it automatically linked to their customers’ existing eBay auction listings and added a PayPal logo to the bottom of each eBay listing of theirs, this feature could be activated by customers from the PayPal Website – again without integration with any public API.

The only catch was that PayPal required their customers to submit his or her eBay username and password to be activated, but it didn’t deter customers from using AutoLink since they already trusted PayPal to handle their money.

The result was almost instantaneous. They boosted their “listing share” from 1 percent to 6 percent of all eBay auctions within three months of launch.

4) SoundGecko – HackerNews Audio Station

Hacker News is a social news website catering to computer hacking and startups, run by Y Combinator. Hacker News is a very powerful news aggregator especially for startups. Freelancer.com engineers and data scientists are regular readers of Hacker News including our CEO – Matt Barrie.

Hacker News readers usually comprise of hackers, innovators, early adopters, startup enthusiasts, programmers, etc. This is where startups hang out and share interesting articles/news. Comments on article submissions are also encouraged and usually very insightful. Hence, a lot of startups submit their ideas/features to gain powerful insights and feedback.

SoundGecko – a product by 121Cast.com co-founded by my friends Andrew Armstrong, Ed Hooper & Long Zheng – was created with a simple mission: turning your favourite blogs/articles into MP3 files for later listening.

I am a strong believer and advocate of 121Cast. Their growth potential is very promising as they are looking to reinvent the radio by creating an online platform that delivers personalized audio for consumption on the go. Their vision is to be “the radio station of choice for smartphone owners with an intelligent and contextual audio stream to compliment the busy lifestyle and heavy information consumption of the modern”

Having brainstormed about how to generate user growth for SoundGecko, we then came up with an idea of creating an audio version of Hacker News.

Image: SoundGecko

Within minutes of the submission of this on Hacker News, SoundGecko was voted up to the front page – subsequently staying on the front page for another 36 hours. The result was staggering – close to 100,000 visits and a doubling of the user base  in a month.

My blog post about “How To Build A Kick-Ass Growth Team” was also on the front page of the Hacker News for a few hours and I had up to 5,000 visitors on that day.

5) Harrah Entertainment Inc – Hiring Gary Loveman as its COO subsequently CEO

Gary Loveman is one of the most practical academics I have ever seen. He received his Ph.D. in Economics from the MIT’s Sloan School of Management. He was well known for helping the company break out of a financial performance plateau.

He perceived his customers as a set of probabilities and attributes wrapped in human flesh. He is very empirical and data-driven. There are three things that can get you fired from his company (he claimed):

  • Stealing
  • Sexual harassment
  • And most importantly running an experiment or A/B test without a control group.

Harrah’s Entertainment Inc – now Caesars Entertainment Corp – is the largest gaming corporation in the world thanks to Gary Loveman. He built Harrah from a regional operator of 15 casinos to one with 39 in the U.S. and 13 more overseas – solely relying on Mathematics in achieving this goal.

“My sort of logic excels at things like acquisitions or expansions or developments,” he says, “where I can look at the numbers and make it a defined, deductive problem.”

Image: Caesar’s Palace

Loveman in his first few months ran a regression analysis on the revenue of the casino. Stickiness of customers is definitely a key to increase the revenue. Consequently, Loveman concentrated heavily on increasing the retention rate and loyalty among the casino’s customers. On the other hand, conventional casino marketing will involve spending big chunk of money to lure “whales” – wealthy gamblers.

Leveraging the data, he went a lot further – compiling and collecting all his customer data and leveraging that data to send targeted and personalized offers and come-back-soon incentives to millions of the customers with, of course, a predefined set of probabilities for them to convert – this formed the Harrah’s Total Rewards Loyalty Program.

This program of his was so advanced that it contributes up to 80% of Harrah’s revenue versus industry average of 45 percent. By 2010, this program has grown to over 40 million members, the largest database of probabilities in the industry. It allowed for a more accurate analysis of betting patterns — probabilities — and a more equitable distribution of “comps” or free rooms, meals, show-tickets and the like.

Before joining Harrah’s, he also spent two years at Federal Reserve Bank – running regression analysis on the impact of the burgeoning budget deficit on interest rates and was a professor at Harvard Business School.