Growth hacking or growth marketing is a hot topic today. That’s why we’re devoting a mini-series of blog posts to it, where we dive into the subject, question experts and give concrete tips. This week we find out what growth hacking is, what the classic examples of it are and where it sometimes goes wrong.
What is growth hacking?
What we call growth hacking today refers to a set of marketing techniques that have been in vogue in Silicon Valley since the 1990s. A blog post from 2010 first put the term growth hacking on it. That designation then became really popular after Andrew Chen of the investment firm Andreessen Horowitz blogged about it.
An exact definition of growth hacking has always remained somewhat flimsy since then. But Ryan Holiday, former head of marketing at American Apparel and today best known as a writer, gave a good definition in his book Growth Hacker Marketing.
A growth hacker is someone who has thrown out the playbook of traditional marketing and replaced it with only what is
testable, trackable, and scalable.
Their tools are emails, pay-per-click ads, blogs, and platform APIs instead of commercials, publicity, and money. While their marketing brethren chase vague notions like ‘branding’ and ‘mind share,’ growth hackers relentlessly pursue users and growth-and when they do it right, those users beget more users, who beget more users. They are the inventors, operators, and mechanics of their own self-sustaining and self-propagating growth machine that can take a start-up from nothing to something.
That definition contains the key elements of growth hacking:
- It emphasizes digital marketing instead of traditional channels like print, radio and television.
- Metrics are very important, because you want to constantly measure the effectiveness of your marketing actions. This is where growth hacking differs from traditional marketing, which (especially in the past) relied more on gut feelings.
- It is cost-effective. The emphasis is always on getting as many results as possible for as little investment as possible.
- Experimentation is key. Growth hackers often do this through so-called A/B testing, in which you experimentally compare different versions of a campaign and use data to determine the best option.
- It is interdisciplinary. A growth hacker often combines knowledge of programming, data analysis and marketing. They also often incorporate marketing directly into their digital product.
- The goal is growth. Growth hackers typically want to put together a machine that almost autonomously drives exponential growth.
Growth hacking is a form of marketing that is low-cost, digital and growth-oriented. This gives small start-ups the chance to gain traction and customers for their new product quickly. Because they were looking for a “lean” version for traditional marketing with its big budgets, traditional channels and dominant advertising agencies, growth hacking is hugely popular within this group of entrepreneurs.
Three iconic growth hacks
Many of the iconic startups of the past 20 years were able to grow thanks to a marketing strategy very similar to growth hacking, although they don’t always call it that. Below are three of the most important examples of this.
Today, Airbnb is a mastodon of a company. They have already raised over $4 billion in capital and today rent rooms in 81,000 cities around the world. But that success didn’t just happen.
In 2007, the company was a small start-up. And their two-sided marketplace urgently required travelers and apartment renters. So they integrated their site with Craigslist, a very popular American classifieds site.
They made sure that every time someone put an apartment on Airbnb, it ended up on that site as well via Craigslist’s API. This programming trick drove millions of users to Airbnb and launched them as a business.
This simple action is an iconic example of growth hacking today. A classic marketer would never have come up with the idea of programming that automatic integration, let alone have the skills for it. Airbnb, on the other hand, integrated marketing directly into their digital product, building an unstoppable growth machine.
A second classic example of a growth hack is Hotmail. Today that is one of the most popular services offering free email, but in 1996 they were a small player.
Where email was usually connected to internet providers until then, they offered a free online version. To grow, they used a hack: every time someone sent a message through them, they added this message at the bottom of the email:
“PS: I love you. Get your free e-mail at Hotmail.”
Today that looks unrevolutionary and even slightly irritating. But in the 1990s it caused a real landslide. It brought exponential growth for Hotmail, because the more users sent emails, the more people saw their message. It quickly made them the largest provider of webmail. When Microsoft finally paid 500 million dollars in 1997 to acquire Hotmail, it was the largest acquisition up to that point.
One last classic growth hacking success story is Dropbox. The online storage provider became frustrated with paid ads and decided to create a digital referral program.
Every user who referenced another user at the time received 500 MB of free storage in return. Of course that sounds corny today but in the 2000s it caused extreme growth. Over a period of eighteen months, from September 2008 to January 2010, their user base went from 100,000 to 4 million. They managed to continue this growth.
They eventually raised over a billion dollars in capital and successfully went public.
These kinds of techniques put growth hacking on the map. Since then, of course, the field has evolved greatly. Growth hacking thus implies that you are constantly looking for new methods as the older ones lose their effectiveness; putting a tagline at the end of an email message like Hotmail did, will not now provide exponential growth.
Growth hacking today relies more heavily on channels and techniques such as social media, content marketing and UX design. Nevertheless, the classics show what you can achieve with a well-planned growth campaign.
Growth marketing > growth hacking
Despite the great potential, there is also criticism. For example, the term hacking is controversial. It wouldn’t cover the scope and steer people away from the techniques behind growth hacking. Or as Y Combinator puts it in their growth guide:
Hacking’ implies a haphazard / gut-driven approach, and the reality is quite the opposite. Startups that have seen amazing growth have developed teams and processes that are intentional, exceedingly metrics-driven, and thrive on experimentation.
That notion is emerging in Belgium. For example, Yannick Khayati of The Growth Revolution told Techmag in an interview that they, “don’t call it growth hacking but growth marketing, because hacking quickly has a negative connotation. What we do is just look for a very efficient way of marketing.”
The dark side
Growth hacking also has a dark side. Growth hackers often automate their campaigns, which can sometimes end up in spamming potential customers. Think about the mass sending of automatic private messages on LinkedIn. And growth hackers sometimes transgress ethical boundaries in their drive for growth. For example by building interfaces in such a way that users do things they don’t want to, also called
or dark UX.
This already created a push-back against growth hacking and critics argue that this technique hurts the authenticity of your business and brand. Or as author and entrepreneur Paul Jarvis put it very harshly out of frustration with bad growth hacking:
“I don’t want to hack anything in my business or with my mailing list. I want to build and create sustainable and long term assets. I want them to grow not because I spammed the most people, but because people actually enjoy something I’ve made so much that they tell others. Growth hacking puts short-term gains above long-term plans, because no business, no matter how many ‘smart’ growth hackers it hires, can sustain their tactics for long without generating ill-will.”
Of course, this doesn’t mean that you should completely forget about growth hacking. With the necessary ethical boundaries, it can be an important tool in the toolbox of many companies. The mentality of quick experimentation and measuring results fits small, fast-growing companies like no other. The combination of ethics and growth hacking can be a secret weapon for a lot of players and make your company grow in a sustainable way.