When growth is in your title, you better be growing or you're not doing your job, right? And so there's a lot of accountability in that role. So you have to find a way to get people across the company on board more through convincing them than commanding them in a
sense.
Today we've got Shaun Ellis with us. I've known Sean for many years as a guy who coined the term growth hacking he was the first marketer and the growth person in the earliest days of Dropbox and look out and log me in and SOB knee and uproar and Eventbrite got a book out called hacking growth which came out about three years ago, and he was nice enough to send me a few early reader before the book got published and reviewed that for him and now he's working at go practice, which we're going to talk about in the podcast and Sean has one of the OG growth hacking.
Along with me and a few other folks and it's always great to catch up with him. And we thought we would record our conversation for the benefit of all you early stage startup Founders who want to get more grounding and growth and I've always found Shawn to be so thoughtful generous with his time and with this thinking helpful to other people always think about how to teach these growth principles to people so very excited to have you on the broadcast today. Sean
Thanks James. I'm excited to be on with you.
It seems to me that the number of people who have what it takes to learn effectively.
Lee and sustainably drive growth is not that great and you know the growth hackers the people who are good at it and become the sort of special group of Illuminati, right and you're one of the priests and but yet you've tried a lot of stuff to help people be better at growth you've built different software platforms like Canvas OR, you know survey I are trying to teach people to fish right because you're good at fishing and you're trying to teach other people to fish you wind up. I think often just jumping in yourself to do it for them. Am I right? It
says some degree or at least jumping on where?
Biggest challenges
are yeah, and you'll go into as an interim this an interim that three four five months to help get them going in the right direction. What what's so hard about growth Sean
what's different about growth now than maybe 10 or 20 years ago is that we just have so much more data to work with so it's become this kind of more scientific data driven approach, but at the same time the sort of empathy and psychology side and even creativity is still really important and the truth is that most people are strong on one.
Side or the other and to be effective you need to be strong on both sides and I do think that people can be trained to be stronger on the side. Maybe that doesn't come as naturally to them. And so that's part of the reason why I wrote the book and doing the go practice and everything that I'm doing I do if I thought it was a lost cause I wouldn't be doing those things. I would probably just assume there's a handful of people who can do things and you know, just focus on interesting businesses, but it's I feel like that it is actually possible to get a lot more people in the realm of being effective at how they can.
Growth, so typically the people who just sort of popped up and we're naturally gifted at it where people who are naturally good at both language and empathy and creativity sort of right brain stuff. But no good at the left brain stuff the data the iteration the testing
the discipline discipline not taking wild swings in directions until they're proven with
data got it been because there were so few people who are naturally like that. We haven't seen a lot of incredible growth people, but
You're saying that you can train yourself to be better. I think that's an important thing for people to understand that, you know, everyone assumes that they can do it. And I think if people are honest with themselves about their own deficits than they can come to your book they can come to your go practice. They can come to various things and get better at the side where they're weak. I think it's an incredibly important point. Where are we in terms of the evolution of digital growth at this point. I mean if we look back, you know back in the late 90s, the thing was to partner with AOL and Yahoo to get distribution and then it became
Of instrumented viral stuff that we were doing with emails and whatnot. And then Facebook everybody kind of all the traffic goes to Google and Facebook now and so they put pay walls up. So then it becomes sort of paid marketing emails not super effective as a channel SMS never got really effective, you know Android and iOS prevent us from getting the data in the middle parts of these sort of viral paths and growth paths kind of Flying Blind since everybody's been on mobile. Where are we is there a big picture
You've got right now about where we are in the evolution of growth.
Yeah, I think you know in some senses. It's almost come full circle where I think the data and iteration was so powerful that people really leaned into that for you know, the last 10 years just as more of us started to write about it people realize that you know, if I can optimize ver ality, I can grow something really fast, but you know at the end of the day, we don't have value that keeps people coming back. It turns out it doesn't really matter if you can go really fast because eventually
Just going to disappear and so I think what we're doing is kind of more more than ever really understanding the physics of growth beyond the tactics of growth and the physics of growth are definitely the data is an important part of that. But at the end of the day, I would say of the companies. I have Hands-On work in the early days of bringing them to Market and five of them Reach Billion Dollar Plus valuations, and I would say in each of those companies that the most important growth driver was eventually strong organic.
Word of mouth. It's just you know, when you deliver a great experience people talk about that experience. And so I think to me it's more about kind of understanding that flywheel built around value. And now how do you layer the tactics on that to get more people to the right experience to one you retain them when you get them to the right experience but to you unlock a lot of word of mouth. And so when you kind of have a better view of how growth actually works and how you can later the tactics on now, you can build much more sustainable growth engines over.
So it's going back to just building a great product that provides so much value that the word of mouth helps it grow and then we can look back in the last 20 years and look at all the different tactics and we can layer those on to add 5% 20% growth, but it's not going to be adding a thousand percent growth like we used to see back in 2007 2012.
Yeah, like obviously Dropbox really didn't rely on paid marketing to get to its billion dollar Revenue run rate that was mostly done on Word of Mouth.
Was really strong obviously like Pedro, so there's paid like paid referral program. There's giving away free space which costs money but the benefits of these things are that, you know, you have kind of a monopoly on those channels as opposed to jumping into a channel where you're trying to outbid someone else for that attention. And so I think that they're still those possibilities of morality being a powerful driver of growth. I would say Zoom grew mostly through four reality as a powerful driver of growth not every business has kind of that natural morality built into the product.
Even when I was at Dropbox natural word-of-mouth outpaced any of the other things at least in those early days, it was not so much the file sharing and the folder collaboration that was driving growth that was people who loved the experience of having their data synchronized across all their devices and telling other people that and then incentivize referral program was really just pouring fuel on that fire. And when you add all of those together you get a really powerful growth engine, but I do think it comes back to really understanding value. First of all, making sure you have it if you don't have it.
Then any growth that you have is not going to last and then once you have it really understanding it and building that flywheel around that growth and then paid marketing can be great. You're not just spending money to get one person you're spending money to bring in to feed that flywheel of growth and signs. You're spending that money smartly. Like I've never been one to spend for at a loss or even at a really long payback period but if you have a fast enough payback period and you can spend that efficiently that would be really powerful for driving growth in a
business. Where do you put
Referral marketing I've had this theory that people do it because it kind of makes sense on face value. But if you actually numbers it's one of the most expensive channels you can use.
Yeah, I think more often than not people do it because they don't have much natural referral happening and I don't think it works that way like I mentioned with Dropbox before we introduce the paid referrals, we had massive word-of-mouth referrals. And
so you already had or referrals. It was already a natural thing for people to do
exactly it. Was it an X?
Accelerant on that as opposed to trying to make something happen. That's not happening or that's barely happening. So I think that's the differences you figure out the engine that already has strong organic growth and then test to see will an incentive accelerate that further
remember going through the few companies that I was working with and I was looking at all the different channels and the paid referral was happening anyway, and then they were prone to put gas on it, but it was their most expensive Channel. They should have just spent the money on Facebook or Google but the employees wouldn't have accepted it. They
I said, how could they stop that? That's so stupid. It's so obvious that we should be doing that
right and I think most of the time they're pointing to other companies when they made that
decision. Yeah, that's right. Well you overdid it must make sense,
right? So what's interesting is when I was at log me in we were spending a million plus dollars every month on customer acquisition yet 80% of our new customers were coming in through word of mouth. I always thought about got should we introduce, you know a paid referral program on top of that and I was always afraid that like somehow
Oh, it was going to break something that was already working really well and so, you know when I got to Dropbox, yeah, just a few months after leaving log me in it was it was still early enough where it made sense to test it and there wasn't a ton of risk in doing it. But in hindsight, I think log me in probably would have been a great place to add a paid referral program.
And what do you think back all the companies you've worked with? What is one big sort of company saving realization you had and what helped you see it.
There's a lot of them.
But I think you know one of the things that I spend a lot of time on today as cross-functional like getting teams cross-functionally aligned around growth that turns out to be one of the biggest blockers and I first realized the need of cross-functional alignment and cross-functional collaboration for growth when I was at log me in and probably 15 people is pretty early. You would just come out with the first version of the product. We'd raised ten million dollars that the team had already taken one company public on NASDAQ. And so we probably could raise money.
A little bit. He's there still wasn't that easy because it was early 2000s. So we'd raised 10 million. I was tasked as the VP of marketing to go out and start spending that money efficiently to acquire as many customers as possible and it turned out that I was really capped at spending about $10,000 a month with a positive return on investment. We were just really inefficient on our ability to convert people to active users who were coming in through that spending and so as the marketer my job kind of ended on I bring them to the site. Maybe I can work the
Any pages, but after that it's not really my responsibility or even within my scope of power to be able to do something to actually get those people activated. And so it was something that I ultimately shared the data with the CEO and said we need to figure out if figure this out or we're going to have a really hard time scaling beyond that $10,000 a month then the time I was hoping that maybe the product team would kind of appoint one person from the product team for some time and we could work on maybe getting that first user experience better. But you know and just to put it in context we were losing.
Oozing 95% of the people who signed up never once did a remote control session. So they're signing up. They cared enough to fill out the registration form, but they gave up the for the first time they actually use the product and so it's really a lot of room for improvement there. And so the CEO actually said we're going to put a complete freeze on the product development roadmap me and the couple other people I had working with me and marketing stop trying to discover new channels. Everyone's going to come together and work on this activation problem, and we're going to try to figure
How to get that higher and so that was where yeah, lots of surveying lots of user testing feeding lots of experiments in about three months we were able to get the sign-up to usage rate up to fifty percent and so from 5 percent to 50 percent that's a thousand percent Improvement that was leverage through every dollar we were spending on marketing. And so now when I went back and tried the same channels I had about a million dollars a month that I could spend on marketing with a three-month payback on dollars invested and so and you know, and then we got to that 80%
I sent word of mouth. So really the inflection and the whole business was about figuring out what's preventing us from being able to grow this business. The main thing was I had to step out of my comfort zone into another area and get the overall company to focus on something that was in a way that none of us had done in the past
gotta and you're saying out of your comfort zone meaning going deep into that first user experience and what the product actually
does. Yeah. I'm a marketing guy. I'm not a product guy the idea of messing with code and those kinds of things seem scary to me as a marketer.
Who's more about buying ads and testing ads and the end of the day? Like that's the problem that needed to be solved to get growth started and so by collaborating and bringing my marketing skill set to a product team that's not used to that High Velocity test and using data to make decisions that the combination was pretty powerful, especially when we brought in designers and engineers and skillset that crossed all of those and it comes back to what I was saying earlier in the conversation is that in an early stage startup, you might be looking for one person that has all of those skills.
Eels and I would say now after a lot of years of learning I have much more well-rounded skill set, but I didn't have it in the beginning but you can see even when I didn't have it by teaming up with the people who did and being focused on customer value were able to drive really good
results God and this is true. Even if you've got eight people or 15 people we often hear these stories about the fights that go on in large organizations, like a late-stage Dropbox or late-stage Facebook about trying to get stuff done. But you're saying look this collaboration this cross-functional stuff needs to start early.
Roaches everything exactly and most startups are set up like mini versions of big companies, you know, like there's a head of this ahead of that and ahead of the and they have kind of a traditional scope of responsibility that they're used to executing in and that lack of communication starts pretty early in those companies. And so, you know, one of the most powerful things I think that you can do to overcome that in the really early days is come up with a single metric that everyone is responsible for growing and instead of the kind of the more siloed.
Metrics where marketing is about getting more visits to the site or maybe the better metric might be more sign ups, but some Mount Lee and product team is about driving maybe more engagement but yet the end of the day if you've got great engagement, but very few people you make very little impact as a business. So it's if everyone can really think about how do we actually impact customers in need of the solution and work together to do that and come up with a single metric that helps us understand progress. We can then all work much more effectively together to move that metric
I remember going into
Company where they had a growth team and they have been tasked with growing. But as a growth team, you really kind of touching every aspect of the business and so they have to be really good friends and connected to every functional group and in the end the growth team everybody ended up quitting because the CEO is not willing to give them enough cover for them to go break the eggs that you need to break in order to accelerate growth and there wasn't a general buy-in from the top that things could go wrong. We will break things this growth team has the ability to
Reach into marketing reach into product reaching design reaching than airing and change things in order to make the thing grow four hundred percent a year not a hundred twenty percent a year and people weren't on board. And so they were ineffective and after three years, they just disbanded there like I can do this anymore.
That's probably the number one issue that I saw from people who read hacking growth they come back in there just like I got so excited about this but my organization really didn't allow me to apply these in a way where it could be effective and that's the frustration that people have had.
Over the years and so yeah, starting two or three years ago. I really start working on that problem and feel like I actually have a really good solution to that which is the workshop programs that I think in 2019. I traveled about a hundred and fifty thousand miles and put a few hundred companies through Workshop sometimes in group workshops, sometimes individually, but ultimately it was cross-functional leader. Sometimes entire companies and teams getting together for a full day to really get on the same page around. How do we drive success in this business working together and by getting
Ting everyone together for a full day and facilitating that collaboration I was able to see a lot more companies effectively apply the lessons from hacking growth. Once you had the teams on the same page
so managed to get cinnamon is like a change manager. Yeah culture architecting
it took me like a little trial and error so I went through a period where I tried to like embed myself in companies and gradually help them make that change and I just learned that you know had about a 2-week honeymoon period And then after that, I was just another pain in the asking people to do things they didn't want to do and so
Really took that you know step out of the day-to-day everyone needs to look at the big picture and then essentially everything from defining that metric that I talked about to getting a shared view of what does the growth model. What is the growth engine in this business actually look like and they collaboratively design it together. Then once they collaboratively design it together, then they're all on the same page about how does this business grow? And then really teaching them the test learn growth hacking process, but you know, they're not on the same page around.
What's the metric we're trying to grow what's the value that that reflects and how does this business deliver that value then a systematic approach for driving improvement is going to almost always fail. If you're not starting from the same
point there. Are there any more recent examples the last three four years that you've either been involved in or that you've seen externally that have done a really great job and what have you learned from them? Yeah. I
mean that's that's a big part of the reason why I launched my podcast is literally to find who are those new emerging companies and I learned from every one of those interviews that I'm looking at the companies that
Growing like really really fast. So in the last couple of weeks and last two of the last three interviews I had were one was Zoom info. So there the at that point I think would be done this now, but at that point they were the most valuable IPO Tech IPO of 2020. I interviewed their CEO Henry shook. It was really interesting to hear using the same process that I've primarily used in need to see companies, but he's used it in B2B companies and it was definitely a test learned process there and then my most recent
interview was karna and they're out of Europe the biggest private fintech company over a ten billion dollar valuation and interviewed their head of growth and it was just for them being able to look at a growth engine that was primarily around through Partnerships initially. So embedding there in the kind of e-commerce space to make it easier to pay for your purchases over time. So they partnered with different e-commerce sites embedding on those sites, but then just in the last couple of years, they've launched an app that separately helps you pay on sites where they may not already be
Partnered with them also discover better deals and so it's just interesting and fintech to see how they've combined kind of both the B to B to C and then a direct-to-consumer b2c approach to build that growth engine, but I think at the heart of almost every company that I've looked at it is the test learn process. That's pretty well accepted across the company
got it and getting that cultural acceptance that language that communication internally between all the people, you know, it's like I had a growth is honestly a little bit like the shadow CEO aren't they?
Yeah, I mean they need
The CEO profile in the sense that when you're marketing you can maybe say you're doing a good job. If you're not growing that, you know, our awareness is growing but when growth is in your title, you better be growing or you're not doing your job, right? And so there's a lot of accountability in that role and you essentially unlike the CEO. You often aren't people's bosses. So you have to find a way to get people across the company on board more through convincing them than commanding them in a sense. So I think in some senses up probably
Than the CEO job. How would agree I would agree
with that and I've seen people get stuck in those it's so they have all the weight on their shoulder but down to the power to make it happen and when things go right it's the CEO gets an interview not the head of
growth absolutely. But hopefully if they have a negotiated some good equity and some other things that they get well compensated for it,
you know, what are people getting wrong about growth? And what do people come to you? They ask you the wrong questions or they're talking about the wrong things about growth is there
it's changed over time like so it used to be when I first
it started working with other companies and shorter-term roles. Almost every CEO said I need someone to help me build awareness and that drove me crazy. It's like so you people see 3,000 advertisements a day and you think that you're going to on your thousand dollar budget actually break through and build any kind of meaningful awareness like so for me, it was a bit of an education transition where it's like build awareness by delivering experiences that lead to lasting relationships that lead to Word of Mouth eventually. You're going to have great awareness.
But focus on Roi driven marketing don't focus on spending money just to buy awareness today. I think it's much more of it's everything from just trying to push through a growth process when the rest of the team doesn't buy into it. And so not having a strategy of how do I get everyone on board to thinking that you know, a test learned growth process driven by data can overcome a situation when you don't have product Market fit. No one who tries the product loves it enough to come back and use it. You're not going to grow your way out of that. You've got to kind of
go back to the fundamentals and think okay. How do we get this product right before we really focus on
growth, right? So they're thinking that you can come in and slather a fix when in fact, the issue is really at the core of things are mental model about what the product is and what it does for people probably needs to shift. Then you need to do a different product reconfigured product. And then go again, you got to kind of go back you get it like playing soccer. You gotta pass the ball backwards before you can pass it forwards
one of the challenges that I also see in companies though is less about what they're asking for and more about when I
Step into a company the number of people that kind of present things as facts when they're totally unproven when a company is essentially built off of a bunch of unproven assumptions where most of them are wrong. That's a really tough environment. So one of the first things that I try to do culturally and I really learned this from Oleg and go practice is get people to think in terms of facts and hypotheses. Everything is a hypothesis until it's proven through experiments or data or you've got your direct.
A feedback enough times where you can really make a case that that's a you know, hypothesis is supported with a lot of data and insights. And so I think if you can get people in the mode of realizing that everything in the business is a guess they're going to be in a lot better position to be more flexible on changing the parts until they have it right and on ultimately figuring out how to drive growth and acceleration through that test learn
process. Yeah, I get it and so for early-stage founder audience
You could grab them by the shoulders and just say one or two things. What would be those messages for them around growth?
It would be, you know, get your short list of your must-haves users and learn everything. You can about them the most recent kind of Hands-On role that I had. I made a profile page of everybody who said that they'd be basically that they'd be very disappointed. They could no longer use the product and that they had a really high engagement rate as shown by the data then it was like, okay, what are all the facts about this person? How did they discover the product? What?
Do they love about the product? And so instead of just showing kind of aggregated survey results? I would literally take the team through slide after slide after slide of these are the people we need to reverse engineer and create a lot more of
God. It's sort of the reverse thinking so often the case, it's counterintuitive, but it's you know, a lot of people think I'll build it and then I'll stick marketing language on it and what we've realized is no you actually think of the language and then you build the product to reflect the language that the customers actually want and your same thing around people like find those people who want it and then build the product for them or
The language for them and
it's a lot about getting those things in sync. So it's not always one thing precedes the other but it's about kind of making sure that they're in synch where ultimately it's all rooted in
facts push on. I really appreciate all of the book writing and the product building and the coaching and the flying under 50,000 miles to sort of teach this mental model this way of thinking to so many people so that they can improve their businesses in their lives because it's hard to teach and you are doing a big work to make sure that
As many people can learn this stuff as possible. I certainly from a big picture long-term. I've known you now for I don't know 15 20 years now. It's like you've done a lot of great work to help a lot of people. So,
thanks again. Well you two, I've definitely learned from you and you know, you've done a good job of particularly in the NF X group of just all the companies going through their how much value they get from that but also you've been out on the speaker's circuit plenty of times putting lots of important insight into how this stuff works and taught me along the way as well. So constantly trying to get smart about this stuff because I don't
You ever have Mastery of it?
That's right. I totally agree. All right, my friend talk soon. Alright. Thanks James.
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