Growth.
It’s what every startup strives for, and what many of them struggle with. Growing your user base exponentially – and quickly – is no small task, one that requires a combination of marketing efforts, product tweaks and sales vision and execution to achieve. In other words, a healthy amount of “growth hacking.”
Enter Brian Balfour. The VP of Growth at HubSpot has varied hands-on experience in growth hacking for startups, having started two VC-backed companies and grown user bases to millions of daily active users. As someone who clearly knows a thing or two about the subject – the word “growth” is even in his job title! – Brian also writes about it frequently on his blog.
We recently had the pleasure of speaking with Brian on a variety of subjects including his early experiences with startups, what he thinks are the keys to growing user bases and, of course, growth hacking!
1) What are some of the basic principles of growth hacking?
The real question we should be exploring is: How is the game changing, and how do we need to evolve with it? (Click to Tweet!)
– Brian Balfour
Growth hacking has been a very polarizing subject – there’s been both a lot of positive thoughts and animosity around it. I think part of the reason for this is that growth is a maturing subject. It’s in its “awkward teenage years.” A lot of the hate is focused on terminology, or spammy marketing techniques being labeled growth hacking. But I think of this actually misses the point. The real question we should be exploring is: How is the game changing, and how do we need to evolve with it?
There are 4 things changing the game right now. The first is ease of access to data. The plethora of analytics tools available now weren’t really available to us 5 years ago. The number of platforms we have access to that help us acquire, retain and monetize our users is increasing at an accelerating pace. Scale and speed is the next one – obviously, companies are expected to grow a lot larger, a lot faster. That’s been a new development over the past few years. Finally, the merging of technology and marketing is becoming very apparent, especially on growth teams.
2) What does a growth team look like?
Growth teams have the skills to be able to influence any part of the funnel at any given moment. That largely depends on having engineers and designers and getting people integrated into the growth team, rather than having them live on different teams. The mission of growth teams is around growth rate – understanding how all these layers interact with each other in a much more holistic way.
Traditional marketing teams,f or example, are built to focus on the awareness and acquisition layers of the marketing funnel. Their goals tend to be around leads, downloads, registrations and new users. Their teams are built to support these goals, so most people come from backgrounds in content marketing, PR and paid acquisition. The engineering, product and sales teams live in completely different departments and are kind of siloed from one another.
Growth teams tend to focus on all parts of the funnel and on goals that reflect the entire funnel – typically something like growth rate or some overarching metric. In Facebook’s case, it was daily active users. In a SaaS company’s case, it might be active monthly subscribers.
Since growth teams are built to influence any part of the funnel, engineering and design are much more heavily integrated into them, compared to old-school marketing teams. They can influence and integrate and make changes at a rapid pace at any layer of the funnel. If it’s not done this way, getting any time from an engineer on the core product team for marketing is like pulling teeth. Marketing activities or growth activities are often de-prioritized, and that’s a really big problem. Engineers and developers need to be an integrated part of a growth team, and not live in a completely different silo.
3) What is some advice you might have for someone diving into a new industry? What is your learning process?
I think it’s a mixture of 3 or 4 things.
First, I try to read as much as I possibly can on the subject. That will often lead to a bunch of questions, and then you take those questions and network. I’ve done a pretty decent job in the past of being able to network into meetings with other industry professionals, and that’s how I get a bunch of my questions answered. After that, it’s all about diving in and trying out – the things I read about, the things my network told me.
The fourth, which is a more recent development, is writing a blog. I’ll internalize something and then go and write about it to try and explain it to someone else and then leads to all these new questions I didn’t realize I had in my head.
Like many others, I probably lacked some confidence in years past: Could I really learn about this? Once you get into it, you realize that you have a much higher ability to figure things out than when you look at it from afar. Just dive in and start doing it and you’ll find your way there.
4) What is the most important lesson you learned from your early experience with PartyCampus.com, back in college?
Looking back, just how young and naive we were. I don’t think we were even of legal drinking age back then. The most important things I learned back then seem obvious now, but back then, there weren’t as many startup and entrepreneurial resources online and we weren’t necessarily in an environment that was surrounded by that mentality, at the University of Michigan. We made all the classic mistakes.
The biggest mistake was trying to do everything at once. (Click to Tweet!)
– Brian Balfour
We didn’t have a technical person as part of the founding team, which was a huge mistake. We tried to do everything at once, instead of simplifying down to its core elements and building up from there. Those were the two biggest mistakes that are classic now, very obvious to any entrepreneur. We weren’t in the right environment to have anyone slap us out of it.
This is how bad it was: We met with the head of the entrepreneurial program, which had just received millions in funding, and he handed us a book that talked about the differences between online businesses and brick-and-mortar businesses. That was the type of support we were getting at the time. I think we would’ve learned those lessons quicker if we were in the right environment. This was back in 2003, though. I’ve heard from more recent alumni that the University has made big improvements in their entrepreneurial support and culture, which I think is awesome.
5) What are some key metrics that early-stage startups should focus on?
To overly generalize, there are three big phases for a startup: traction, transition and then growth. In the traction phase, where most early-stage startups are in, it’s all about retention, which is an indication of product-market fit. The metrics are specific to your business and how you’ve built, but generally you want to do a cohort analysis of how users retain over time. Plot that on a curve, and if you’ve got a linear slope that trends toward 0, you’ve got a real problem. If the curve starts to flatten off, you know that you’ve found product-market fit with some percentage of your users. The question then is, “How big is this market?” Everything revolves around retention and that cohort analysis at an early stage, and how you get that data. You need to have a minimum level of users flowing through the funnel to gather that retention data. Your efforts should be prioritized around that metric.
The biggest mistake I see people make is focusing on too many growth channels at once. (Click to Tweet!)
– Brian Balfour
Once you’ve started to gather some retention data, you move into the transition phase. You want to find 1 to 2 – not more than that – scalable acquisition sources. Transition means you’ve found product-market fit around some segment of users, you just have to find more of them. How do you start uncovering some of the growth levers that will make up your machine? You want to find the 1 or 2 channels that will really help you accelerate that growth. The biggest mistake I see people make in this stage is they focus on too many channels at once. The problem with that is during this phase, you still don’t really have the resources to understand and really nail more than 1 or 2 growth channels. You really have to find those that have a really high ceiling and focus on extracting as much value as you can from them.
When you move from the transition to growth phase, you want to figure out how you can turn up your growth levers as much as you possibly can. You start to expand, add growth channels, your optimization tends to be more micro, and you have enough data and people flowing through the system. These small changes can make a big impact over time. You have a much larger team and more resources, and this phase is all about how much fuel you can pour on the fire.
6) What is the key to growing user bases? Consequently, what is the biggest mistake you see startups making in their attempts to grow user bases?
The number one question I’m asked about growth is, “How would you grow my business? Is there a tactic or a channel that I don’t know about?” This question typically stems from the fact that they’re looking for a hack or secret that will unlock the explosion of growth in their business. The reality is there’s no silver bullet. There aren’t any secrets. Growth stems from aggregating a bunch of continuous improvements over time. My message to most startups is to focus on process first, and tactics second. You need a process that will help you continuously uncover new growth ideas and experiment with those ideas and analyze what worked and what didn’t. Feed those learnings back in the process and you’ll get better and better over time. If you focus on building a process that accomplishes those things, the chances that you’ll uncover success growth tactics increases with every cycle you do. The process is your machine; your tactics are the output from your machine.
7) How do you think startup founders and executives should think about company growth in conjunction with their own personal or career growth?
For me, it’s easy. I’ve got one mission or passion and that’s growth, and that manifests itself in a few different ways. I’ve always been in startups, always focused on the growth role and how you grow those products. I’m also a huge fan of asking, “How do I grow myself as a professional, and grow my team members?”
Our number one principle is: “Be the best at getting better.” (Click to Tweet!)
– Brian Balfour
The number one principle on our Signals team is “Be the best at getting better.” That’s about being the best at getting better in our competitive space for our product, but also improving as a team over time and as individuals. If you take that mentality and just focus on how you get better over time, you’ll win in the long run, both personally, professionally and as a company. The people who can iterate the fastest tend to be the ones who find success.
8) How do you foresee the marketing and acquisition worlds changing or trending over the next 5 years? What can CMOs or CEOs do to prepare themselves for this change?
The rate of change is accelerating. If you look at all the channels that have been around for years – email, SEO, display advertising, etc – those channels are changing at a faster and faster pace. Look at display advertising: everything’s moving toward real-time bidding, browsers are taking away cookies, display on mobile is a completely different problem. For SEO, Google is changing the search format, they’re taking away keyword data, changing algorithms constantly. It’s both exciting and very scary at the same time. So much is changing in such a short period of time.
In addition, the number of new channels we’re getting is also accelerating. Because of that, we’re going to move away from organizations where marketing lives in silos, compared to product and engineering. You’re going to have a team that focuses on growth in a much more holistic way. If you look at the ecosystem as a whole, this mentality is already taking shape. More companies are forming growth teams, rather than “marketing” teams. It’s exciting, and it’s kind of scary, because it’s hard to keep up with how fast things are moving and changing.
Brian is the VP of Growth at HubSpot, working on new product initiatives such as Signals. Previously, he was an EIR at Trinity Ventures and co-founder of two venture-backed companies, including Boundless and Viximo (now part of Tapjoy). Read more about Brian’s thoughts on growth at Coelevate.com.
