Why "Growth?"

Exponential, scalable, hockey stick… whatever you call it, growth has become the holy grail for startups. Concurrently, it has emerged as a critical function at the fastest growing companies, making the establishment of growth teams a dominant trend in the startup world over the past 5 years. 

Despite the airtime it’s been getting, I still field a lot of questions and a fair bit of skepticism about growth, and they mostly boil down to this: 

What exactly is “growth”, and how is it different?

Let’s start with a story. 

The Origins of Growth 

Growth (the kind found on an org chart) began at Facebook under the direction of Chamath Palihapitiya. In 2007, he joined the early team in a nebulous role - one that fell somewhere between Product, Marketing and Operations. According to his retelling of the story on Re/code Decode, after struggling to accomplish anything meaningful in his first year on the job, he was on the verge of being fired. 

Sheryl Sandberg joined shortly thereafter, and in a hail mary move he pitched her the game-changing idea that led to the creation of the first-ever growth team. This idea not only saved him his job, but earned him the lionshare of the credit for Facebook’s unprecedented growth. 

At the time, Sheryl and Mark asked him, “What do you call this thing where you help change the product, do some SEO and SEM, and algorithmically do this or that?” 

His response: “I don’t know, I just call that, like, Growth, you know, we’re going to try to grow. I’ll be the head of growing stuff."

And just like that Growth became a thing.

Why Growth Video

(Or just scroll below this video for the rest of the post...)

A New Functional Bucket for Growth

The key observation in the story of Chamath at Facebook is that there was a bucket of things he wanted to do in a certain way that didn’t fit the traditional marketing or product development buckets, so they gave it a separate and permanent home in the org structure.  Today Facebook’s growth team is hundreds of people and has spawned leaders of other growth teams like Ed Baker at Uber and Andy Johns at Wealthfront. 

Trailblazers like Chamath at Facebook and Elliot Shmukler, who to my knowledge started the second growth team in history while at LinkedIn, were early to recognize how software could open new avenues for growth and successfully create experimental processes to drive growth at scale. They experimented with new technical and quantitative strategies and tactics and generated exponential growth as a result.

But there is a key question.  Why did the bucket of things not fit within other orgs?  What had changed that created an opportunity to operate differently?  To answer those questions we need to take a look at what has changed in the world of software.

Four Ways Software Changed How Companies Grow

There have been four major market changes caused by the proliferation of software that have changed our approach to growing products. 

1. The blurring of the line between marketing and product
2. Marketing’s expansion into technical and quantitative territory
3. The increased accessibility of data
4. The emergence of platforms and APIs

The Blurring of the Line Between Marketing and Product 

Let’s rewind a bit to pre-software days to think about physical products.  The typical experience for a physical product was that you would learn about it most commonly through some form of marketing (TV, Print, Radio, etc).   You would then go to the store to buy the product and take it home to use it.  The marketing and product experiences were pretty separate.  As a result, organizations were structured around those experiences.  Product development teams developed the product. Then marketing teams would take the product and figure out how to get people to buy it. The two collaborated, but spend most of their time in their own silos.

This structure then carried over to software companies.  We had marketing teams drive customers to the website and product team develop the product.  The two were (and still are in a lot of places) separate.  

But a lot has changed  with the advent of software.  The experiences we previously considered marketing and product are no longer clearly separated in the eye of the user/customer.  

Take Dropbox as an example.  One of their primary ways to acquire more users is through their invite referral program.  Is that marketing?  It IS marketing’s job to acquire users after all, but the invite program lives inside the product and requires engineering to improve.  Or is it product?  It lives inside the product, but its primary function is to acquire users which is the goal of a different team. The answer is unclear.  

This blurring line is has been accelerated by the next big change...

The Emergence of Platforms and APIs

Every company is built on top of a larger pre-existing platform. There are three ways companies tap into these pre-existing platforms:

1. Buy - ads and placement within media
2. Partner -  with other companies to leverage their platforms for distribution (eyeballs)
3. Build -  integrations with other platforms (i.e. Facebook, Twitter, Slack, etc.) via API’s, embedding, etc.

In the early 2000’s if you wanted to tap into one of the popular platforms (i.e. Yahoo at the time) you most likely had to partner or buy (via ads).  Fast forward, and building has become much more popular with the proliferation of API’s and and open platforms. Today you can integrate your product into numerous platforms such as Facebook or Slack to not only help acquire users, but activate, retain, and monetize them.  The goals of these integrations tend to align more with marketing, but yet require skill sets that align more with product/engineering.  So where does it live?  

The Increased Accessibility of User Data 

In 2008 if you wanted to track user data you basically had three options.  

1. Google Analytics - Not really built for web applications.
2. Buy Omniture (or some other enterprise solution) - Extremely expensive both money and time.
3. Build Yourself - Serious time and and expense commitment.

In contrast, just eight years later the plethora of analytics solutions on the market is downright overwhelming.  Mixpanel, Amplitude, Segment, KISSmetrics, Localytics -he list goes on and on.  These tools have brought cheaper, faster, and deeper access to user data and analysis.  As the friction has massively decreased, it has changed how the most effective teams work.  The teams that have embraced data to draw actionable insights are able to grow much quicker.

Marketing’s Expansion into Technical and Quantitative Territory

The blurring marketing and product, proliferation of API’s, and increase in access to data already points to the fact that the “job” of growing has shifted to be much more technical and quantitative.  That shift is even stronger when you look at what it takes to compete in acquisition channels such as SEO and paid marketing.  Teams doing either at scale have to invest in building technical infrastructure and tracking and analyzing loads of data to stay competitive.  As digital acquisition channels become saturated, teams experiment with increasingly technical and quantitative tactics to find a new edge.  To be the most effective at growing your product:

1. Approach growing as a meld of marketing and product.  Acquiring customers is no longer just the job of marketing and growing doesn’t result just from building a “good product.”
2. Deploy a data driven experimental process.
3. Re-think the set of skills required to drive growth

How Are Growth Teams Different From Marketing and Product Teams?

The most common questions with growth are:

1. How are growth teams different from marketing teams?
2. How are growth teams different from product teams?

Any team has three defining components (which will be explained in depth in later modules):

1. Goals - What are the primary objectives?  How are they measured?
2. Team -   What skill sets and roles are needed to achieve the goals?
3. Process - How does the team operate to achieve the goals?

Using those three components we can draw comparisons between growth and other types of teams. 

Growth teams pursue growth as a holistic system and goal.  They deploy a fast, data driven process to figure out what works and what doesn’t.  They use a cross functional team with product, engineering, marketing, and data skill sets to execute that process.  

Some marketing or product teams DO operate in this manner.  Those are the exceptions, not the rule,and in that case what I’m describing is just a difference in name.  

A New Era in Growing Companies

Developments in software are pushing marketing and product to evolve, and a handful of startup pioneers have responded by improving the processes for growing companies. They’ve created more efficient and effective approaches to growth by designing teams to have diverse skill sets, giving them authority to make changes across all layers of the funnel (not just acquisition) and implementing a very fast data driven experimental approach to drive growth.

Now that you have a foundation for what growth is, where it came from and why it’s so important, next we will discuss a profoundly important distinction between “good” and “bad” growth. Most critically, I want you to recognize the difference so you can build your company to last.

Thanks to Lauren Bass for helping me produce this content.