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What exactly is "growth"?
Jan 20, 2019
5 minutes read

Most well-known consumer tech companies – Facebook, Uber, Slack, LinkedIn, AirBnb – all have “growth teams”. You’ve probably heard terms like growth hacker and growth marketer, which today are commonplace job titles with job descriptions containing buzzwords such as growth models and growth channels.

But what is growth? What does it mean to have a person or team focused on the growth of a company? How should you start thinking about growth in your products?

The goal of this post is to explain what exactly growth means, and how many successful companies approach growth in a systematic, scientific way. For those familiar with growth, I’ll make things more interesting by not using any popular buzzwords such as retention, paid acquisition, funnels, virality, SEO, north star metric, and DAU/MAU. Let’s get started.

Growth has just three steps

Growth engine's three steps

Step 1: Users give you something in exchange for something else.
Step 2: You invest what they give you to tell more people about your product.
Step 3: Some of those people become users!

I call this the growth engine. So what does this actually look like within a product? Let’s check out some examples.

How Candy Crush grew by showing ads.

Ads are by far one the most popular ways to grow, and games such as Candy Crush use ads extensively.

Step 1: Users give Candy Crush money in exchange for in-app purchases. In-app purchases allowed Candy Crush and other games to make a large portion of money from a very small amount of “power” users – for most games, the top 1% of users generate over 50% of the revenue.

Step 2: Candy Crush invests that money to show more ads. The percentage of users that start playing a game via an ad is extremely small, so you’d serve ads to many people every day.

Step 3: Someone sees a Candy Crush ad and starts playing. Voila, a new user is born! Doing some basic math can tell you on average how much you’re spending to get each new user and how much money you make from each new user. As long as you make more money per new user than you spend to acquire them, you’re making money. Easy as pie.

How LinkedIn grew by getting people to create profiles.

LinkedIn and other online forums and directories (Yelp, Quora, Stack Overflow) grew using a completely different growth engine.

Step 1: Users give LinkedIn personal information in exchange for seeing others’ profiles. LinkedIn goes so far as to gamify this process by showing a progress bar to incentivize you to fill out every single field.

LinkedIn profile gamification
Really LinkedIn? You think I’ll write a summary just because I don’t have a – oh wow, they made an auto-summary? I wonder what it says…

Step 2: LinkedIn allows their personal information (profiles) to be crawled by search engines. Companies like Google and Bing have bots that crawl profiles from sites such as LinkedIn so that when you search someone’s name or company, you can see their LinkedIn profile in the search results.

Step 3: Someone clicks a LinkedIn profile from a search results page and signs up. And once again, a new user is born. Sneaky sneaky companies that rely heavily on this process to grow (LinkedIn, Quora, Medium) will block you from accessing the page until you actually create an account. Don’t believe me? Try visiting my LinkedIn profile in Incognito mode and hard refresh the page once (Shift+Refresh).

How Dropbox grew by getting existing users to invite new users.

There’s no story like Dropbox, which created one of the best referral programs and pushed Dropbox up from 100,000 users in 2008 to 4,000,000 users in 2010, just 15 months later. But, once again, they followed the same three steps of any growth engine.

Dropbox's referral program
Dropbox’s referral system is the gold standard of referrals and the reason companies like Uber and Airbnb created similar referral programs and also the reason your friends will harass you to sign up using their referral code. Thanks, Dropbox.

Step 1: Users give Dropbox their friends’ emails in exchange for free Dropbox space. The beauty of giving users free Dropbox space is that it encourages them to use the product even more!

Step 2: Dropbox sends their friends an email inviting them to register. Not only will my friends receive an email, but they’ll receive a text, Facebook message, and voice mail from me asking them to sign up using my referral code. Persistence pays off.

Step 3: Friends click the link in the email and sign up for Dropbox. Voila, a new user is born. And now, once this new user signs up using a referral link, they already know how useful referring someone else can be – they’ll be even more inclined to refer their friends and the cycle repeats itself.

How can you make your product grow?

Remember, the growth engine just has three steps:

Step 1: Users give you something (money, personal info, or friends’ email addresses) in exchange for something else.
Step 2: You invest what they give you to tell more people about your product.
Step 3: Some of those people become users!

Examples of the growth framework

So how do you get started? Start by picturing your ideal user. Then, ask yourself three questions:

  1. What is the problem in their life that your product solves? If your product doesn’t solve a problem, then there’s no reason for any user to continue using it.
  2. Now, what can you ask them for in exchange for solving that problem? Don’t default to saying money, since I’ve given you two examples of successful products (LinkedIn and Dropbox) that grew quickly without making users pay them.
  3. Finally, how can you leverage what they give you to acquire more users? This requires experimentation and iteration, and you probably won’t succeed at first.

We’ve only covered three examples of growth engines, but there are many more, and successful products will use a combination of many different growth engines to power their growth-mobile. In order for your product to continue growing, you’ll have to continue experimenting and learning from mistakes. By thinking about growth using this framework, you can keep building out more growth engines in your product and continue helping more users every day.

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