Growth
TDC2014

9/10 startups fail

(Startup Genome Project, study on pre-mature scaling)
74% of high growth internet startups
fail due to premature scaling

1/10
How to be the successfull
startup?

Computer Engineer, PUC-Rio
CTO & Co-Founder @ Passei Direto
Product Management, Growth
Internet Business, Software Engineering
Andre Simoes

Transition to
Growth
Product/Market Fit
Growth

Transition to
Growth
Product/Market Fit
Growth

Transition to
Growth
Product/Market Fit
Growth

Find your product/market fit
before you run out of money

Focus: Customer Development
Experiments: Pivot
Metrics: Qualitative

“How would you feel if you could no longer us this product?”
Sean Ellis

“How would you feel if you could no longer us this product?”
Sean Ellis
-40%
Very disappointed
Iterate
+40%
Very disappointed
Move to next stage

NPS – Net Promoter Score
NPS = (% de Promoters) – (% de Detractors)
The Net Promoter Score can vary from -100 to 100
 De 0 a 6 = “Detractors"
 De 7 a 8 = “Passives"
 De 9 a 10 = “Promoters"
“In a scale 0 to 10, how likely is it that you would recommend this product to a friend?”

Transition to
Growth
Product/Market Fit
Growth

Focus: Growth
Experiments: Optimizations
Metrics: Quantitative

Implement users analytics
Identify must have benefits
CRO
Hire growth expert
Improve business model

Conversion rate = desire - friction

Transition to
Growth
Product/Market Fit
Growth

Explore different acquisition channels
Find different markets
Expand internationally

Warning!
UGC products may need growth to assure
PMF

Network Effect

Metcalfe’s Law
U = k*n²(utility of a network)

Transition to Growth
Transition to
Growth
Product/Market Fit
Growth

Focus on the right metrics

The key is to map out the user
lifecycle for your product

Key Metrics
Acquisition
Activation
Retention
Revenue
Referral
How do users find you?
Do users have a great first experience?
Do users come back?
Do users tell others?
How do you make money?

Key Metrics
Acquisition
Activation
Retention
Revenue
Referral
How do users find you?
Do users have a great first experience?
Do users come back?
Do users tell others?
How do you make money?
PR, SEM, SEO, Campaigns, Blogs, Email
Landing pages, step-by-step, find something cool
News feed, transactional emails, alerts, notifications
Invite friends, share content
Ads, subscriptions

Growth Metrics
Acquisition
Activation
Retention
Revenue
Referral
How do users find you?
Do users have a great first experience?
Do users come back?
Do users tell others?
How do you make money?
PR, SEM, SEO, Campaigns, Blogs, Email
Landing pages, step-by-step, find something cool
News feed, transactional emails, alerts, notifications
Invite friends, share content
Ads, subscriptions

Value Metrics
Acquisition
Activation
Retention
Revenue
Referral
How do users find you?
Do users have a great first experience?
Do users come back?
Do users tell others?
How do you make money?
PR, SEM, SEO, Campaigns, Blogs, Email
Landing pages, step-by-step, find something cool
News feed, transactional emails, alerts, notifications
Invite friends, share content
Ads, subscriptions

Acquisition
How do users find you?

Word of Mouth

Activation
Do users have a great first experience?

Getting users to the
A-HA
MOMENT

What’s the one core activity
of your product?

What’s the one core activity
of your product?
How can you get people
there as fast as possible?

What’s the one core activity
of your product?
How can you get people
there as fast as possible?
Our AHA moment at Twitter was ‘Once
a user follow 30 people, they’re more or
less active forever.’
- Josh Elman, ex-Product Lead at Twitter

What’s the one core activity
of your product?
How can you get people
there as fast as possible?
Our AHA moment at Twitter was ‘Once
a user follow 30 people, they’re more or
less active forever.’
- Josh Elman, ex-Product Lead at Twitter
‘Reach 7 friends in 10 days.’
- Chamath Palihapitiya, ex-Product Lead at Facebook

What’s the one core activity
of your product?
How can you get people
there as fast as possible?
Our AHA moment at Twitter was ‘Once
a user follow 30 people, they’re more or
less active forever.’
- Josh Elman, ex-Product Lead at Twitter
‘Reach 7 friends in 10 days.’
- Chamath Palihapitiya, ex-Product Lead at Facebook
‘Put at least one file in one Dropbox folder’
- ChenLi Wang, Business Ops at Dropbox

What’s the one core activity
of your product?
How can you get people
there as fast as possible?
Our AHA moment at Twitter was ‘Once
a user follow 30 people, they’re more or
less active forever.’
- Josh Elman, ex-Product Lead at Twitter
‘Reach 7 friends in 10 days.’
- Chamath Palihapitiya, ex-Product Lead at Facebook
‘Put at least one file in one Dropbox folder’
- ChenLi Wang, Business Ops at Dropbox
‘Find one relevant study material.’
- Passei Direto

Examples

Examples

Retention
Do users come back?

Transactional Emails
NotificationsNews feed Gamification

(+) New User Registrations (+) 20.000
(+) Ressurected Users (+) 1.050
(-) Deactivations (-) 50
(-) Gone Inactive (-) 10.000
(+/-) Net Change (+) 11.000
User accounting
Track it daily
Total Active Users 1.000.000
Total Active 1.011.000
Yesterday
Today

Cohort Analysis
Group of people who share a particular
characteristic over a priod of time

Twitter (tweets) Pinterest (pins)

Referral
Do users tell others?

Examples

Single viral loop

Single viral k-factor
k = (% who invite) x (#avg invites) x (%accept)

Single viral k-factor
k = (% who invite) x (#avg invites) x (%accept)
70% 10 20%1,4

Double viral loop
1) Register
2) Invite
3) Nudge existing users
4) Existing users invite new users

(1) Register
(2) Invite
(3) Nudge
Existing users
(4) Existing users invite more users

You need to measure conversions at each step
124,300
37,737
13,208
6,868
46% 35% 65%
Acquisition Activation Retention Revenue

124,300
820 189 23
1% 23% 15%
Acquisition Activation Retention Revenue
At first your numbers will be really shitty

At first your numbers will be really shitty
124,300
820 189 23
1% 23% 15%
Acquisition Activation Retention Revenue

At first your numbers will be really shitty
124,300
12,306
2,830 340
15% 23% 15%
Acquisition Activation Retention Revenue

Measure different channels seperatly

Stage User State Conversion % Visitors
Acquisition Visit the site 100% 1,534,000
Acquisition Sign up step 1 4% 67,386
Acquisition Sign up step 2 4% 57,277
Activation Buy something 72% 41,177
Retention Back at least once in the month 39% 16,227
Retention Back and buy something 10% 4,007
Referral Invite 1+ users who just visit the site 21% 4,007
Referral Invite 1+ users who visit the site and sign up 5% 4,007
57,277
41,177
4,007 4,007
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Conversion funnel
Acquisition Activation Engagement Referral
Acquisition Channel  SEO
72% 10% 5%

Don’t focus on acquisition or referral if your
activation rate is 1%

Don’t focus on acquisition or referral if your
activation rate is 1%
What happen if you do that?

This...

And this..

The product don’t sustain it self
and loses traction
Then..

Growth Hacking

Sean Ellis (2010)
“A person whose true north is growth”

Growth Hacking is a set of tatics and best
practices for dealing with user growth

Growth Hacker job is to figure
out how to move users from
one state to the next
Acquisition
Activation
Retention
Referral
??

Growth Hacker
CRO
SEO
Analytics
PR
Email mkt
A-ha moment
SEM
Onboarding UX
A/B testing
Crawlers
Habits

Famous Growth Hacks

Insight
Use the own mailing system to tell others about it
Hack
Put ‘PS: I love you. Get your free e-mail at Hotmail’ at the bottom of
each e-mail

12M
users

12M
users

Insight
Craiglist is where people look for rooms
They could cross-post to Craigslist
Hack
Even without an API, AirBnb team figured out a way to hack the craiglist
submission process (w/o API)

1)
2)

Insight
Traditional marketing wasn’t working. CAC $300 to $99 LTV.
Activating customers was the key to paying accounts
Hack
Giving away free space in exchange for word of mouth referrals
Giving away free space in exchange for activation

Activation Referral

Insight
They could leverage the size of Facebook and its open graph permissions
to drive growth
Hack
One click invite send and account creation with Facebook Connect

Insight
It’s not how many Tweets you send, it’s how many people you follow
User follow 5-10 people, they are far more likely to remain active
Hack
Drive product onboarding not around publishing, but following

Mistakes that kill Startups
• Premature Scaling
• Too many features
• Ego
• Lack or excess of metrics
• Lack or excess of validations
• Data-driven x Data-informed

What do I do next?
Be creative.
Use your data.
Kill features.
Ship. Measure. Learn

Questions?
andre@passeidireto.com

• Names mentioned
• Sean Ellis
• Dave McLure
• Steve Blank
• Analytics and Customer Relationship tools
• Mixpanel
• Kissmetrics
• Google Analytics
• Optimizely (a/b test)
• SEOMoz
• Geckoboard
• Uservoice
• Qualaroo
• Infrastructure tools
• Zabbix
• Pagerduty
• Pingdom
• Blitz.io
• Startup Genome Report
• http://gallery.mailchimp.com/8c534f3b5ad611c0ff8aeccd5/files/Startup_Genome_Report.pdf
References asked by the audience