Explosive growth. Sean Ellis - Explosive Growth. How today's fast-growing companies are making a successful breakthrough

Until recently, it took decades for companies to earn a billion. Today, many businesses such as Snapchat, WhatsApp and Uber go through this path in a couple of years. We have entered an era of high speed, now, in order to survive and succeed, companies are forced to grow rapidly. Key questions: how to compete successfully in this new world? How to avoid the notorious growing pains? The answer is to become an exponential organization.

This book - practical guide on the creation and management of exponential companies. The authors talk about the experience of a business that fits into the new conditions and give advice on how to adapt to change. existing organizations. Thanks to Explosive Growth, any company, from a startup to a huge corporation, will learn to use new technologies in order to achieve exponential growth.

In the late 1980s, Motorola took a strategic step to dominate the nascent mobile communications industry by building a satellite telephony system called Iridium. In those days, mobile communication technologies were quite expensive, so they were introduced only in major cities with a high population density. Motorola, before other operators, drew attention to the lack of similar solutions for regions outside the metropolitan areas, especially in countryside. However, calculations have shown that covering these vast areas with cell towers that cost about $100,000 each, not to mention operating costs and the considerable cost of manufacturing brick-sized mobile phones, will not pay for itself.

But soon a more radical and seemingly viable solution was born - to create a constellation of 77 communications satellites in low Earth orbit (this number corresponds to the atomic number of iridium in the periodic table, hence the name of the program - Iridium), which will cover the entire surface of the globe and provide mobile communication services at the same cost regardless of location. The company also calculated that if at least one million people in developed countries world will purchase a satellite phone for $3,000 each and pay $5 per minute, the network will quickly become profitable.

As we know today, the Iridium program failed miserably and swept $5 billion of investor money into oblivion. In fact, this satellite system was doomed even before it was created, becoming one of the most impressive victims of technological progress.

There were several reasons for the failure of Iridium. While Motorola was launching its satellites, the cost of building cell towers was dropping, network speeds were skyrocketing, and mobile phones were shrinking in size and price. In fairness, we must admit that Motorola was not the only one who made a mistake in forecasts. Its competitors Odyssey and Globalstar made the same fundamental miscalculations. In total, more than $10 billion of investor money has been lost on the wrong bet that the pace of technological change will be too slow to keep up with market demand.

The main reason for this miscalculation, according to Dan Colussi, who led the Iridium buyout in 2000, was Motorola's inability to update its business model assumptions. "The business plan for Iridium was developed twelve years before the system went live," he says. Even by the standards of that time, this was a huge period of time, which actually did not allow predicting what the state of affairs in the field of digital communications would be by the time the satellite system was put into operation. This is where an approach using linear tools and past trends to predict the future can lead. We will refer to this approach as the Iridium-style mentality later in this book.

Another prime example of the Iridium-style mentality is the infamous story of Eastman Kodak, which filed for bankruptcy in 2012 after inventing and then rejecting the idea of the digital camera. Around the same time that Kodak closed its doors, just three years old startup Instagram with 13 employees was acquired by Facebook for $1 billion. (Paradoxically, this happened at a time when Kodak still owned the digital photography patents.)

The miscalculations in Iridium style and the epochal change of leaders in the photo industry from Kodak to Instagram were not isolated events. Today, leading US Fortune 500 companies face competition not only and not so much from the largest Chinese and Indian companies. As Peter Diamandis rightly pointed out, their competitors are increasingly being startups that are created by smart guys in their garages and cleverly use exponential growth technologies. YouTube grew out of a start-up funded by Chad Hurley and in less than a year and a half became so wildly popular that it was acquired by Google for $1.4 billion. Groupon took less than two years to go from concept to a $6 billion company. The most valuable startup in the world, Uber, is now valued at nearly $17 billion, ten times its value just two years ago. We see new type organizations that grow and generate value at a rate never before seen in the business world. The above graph clearly shows the accelerating metabolism of the economy.

Welcome to new world Exponential Organizations or ExOs. This is a world where, as Kodak has learned the hard way, neither age, nor size, nor reputation, nor even current sales volume guarantee tomorrow's survival. This is a world where a rapidly growing, dynamic and intelligent organization is able to achieve a level of success - exponential success - that was not possible in the past. And all this with a minimum of resources and in a minimum time.

We have entered the era of billion-dollar and soon trillion-dollar startups, an era of lightning speed where companies and institutions will have to move at the speed of light to survive and thrive. If you don't make the transition to an exponential organization and stick with the traditional model, you'll soon see your competitors disappear over the horizon and you, like Kodak, fade into oblivion.

In 2011 graduate School F. Olin Business of Babson College predicted that in ten years, 40% of the then Fortune 500 companies would cease to exist. Richard Foster of Yale University calculated that the average life expectancy of S&P 500 companies has fallen from 67 years in the 1920s to 15 years today. And, according to his forecasts, this figure will decrease even more in the coming years, as giant corporations will not only be forced to compete, but also completely ousted from the market, and almost overnight, by new types of companies that use the full potential of exponential technologies - from group work and data mining to synthetic biology and robotics. And, as the rise of Google marks, these new companies will dominate the global economy for the foreseeable future.

doubling phenomenon

For most of human history, the productivity of the community depended on the people themselves: men and women were engaged in hunting, gathering, building, and children helped them. To double productivity, the community needed to double the number of workers involved in harvesting or procuring meat.

Over time, mankind domesticated beasts of burden, including horses and bulls, which led to an additional increase in productivity. But the equation was still linear. Doubling the number of pets meant doubling productivity.

With the advent of the industrial age and market capitalism, a gigantic leap in labor productivity was made. Now one person could operate a machine that did the work for 10 horses or 100 workers. The speed of vehicles, and thus transportation and distribution, doubled and then, for the first time in human history, tripled.

The increase in labor productivity improved the living conditions of many people and ultimately led to a manifold increase in the standard of living. Since the end of the 18th century, largely due to the industrial revolution and the development of modern science, the duration human life doubled, and inflation-adjusted per capita income tripled, trends that continue to this day.

During the previous stage of human history, the main factor limiting the growth of productivity was not manpower (that is, the number of people or animals), but mechanical (the number of machines) and the amount of capital available. But the linearity remained, and the doubling of output was still achieved through doubling production capacity. Companies grew in size and expanded their activities to the entire globe. The increase in size allowed for an increase in global reach, gaining a dominant position in the market and thus guaranteeing a sustainable and profitable business.

But such growth takes time and, as a rule, significant capital investments. And taking into account all the complexities associated with the design and construction of new production facilities, organizing logistics systems, hiring personnel, etc., the implementation time of such projects is still measured in decades. Often, CEOs and boards of directors, as in the case of Iridium, are forced to "go for broke", betting on a new line of business that requires hundreds of millions and even billions of dollars of long-term capital investments. Pharmaceutical, aerospace, automotive, and energy companies follow this traditional pattern, making investments that will (if they start) start to make a profit many years later.

Although this system is quite workable, it is far from optimal. Too much money and valuable talent is invested in ten-year projects, which often feel like a lottery, as their success or failure becomes clear only at the very end. This leads to a colossal waste of resources, not to mention missed opportunities and unrealized ideas that could benefit humanity.

This situation is no longer acceptable or acceptable. Solving the global challenges of the 21st century requires using all the creative energy, all the ability to innovate that humanity has.

We must find better ways to organize ourselves. We have learned how to create fast-growing, highly effective and cheap technologies - now it's time to learn how to create organizations to match these technologies. New century requires a new approach to doing business, ensuring development and growth, organizing people and solving problems.

And such new approach offers us an exponential organization.

We cannot guarantee you success, but at least we can explain the new rules of the game to you and point you in the right direction. This plus your own initiative will give you a good chance of becoming a winner in the new world of exponential organizations.

Explosive Growth: Why Exponential Organizations Are Dozens of Times More Productive than Yours (and What to Do About It)

Until recently, it took decades for companies to earn a billion. Today, many businesses such as Snapchat, WhatssApp and Uber go through this path in a couple of years. We have entered an era of high speed, now, in order to survive and succeed, companies are forced to grow rapidly. The key question is: how to compete successfully in this new world? How to avoid the notorious growing pains? The answer is to become an exponential organization.

This book is a practical guide to building and managing exponential companies. The authors talk about the experience of business that fit into the new conditions and give advice on how to adapt existing organizations to change. With Explosive Growth, any company, from a startup to a huge corporation, will learn how to use new technologies in order to achieve exponential growth.

Why Explosive Growth is worth a read:

The authors studied dozens of companies that have managed to take advantage of the new realities and have achieved unprecedented growth rates as a result.
More importantly, they provided insightful analysis and developed practical principles for how existing organizations can adapt to change.
The book is a "survival guide" for top managers and entrepreneurs, because if you don't manage to grow into an exponential organization yourself, you will eventually disappear from the face of the earth like dinosaurs.

Who are the authors

Salim Ismail - co-founder and executive director of Singularity University, where is he oversees many academic programs and is also its Global Ambassador. Prior to that, he was a vice president of Yahoo, where he created and managed its in-house business incubator, Brickhouse. His last company, Angstro, was acquired by Google in August 2010. In total, he personally founded and led seven startups.

Uri van Geest - Singularity University graduate, world leading mobile technology expert and passionate researcher of exponential technologies and trends.

Michael Malone – respected world-class high-tech journalist. In addition, Michael developed two widely recognized organizational models, predecessors of the ExO concept.

The Explosive Growth book helps to understand completely new principles of "organizational culture"; see what makes some cultures more effective than others. Often simple at first glance lessons are very difficult to implement in practice. And because this book shed light for the first time on the hidden processes of creating global high-growth projects, it will definitely become a classic of business literature.

This sounds especially relevant because there is not a single company with domestic roots on the world stage that has turned its industry around, changed the business paradigm, and grown to a capitalization of $1 billion in 1–2 years. And this is a challenge facing the Russian-speaking business community! And it will definitely be accepted, because the book "Explosive Growth" appeared in Russian. Every time I am pleased to meet people whose life path led them to similar ideas, and, as a rule, this does not happen by chance.

It remains only to envy those who start reading the book: they will have an exciting intellectual adventure.

Foreword

Welcome to an era of exponential change - in my opinion, the most amazing era in all of human history.

In the pages of this book, my colleague and friend Salim Ismail, one of the leading theorists and practitioners in the field of the future of organizations, offers his vision of the world of the future – and how it will change the way we live, the way we think, and the way we work and do business. Salim studied dozens of companies that were able to cleverly take advantage of the new set of realities and, as a result, achieve growth rates many times higher than the normal growth rates of traditional companies. More importantly, he provided in-depth analysis and developed practical principles for how existing organizations can adapt to these changes. I believe that the book you hold in your hands is the best guide for executives and entrepreneurs who want to learn how to ensure that their companies thrive in an era of transformational change.

* * *

Preface to the Russian edition

It is not the strongest or the smartest who survive, but the one who adapts best to change

Charles Robert Darwin

PHENOMENAL RAPID SUCCESS some new companies has led to the need to rethink traditional business models, the emergence of the theory of "explosive growth". This topic has been developed in the works of various researchers, including Sean Ellis and Morgan Brown. Explosive Growth is the book that many businessmen under the pressure of difficult economic circumstances have been waiting for. The crisis situation, the growth of competition, the growing demands of consumers - these are the factors that complicate the implementation of new business ventures for many entrepreneurs. After all, there is an opinion that only companies with a long history and a strong brand are able to succeed in the market in such a difficult time. But in this book, the authors debunk this myth, showing with numerous examples that using certain, non-standard, and sometimes quite bold approaches, you can both revive an already existing (albeit without much success) business, and open a truly successful and profitable startup. , which through a short time will win huge audiences.

Explosive growth, or Hacking growth - from the word "hack", in computer jargon, "an ingenious solution to a problem." In this book, "hacks" are the very approaches, using which you can change the traditional path of development and get significant results ten times faster.

In a rapidly changing environment, only those who can make quick decisions can succeed. Today, companies often do not have time to slowly implement long-term strategies. The fundamentalization of big business, which is associated with the complication of processes, the growth of bureaucracy, today often turns out to be inconsistent with the realities of the present. Explosive growth is, in a sense, an “oppositional” solution that provides for the maximum simplification and acceleration of all business processes. And often with the use of effective creative approaches.

An example is "pop-up" - a rapidly developing format retail. Named from the English "suddenly appear", pop-up stores suddenly open on some city street, and just as suddenly close, providing customers with significant discounts during their work. Typically, such stores are located in special temporary structures. The absence of the need to spend money on rent or serious construction makes the choice of this trading method very attractive, and the word of mouth method attracts many buyers to the store. From the point of view of promotion, such an outlet is aimed at stimulating sales and can solve the same issues that traditional promotions are usually aimed at: seasonal sales, getting rid of leftovers, etc. But for the consumer, this format is also interesting because of what it brings some element of the game. It is not known in advance: exactly where the store will appear, where you can buy your favorite brands of goods at a significant discount. Such information is tracked and quickly passed by word of mouth to buyers. In many European countries, including in the UK and Germany, pop-up stores have already become familiar to local buyers. In Russia, this format is still new.

In order to find ideas and develop business in the direction of "explosive growth", the authors show how it is necessary to form special teams. These divisions complement organizational structure enterprises, their main task is to set up processes for systematic growth. For example, just as retail chains traditionally use "launch teams" that deal with all the issues of opening a new store, and then move on to other stores in the chain, so here, "growth teams" are used to permanent job to establish processes and algorithms that ensure explosive growth.

The key point that the authors emphasize is that when looking for effective solutions, one should not limit oneself in the number of ideas, even if they end up being wrong. Studies show that the ratio of correct and incorrect ideas in ordinary people and geniuses are almost the same. Just geniuses generate them like that a large number of that some definitely "shoot" and change the world around us. For example, in 1879, the famous inventor of the incandescent lamp, Thomas Edison, according to various sources, conducted up to 10,000 experiments before he got the very light bulb that the whole world uses.

This is the "hacker spirit" of the business approach itself: in the search for original and super-efficient solutions. It is necessary to constantly test emerging ideas, quickly implement those that have confirmed their value, avoiding the inertia of past experience, so that it does not work out as in famous saying, "a gun is bought - it is necessary to shoot." In this case, a certain scheme of "prioritization of experiments" can be used, which allows you to rank ideas and experiments in terms of significance and implement them in a strict order, albeit at a very fast pace. The authors call for such a speed of decision-making, which would provide not quantitative, but qualitative changes. As in the situation with the Helm-bearing Basilisk, a lizard that, due to its ultra-fast moving with its legs, is able to run on water. Thus, achieving a high value of running speed allows you to achieve a surprising new qualitative result.

When choosing directions for development, the authors suggest looking for ideas from the consumers themselves, which can be helped by operational surveys, as well as focusing on micronuances consumer behavior. But you need to understand that the whole “explosive growth” approach can only work effectively if the company has a really worthwhile product. In addition to the need for the consumer, this product must also be marketing-active, i.e., contain elements of promotion in itself. It should focus on a certain value that will provide not only customer satisfaction, but also a viral effect: the desire to advise and promote the product further. Communication tactics are also aimed at this: the idea of stimulating consumers to attract other customers, who, in turn, will also receive additional benefits when ordering a product, is used, which forms the so-called customer loop.

Much attention should be paid to increasing the conversion rate of marketing tools. Practice shows that this is a huge resource for increasing efficiency. Increasing conversions at each stage of the sales funnel has a much greater effect than investing resources in the initial acquisition of customers.

The book also proposes to use simplified (not in terms of quality, but in terms of time and effort expended) methods for assessing the effectiveness of work, including by fixing and analyzing successful and unsuccessful experiences.

From a marketing perspective, the explosive growth approach can be described as a new, "experimental form of marketing" that has emerged as a response to a rapidly changing environment. It pays special attention to tactics and makes adjustments to the understanding of the possibilities and goal setting of marketing. Its task can be called the provision of a scalable, accelerated iterative growth process, and as part of the development of the marketing paradigm, “explosive growth” is the next round of its evolution based on the convergence of modern marketing and management theories.

Valery Nikishkin,
Doctor of Economics Sciences, Professor of the Department of Marketing,
director of the UC for retraining and advanced training of the Higher School of Economics of the Russian University of Economics named after G. V. Plekhanov,
honorary member of the Marketers Guild

Thanks

« Explosive growth” relies on knowledge, which we have accumulated throughout our career, so I would like to thank those who gave me the opportunity to study. Firstly, to my family for being patient with me disappearing all day at work when we were testing in our startups. As well as the founders and CEOs who trusted me to experiment with their startups, and my precious early clients. Especially Mike Simon of LogMeIn and Uproar, who took the risk of taking me under his wing, and David Weden, Adam Smith, and Mat Brezin of Xobni; Drew Houston of Dropbox; Kevin Hartz of Eventbrite; John Haring of Lookout, all of whom have been gracious about my unorthodox desire to serve as a temporary leader of the growth team in the most vulnerable phases of their startups. I also want to thank David Barrett of Polaris Partners and Tony Conrad of True Ventures, vice chairs, who supported me as a founder and allowed me to learn a lot at GrowthHackers.com.

Finally, I want to thank the amazing team that helped create this book. First of all, my co-author Morgan Brown, whose dedication and hard work helped keep me on the right track from the very beginning. And our talented team, including Lisa DiMona, Emily Luz, and Talia Krohn, who helped us take Explosive Growth to the next level.

So many people to thank at the end of a job, or rather a journey like this. We worked on this book for three years, and of course it is the result of everything I have learned in my career. The first people who deserve special thanks are my family: wife Erica and children, Banks and Audrey Grace. They sacrificed so many evenings, dinners, and weekends so that I could work on the book that I am horrified to think how much time I lost with them in order for Explosive Growth to see the light of day. I hope I did not work in vain, and they know that I did it for them, with great love. I am grateful to them for this opportunity. Thank you, Erica, for your dedication, understanding and kindness. You are an amazing person and without your love and support, I would not have been able to accomplish this task. Love you, mon ange.

Thanks to Sean, my co-author, who entrusted me with the role of a partner in this project and shared his experience and knowledge with me. It is hard to overestimate the impact that working with you has had on my career, and I am forever grateful for the opportunity to learn from you. It's hard to find a good mentor, and I'm lucky in that regard.

A book cannot be written clean all at once; it is written, rewritten, crossed out, and rewritten. This is not the work of two, but of many people, and they all deserve recognition. First, Lisa, our agent, who saw a brilliant idea in the midst of a clumsy proposal and took the time to help us streamline the work plan and find the right people. Without her vision and guidance, this book would not exist. Then Emily, our editor and collaborator, who turned our uncouth language, muddled thoughts, and bird language into a light narrative that reads as it should. Talia and Tina and the entire Crown Business team who believed in this book and helped make it possible, we thank you for your trust and teamwork.

This book comes after seventeen years in digital marketing, from my first post-college job at startup SalesMountain.com to every startup and company I've been lucky enough to work for since. Choosing the next project, I was guided by the principle “the main thing for the team is optimization”, and thanks to this I had the honor to work with amazing people. There are so many I would like to thank! I "stand on the shoulders of giants" and am grateful for the time and wisdom they have given me. These are just a few of the people I would like to thank: Jack Abbott, thank you for teaching me the art of virtuosity, the ability to create value from nothing. Mark Affleck, your advice on how to build confidence and build on your strengths helps me improve every day. Laura Goldberg, your standard of excellence and your insistence on being factual has had a tremendous impact on the way I work and lead. And Brad Inman, who taught me that there is no surer path to success than to hunt for new opportunities.

And finally sincere gratitude To my parents. Without them, I would not have been able to write this book. To my mom, thank you so much for the incredible support, even though at times I just didn't deserve it. Your endless love is a real gift. To my father, who has always inspired me that I can do more than I think - I am grateful to you for the high standards that I can strive for. And thanks to my brother Gramie, to the best friend Thank you for many years of friendship and understanding. I love you all.

Morgan Brown

About authors

Sean Ellis – general manager and co-founder of GrowthHackers.com, the leading online community for growth hackers with 1.8 million users worldwide. Sean coined the term "growth hacker" in 2010 and is a producer at the Growth Hackers Conference. He is a frequent speaker for startups and Fortune 100 companies and has featured in The New York Times, Wall Street Journal, WIRED, Fast Company, Inc.com and TechCrunch.

Morgan Brown is a veteran startup marketing co-founder of GrowthHackers.com with Sean. They regularly speak at major conferences such as SXSW, TechWeek, HubSpot and more.

Introduction

When in 2008 to me (Shown) Dropbox founder Drew Houston called, I was immediately intrigued difficult situation, which turned out to be his one-year-old startup. The company offered cloud data sharing and storage services, which allowed it to build a good customer base, focusing primarily on Silicon Valley techies. Even before product development was complete, Houston launched an online video prototype with detailed information about how the service will work, thereby enlisting the support of the influential YCombinator business incubator and managing to attract a whole stream of users.

As soon as the video appeared on the news aggregator Digg and became a hit - the waiting list for the experimental version grew from 5,000 to 75,000 in the blink of an eye, it was immediately obvious that Houston had stumbled upon a brilliant idea. The next wave of users who emerged after the official launch of the product were happy with the service, but Houston never managed to move beyond the tech elite. And time was running out. The competition was brutal. One startup, Mozy, entered the market three years ago, while another, Carbonite, received $48 million in funding, as opposed to the $1.2 million in seed money that Houston managed to get. Meanwhile, heavyweights such as Microsoft and Google were also planning to roll out the cloud storage space. How can Dropbox grow its customer base with such intimidating competitors?

Houston wanted to see if I could help them expand their stable but undersized customer base. I was just about to wrap up my part-time job as VP of Marketing at Xobni, a startup run by Drew's close friend Adam Smith, when Adam suggested that we meet and discuss Dropbox's predicament. I have a reputation in Silicon Valley as someone who knows how to help companies as low-budget as Dropbox get off the ground, especially when the competition is so fierce. My first successful project was the growth in sales of online gaming pioneer Uproar, which became one of the top 10 gaming sites on the web with 5.2 million gamers during its initial public offering in December 1999, all in the face of an aggressive intrusion by Sony, Microsoft and Yahoo. in the realm of online gaming. I then took on the growth project at LogMeIn, an innovative service founded by the founder of Uproar. There I managed to turn the company into a market leader, despite the active marketing campaign of its main competitor GoToMyPC. What's the secret? I have worked with designers to use technology in ways that they don't see fit: to develop a new way to find, connect, and research customers that will enable them to understand the target market, grow their customer base, and get the most value out of money. spent on marketing.

I didn't know anything about development software; in 1994, I started my career selling advertising space in print business magazines at a time when the business was just thinking about moving online. But I did see the prospects of a web business, and when I met the founder of Uproar, I decided to invest some of my hard-earned commissions and started working on a gaming portal - and selling ads again. I soon became fully aware of the dangers of relying solely on traditional marketing methods—even newer, online versions of older methods, such as online banners, to increase sales. I finally had my epiphany when the top advertising firms I tried to partner with (such as Saatchi and Ogilvy) refused to recommend banner ads on Uproar to their clients because the site didn't have a large enough user base. With empty pockets and the risk of missing out on the sales commission I desperately needed, I was suddenly given a task by the site's founder to figure out how to get users, and the sooner the better. I immediately thought of paid advertising on web portals such as Yahoo! and this, of course, stimulated the growth of the company. But it didn't come cheap, and as Drew Houston soon discovered, the return on that ad wasn't worth the money spent. Meanwhile Sony, Yahoo! and Microsoft went on the offensive, flooding the web with gaming ads, and a young startup like Uproar didn't have the financial strength to compete head-to-head with them. I knew that I had to go the other way.

And then I came up with the idea to create an absolutely the new kind advertising that will allow website owners to offer Uproar games for free on their sites, meaning the site will be able to offer visitors interesting new features, and Uproar will have access to everyone who visits these pages. The founder gave the green light, and a few weeks later the programmers and I developed a new custom game that could be added to any website with a simple code; it was one of the first embeddable widgets. Site owners partnered with Uproar, who spent as little as $0.50 per new player brought in through their sites. The low cost gave us a free hand, and since the game turned out to be really exciting and attractive, the partners were happy to publish it on their site. In addition to bringing new players to Uproar, we experimented with an "Add a game to your site" link that made it easy for other site owners to host the game.

When we saw that the game took root, we began to experiment with different versions of the game and options for further actions to find the most effective combination. The result for Uproar was meteoric growth; free games were soon to be found on 40,000 sites, and Uproar was on the top of the gaming market, beating the heavyweights with their ostentatious marketing campaigns. Since then, many other companies have followed the same growth strategy, the most famous example being YouTube, which later achieved mind-blowing growth by developing its famous embedded video player widget that allowed YouTube videos to be shared across the web, turning online video into a real phenomenon.

This success prompted the founder of Uproar to ask me to help develop his next brainchild, LogMeIn. This original product gave users access to their files, e-mail and programs on your home or work computer from any other PC with the Internet. However, while an aggressive search engine marketing campaign led to a good initial influx of subscribers, growth soon stalled, and I realized that advertising was again too expensive and ineffective - especially when, on my advice, LogMeIn switched from a paid model. to freemium in an attempt to distinguish its services from those of its dangerous competitor GoToMyPC. At $10,000 per month on advertising, customer acquisition was no longer profitable. Despite careful analysis of the effectiveness of advertising and experiments with keywords and advertising platforms, the conversion rate was disappointingly low - and this is for a service that was not only useful, but also free. Once again, I turned to Internet technologies to find a new solution to the problem.

I decided that it was worth getting the opinion of people who signed up but did not use the service. They left an email address during registration and we sent out an email asking why they didn't use LogMeIn. It seems to be obvious, but at that time it was a radical idea. Just a few days later, subscribers' responses made the problem clear: they didn't believe the service was really free. At the time, freemium software was new and still seemed too good a deal to many people to be true. Based on this data, I assembled a team of marketers and programmers on brainstorm to discuss how to change the landing page so that users immediately understand that there is no catch, and LogMeIn does offer a completely free version of the product. We tried a lot of text and page design options, but even this did not lead to significant improvements. Then we decided to add a link to purchase the paid version of the product. And this allowed us to build the optimal combination of design, message and offer, which tripled the conversion rate. This was just the first step. After carefully analyzing the data, we found an even larger churn of users who downloaded the program but did not use it. We continued to experiment - we made changes to the installation process, registration, and so on - and eventually improved the conversion rate to such an extent that search advertising became not only profitable again, its effectiveness could be increased by 10,000%. The company did just that, and growth immediately took off.

Once again, the solution was found in just a few weeks, using a recipe that included reasonable doses of out-of-the-box thinking, cross-functional collaboration, and joint work problem solving, rapid market testing and experimentation (at little or no cost), and flexibility and the ability to take appropriate actions based on performance. These are the main ingredients that I later incorporated into the explosive growth methodology that you will read about in this book.

Of course, Uproar and LogMeIn weren't the only startups that combined programming and marketing know-how with the development of networking technologies to achieve strong growth. Hotmail, for example, was one of the first to capitalize on the web's ability to "sell itself" when it added a very simple tagline: "P.S. Get Your Free Email at Hotmail at the end of every email sent to users, with a link to the landing page where you can create an account. At the same time, PayPal has shown amazing growth potential by creating a synergy between the product and a popular web platform – in this case, eBay. When the team noticed that sellers recommended PayPal as the easiest payment method for auction winners, they developed AutoLink, a tool that automatically added the PayPal logo and a link to subscribe to all current auction listings. This tool tripled the number of PayPal auction sales on eBay and fueled tremendous growth on the platform. The LinkedIn company that barely moved from dead center in its first year of existence, reached unprecedented growth at the end of 2003, when the design team developed an original way for network users to painlessly download and invite their contacts from e-mail (from the Outlook address book), increasing network efficiency several times. And in each of these cases, growth was achieved not through traditional advertising, but through the ingenuity of programmers on an extremely meager budget.

These approaches to building, expanding, and retaining a customer base, based not on traditional marketing plans, costly go-to-markets, and monstrous advertising costs, but on designing software to embed marketing into the products themselves, have proven to be incredibly effective and surprisingly cost-effective. Most importantly, the ability of companies to collect, store, analyze large amounts of user data and track it in real time has allowed even small start-ups to experiment with new features, new messages and branding or other new marketing methods - at minimal cost - much faster and more efficiently. . The result was a radical approach to driving rapid market growth through velocity and cross-functional experimentation, for which I soon coined the name Hacking growth.

After the success of LogMeIn's growth strategy, I decided to help startups drive growth through experimentation. And when Drew Houston contacted me to discuss my collaboration with Dropbox, I was itching to put the method I had developed into practice. My first step was to get Houston to agree to a simple user survey to calculate what I called the "Required Score" (you'll read more about this in the relevant chapter of the book). I wanted to ask a simple question: "How disappointed will you be if you can no longer use Dropbox?" and give response options: “I would be extremely disappointed”, “I would be slightly disappointed”, “Not disappointed (he is not that useful)”, and “Not relevant. I don’t use the product anymore” (I phrased the question this way because I found that asking people if they are happy with the product doesn’t provide any meaningful information, and disappointment is a much more accurate measure of product loyalty.) I've done this startup survey many times before and found that companies where over 40% of respondents say they would be "extremely disappointed" if they can't use the product have very high growth potential, and below 40%, then it was much more difficult for companies to develop (due to the indifference of users). Although, when I saw the results of the survey, even I could not believe my eyes: the rating was prohibitively high, especially from users who fully explored all the functions of the product.

This indicated a huge potential for growth, and the next task was how to use it. I suggested to Houston that they experiment and find alternative ways stimulate growth – in addition to paid advertising. Houston agreed and appointed me as the company's chief marketer for a period of six months. A design engineer and MIT graduate, Houston has already successfully applied his design skills to product development; now we were going to use those skills to pitch the product to new customers—and make sure they liked it.

We then moved on to the second step in our growth process, analyzing Dropbox user data. One of the discoveries was that a third of new users came from the recommendation of current users of the product. That is, word of mouth worked, even if it did not bring fast enough growth. In other words, Houston created a product that people really liked and they praised it to their friends, but this did not allow them to fully realize the potential of the product in terms of attracting new customers. It was a prime example of the false expectation still all too common among startups: the belief that the main thing is to create an outstanding product, and customers will come.

I thought, what if Dropbox finds a way to amplify the effect of "rumors", make it easy and interesting for fans of the product to tell their friends about it? Drew and I brainstormed with Drew's harnessed intern, Albert Nye, and eventually decided to develop a referral program similar to the one that great success Implemented by PayPal. The only catch with the PayPal program was that it offered to deposit $10 into a user's account in exchange for referrals, and although the total cost was not disclosed (co-founder Elon Musk later said it was $60–70 million), Dropbox couldn't afford to "buy » users to achieve the desired level of growth . And then it dawned on us: what if we offer people something different, something valuable, like additional memory, in exchange for recommendations? At that time, Dropbox was using Amazon's cheap S3 web servers for storage, which appeared a few years ago, so it would be easy (and cheap) to increase the amount of storage. Using the PayPal program as a template, our small team quickly designed a referral program that offered users 250MB of storage in exchange for referring their friends, who would also receive an additional 250MB to their account. At the time, 250 megabytes was the equivalent of a hard drive—and it's free, so the incentive was strong.

Eric Ries, “How Dropbox Started as a Minimum Viable Product,” TechCrunch, October 19, 2011, techcrunch.com/2011/10/19/dropbox-minimal-viable-product/.

I then began working on growth initiatives at LogMeIn, a service hosted by the founder of Uproar that allowed users to access files, email, and software from any computer in the world. We were able to turn the company into a market leader despite a massive marketing campaign by our archrival GoToMyPC. What's the secret? In addition to my knowledge of marketing and sales, I collaborated with engineers to find a completely new application of technology: to develop new methods of searching, reaching and analyzing customers in order to understand what target audience we are serving in order to expand the customer base and extract the maximum value from money invested in marketing.

Steve Jurvetson and Tim Draper, “Viral Marketing: Viral Marketing Phenomenon Explained,” January 1, 1997, DFJ blog, accessed September 13, 2016, dfj.com/news/article_26.shtml.

Eric M. Jackson, The PayPal Wars: Battles with eBay, the Media, the Mafia, and the Rest of Planet Earth (WND Books: 2012), 35–40.

Josh Elman, “3 Growth Hacks: The Secrets to Driving Massive User Growth,” filmed August 2013; posted on YouTube August 2013, youtube.com/watch?v = AaMqCWOfA1o.

. “Conversation with Elon Musk,” online video clip, Khan Academy, April 17, 2013. Accessed September 13, 2016.

Explosive Growth by Sean Ellis and Morgan Brown has been a highly anticipated book by many businessmen under the pressure of challenging market conditions. Crises, increased competition, increasing consumer demands - these are the factors that make it difficult for many entrepreneurs to implement new business ventures. After all, there is an opinion that only companies with a long history and a strong brand are able to succeed in the market in such a difficult time.

But in the book Explosive Growth, the authors debunk this myth, showing by numerous examples that using certain, non-standard, and sometimes quite bold approaches, you can both revive an existing business and open a truly successful and profitable startup, which through in a short time will win huge audiences. Explosive growth, or Hacking growth- from the word "hack", in computer jargon, "an ingenious solution to a problem." In this book, "hacks" are the very approaches, using which you can change the traditional path of development and get significant results ten times faster.

It is not the strongest or the smartest who survive, but the one who adapts best to change

An example is " pop up” is a rapidly growing retail format. Named from the English "arise unexpectedly", stores pop up suddenly open on some street of the city, and just as suddenly closed, providing customers with significant discounts during their work. Typically, such stores are located in special temporary structures. The absence of the need to spend money on rent or serious construction makes the choice of this trading method very attractive, and the word of mouth method attracts many buyers to the store.

From the point of view of promotion, such an outlet is aimed at stimulating sales and can solve the same issues that traditional promotions are usually aimed at: seasonal sales, getting rid of leftovers, etc. But for the consumer, this format is also interesting because of what it brings some element of the game. It is not known in advance: exactly where the store will appear, where you can buy your favorite brands of goods at a significant discount. Such information is tracked and quickly passed by word of mouth to buyers. In many European countries, including the UK and Germany, pop-up stores have already become familiar to local buyers. In Russia, this format is still new.

In order to find ideas and develop business in the direction of "explosive growth", the authors show how it is necessary to form special teams. These divisions complement the organizational structure of the enterprise, their main task is to set up processes for systematic growth. For example, just as retail chains traditionally use “launch teams” that deal with all the issues of opening a new store, and then move on to other chain stores, so here, “growth teams” are used to constantly work on establishing processes and algorithms that ensure explosive growth. .

The key point that the authors emphasize is that when looking for effective solutions, one should not limit oneself in the number of ideas, even if they end up being wrong. Studies show that the ratio of correct and erroneous ideas in ordinary people and geniuses is almost the same. It's just that geniuses generate such a large number of them that some definitely "shoot" and change the world around us. For example, in 1879, the famous inventor of the incandescent lamp, Thomas Edison, according to various sources, conducted up to 10,000 experiments before he got the very light bulb that the whole world uses.

This is the "hacker spirit" of the business approach itself: in the search for original and super-efficient solutions. It is necessary to constantly test emerging ideas, quickly implement those that have proven their value, avoiding the inertia of past experience, so that it doesn’t work out, as in the well-known saying, “a gun is bought - you have to shoot.” In this case, a certain scheme of "prioritization of experiments" can be used, which allows you to rank ideas and experiments in terms of significance and implement them in a strict order, albeit at a very fast pace. The authors call for such a speed of decision-making, which would provide not quantitative, but qualitative changes. As in the situation with the Helm-bearing Basilisk, a lizard that, due to its ultra-fast moving with its legs, is able to run on water. Thus, achieving a high value of running speed allows you to achieve a surprising new qualitative result.

When choosing directions for development, the authors suggest looking for ideas from the consumers themselves, in which operational surveys can help, as well as focusing on the micronuances of consumer behavior. But you need to understand that the whole “explosive growth” approach can only work effectively if the company has a really worthwhile product. In addition to the need for the consumer, this product must also be marketing-active, i.e., contain elements of promotion in itself. It should focus on a certain value that will provide not only customer satisfaction, but also a viral effect: the desire to advise and promote the product further. Communication tactics are also aimed at this: the idea of stimulating consumers to attract other customers, who, in turn, will also receive additional benefits when ordering a product, is used, which forms the so-called customer loop.