Dan Martell at GROWtalks: Growth Hacking is Not Marketing

Toronto’s DMZ’s George Vari Engineering and Computing Centre played host to the GROWtalks conference yesterday.

Angel investor and Clarity founder Dan Martell dove into the art and science of growth hacking (a topic on many minds these days). He shared his own product-based method of growth hacking. It starts with measuring two basic things:

  1. Revenue.
  2. Retention.

His point is that you can pound the pavement and ask for feedback all you want but, at the end of the day, it’s not in people’s best interests to be honest. That is to say, even if your idea doesn’t resonate with friends or people in your target market, they will still tell you otherwise because they don’t want to sound discouraging or mean.

Instead of opinions and words, use revenue to measure honesty—if people are willing to fork over some money for your solution, then that speaks volumes.

Martell mentions in another interview that his initial gauge for Clarity was to go on Skype and ask if a potential customer was interested in getting advice from an expert. He then asked the expert if he’d be willing to get paid for an hour of his time, and then got the customer to send money to his PayPal account before he made the introduction.

In case an app does not have a way to monetize yet (like Instagram didn’t), then measure retention: how often are your users coming back, week by week? In six to seven weeks, retention often drops to zero for many entrepreneurs.

In order to make your product stickier, start by measuring your core product value. What is that fundamental thing that compels users to come back? In Instagram’s case, it is the fastest and easiest way to post onto multiple social networks.

It’s important to differentiate between the core product feature and retention features: losing the edge on a core product feature could spell doom for your product.

Martell points out that there are three types of users:

  • Curious users: the ones that just want to shotgun their username and will never come back to your product.
  • Casual users: the ones that come in and somewhat understand the problem you’re trying to solve, and will set up a profile and are willing to come back to your service when reminded or prompted.
  • Core users: the ones that experienced the core product value (the aha moment).

Watch what your core users do, he says. This can be done, for example, through tracking their activities. Log real-time and track the metadata (i.e. characters they put into fields) to see how they’re using certain features.

Is there a pattern that they all went through to become this engaged? Is there a commonality that all these core users share? For example, Twitter understands that in order to get a user engaged, they need to be following 10 users in the first two days. Getting the new user to contribute and create content is almost secondary. This way, users won’t (and can’t) lie about their favourite features. They are not telling you what they want, they are showing you.

Additionally, Martell shared two growth tactics:

  • Leverage Other People’s Networks (OPN): similar to what Airbnb did with Craigslist, PayPal to eBay, and YouTube to MySpace, give users a reason to share something with their current social networks.
  • Shareable features: You need to give value to both the invite and the invitee: for example, PayPal gave cash to both parties when a user signed up after being referred by another user.

Martell suggests Lean Analytics and The Lean Startup as essential reading.  

The methodical advice is succinct—measure, test, and try. Build tracking into your product, and focus on revenue and retention. Martell ended with encouraging words for entrepreneurs and business leaders:

“I want to thank you guys for getting up every day. As entrepreneurs, you forget how special you are,” he told the GROWtalks audience. “I don’t mean that flippantly. Every day you get up to make the world a better place for everybody else to enjoy, from a service company to a core product. You are solving a problem and making the world a better place. The only thing I would ask of you: make no small plans.”