presents

Brian Balfour@bbalfour

Startup Growth: Up and to the Right

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Growth Principles To Live By

Building A Growth Equation

Running A Growth Process

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Principle One: Growth Is A Methodical ProcessThere are no silver bullets, single “hacks,” or magical solutions. Finding growth levers is a methodical process.

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Principle Two:Be A Pirate (via Dave McClure)Growth is more than just “Acquisition.” Growth is about the entire funnel...

Credit: Dave McClure “Startup Metrics For Pirates”AARRR

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Revenue

Referral

Activation

Retention

Acquisition

This funnel helps you understand the most important comparison in

growth...

CPA to LTV

Where Is Your Growth Advantage?

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Over time, all advantages at the acquisition phase of the funnel get competed away....

so you need to be better than your competition at some other part of the funnel...

Revenue

Referral

Activation

Retention

Acquisition 1

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to turn the CPA to LTV equation in your favor.3

They competed in the same acquisition channels (Facebook ads and feed) but....

Example: Zynga vs Kixeye

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Zynga Kixeye

RETENTION: 2 Months

REVENUE: 2.4% Conversion

RETENTION: 7 Months

REVENUE: 6% - 9% Conversion

LTV: 10X + Higher

Result: Kixeye could outspend/outcompete Zynga in the same acquisition channel with the same techniques.

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Principle Three:Sustainable Is Sexy

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Guess The Growth Curve

DAU’s

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An Example Of Unsustainable Growth

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Principle Four:There Is No Such Thing As “Free” UsersEvery user costs money whether you paid for them directly, or indirectly with your time. Know the cost of both.

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Principle Five:There Is A Time For Traction And A Time For GrowthKnow what stage you are at. It dictates the goals of your growth process.

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Traction vs Growth?Credit: Sean Ellis - Authentic Growth

Understand Must Have Experience Macro Optimization Micro

Optimization

Product/Market Fit

Turn On The FaucetFocus On RetentionStart Getting Data

Turn Up The FaucetFocus On Activation/

Acquisition

Faucet Full ForceAdd More ChannelsOptimize CPA/LTV

Velocity = Payback Period

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Principle Six:More Tools ≠ Sophisticated GrowthGrowth does not require a magical combination of tools. There are 4 basic things that will take you surprisingly far....

Growth does not require sophisticated toolsFour Foundational Pillars

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Analytics Excel

Basic SQL Skills Basic Statistics Skills

Google Analytics + Mixpanel (or KISSmetrics) Your Best Friend

Statistical Significance, Correlation vs Causation, Regression, Mean/Median/Mode/Distribution

Analysis

There will always be certain analysis you can’t do in your analytics tools.

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Growth Principles To Live By

Building A Growth Equation

Running A Growth Process

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Why Build A Growth Equation

‣ Math Doesn’t Lie‣ Focus, Focus, Focus‣ Predictability‣ Prioritization‣ Provides A Compass For The Business

5 Steps To Building Growth Equation

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Define Success Metric

Drill DownChoose A Channel

Basic Equation

Define Funnel

Example: SaaS BusinessStep 1: Define A Success Metric

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‣ Success Metric = X + Y + Z• It’s the variable that you are solving for

‣ What Drives Revenue For The Business?‣ Always Include A Time Period

• i.e. Not just Active Users, but DAU’s or WAU’s

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‣ What are you optimizing for?• Learning? Volume? Cost?

‣ What are you constraints?• Time? Money? Legal?

Step 2: Your Channel HypothesisHow do you choose the right channel?

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Cost Targeting Control Input Time Output Time Scale

Perfect World

SEM

SEO

Viral

Low High High Low Low High

Medium High High Low Low High

Low Medium Low Medium High High

Low Low Medium High Medium High

Sales Very High High High High High High

Channel value depends on business. For example, SEO input time could be high for one business and low for another depending on how competitive the terms are.

Step 2: Your Channel HypothesisBuild A Channel Matrix For Your Business

Example: SaaS BusinessStep 3: Define The Basic Equation

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Success Metric = New + Retained - Loss(Define what New, Retained, Loss Means)

Example: SaaS BusinessStep 4: Define “New” Funnel Per Channel

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Success Metric = New + Retained - LossNew = Visitor * Acquired * Activated

Note: Funnel may vary on channel

Example: SaaS BusinessStep 5: Drill Down On Funnel Variables

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Success Metric = New + Retained - LossNew = Visitor * Acquired * Activated

Visitor Channel = A * B * C

Acquired Channel = A * B * C

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Growth Principles To Live By

Building A Growth Equation

Running A Growth Process

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Growth Process Goals

‣ Establish A Rhythm/Cadence Of Testing & Improvement‣ Forces You To Learn About Your Customer Over Time‣ Tests Become More Predictable Over Time‣ Establishes Accountability Among Team (No HiPPO)‣ Provides Focus Among Team

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Build Your Growth Pipeline/BacklogList Of Growth Experiments

Example: Growth Backlog Template

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Predict

Prioritize

Test

Measure

Analyze

Review

Growth Pipeline Process

Growth Pipeline

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Predict

‣ In the beginning, you will be dead wrong. This is good.• It means you don’t really understand your customer/

product.

• Over time you will improve. Understand the “why” behind the success/failure of each experiment.

‣ Use Both Qualitative and Quantative Evidence To Back Up Predictions

• Qualitative: Customer Dev Interviews, External Lessons Learned, etc

• Quantitative: Previous Experiments, Surrounding Data, etc

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Prioritize

‣ Focus On 1 - 2 Channels At A Time• A channel rarely works out of the gate.

• The depth of knowledge on an individual channel becomes a competitive advantage over time

• Most big companies have been built off the back of 1 channel.

‣ What Stage Are You At? Traction or Growth?• Need big results? Don’t focus on the micro (i.e. Button

Color)

‣ What Variable Are You Optimizing For?

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Test

‣ What is the MVT (Minimum Viable Test)?‣ Segment/Isolate Your Test

• i.e. Test a change on a portion of your keywords, not all of them at once

• Segment large enough to get close to Statistical Signficance

‣ Define The Test Period/Goal• The number/date when you stop a test

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Measure

‣ Self Explanatory

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Analyze

‣ Owner Should Analyze Results ‣ Understand Why They Were Right/Wrong‣ Averages Can Be Misleading

• Use distribution analysis to get rid of outliers

‣ Understand The Macro and Micro

Source: http://www.kaushik.net/avinash/excellent-analytics-tip-13-measure-macro-and-micro-conversions/

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Team Review

‣ Transparency Is Key‣ Why Was The Prediction Right/Wrong?

• Drill Down

‣ What Were The Lessons Learned?• Feed these lessons back into the experiment

‣ Are There Any Repeatable Best Practices?• Extract the repeatable best practices to inform and gain

consistency of future marketing initiatives.

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Predict

Prioritize

Test

Measure

Analyze

Review

Repeat Process

Growth Pipeline

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Thanks & Resources

‣ Me - http://brianbalfour.com and @bbalfour‣ Growth Masters: Andy Johns, Andrew Chen, Sean Ellis,

Mike Greenfield, Gustaf Alstromer, Chamath Palihapitiya, Noah Kagan, Mark Roberge

‣ Stats/Analytics: Avinash Kaushik, Udacity/Coursera/Boundless

‣ Quora/Twitter

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