Learn how to build a business. This deck covers growth principles, equations, and a process for creating a startup. Taught by Brian Balfour of Boundless. Find more great classes at http://Intelligent.ly/learn
presentsBrian Balfour@bbalfourStartup Growth:Up and to the Right
2Growth Principles To Live ByBuilding A Growth EquationRunning A Growth Process123
3Principle One:Growth Is A Methodical ProcessThere are no silver bullets, single “hacks,” ormagical solutions. Finding growth levers is amethodical process.
4Principle Two:Be A Pirate (via Dave McClure)Growth is more than just “Acquisition.” Growth isabout the entire funnel...
Credit: Dave McClure “Startup Metrics For Pirates”AARRR5RevenueReferralActivationRetentionAcquisitionThis funnel helps you understand themost important comparison ingrowth...CPA to LTV
Where Is Your Growth Advantage?6Over time, all advantages at theacquisition phase of the funnel getcompeted away....so you need to be better than yourcompetition at some other part ofthe funnel...RevenueReferralActivationRetentionAcquisition12to turn the CPA to LTV equation inyour favor.3
They competed in the same acquisition channels (Facebook adsand feed) but....Example: Zynga vs Kixeye7Zynga KixeyeRETENTION: 2 MonthsREVENUE: 2.4% ConversionRETENTION: 7 MonthsREVENUE: 6% - 9% ConversionLTV: 10X + HigherResult: Kixeye could outspend/outcompete Zynga in the same acquisitionchannel with the same techniques.
11Principle Four:There Is No Such Thing As “Free” UsersEvery user costs money whether you paid for themdirectly, or indirectly with your time. Know the costof both.
12Principle Five:There Is A Time For Traction And A TimeFor GrowthKnow what stage you are at. It dictates the goals ofyour growth process.
13Traction vs Growth?Credit: Sean Ellis - Authentic GrowthUnderstand MustHave ExperienceMacro OptimizationMicroOptimizationProduct/Market FitTurn On The FaucetFocus On RetentionStart Getting DataTurn Up The FaucetFocus On Activation/AcquisitionFaucet Full ForceAdd More ChannelsOptimize CPA/LTVVelocity = Payback Period
14Principle Six:More Tools ≠ Sophisticated GrowthGrowth does not require a magical combination oftools. There are 4 basic things that will take yousurprisingly far....
Growth does not require sophisticated toolsFour Foundational Pillars15Analytics ExcelBasic SQL Skills Basic Statistics SkillsGoogle Analytics + Mixpanel (or KISSmetrics) Your Best FriendStatistical Signiﬁcance, Correlation vs Causation,Regression, Mean/Median/Mode/DistributionAnalysisThere will always be certain analysis you can’t doin your analytics tools.
16Growth Principles To Live ByBuilding A Growth EquationRunning A Growth Process123
17Why Build A Growth Equation‣ Math Doesn’t Lie‣ Focus, Focus, Focus‣ Predictability‣ Prioritization‣ Provides A Compass For The Business
5 Steps To Building Growth Equation18DeﬁneSuccessMetricDrill DownChoose AChannelBasicEquationDeﬁneFunnel
Example: SaaS BusinessStep 1: Deﬁne A Success Metric19‣ 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
20‣ 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?
21Cost Targeting Control Input Time Output Time ScalePerfect WorldSEMSEOViralLow High High Low Low HighMedium High High Low Low HighLow Medium Low Medium High HighLow Low Medium High Medium HighSales Very High High High High High HighChannel value depends on business. For example, SEO input time could be high for one businessand 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 Equation22Success Metric = New + Retained - Loss(Deﬁne what New, Retained, Loss Means)
Example: SaaS BusinessStep 4: Deﬁne “New” Funnel Per Channel23Success Metric = New + Retained - LossNew = Visitor * Acquired * ActivatedNote: Funnel may vary on channel
Example: SaaS BusinessStep 5: Drill Down On Funnel Variables24Success Metric = New + Retained - LossNew = Visitor * Acquired * ActivatedVisitor Channel = A * B * CAcquired Channel = A * B * C
25Growth Principles To Live ByBuilding A Growth EquationRunning A Growth Process123
26Growth 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
27Build Your Growth Pipeline/BacklogList Of Growth ExperimentsExample: Growth Backlog Template
29Predict‣ 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” behindthe success/failure of each experiment.‣ Use Both Qualitative and Quantative Evidence To Back UpPredictions• Qualitative: Customer Dev Interviews, External LessonsLearned, etc• Quantitative: Previous Experiments, Surrounding Data, etc
30Prioritize‣ Focus On 1 - 2 Channels At A Time• A channel rarely works out of the gate.• The depth of knowledge on an individual channel becomesa competitive advantage over time• Most big companies have been built off the back of 1channel.‣ What Stage Are You At? Traction or Growth?• Need big results? Don’t focus on the micro (i.e. ButtonColor)‣ What Variable Are You Optimizing For?
31Test‣ What is the MVT (Minimum Viable Test)?‣ Segment/Isolate Your Test• i.e. Test a change on a portion of your keywords, not all ofthem at once• Segment large enough to get close to Statistical Signﬁcance‣ Deﬁne The Test Period/Goal• The number/date when you stop a test
33Analyze‣ 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 MicroSource: http://www.kaushik.net/avinash/excellent-analytics-tip-13-measure-macro-and-micro-conversions/
34Team 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 gainconsistency of future marketing initiatives.
36Thanks & 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