Fireside Chat, Interview, Panel
Advice on Organizing and Running Growth Teams from Dan Hockenmaier and Gustaf Alströmer
Y CombinatorDan Hockenmaier, Gustaf Alströmer, Craig Cannon, Toni, Michael Savage, Justin LaRosa, Mark Mandelbaum, Francesc Campoy, Dan Galpin, Dan Gallup
- Early-stage teams are frequently advised against pursuing ideas with diminishing returns, and attempts at heavyweight acquisition or paid marketing prior to establishing stable retention cohorts may lead to problematic burn rates and early cohort failure.
- Companies are expected to prioritize activation rates, as a 5% increase there is predicted to be significantly more powerful than a 20% increase in acquisition; conversely, ignoring primary distribution channels to add SEO or virality years later is viewed as an ineffective strategy.
- To achieve $100 million in revenue, 70-80% of new customer acquisition typically originates from a single dominant channel, which necessitates a focus on core product work to enable other channels before paid marketing can be sustained.
- Startups are predicted to achieve better retention by focusing on early proxies such as first session or first week metrics, while long-term pricing experiments require testing for a sufficient duration with 5% of the original test group retained to validate behavioral changes.
- Most business decisions, including pricing, features, and packaging, are expected to be roll-backable type two decisions, allowing teams to optimize for speed and test disparate hypotheses rather than optimizing strictly for speed at the cost of learning.
- Paid marketing is anticipated to have shifted from a free channel to a dominant, equally competitive driver, creating a compounding negative effect of higher costs and lower retention for companies like Blue Apron that relied primarily on paid acquisition.
- Entering new markets often involves spending into negative ROI initially, requiring companies to test the shape of that curve; in emerging markets, this may present an arbitrage moment due to a lack of premium services and brands on platforms, whereas regions like Russia, Korea, or China present constraints due to the unavailability of Google search.
- General viral growth in open networks is expected to become more difficult due to a lack of platform shifts, while incentivized referrals are predicted to function more like paid marketing, requiring payback analysis and ROI-positive levers.
- Word of mouth accounted for over 50% of new guests and over 70% of new hosts for Airbnb, while mobile adoption and international language translation represented significant growth steps for Facebook.
- Internal A/B testing infrastructure is generally not recommended to be built immediately unless the team can commit an entire engineer to perpetual maintenance; instead, a thoughtful approach with fewer hypotheses (e.g., 4-6 from a backlog of 80-100) is often superior.
- Companies can often go longer without a VP of Marketing due to a scarcity of experienced team builders, though disjointed consumer experiences may result if multiple teams own metrics like retention without joint accountability.
- B2B companies with customer lists in the hundreds of thousands or smaller are advised to target that list across all channels, while enterprise companies require traditional sales for closing and SMB companies often utilize automated sign-up flows.
- Growth tactics should be built in-house as quickly as possible to capture rich customer feedback missed by consultants, with consultancy engagements typically lasting around three months to help companies understand these dynamics.
- Monetization models where the user is the direct customer produce different outputs than advertiser-optimized models, and products such as meditation or fitness apps are expected to employ growth tactics to drive personal improvement.
- Products must be built on an instrumented framework before experimentation can occur, and adopting principles against dark patterns is expected to place companies in a safer position for making long-term decisions.
- Legacy growth hacking mentalities from platforms like Facebook and Twitter are problematic for businesses not yet at extreme product-market fit, and traditional growth efforts should be deferred until product-market fit is established.
- A product's unique nature can allow it to compete on different distribution vectors that competitors cannot replicate, whereas bad products will fail to grow and good products will naturally slow down without a dedicated growth team.