Advice from Growth Hacking Experts on Reaching Sustainable Growth

There’s no silver bullet to growth. However, there are steps that companies can take to reach sustainable growth, or the realistic attainable growth that a business could maintain without running up against financial problems.

Sustainable growth isn’t a new problem, but it’s still one of the biggest challenges anyone in the business of startups faces. For many companies, growth simply doesn’t happen overnight, or, if it happens, it doesn’t always have the right unit economics. This takes a bit of time and a lot of hard work to achieve.

Sean Ellis, Jack Mardack and Riaan Ahmed have spent their careers solving the incredibly complex problem of achieving sustainable growth for various companies. Whether it was customer growth during the early stages of Blue Apron, pivoting Eventbrite from an events website to a bonafide ticket sales network or literally defining the word Growth Hacker—they’ve seen and done it all.

I recently rounded up Sean, Jack and Riaan together for a Growth Hackers Data Coffee Hour and picked their brains on the secret to sustainable growth as they shared their growth stories.

Getting Started: Finding Product-Market Fit

Before companies can reach sustainable growth, you need to have product-market fit, or having a product that satisfies the demand of the market. Much like sustainable growth, the path to product-market fit is unique for every company.

“The thing with product-market fit is that it’s always been a fairly abstract concept. I first read about it from Marc Andreessen where he said ‘you’ll know when you have it.’ But what I’ve found is that it’s best measured with how you’re able to retain users—if they keep using your product—then it’s a good chance you have product-market fit,” said Sean Ellis. 

The thing with product-market fit is that it’s always been a fairly abstract concept. But if you’re able to retain users, then it’s a good chance you have product-market fit.
— Sean Ellis

When Sean Ellis was at LogMeIn, the path to product-market was hard out of the gate, but once they found it, the company became wildly successful and reached IPO in 2009.

“The trouble when you’re a startup is to know when to move from a small group of core users to get to the wider market majority that indicates product-market fit,” said Riaan Ahmed, speaking of his early years at Blue Apron.

Riaan joined Blue Apron in 2013 to fuel growth for the then one-year old startup. Riaan implemented a referral program with an initial set of users gifting a free box of Blue Apron to friends who would then gift to their friends, which then set off a domino effect of rapid growth.

“People loved Blue Apron enough to share it and the referral program went viral. When we saw that taking off, we were confident that we finally hit product-market fit,” said Riaan.

Much of the path to product-market fit is about measuring and iterating upon your efforts in both marketing and product. Jack Mardack has worked on product-market fit at a handful of companies and approaches the complex problem with an iterative approach that’s informed by measurement, customer development and product evolution.

Product-market fit undersells what you’re trying to do. I think a company, particularly a startup, should feel the whole weight of what you’re trying to do.
— Jack Mardack

“The thing about product-market fit is the name itself is provocative, but it undersells what you’re trying to do. I think a company, particularly a startup, should feel the whole weight of what you’re trying to do,” said Jack, currently Head of Growth at Nexmo, a Vonage Company. 

So how do you know if you have product-market fit? For Sean Ellis, he asks one simple question:

  • How would you feel if you couldn’t use the product anymore?

“I’m looking for answers that say, ‘very disappointed,’ so when I get that answer, I know that product-market fit is there and the business is able to support sustainable growth,” said Sean.

Finding Your North Star Metric

“Building off of product-market fit, which requires that your product is providing value that keeps people coming back, there’s the North Star Metric which quantifies that value,” said Sean.

The North Star Metric quantifies [product] value.
— Sean Ellis

Much has been written about vanity metrics and the pitfalls of chasing after these metrics alone, the North Star Metric (NSM) is the the exact opposite of a vanity metric.

Growth Hackers defines it as, “a single metric that best captures the core value that your product delivers to customers. Optimizing your efforts to grow this metric is key to driving sustainable growth across your full customer base.”

The NSM is about understanding the must-have user experience for your product that delivers the most value and lays down the track for activation, engagement and virality (also known as the steps to sustainable growth). Unlike tracking Daily Active Users, the NSM truly quantifies value and as the metric grows over time, that’s how companies know they’re delivering real value to their customer base.

“Take Airbnb for example, their North Star Metric is nights booked. Every time a night is booked, there’s value for both the host and guest. If someone signs up for an Airbnb account and never books anything, there’s no value. The value is booking a night,” said Sean.

The North Star Metric, At Every Phase

Companies, whether they’re Airbnb or an early-stage startup, need a North Star Metric. Why? Because it gives you focus. Just as the name suggests, following a North Star Metric provides absolute direction to both your product and company.

For Riaan, after two high-growth years at Blue Apron, he joined Thomson Reuters where he now heads up Growth and Analytics and has implemented the North Star Metric strategy.

“At Reuters, our North Star Metric is maximizing content views that we can monetize. This is a metric that measures the value our product provides to users, but also the value it contributes to the business,” said Riaan.

While Thomson Reuters may have years over other companies in terms of monetization and years of existence, as aforementioned, the North Star Metric applies to every phase of a company.

It’s important for a company to have a North Star Metric that’s relevant to their phase and the metric will become visible over time.
— Jack Mardack

“It’s important for a company to have a North Star Metric that’s relevant to their phase and the metric will become visible over time. When you don’t have product-market fit yet, your North Star Metric is proving that you’re connecting with the user,” said Jack.

Through his years of experience, Jack also advised companies to also think critically about their North Star Metric.

“It shouldn’t take you two quarters to prove it out. You should be able to see its impact in relatively short period of time,” said Jack.

The Path to Growth Always has False Starts

False starts, they’re inevitable and each story is uniquely ingrained into the DNA of reaching product-market fit and sustainable growth. Sean, Jack and Riaan have all had their share of false starts, they all lived through it, learned from those misfires and shared their stories.

Prezi for Digital Scrapbooking

“As a Growth Hacker, one of the signals I look for is pre-existing demand. When I was at Prezi, we saw that there was a bunch of demand in digital scrapbooking and that was the lightbulb moment for me. I thought with a bit of tweaking, we could make Prezi really good for that. We got people through the door, but ultimately those users were far from what would drive high-growth for our business,” said Jack.

While Jack’s scrapbooking hack, which is still live, didn’t hit it off as a revenue stream, it did (1) create an interesting cohort analysis for the company and (2) allowed the company to re-focus on targeting the right ideal customer which lead to growth.

Free Reuters Notebooks

“When I joined Reuters we were launching a new product called Reuters TV, and since I was fresh out of Blue Apron, I immediately pitched a referral program. For the program, you had to download the app and invite three friends to download it as well, and then you’d get a free Reuters branded notebook. I thought it was brilliant, and the notebooks were much cheaper than what we were paying in online acquisition costs,” said Riaan.

In the end, the data showed that people were only referring one other person, and not the en masse numbers Riaan was expecting. While the program didn’t take off, Riaan learned a few things for next time:

  • Create messaging and talking points for users, so they know what to say when referring the product
  • Create landing pages or online destinations that provide the value

Use Pricing to Fuel Growth

Earlier on in Sean’s career, he acquired KISSinsights, which turned into Qualaroo. However, Sean made the false assumption on the business’ freemium model. The assumption was this: if the company worked to strengthen the value of the free version, it would unlock business growth. So, the development team worked to rebuild feature sets for the free version, and it did the business did not take off as expected.

“I learned a valuable lesson, which was that there wasn’t that much price sensitivity to the product, even though I thought there was. So, with those learnings, we went in the other direction and started to increase the price as we continued to add value to the paid product. Over time, we increased the price 300 - 400% and that fueled a lot of growth.”

To get more in-depth information from our panel of Growth Hackers, watch our on-demand webinar and learn how to reach sustainable growth from the pros.