Ever wondered how tech giants like Dropbox and LogMeIn skyrocketed to industry dominance?
Look no further, as the mastermind behind their growth strategies, the acclaimed author of "Hacking Growth," - Sean Ellis, joined us to unpack the secrets of explosive startup success.
From the art of nailing product-market fit to the finesse required in execution, our guest delves into the captivating stories behind turning startups into unicorns. He shares the wisdom gleaned from guiding countless companies through market disruptions and the evolution of marketing strategies via meticulous data analysis.
Our guest's textured narrative reveals the indispensable role of problem-solving and strategic marketing, including how a sophisticated tracking system built by Eastern European developers was a game-changer for optimizing marketing ROI. The discussion is teeming with tales of triumph, adaptation, and the pivotal role that innovative approaches to user acquisition and the freemium model have played in redefining business growth.
Wrapping up the episode, we explore the power of cross-functional team collaboration and data-driven experimentation that has guided companies to achieve billion-dollar revenues at breakneck speeds. Our guest emphasizes fostering a culture of ownership and aligning teams towards shared growth objectives.
Whether you're a budding entrepreneur, a marketing maven, or anyone enthralled by the relentless pursuit of success, this episode is packed with invaluable insights that will inspire you to harness the full potential of growth hacking strategies.
Ever wondered how tech giants like Dropbox and LogMeIn skyrocketed to industry dominance?
Look no further, as the mastermind behind their growth strategies, the acclaimed author of "Hacking Growth," - Sean Ellis, joined us to unpack the secrets of explosive startup success.
From the art of nailing product-market fit to the finesse required in execution, our guest delves into the captivating stories behind turning startups into unicorns. He shares the wisdom gleaned from guiding countless companies through market disruptions and the evolution of marketing strategies via meticulous data analysis.
Our guest's textured narrative reveals the indispensable role of problem-solving and strategic marketing, including how a sophisticated tracking system built by Eastern European developers was a game-changer for optimizing marketing ROI. The discussion is teeming with tales of triumph, adaptation, and the pivotal role that innovative approaches to user acquisition and the freemium model have played in redefining business growth.
Wrapping up the episode, we explore the power of cross-functional team collaboration and data-driven experimentation that has guided companies to achieve billion-dollar revenues at breakneck speeds. Our guest emphasizes fostering a culture of ownership and aligning teams towards shared growth objectives.
Whether you're a budding entrepreneur, a marketing maven, or anyone enthralled by the relentless pursuit of success, this episode is packed with invaluable insights that will inspire you to harness the full potential of growth hacking strategies.
Well, you know what? Just show it, and you'll see something Cheers Coming through.
Speaker 2:Yeah, of course.
Speaker 1:I know that you have a jam-pack schedule and, as always, you know very appreciative of the time you've taken to come and meet with us at our studio, so maybe just to break the arse a bit before we go down the journey that you've had that's led up to this point, and the amazing work that you do. Just a quick high-level introduction of yourself, and I'll then start asking some probing questions around that.
Speaker 2:Yeah. So the probably the biggest highlights that I'm most well known for these days is my book, my book Hacking Growth. We have nearly a million readers now, thanks to China that has 600,000 of those. China yeah, china definitely adopted the book a lot, but it's in 16 languages and so when you combine it all together, we're not quite at a million, but getting pretty close, and it really laid out the playbook for growth.
Speaker 2:Hacking, which I coined as a term in 2010, and at that time, I had just come off the back of helping to bring Dropbox to market. So Dropbox, when I joined, was eight people. I was the first non-engineer in the business and, yeah, we just we kicked off some really rapid growth. They were in coming out of private beta the week that I joined and, with the things that we did in those first six months, I put Dropbox on a path to reach $1 billion in recurring revenue faster than any SaaS company before it, and Dropbox was actually my third unicorn I worked on, so I had the first two.
Speaker 2:We started in Eastern Europe, interestingly, and in Budapest, hungary, and so first one was a game company called Uproar, and I led marketing from customer zero to IPO, and then the second one was LogMeIn, which we also started in Budapest. Both companies eventually moved their headquarters to the US, but we started in Budapest. Logmein sold for $4.3 billion in 2020, but I led marketing through the NASDAQ filing. So that was in 2007 and so, yeah, six months after I left LogMeIn, I went to Dropbox, also helped to bring Eventbrite to market, and another company called LookOut, which is in the mobile security space, which has also reached the billion dollar valuation, so got really fortunate. I think the big thing with each of those companies that they had the right products in the right market, which in the startup world we call product market fit, and so that defined the potential and then we were. Ultimately, it was all about execution and putting them on a path to really fast growth, and that's what I like to do. I still focus on it today. I go in and do these short-term interim VP growth roles.
Speaker 2:Just finished with a company called Bounce that's based in Lisbon my private companies is hard to compare, but I would bet that they're among the top five fastest growing companies at their revenue level and it's an app for luggage storage. So really simple concept. But basically, all these people staying in Airbnb's if they arrive five hours before they can check in, they're stuck with their big bags sitting in a Starbucks waiting for it to open, and now they can generally find in any major city at least in Europe for sure, any major city. Within five minutes walk of wherever they are, there's probably a place they can store their bag for five dollars per day, and so that was a super exciting business. I think one of the things that was fun in particular of that business was it was the first time I worked on something that had a physical component to the business. So with 10,000 partners, there's just a lot of the how do you manage and optimize the physical side of the business? Amazing.
Speaker 1:Wow, so much there. Not many people can talk to having the kind of experience and working on so many unicorns, and I think you've been extremely humble. I don't believe that they just had product market fits. I suspect you played an integral role in helping to establish that and, as someone who has been a founder and in my current role I work with founders every day, trying to help establish the basics, which is, what is the problem you're solving and who are the stakeholders linked to that and what are their task, pains, gains that they're experiencing, and what is your existing product.
Speaker 1:How do you currently map against the PMF for those stakeholders? And then, what can you do to create a stronger product market fit? I've done that hundreds of times in the last two years with startups and that's probably the most important thing. And then it doesn't stop there, right, because you can have product market fit, but it doesn't mean that your product is going to scale. So there's so many dimensions to this. So I think you've been extremely humble when you said fortunate, serve worked at these companies that had that, because I want to scratch a bit more at the surface there.
Speaker 2:I actually do think there's a lot of luck involved with that and I'm happy to dig a little deeper into that.
Speaker 1:Yeah, please do share, because you know people often refer to successful people as lucky and normally there's quite a long runway and build up towards them starting to convert those successes. So I'm keen to take a step back prior to you working with these unicorns. Just paint a picture for me. What did you study? Where did you come from? How did you enter into this realm of startups?
Speaker 2:Yeah. So I took kind of a non-traditional path, as a lot of people do in the startup world. I studied international relations at UC Davis in California and I was kind of just terrified of a normal life when I graduated from school. I was like I get the two car garage and have two and a half kids and get a good, stable job and do that until I die, like that just might as well just shortcut to the end.
Speaker 2:now that sounds off Quite depressing, yeah, and so I, much to my parents' disappointment at the time, just said I'm moving to Eastern Europe as soon as I graduated and I'll figure it out. I'll get a job when I get there. So I had nothing lined up. It was this was 1994, and so really the internet hadn't kind of kicked in yet.
Speaker 1:Why in?
Speaker 2:Europe. So I had studied, I done a year abroad in Budapest, hungary. So, and then even why I picked Budapest Hungary? So I started university in 1989 and, with an international relations major, the most interesting place in the world was Eastern Europe and all that economic transition that was happening and political transition.
Speaker 1:But unstable at that period.
Speaker 2:Yeah and so, and then I had actually even my parents are pretty adventurous, and so we had even gone into Eastern Europe when it was still communist. So we tried to get into the Czechoslovakia, got turned away at the border, but were able to get into Hungary, and the way I traveled with my parents was they would drop me off at the youth hostel, give me some money and say we'll see you in a week. So as a teenager, I spent a week in Budapest, hungary, being the first American most of them had met and just really liked it, had a blast. And so when I was at university and trying to decide if I was taking Italian and Spanish at the time, and trying to decide will I study in Spain or Italy, I walked into the education abroad program and they had a brochure that said we offer a program in Hungary as well, and so it's like wow, and they had just started offering it, and so I all three then came on my radar.
Speaker 2:I took a quarter off of school and just traveled around Europe, did the, did the Euro rail pass and kind of found myself as people do, and. But I visited each of the universities and talked to the students, and the ones in Hungary were having a blast and really, you know, it was not just fun but really rewarding for them to be a part of that whole transition that was happening, and so I decided to go to Hungary. And then, yeah, after I graduated I went back, finished my last year and then decided I wanted to go back and start my career in Hungary. But you know, my dad, who had spent a lot of time as in international business, basically said it doesn't work that way. You, you go work for a big corporation, you get a few years in, they send you abroad. You know, of course your parents always want you to take the safe route and so, but I the classic startup found a kind of kind of mentality yeah, it's just like now I'm just going, I'll figure it out.
Speaker 2:And so it was hard, like it wasn't, wasn't something like I just landed, it was was definitely, I find, like my biggest points of growth in my life and we can, we can go in and do it and across some of the sections is, you know, when I step the furthest out of my comfort zone is usually when I get my biggest wins in life. And so stepping out of the comfort zone of going to Eastern Europe you know, not having a job lined up, not having living permission, not having the internet and FaceTime and all the things that make it really easy to live abroad today and just just had to drop in myself, there was. It was definitely a struggle to find that first job and pretty depressing at times, but landed a job selling advertising for business journals and was terrible at it, didn't sell anything for the first three months and I'm really stubborn. So I decided that I I was going to get good at it and then I was going to quit, because I don't want to quit as a failure. I'm a quit when I'm good at it. And so read every sales book I could get my hands on, took Hungarian lessons where I was studying sales scripts. So some of the some of the sales were in English, but some were in Hungarian, and and then started to be able to sell and and so, within within a year, I became the top salesperson across not just that business journal, but we had three, in Central Europe and Eastern Europe. And and so, yeah, when I my step into the internet, I how all the commissions I had earned.
Speaker 2:I invested into an internet company in 1995. So really, really good time to make your first investment into something's. It's like buying, you know, bitcoin and in its first year or something, and so. But in order to make that, I had the commissions that were owed to me, but I hadn't gotten that money yet and the window was really close to closing. And so my friend this is my friend's company and he said you were talking to VCs once we close on that, we can't take any more private investment in, and so I wasn't gonna have my hands on the cash.
Speaker 2:So I actually borrowed at 8% to make the investment, knowing that I had these, these commissions coming. But convince my father to lend me the money to make the investment and convince him to to invest alongside me, because the minimum investment was $25,000, and so I took about 20,000 of it. He took about the you know 5,000 of it and and he continued to invest over time into it, but his, his share, over time grew to about $10 million in gains, and so he was long afterwards saying how, how he had encouraged me to go abroad and absolutely but yeah, so the you know, getting getting in at the right time was a good thing, and so I joined that company, then full time six months later, essentially to sell advertising, the same thing that I was doing.
Speaker 2:But what was their product?
Speaker 1:it was games, so leveraging the internet yeah.
Speaker 2:So the idea was they were gonna bring kind of a game show format like we're used to you know, television game show format but they were gonna bring it to the internet. Everyone would be able to play these games. They would register with their correct information because they have a chance to win cash prizes, so they don't want to put fake information, and then we would use that to target advertising. All sounded great. I invested, I went to New York City, started calling on the world's biggest advertising agencies and they gave me the feedback that we have no interest in reaching 362 people, which was how many people we had playing the games or whatever it was.
Speaker 1:I mean, but like, let's just pause because for those that are listening, the internet in 1995 was nowhere.
Speaker 2:Right, I mean that's like-. So it was 1996 by the time I joined full time, but still very, very small yeah.
Speaker 1:Anything pre-2000 is so kind of early in the game. Yeah, okay, I mean I would be interested to know what the status of 100 people actually, even on the internet, at that stage.
Speaker 2:Right.
Speaker 1:The dot com bubble was what? 2000? Yeah, 2000.
Speaker 2:And so you know, eventually, yeah, a lot of companies emerged, but it was, you know, I was not, I was not jumping on the hype train when I invested in this company.
Speaker 2:It was much more of this makes sense, like I remember. The thing in particular that jumped out at me was the idea of very personalized ads. They even even that we kind of not to that level now, but like, hey, sean, wouldn't you like to drive a white Lexus down the streets of Newport Beach, California or whatever, like being able to kind of take this information and customize an ad experience like just the potential of that when I was selling just you know, print advertising that's totally not personalized or targeted was super exciting to me. But this idea of my yeah, I'm in New York City, I cut my salary in half to go work for this company, where in Budapest the salary that I was making was good. I cut it in half to go to New York City and then the commissions were going to make up for it, but clearly I wasn't going to sell anything in New York with that few users. So, yeah, so I told the CEO I was like we're being.
Speaker 2:I remember I somehow I'd heard a radio something, a radio interview maybe or something and someone had talked about too many internet companies are being complacent about trying to build audience. And so I kind of used that, those words, without quoting the radio. And I just said I think we're just being too complacent about trying to build audience here and you know, none of these guys care about a super immersive advertising opportunity if we don't have users. And I remember turning to my colleague who had come over to help me. You know I got there and then a month later he had gotten there to help me try to build up the US side of things. And I remember covering the speaker going I've never heard someone use the F word so many times in one sentence. He was just like stop making excuses, just get out there and sell. And I mean anyone in a product market fit situation who's been in sales probably has heard the same sort of thing.
Speaker 2:And I, you know, like being being kind, of like get to the root of the problem, which is probably a theme across every success I've had get to the root of why we can't do the things we want to do. I was like we need to focus on building audience. And he, you know he's just like stop making excuses, go out and sell. But then the next day he contacted me and he's like you know, I thought a lot about what you said and I agree we do need someone to focus on building audience, and I think you should temporarily take the role, and my thought was I'll, I'll get it on a, on a, on a better trajectory of users, and then I'll go back and sell advertising and actually be able to make a living.
Speaker 2:But turned out like, over time, that I was pretty good on the audience building side. So that company I can talk about the how, but to cut to the, to the end real quick, it became a top, one of the top 10 internet companies in the world in terms of total usage time. So that's, that's the. That's the metric that's going to matter from an advertising perspective the more time the you know number of unique people times the amount of time they spend on the site is going to indicate how many advertisements they're seeing. And so, yeah, we ultimately listed the company on NASDAQ and, you know, went over a billion dollar valuation, and so my investment did well, but, more importantly, like, I got the skill set that I'm still using today, nice.
Speaker 1:And I think on that, on that point, what I would like to do is, as we jump from each of these experiences that you've had, I'd like to extract a pull of wisdom, because, I'm pretty confident. That's what's led to this book, which we'll talk to right at the end. Sure, and I'll follow that, that arc. So, to sum up, the biggest learning that you took from this experience, which was your first real success at scale. How would you sum it up?
Speaker 2:based on what you just said, I'd say, just embracing the brutal facts, be it, you know, having that hard conversation with a founder and CEO who did not want to hear what was what was holding back our ability to be successful. And you know, once you there's a quote that I love and it's a catering. You know a hundred-year-old quote from early innovation guy at General Motors, and he says a problem well-stated is a problem half solved. And so once I was able to identify, you know, a tell were very you know, there was kind of the joke at that time Too many internet companies are sort of build it and they will come based on the movie that was popular in those days. And so, you know, they don't just come because you build something cool.
Speaker 2:And so, yeah, having that conversation shine a spotlight on what we needed to do, what we needed to do address. And then and then I was given the opportunity to attack that problem and I worked with the CEO for another 10 years, across both uproar and log me in, and consistently I would bring to him the thing that we needed to focus on and he would say, you know, take him a little bit, but he would say, wow, we need to focus all of our resources, or significant resources on figuring out that thing and it would you know he'd give me the support to really boldly go after that problem. And as soon as we solve that problem, that tended to be the thing that unlocked greatness in the business.
Speaker 1:And something that I've, in my short career, picked up is that the problems, the mistakes are the same, the learning curves are the same. Right, if I look at that specific story, there's an emerging technology, that is the internet.
Speaker 1:It's changing the game for how you engage, audience, personalize, engagement. It's about understanding how that landscape is changing, understanding the problem statement, understanding the stakeholders that are linked to that and then, most importantly, making sure you have something that you can exchange value for. Right, Because so often it's just go sell it, sell, sell, sell and if you're not selling the right thing, you can't exchange the value because the customer doesn't want to pay for what you perceive to be very value, which means more than likely, you don't have product market fit or you're pitching to the wrong persona in this journey. So that's quite interesting.
Speaker 2:Yeah. I think there's another important lesson in there, though, is that startups have such finite resources that if you say we've got to solve these 42 things, you're going to spread those resources so thin that none of them are going to be solved very well. So you've got to figure out the one, or maybe two, or at most three things that matter the most right now and really concentrate not just financial resources but brainpower, and focus on those things, and if you can sequence those things in the right order, that's critical for creating a successful company.
Speaker 1:Sequence those things in the right order, because that's what it is. You're opening with any business or idea, you're opening up this long line of tasks, and how do you prioritize what to focus on with finite resources? I think that's a great point. Okay, so you have this initial success. I mean, you probably could have retired and called it a day.
Speaker 2:Not quite. I mean, we did get the dot com bubble bursting so we wrote it up. Fortunately, we actually did a public listing only a year after I started there about. So we did a listing on the Vienna Stock Exchange and then, because it was so hard raising venture capital in Eastern Europe, that being a publicly listed company actually made it easier for us to raise money and then so. But that also meant that I had liquidity from my initial investment. So over the years I was able to take money off the table and buy a house and you have some of that stability.
Speaker 2:And we didn't do our NASDAQ listing until March of 2000 and March of 2000. Literally, we did it on the day that the NASDAQ peaked, and if we had done it a day later the company probably would have failed. But we raised $200 million on the day that the NASDAQ essentially crashed. So we came out that morning and then you see everything turn red and that was, I believe, March 20th of 2000. And then the dot com bust happened from that point on, and so we didn't have a chance to waste any money. Fortunately we were really efficient in how we spent. But I think there's a couple of really interesting things that sit in between the initial challenge and getting that initial ability to grow the business and that success of that NASDAQ listing.
Speaker 1:If I can hit on a couple of those, Please do, because I've had the benefit to work with one company that went from 30 to 150, 150 to 300 staff globally by no means the size of the companies you've worked for. But what was interesting for me is to see, once you raise the $1.2 billion and you push it into the business, the kind of chaos that can emerge if it's not done in a structured fashion. So I would love to learn from you and hear what your experience has been.
Speaker 2:So when I was given the role to drive growth in that business, that was, I still had never taken a marketing class. I'm a total fish out of water being given a task, but I was very motivated. I had invested every dollar I have into the business, which was kind of a good place to be. And surprisingly, my sales background turned out to be a pretty good background because in sales you think in funnels. So you think of I know, in order to hit my three sales a week I need to have 10 meetings a week face-to-face meetings and to get 10 face-to-face meetings I have to have 100 phone calls, and so you're used to thinking in funnels where most of the other people who were given the marketing task for other people trying to do the same thing as us so other game sites they had a more traditional marketing background where it was much more around. You know I'm going to build awareness and hopefully once there's enough awareness out there, convert that awareness.
Speaker 2:But they weren't really used to working with data. So one of my big advantages I said I was an international relations major, but my really strong subject, my focus area, was world trade and my really strong subject was economics, and so I loved my economics classes. I actually started pre-med and realized that chemistry was not the way my brain was wired. I struggled in those classes. So I just bring that up as the contrast that I'm not good at everything I do, but economics was one of the things that I was really good at. And so when I came into this role there's a principle in economics of comparative advantage and which role is this now? My new leadership of the efforts to aggregate audience at uproar. So we would eventually call it, you know, a head of marketing role.
Speaker 2:But it was like you're the guy who's going to think about how do we start growing audience on here, and so I, you know, first thing I did was like, okay, yeah, I'm going to go spend some money on advertising. I've been selling advertising. That's the way my brain's wired. And so I, when I went to the, yeah, there was kind of some big search engines starting to emerge at that time. By big I just mean like they were the hubs of where traffic went. What are you all waiting for? Yeah, I was like excite, lycos, some names that have all kind of disappeared, but Yahoo. Yahoo was in that mix. They were the one that survived.
Speaker 1:Google wasn't around yet 1998, 1999.
Speaker 2:Yeah, this was you know, 1996.
Speaker 1:1996, at this point, Okay got it.
Speaker 2:And so I said, okay, I'm going to go to one of these search engines. They said the minimum buy you can do is $20,000. I was like, oh, that's a lot. But let me see, I got permission to do it. I spent the $20,000 and our audience doubled, and so my CEO was super excited. But I'm looking at it going. You know how much are those people worth that we just got? Will we ever get that 20,000 back, you know? So now we have an extra 350 people playing games for free. Will we show them enough? Avatars like this doesn't seem like it's gonna model out to profitable customer acquisition that that feels more important. And then I'm competing against. You know, yahoo was actually, as I said, growing already. They had games.
Speaker 2:There was some other Silicon Valley companies that had attracted a lot more investments than us, and so I'm thinking how we're in Eastern Europe? We barely have any money. How do I keep up with them from a spending perspective? And so I thought, in this Idea of comparative advantage, what? What are our strengths relative to their strengths?
Speaker 2:We have really talented developers in Eastern Europe that cost a fraction at that time it was like 20 cents on the dollar for those developers. So how do I leverage that cost advantage In? You know we already had that advantage on the product development side, but how do I leverage that into the marketing side? And so I thought I'm gonna I'm gonna get the very best tracking possible. And so I gave these developers the list of questions I wished I could answer, and I knew that they could track it if, if I pushed hard enough, and so Ultimately I was able to get down to the point where I could actually answer that question how many for that $20,000? How many advertisements Was where people gonna see on our end? What's our average revenue per advertisement that people see? And I could see I was really not going to Effectively be spending money that way.
Speaker 1:So so, on surface value, if I can just try and, yeah, crystallize this surface value, you got approval to spend the $20,000 with Yahoo. On face value. It seemed like a win because you gained Quite a result. You saw a result which, on on face value, seemed positive. Yeah, but when you drilled into the data, we didn't have data yet. Okay, so you, you created data. Yeah, and when you analyze that data, you could see that that wasn't actually converting into tangible revenue.
Speaker 2:Yeah, so this was this was 1996, where there was there was Most the other marketers were weren't even focused on how much it costs them to get a click to their website, let alone what those people did on the website, how long they spent, and so I wanted to be able to have the data that could track literally down to a lifetime value of the customers and and, fortunately, was able to convince the engineers to take some of that product development time and put it into a tracking system. That gave us a lot more visibility. So as soon as I could track, then I could start testing and seeing what gave me the best return on investment, and I suppose that principle applies to anyone today right.
Speaker 1:Totally. You're gonna spend your marketing budgets and Making sure that you have data. Yeah to justify the spend on Customer lifetime value and, right or not, you actually converting. So what was your pivot at that point? And then I want to jump to the next company, conscious of time.
Speaker 2:Yeah, I just have two pieces on this one.
Speaker 2:They're really important and I can. I can sum them up in a minute. So the first was I suddenly said it's crazy for me to spend ten, twenty thousand dollars to figure out if something works. So I said I'm not spending money anywhere where I don't start with a five hundred dollars spend. And if they said they couldn't do that, I said I'm not spending with you until I found the ones who could. So I Started to only test at five hundred. If I got the return then I would do more. I also started testing lots of different advertisements. Some perform better than others. I started testing different landing pages. Some perform better than others. So that was one big thing that got our, our acquisition cost way below our competitors.
Speaker 2:But then we had a really big breakthrough, which was just rethinking the funnel. I thought why am I buying advertisements and losing people every step of the way? And and then by the time I've, you know, got a hundred people interested in playing. One of them actually plays a game. You know, a hundred clicks on an ad, one eventually plays a game. Why don't I flip that around and start to get the games on other people's websites and Use the games to drive conversions to other games. So we we really I'd never seen anyone do this before today. It's kind of how YouTube grows. But so we had a you to YouTube sized game that people could Copy a little piece of code and embed it on their own website. And then there was a button on it that said add this game to your website. So it spread to 40,000 websites and started the gameplay experience.
Speaker 2:And then, essentially, it became really easy for people to qualify for a weekly cash drawing by answering a few trivia questions. And then it said Congratulations, you're qualified, you know, let us know your name and if you win, so we know where to send the money. And then, and then it said If you want to join a game right now, next cash prize in eight minutes. There's 45 people playing in this game. Join game now.
Speaker 2:And then they went into a multiplayer game, and so I paid out each of those companies only when someone converted all the way down to playing a game on our site. So that took it down to 50 cents per acquired customer, and the one of the best free registered user companies in the world at that point was Yahoo, and they they had a. They were paying about $30 per per Free registered user and we were paying 50 cents for an activated free registered user. We were still spending on on ads, so our blended average that you know, pushed it up to little under $5, but still just a fraction of what anybody else was. So that was. That was the ultimately what we rode to becoming Top 10 website in the world amazing.
Speaker 1:I mean that's fantastic because it shows that it's never clear cut from the get go. There was a lot of focus and determination to fix the economics and dive into the detail, generate the data. When there wasn't data, yeah, build it out, review it and coming out of that was a benefit of cost of acquisition right and and and really leveraging our development.
Speaker 2:So it's like leveraging our development to create this Immersive experience that we could do on third-party websites. So even if our competitors wanted to replicate, frame your thinking it would have cost them a lot more to try to replicate that kind of program.
Speaker 1:Nice okay, fantastic. So lots of nuggets there. Next next big leap. So from there, yeah so the same team.
Speaker 2:We sold that business to Vivendi Universal in 2001 and then I was back in Budapest. I had been tapped at up or after our Nasdaq listing to run European operations and Went through the the painful slimming down of teams before the acquisition, just because that was the reality. Most of our advertisers were other internet companies. So suddenly, suddenly, a lot of our revenue dried up and we had to make those hard adjustments. But we sold that business then to Vivendi Universal and and started logging in, also in Budapest, and so logging in remote access software, you, you put it on your computer, you can remotely control it from any other computer. And that was, you know, when we had the idea for that, my, my previous CEO and and the chief technology officer who built the initial product and I kind of came together and put put together the plan for it and and we it's interesting it's actually somewhat related to the first company is that the initial technology, the, the Original founder, had developed that initial technology to manage all of the servers. There was no AWS at the time for the game site, so that being a top-10 website, we just had a massive server load to support all of that real-time gameplay, and so he developed a tool to effectively manage those servers and then Built a business around that tool. It was called remotely anywhere most of the early users on, or most of the people who are signing up for that tool, were consumers who, because it was a descriptive name, they decided they wanted to use it to remotely anywhere access their own computer, and they were overwhelming support. And so that's where he said, you know, he had talked with the person who became the CEO ultimately and he said, god, these guys are killing support. What do we do with this? And the CEO said maybe there's a signal that there's actually a business opportunity there. And and then they called me in as the guy who could help build the audience and assess that business opportunity. And so then we decided, yeah, we're gonna build Something that that the demand is there, so we just need to create something that is easy for them to use so they're not overwhelming the support team. So that was that was the seeds of.
Speaker 2:What logged me in was was we had already assessed demand before we built the product, and then it was about creating a very easy to use remote access solution and that that was the next opportunity. Those days it was like, okay, now let's build it right before we put it out there. So, waterfall mode, crawling to the cave, come out, you know, seven, eight months later we're done and the market had changed. We had, someone else had launched a very easy to use remote access products and had grown so quickly that it had already been acquired. They were spending you know we use private companies so hard to know for sure but they were spending probably around 20 million dollars a month on television, on radio, product called go to my PC. And so again it's like, okay, we've got this product, now we could go compete and do the exact same thing and be slightly cheaper, or you know, but we'll probably fail. How can we, how can we compete against them with this product? That is almost the same thing.
Speaker 2:And that's when I came up with the idea let's, let's, let's create a free version of the product. And I had looked at the only other solution that was doing kind of well in that space was an open source product called VNC, but it was really hard to use, but it was free. So I thought, okay, hard to use, but free is growing, easy to use and expensive is growing. So let's go. Let's go easy to use with a free version and see if we can carve out our niche in the market. And then I was hit with the unfortunate news that our Per user cost to make this easy, we basically the reason it was easy is we have Data centers, that every connection had to go through these data centers and that that meant that the firewalls were Not blocking your remote access connection.
Speaker 2:You were, you were coming in through a yeah, without getting too technical, you were coming in through a data center there, and so the that the unfortunate news was it was eight dollars per user per year to host all those remote sessions. And so they basically said there's no way we can give it away for free. But then the engineer said let me, let me see what we can do. And they, they, they went back and they, they worked the problem for a While again. Problem well stated as a problem half solved. They were able to figure out how to get it down to pennies per user per year.
Speaker 2:So they, they basically used the data center to make that initial connection, but then they rolled it over to peer-to-peer and so just just to make the next initial connection was cheap. It was once all that data started flowing across when you're trying to do remote access session. That's when it got expensive, but they were able to roll it over to a peer-to-peer connection. So now we were able to give it away for free and that that Differentiation allowed us to break into the space. Lots of challenges along the way that I'm happy to go into details on, but once, once we had a differentiated product. Ultimately we we competed and and logged me in Was acquired in 2020 for four point three billion dollars, and so we were able to build a good business there. Wow.
Speaker 1:I mean, I think the biggest fear of any founder is Normally it's the opposite. You don't have. You don't have market validation. You had market validation, went and spent six months then building out what you thought you needed to deliver, to turn it into a viable product. Come out and All of a sudden you've been disrupted.
Speaker 2:Yeah, markets change.
Speaker 1:It's a good had changed during this. So I mean, how do you and I think you've given, you've given, you've maybe given the answer, which is you, you can Adapt or die, right, right, and you adapt it. You went back to the drawing board, understand how it's changed, what's changed, where the limitations, where the blockages, where do the economics not work? And then, from there, work with your devs teams to reshape a product. Ultimately, you came out the other side with another unicorn.
Speaker 2:Yeah, but what I can tell you is that when we came out with that free product, we struggled mmm, it was very hard to build a business when you have a free version of the product and we but just on the story alone, just on the history of success, we were able to raise ten million dollars in Inventory Capital and the you know, and it was basically with a story that we're gonna spend that on marketing and and my CEO is telling me, yeah, like, get out there.
Speaker 2:We know you can do it, that's why we brought you in. And I'm, you know, as someone who is grounded in reality economics, I don't want to spend money if I don't see a good return on investment. And so I went out and started doing a bunch of testing and found you know, my economics are a lot tighter with a free version of the product. And so, turned out, I could only spend about ten thousand dollars per month Profitably on customer acquisition Anything over ten thousand dollars I was losing money on. And so I was doing lots of testing testing ads, testing as many as much media as I could, testing even landing pages but I couldn't spend more than ten thousand dollars, almost like a repeat of the previous company, where you just going into this deep, dark testing mode?
Speaker 2:Yeah, yeah, but but it didn't get me anywhere. I was, I was basically stuck and so, but it went back to the data side where, ultimately, I'm like, why is it so hard to spend this money? Yeah, again, at the same time, just like when I spent money the last time, I'm being praised oh, you doubled our users. Good job. Here I'm getting from my, my investors. They're saying I can't believe you're signing up. You know, a thousand plus users a day. You guys are amazing and like, yeah, this is great, but I'm not able to scale beyond that. What's wrong with this picture? And so, finally, we we decided to Kind of really dig into the data and see what's happening to these people. Why aren't we able to generate very much revenue from them?
Speaker 2:And it turned out that, even on the free product, the product was really hard to use. It's software that you need to Install on one computer. Even though I said it's easy to use because we have this data center, you still need to do some work to get it working. So you install it, you got to go through you know, sign up, download, install, sometimes that you have firewall that could be blocking. You got to make sure it's not blocking it and then to actually use it you need to go to a different computer and Figure out how to navigate to your computer, log into your computer. We only worked with windows at the time, so you needed to know your windows authentication information and then finally you could say, okay, that was worth it.
Speaker 2:But by that point 95% of the people have given up, and so I Could have pointed at the product team and said you guys need to make this easier to use. But again, same CEO. I went to him with this information and he said he said basically, we, you need to stop trying to build marketing channels. He told me you just we got some things that are working. That's great, that brings a flow of users in. But I want you to focus on this problem, the sign up to usage. Even though I didn't have engineers, I didn't have anybody who could kind of do that in-product kind of testing. But he said to the product team I want you to stop working on the product roadmap and they're so early that they there's a hundred features they still want to build. They're getting all this feedback of things that could be done better, but they're, they're basically being told they can't Keep building product.
Speaker 1:They need to focus on the sign up to usage rate and so I mean it's interesting that that came out so late in the process as a user journey. I mean it's only when you drilled into it you would have thought that that would have been you would think.
Speaker 2:But just, I mean again, this is 2004. Now it's that, like today, people are maybe a little more aware that you need to make it super easy to use your product. We were, we were game people, mmm. Before that, you know, we it wasn't that hard to get them into the game. Where here, getting them to, getting them to do that remote control session was really hard and and so.
Speaker 2:But when we took the product team, the marketing team, the engineers, the designers Everyone's not top priority, only priority, was to fix this.
Speaker 2:We improved our sign up to usage rate by a thousand percent in three months, and so Now I went back, tried the exact same channels and they scaled. I didn't know new creativity on the marketing side. Exact same channels ended up scaling to over a million dollars a month with a three month payback on dollars invested. And so now I Basically something that didn't work before a dollar in 50 cents out. Now a dollar in is likely to be like $5 out, and so I'm gonna spend as many of those dollars as I could. I would have cut them before and so, but amazingly, that million dollars a month we were spending only accounted for 20% of our new signups. 80% came through word of mouth, because we were really early with a free version of something, and the real power of freemium is when you have something that's very valuable and free word gets out there, and so for every person we paid to acquire, we got four more for free, just from people spreading the word about it, and so that's that's what put us on that massive growth trajectory.
Speaker 1:I want to pause there because I was gonna loop back to the freemium model. There's always this knee-jerk reaction to just offer freemium model and I think there's an interesting psychology behind that. On both sides of the fence or on the product owner side of the fence, maybe there's a lot of naïve VT around make it create a freemium model and it will scale. Yeah, okay. On the customer side of the fence, I find sometimes if you give stuff away for free, it doesn't land as an exchange of value in their minds, right? So what advice would you give to any founders around freemium models, freemium thinking? Because this story is a real kind of great example where you had a freemium model. It did result in user acquisition, but you weren't converting because the actual user journey on the back end wasn't seamless. Yeah, and that resulted in blockages and drop-off. That didn't convert and once you fixed that, the freemium model actually then Re-yielded results.
Speaker 2:No one's gonna upgrade to premium until they have a great experience with a free version, and so we at least got them to a great experience with the free version. So I think most people, when they're thinking about freemium, they just it's hard to pull it off and and I don't know what their, what their intentions when they go into it is. But to me, for freemium to work, you need to have a couple things working well. Your Paid product needs to be differentiated enough from your free product that there's a reason to upgrade to the premium, and you don't need everyone to do it, but you need some portion of people to do it for it to work. But your free product needs to be good enough that it powers Really great customer advocacy and word of mouth, and so if you can combine those two things, then then you have the formula that can work well.
Speaker 2:But again, the the economics are a lot tighter. I you know it's a market shrinking in some senses. That you know. If you think of the market as finite, if 80% of the market then is not going to be paying anything for a product, or or 98%, if you have a 2% upgrade rate, then the 2% of that is Then the 2% of that market that will pay suddenly shrinks the market significantly, which isn't a big deal if you're the new guy in the market, but if you're the existing guy in the market, that that has massive market share. It's really hard to counter someone who enters your market with a freemium product or a freemium service, and so it's a great way to break into a market, which was the case with us. But if you're trying to create a market, freemium can be a hard way to do that, but it makes it more defensible if you, if you're able to be successful and I suppose, caution to the wind on doing a freemium model.
Speaker 1:If you bootstrapping, you need to have some depth in your finances.
Speaker 2:The only thing I would say is that, once we made the changes that I talked about, we were cashflow positive all the way through our Nasdaq listing with you know, we had ten million dollars to kind of get everything kick started, but because I was so focused, we a three month payback on every marketing dollar we spent, met that we could cycle the same.
Speaker 2:Essentially, we needed about three million dollars in in cash to Spend a million dollars a month with a three month payback, plus whatever our fixed costs were in the business, and so we yeah, we were cashflow positive All the way through the Nasdaq listing and Dropbox the same thing. Very well, it's what's great with this approach that I'm talking about, that this test learn approach across all of the levers of growth. It's super efficient and Is actually the lowest cost way to accelerate growth in a business. It's just really hard to do, and especially if you didn't do it from the beginning, and so, again, I think one of the key lessons from that log me in story is Product marketing, engineering, design all working together to shape a customer experience that that creates very engaged, happy customers Got it.
Speaker 1:I think that's the key takeaway. Talk to me a bit about Dropbox. I mean, dropbox is well known. I've yeah, I remember the first days where I got introduced to it. I think that that's quite a good memory of Capability that never existed before. Right? I'm interested to you a little bit maybe five minutes on the Dropbox journey and and key takeaways from that.
Speaker 2:Yeah. So I mean, we're all. We're all scarred by our previous experiences to some degree. So leaving log me in, I had I had a couple of things that were were sort of Learnings. So one of them was I looked at my time at log me in and my time at upper before that and realized that I Really love the beginning part. But when the companies became Hundreds or thousands of employees, I didn't like it as much again. It started started to get into that mode of of you know, to car garage two and a half kid life, that that it's a little too boring for me.
Speaker 2:Yeah and so. But the other piece is that my by far biggest contributions in those companies happened in the first six to twelve months of go-to-market, so not during the product development stage, but once the product was ready, figuring out how to get the right customers in, and so that, I think, is the most important stage for growth in any business. But in ten years I only had, you know, a year of experience at that stage and then I had, you know, nine years of experience of like, just managing the teams that execute growing and managing the teams that execute it. So I I wanted to get really good at that stage. So that's where I decided I was gonna do six month roles where I, where I could really figure out that, sequencing what, what is the most important thing to do, in which order, and if I just do it over and over again, I could, I could really document that well. So that was one of the things. The second thing was I I hit a point, would log me in where you know, when I left we had a hundred million Devices that had logged me in, software on them for that were remotely accessible, and it's just really hard when you have a paid marketing engine as as the kind of your lever. I mean word of mouth was strong, but the paid marketing engine was what we were trying to control on the marketing side, to bring even more people in. And when you're dependent on an external driver of growth, law of big numbers kicks in and you start to flatten out your growth rate. It's just the, the reality. And so, and then the third piece was, even though, even though we had the, that one time where we had cross-functional efforts that really drove massive growth Over time, the realities of a big company kicked in to where we had to have more siloed, specialized Departments and when I say we had to, I'm not sure we had to, but we did and so you know, marketing and product and engineering and design really stopped coordinating closely our efforts.
Speaker 2:And if I wanted to run a test in any area that was not within the Marketing area, it took me, it took 80% of my creative energy just to figure out how to run that test, and Let alone to figure out the right test to run, how to implement it, where to implement it. And so I just I just realized that that antiquated Organization that companies have been operating that way for a long time was just not very effective to support long-term growth. And so, going into Dropbox, I had two big goals. One was to get out before I got too big. Three goals and then and then two was to figure out a growth engine that would not die under its own weight Well, not not have those external dependencies. But three, to build the right kind of experiment driven, data driven culture where the team would be used to working cross-functionally, long-term and and we get the benefits of being able to run a high velocity of experiments anywhere in the business. That would accelerate growth.
Speaker 2:And so that was in my contract as a key objective during those six months was to plant the seeds for that culture and and I think I think we really nailed it, and the reason I think so was that, yeah, my approach there was one in the private beta, it was working was working really well in the private beta. So that was definitely I didn't want to start just randomly experimenting and breaking something that was working well. So before I ran my first experiment, I wanted to really understand what was working well. So I they didn't have that the tracking in place to really understand how users were flowing through. So there was no Mix panel or amplitude or some of these, these products that that can give you that great visibility today. We had to build it ourselves, so that took probably 30 days to build that that good tracking system. And then, but then in the meantime, during those 30 days, I got a list of the 100,000 people who had become active users during the private beta and Divided that into 100 lists of a thousand people and every day sent a new survey to each group to just more deeply Understand them, their lives, how the product fit in with their lives, the benefits they were getting, how they did things before, and you know questions like have you recommended this? If so, how did you describe it? It's just all this stuff that gave me a ton of context.
Speaker 2:Then, once the tracking came online, I could really see where we were losing people, started to survey people where we were losing them, had a really good picture of what was going on this is hard to improve, something you don't understand deeply and and basically came up with my first ten experiments and With the idea that if I only run kind of one experiment at a time, the the rest of the team being engineers they might give up after two or three failures where, if I can get the commitment for ten, I'm really confident I'll get at least a few wins. And so we yeah, we were able to. I sat, I Spec down all the experiments, explain why, explain the data that supported it Sat down with the CEO and I was he and I were meeting regularly during this time so he knew where I was headed with things and and and then presented the experiment ideas to the, to. The engineers got their commitment to run the experiment ideas mostly the CEO was presenting it and Very quickly we saw some big gains from those experiments. You know they weren't all successful, but enough of them were where math driven engineers could pretty quickly Kind of do the math and see, and every time we get a winning experiment, our growth rate accelerates. And so after that, almost every idea for experiments was actually coming from the engineers and All of that's great.
Speaker 2:You know, I think I said it we maybe I mentioned that we we got to a billion dollars in and yeah, I did mention that yeah, billion dollars in recurring revenue faster than any SaaS company before it. All of that was exciting. But probably the most exciting was I Interviewed their worldwide head of marketing at a conference a few years later and you know, thousand employees plus now and she, she said in that conference you know, what's unique about Dropbox is that the entire company takes ownership of growth. And so, knowing that we were so intentional about that when we were eight people and that that was how they were separating themselves, now with A thousand plus people in the company, yeah, that culture.
Speaker 1:It's something I wanted to touch on. You mentioned it and I've seen that evaporate within a company as quickly as it made them famous. Yeah, I Want to touch on that just briefly. So I the experiments. How do you structure an experiment? If you could give a quick playbook on how to go about it for a newbie that needs to figure this out, I'll give you an experiment idea from one experiment.
Speaker 2:We ran it like log me in so you know. Again, it's like a problem. We'll state it as a problem have solved. To go back to that quote. So we basically said, okay, we have a lot of people on the free product, we're having trouble getting them on the paid product. How do we increase the upgrade rate from the free to the paid? And they don't. There's a lot of features that are in the paid that they just don't even know they need. So then someone had the idea might have been me, might have been someone else, I don't remember but let's actually for the first 30 days when they sign up for the free product, we'll say congratulations. For the first 30 days you automatically get all premium functionality and you'll automatically switch to just the free version afterwards. And so the hypothesis there was that you know they would find one feature that might be useful enough that they want to start paying for that feature going forward. And so, yeah, we ran that experiment and that doubled our premium upgrade rate.
Speaker 1:So give them a taster. And who would you typically pull into the experiment? Stakeholder grouping Does it vary from experiments to experiments, or is it the? Same people from different divisions.
Speaker 2:Yeah, so I've evolved over time. So my most recent thinking is obviously what I did at Bounce, the most recent company I worked with, and in that company they were already further along than Dropbox. Like I said, we were only eight people. When I joined Dropbox, they were maybe 45 people, and so there were enough ingrained habits that I started with an upfront alignment session explaining the importance of experimentation, why more experiments is better than less, presented some research that I'd already done, so I came in with some information. This is why customers love us. This is how they the ones that use long term, this is what they tend to do first, and so enough that they feel like I'm not just presenting a generic lesson on growth, but it's like very bounce oriented. And then you know, this is what seems to be the best opportunity. And then basically got the commitment to yes, we can experiment anywhere we need to.
Speaker 2:I tell the log me in story of like when we focused on activation, that wasn't really marketing, that wasn't really product, but when we came together and focus on that, everything unlocked and so, through a full day with at least the department heads, ideally get the whole company.
Speaker 2:I think at bounce I probably had about half the company for it, and we didn't even go full day, maybe like five, six hours, but at that I got enough buy in at that point.
Speaker 2:That then it becomes, you know, getting into the weekly rhythm of testing and learning.
Speaker 2:So in our weekly growth meetings it was really analyzing what we've done already, finding the new opportunities and then deciding which experiments we're going to run, going forward.
Speaker 2:And so in those meetings I had a dedicated growth team that in addition to me so I'm full full time, like you know, 12 plus hours a day, kind of full time and then but a dedicated product manager of growth plus two dedicated growth engineers, and the company waited to start with me until they had a data scientist on board to really help on the data side. And so that was kind of the dedicated team. And then, but in the weekly growth meeting we had everyone from the marketing team as well would join. In addition, they had their own meetings for top of funnel stuff, and then the head of engineering would join, the head of product would join, and and then the lead designer would join. And so it's in that meeting where we're making the decisions about which experiments are we going to run and where we're going to run them, and so some of the people were kind of kind of temporarily in there for the day and others others were dedicated to the growth process.
Speaker 1:Got it, got it Okay. So that that takes us on to the amazing work that you do and the book that you've written. So I would like to zoom in on that. What is for those that don't understand? I think you've explained it now but, you've now. You've turned it into a formal methodology, framework and even job roles.
Speaker 2:Yeah, yeah.
Speaker 1:So what is growth hacking?
Speaker 2:Yeah, so I think maybe I even just put one piece that informed me to do it was I moved. When I joined Dropbox, I had moved to Silicon Valley after I left Log Me In. Both those companies Log Me In and Uproar the US operations were on the East Coast, so I moved to Silicon Valley and I realized I have a pretty unique approach. Most of the founders who you know, you do back to back IPOs they think you've got the magic touch. I get a lot of founder introductions and meetings and they all say we need help building awareness. Like I've never focused on building awareness for one thing, but I also was looking at these companies that were growing really fast also. So you know LinkedIn, facebook, some of the other ones I don't remember like Twitter was growing pretty fast at that time and each of those companies was using an approach that looked a lot more like mine and a lot less like almost everybody else, and so I was like this thing needs a name and I actually got together with a couple of friends and like we got to put a name on this thing. It's just it's not marketing, it's not product, it's some other thing, and so that's where we came up with growth hacking and the idea is basically you are using data and experimentation to drive improvement across each of the key levers of growth. So how do I maximize how I acquire, convert, engage and retain customers, improve how we drive referral, even how we monetize? So I've given examples of experiments across each of those and the magic happens you already saw from that Log Me In story just experimenting across activation and acquisition, exploded our growth. Our even faster growth at Dropbox happened when I added referral as an area where we ran a lot of experiments. So a lot of people know the referral program at Dropbox as an important place where we experimented.
Speaker 2:But even before the referral program, how, what happens when someone has a file shared with them with Dropbox? There's there's a whole bunch of different ways you can. You can have them experience that. So do they automatically pull down the file? Do they have to sign up for Dropbox to use the file? Is it somewhere in between? What's the email look like that tells them someone sharing a file with them? What's the headline? What's the experience once they come to the site?
Speaker 2:Like all of those you know, the initial variation of any version of anything is is a guess and the likelihood that you can do better than your initial guess is really high, and so that's that's what you're doing. Is you're running experimentation really across anything that can impact growth, and that's that's what growth hacking is. But really when you, when you zoom out and look at it, it's, it's the scientific method, what you know, what has been around since ancient Greek times, what we learned about in school. We're just applying it to to growth now and not to traditional innovation, but really innovation around how you grow the business Amazing.
Speaker 1:How, how much, how nuanced is it? Can people learn from what's worked for other companies similar to theirs and just replicate, or is it recommended that you go to the drawing board first with your different teams and and really focus on what is specific to your DNA as a company?
Speaker 2:Yeah, I think you've you've gotten glimpses on that too that all the big wins that I've highlighted were very unique to each company, unique to the competitive landscape. So, you know, coming up with that free version at at LogMeIn, we we had to. That was the only way we were going to be able to break in. All the experiments around getting people to use that free version was in response to a very low activation rate on that product. Dropbox, all the referral loops, the referral, the referral focus came on the. You know again, when I said at LogMeIn we had that dependency on external spending. So it was an early conversation I had with Drew, the founder of Dropbox, where I said if we can make our growth engine primarily our existing customers, then as that grows, our growth engine gets more and more powerful and there's no reason why we're going to get that flattening out that I just had in that last company. And so again, I think every situation is unique and there's going to have unique opportunities. Dropbox had a lot of collaborative elements to it which made it prime for focusing on referral.
Speaker 2:Other businesses might not have that, but I mean the truth is that every fast growing company I've worked on just natural word of mouth is really high, so I think the ability to come up with ideas should not be driven by what other people are doing, but by deeply understanding your own unique situation, and I find that if this process is implemented early enough in companies, it can stick and be pretty successful.
Speaker 2:So, if you take all the really fast growing companies, one of the best conversations I've had this week was I've always said I've had some good wins, but they're really great big companies I didn't have anything to do with, and so I don't have a Facebook under my belt or an Instagram or a LinkedIn and then I had a meeting this past week where I talked to the person, who's based here in Singapore, who implemented the initial growth team at TikTok, and he's like everything I did was based on stuff that I read on your blog, or that was my major inspiration, and so really cool to know that, very indirectly, but that one of the great growth stories actually was inspired by some of my writing, and so I think the key message there, though, is that if you implement it early enough, it's essentially a different operating system for the business.
Speaker 1:So your philosophy within your business, yeah.
Speaker 2:So you need that growth mindset, that data-driven approach, that humbleness, like you're not saying people always do this or we know this about. You know you're saying you speak in hypotheses. It's just like a whole different way of approaching the business and if you do that early enough, that can become part of the culture that sticks long-term in the business. The real challenge is when you're already existing even at 50 people, even at 80 people, but definitely if you're a business that's thousands and thousands of people it is really hard to change and adopt this approach. But we see the fastest growing companies in the world are using a different approach than just about everybody else.
Speaker 1:And what would be your advice for those companies that need to, because to survive in today's world, you do need this.
Speaker 2:Yeah, they're going to compete against someone in their category who does this. Well, they're going to get disrupted.
Speaker 1:I would say they're probably not going to compete because they're just not doing enough experiments.
Speaker 2:Exactly. By compete I mean lose.
Speaker 1:Yeah, I'm with you. So what would be your advice for a legacy company that's maybe stuck in their old ways? That's feeling the uncomfortable feeling of being disrupted and not moving quick enough to adopt the new technologies or methodologies or processes that will help them differentiate, be more customer-centric. How do they implement this culture? Because, it is a culture, it's a philosophy of growth hacking.
Speaker 2:So basically what I explained, that I did at Bounce, I think, is the way you've got to do it. That, particularly if you, most of the time it starts with a new head of growth being hired to help us drive this new approach and that head of growth comes in, everyone's excited that they're there within a month or two, everyone's gone back into their old way of doing things and you have a super frustrated head of growth that maybe even has the support of the CEO, but now they've lost all momentum and they can't do anything. So I would be in the same boat if I went into any company, unless I did what I did at Bounce, which is have that upfront growth alignment session where I take people out of their day-to-day execution for a full day and at the very least, I need the functional leaders to come in and just get on the same page about how are we going to do this. Why do we do this? Ultimately, when people zoom out and get out of their own little functional world, they do want to drive impact. There's no impact if you don't get lots of people using that great product that you've created and there is a playbook for driving that impact. And so if you spend a full day really collaborating cross-functionally as a team around, how are we going to work together to do this? I think you have a much better chance of being successful, and so that's the recommendation.
Speaker 2:If you have a new head of growth let's say you're already you have that head of growth who maybe you don't have a head of growth yet at all. Or you have that head of growth who didn't do that and now they're two or three months in. They're frustrated. If it's six months, they probably already unfired, but so they're two or three months in between the hope and the firing. Then I think you need to bring in an outsider and you need to essentially have someone who specializes in helping teams come out of their day-to-day execution. The reason that you can't have your existing head of growth at that point is that it looks too political. It's like now you want me to stop everything I'm doing because what you're doing is so important you haven't done anything since you've been here. You've lost all credibility at that point.
Speaker 2:So I do that with big companies. I've gone into the Microsoft Office 365 group, multiple groups at eBay, so kind of on a business unit level, nordvpn, so a lot of companies who, when I go in, they're bigger companies that can afford to have me spend a full day with them, but that is effective. Generally it's companies kind of a thousand or more that it makes sense for me to go in and spend. I mean, the truth is that it's pretty binary. If they successfully make the turn and they're able to transform and be successful with growth, then with this cross-functional approach to growth they're probably looking at millions or even billions of dollars in additional valuation in the business. So whatever I cost is probably a pretty good deal if it significantly increases their odds. But what I have done to take the price down significantly is they don't need.
Speaker 2:There's enough growth education out there. If you read my book you know everything you're supposed to do, so it doesn't require a lot of teaching. What it requires is more the team doing those cross-functional alignment sessions, as I mentioned. So I do a program where I have teams where it's the five functional leaders in the business, you know, or up to five, but at the very least your head of marketing, your head of product. That tends to be where a lot of friction is. If it's B2B, probably your head of sales. Ideally you want your design and engineering there.
Speaker 2:Because if they don't understand that they're going to have to throw away a lot of the work they do, then they're not going to be supportive of the process.
Speaker 2:Because when you're testing, a lot of things don't work and it's just kind of wasted design, wasted code, but not really because you learn something.
Speaker 2:So in this program I have essentially 10 companies at the same time who each send a group of cross-functional leaders, and then it's about 30% me taking them through the key decisions that they need to make over the course of the day. So nine different sections where I essentially help them get on the same page and then they collaborate on the material and come out of it with a shared understanding of what the growth engine in the business looked like, a shared understanding of the importance of experimentation where they think the biggest opportunity is right now in their business, a backlog of ideas against that opportunity and a commitment to test those ideas. And if they followed everything, the likelihood they see some big wins from those ideas is high and then that can kickstart the process. And so by doing 10 companies at the same time, I don't I charge one-tenth of what I charge for one company, so it basically means that they get it for a fraction of the cost, and so it makes it way more affordable.
Speaker 1:Got it as we get to the end of this, conscious of the time that you have with me and again, thank you so much for sharing so much detail and knowledge, and I'm sitting here really in awe of the life experience that you've had and so grateful that you are there helping other people to learn from this. So maybe just to sum up your book that you've just released, do you wanna just quickly talk to that and the benefit that people could get from the book and where could they reach you if they wanted to?
Speaker 2:Sure, yeah. So the book was not just released, it was actually released in 2017.
Speaker 1:Okay, probably.
Speaker 2:No, no worries, but yeah, that's if it was just Everyone still talks to it.
Speaker 1:It's like brand new. Yeah, yeah, but that's.
Speaker 2:we wrote it to be evergreen, you know we have some case study examples in there that are probably somewhat dated, but the core of it is the scientific method, so that's gonna be evergreen. And, yeah, so they can find it at Amazon or wherever their local bookstores are, and-.
Speaker 2:And the title of the book. It's called Hacking Growth and it's a big, heavy read and that's why it's surprising that we've sold almost a million copies is that it is. It's a hard book to get through. It is a very, very detailed how-to manual on all of this, and so usually when you see a book get close to a million copies, it's more of a kind of pop business short read, easy, gets people excited, but doesn't have a lot of the substance to it.
Speaker 2:So I've heard time and time again I'm on a world tour right now and so I'm about halfway through spent a lot of time in South America and then working my way around Asia and Australia now and the I've heard from a ton of people that I made a huge difference in their career, in their business, and that's what makes all the effort gratifying. I can tell you that, yeah, I was on the radio right before I came here and then I'll do an event tonight and every day I'm doing three or four events while I'm in Singapore and it's exhausting, but knowing the impact that I'm making, I mean when we came for coffee I mean one of the startups that I introduced you to click to the dead just spoken about a methodology out of your playbook and was diving into it with you.
Speaker 1:So that was like wow, your work is permeating across the globe. It's crazy.
Speaker 2:Yeah, actually, the most interesting company I've seen on the entire trip was a bank, which is the last thing I would expect, and what he had asked me about was the Sean Ellis Survey, that is, you know, the Sean Ellis Test is kind of what people call it now, but I when I was in Brazil there's a bank called New Bank and I hadn't even really I'd heard the name but didn't know much about them. But they're on fire. They have like 92 million customers in early 2022, they had less than half of that and I went in there and basically the they actually their head of product is based in Silicon Valley and he came from Facebook and he's like I arrived here and everyone was talking about the SES and I was like what the heck is the SES? And then finally someone said, oh, it's the Sean Ellis Survey. And when I so I did a little engagement with them in Brazil this time and when I really drilled into how they were using it, they've taken it to a whole nother level.
Speaker 2:They the survey, for what it's worth is basically asking your existing customers how would you feel if you could no longer use this product? And you're giving the choice very disappointed, somewhat disappointed or not disappointed, and you're trying to find users who say I would be very disappointed without the product. And if you can deeply understand those users, they're the key to being able to build a massive user base. And so a lot of people have kind of applied that piece. But what this bank was doing was they didn't just apply it for their initial product market fit, they applied it to. They started only on credit cards and now they're a full-fledged bank and every new thing they launch, they do it. But every feature they launch, they do it. How would you feel if you could no longer use this feature? And so the feedback I'd already always had in the past when I had banks for example in a workshop or in a class I was teaching was oh, we're a highly regulated industry, we can't do this, but they found the one piece in the methodology that you can do as a bank. You know, maybe high-velocity testing is a lot harder in a regulated industry, but they found a way.
Speaker 2:So all that growth I mentioned almost no traditional marketing. It's all been word-of-mouth driven, and the main thing that it's been driven off of is a market opportunity that was totally untapped. Most of Brazil was unbanked and the top 5% was abused by the existing banks with really high rates on everything, and so that's why I say product market fit is the biggest, most important driver. But they have clearly come up with the right product to fit that market and then execute it. The heck out of it to have to build an amazing business. And so if a big bank can do it, I just think really any category can be doing this and again, as you said, you're gonna lose to someone in your category that does it if you don't do it. And hopefully, after listening today, people have a little more of a roadmap on what to do.
Speaker 1:Yeah, fantastic, and if people wanna reach out to you or get onto your courses, maybe you can just give them some details.
Speaker 2:My easiest is if you go to my website, seanellisme, it outlines what my world tour is, where I'm stopping. I'm in Singapore for another until Wednesday of next week I think this is gonna come out around Friday and so I am doing a workshop on the 19th here in Singapore and we still have room for a couple more companies, and then I'll be heading to Australia, then Korea and Japan, but Europe later on in the year, and so, yeah, that'll lay out the tour and kind of describe the programs more, and there's lots of contact forms on there, or feel free to reach out to me through LinkedIn as well.
Speaker 1:Fantastic well, sean. Thank you. It's a pleasure to have met you and looking forward to learning more from you and hoping that we can loop back when you come back to Singapore, and wishing you all the best in the rest of your world tour. I'm sure it's gonna be a resounding success.
Speaker 2:Yeah, one way or the other, it's gonna be a lot of fun, so I'm exhausted.
Speaker 1:Yeah, as long as you're having fun on the way through. I mean that's the most important thing and I think what I've seen and what I've heard, and I think what you're feeling is a lot of people are very grateful for your work and that's your legacy. So to those, to you.
Speaker 2:Yeah, and that's the important thing like being able to make impact is amazing, and being able to at the end of this I mean I've probably taken over 1,000 selfies with people. I just did one in the lobby coming in here, and at the end I wanna make a collage of all the selfies that I've taken with people, and almost always I'm getting that feedback of what a difference I've made for their company or their career, and that's what motivates me a lot. There's this there's so much great innovation that's out there that misses the mark because no one can really figure out how to get it in front of the right people who really benefit from it, and so it's really gratifying when I see talented entrepreneurs who take the big risk and they're able to ultimately figure out how to build a great market and a great business and a great life around it. That's a very good thing, amen.
Speaker 1:I mean, if there's one thing I'm really passionate about, it's founders, and it pains me to see founders falling off the bus because they're making the same mistakes that many others have made, and I'd like to flip the script, and I think your work does that. It doesn't need to be a 90% failure rate show. There needs to be pain and learnings to help you become a resilient founder. But I do believe we can make it easier and going back to the core fundamentals, which is what we do in our incubator, here is I'm the person that does that first module, which is product market fits. And starting there and surprisingly not surprisingly, because I've been a founder a few times just run out the starting blocks with that founder spirit, go straight into building the website, the SaaS, whatever it is, and then try and exchange value for it and can't make it happen. They don't know why and that's where they start falling off the bus.
Speaker 2:Right and iterating enough and hanging in there till you get it right. But trying to grow without the product market fit is the fastest way to run out of money and die as a business. So yeah, just using for that survey I mentioned, pmfsurveycom lays out the eight questions that I include there. That really will help you understand if you have the seeds of product market fit or not and, if not, it'll give you the insights to help dial it in.
Speaker 1:Perfect. Well, that's the perfect spot to end this podcast on. Sean thank you all the best. Thank you so much for having me. Thanks, cheers, here it is.