This is Kristen O'Brien, Managing Editor at NFX, and this is the founder list. Audible versions of essays from technology's most important leaders selected by the founder community. This is the growth pyramid revisited, written by Sean Ellis, CEO of growth hackers. A lot of people are asking how Dropbox became the fastest growing SAS business ever, reaching a $1,000,000,000 revenue run rate in record time.
I saw signs of this explosive growth when I joined Dropbox in an interim VP marketing role 1 week after the public launch in 2008. Of course, Dropbox is a fantastic product, which really Beller. But that doesn't tell the whole story. Katie Srinivason, Dropbox's current head of worldwide digital marketing, captured the key to their growth when I interviewed her last month in the growth hacker's conference.
She explained that what's unique about Dropbox is that the entire company takes ownership of growth. Beller is a short snippet of that interview. Compare this to slower growing companies where team members are often isolated in their functional silos and believe they must rely on the marketing department to pour an ever increasing amount of resources into advertising to accelerate growth. This growth culture at Dropbox might seem like a fortunate accident, but it wasn't.
One of the key goals that Drew Houston and I discussed when I joined the team was to create culture of growth and experimentation across the full company. I'll get to how we did that in a bit, but since that time, I've realized that a culture of growth has also been key to success of other breakout growth companies like Facebook and Airbnb. Not long after I left Dropbox, I published a blog post outlining what I called the startup pyramid.
It was based on the patterns I'd seen taking 5 companies to market, 2 of which had already listed on NASDAQ. Below is the original pyramid and a new version that goes into more detail about how to actually accelerate sustainable growth. As you can see, it ends with company wide growth habits and culture. The milestones of growth. There are several milestones that must be cleared before you can create a company wide culture of growth. 1, product market fit.
The first is a product that people actually consider a must have. In the startup world, this is generally referred to as product market fit. 2, instrument for growth and define North Star metric. Once you validated product market fit, then becomes important to define an overall success metric. This success metric should be a North Star metric for the entire team to gauge the success of the business. The right North Star metric tracks cumulative value delivered across a growing customer base.
This is a much more sustainable growth indicator something like registrations, downloads, or even revenue. Many subscription businesses have inactive users that are still on a paid subscription, but will likely churn. It's important to instrument for growth so that you can truly understand what is happening. For example, at Dropbox, I wanted to be careful not to break what looked to be a potentially powerful growth engine.
I worked with the team to instrument tracking and reporting that would tell us exactly how new customers got started with Dropbox, which features they use first and ultimately how they used it on an ongoing basis. Just as importantly, I worked to understand why people did those things. During my 1st couple of months, we sent out surveys almost daily.
Another important part of instrumenting for growth testing tools such as Google Optimize that allow you to implement AB tests across your website and product. Finally, you'll need a system to bring all this information together, so that your team can learn how to improve growth. 3, growth team, process, and Morgan learnings. Now you're finally ready to start accelerating growth. Is level 3 of the pyramid.
In this stage, you should focus on building a growth team that can effectively execute a growth process. The purpose of this growth process is to uncover better ways to accelerate growth in the business. Your goal here is to build a rhythm and habit of testing. Every test you run will lead to additional learning, even if it doesn't directly drive immediate improvement in growth.
It's important during this stage to catalog this learning so that the team keeps getting smarter about how to accelerate growth. 4, align team and testing around high impact opportunities. Once you Beller a testing habit within the growth team, ideally 2 to 3 tests per week, it's time to start trying to maximize impact. To drive full impact, you'll need to be able to test across the entire customer journey, acquisition channels, new customer onboarding, referral hooks, and product, etcetera.
This is where things start getting hard. The highest impact part of the customer journey is usually testing across the first customer experience. At Dropbox, I needed to work via the CEO to drive initial testing here. It would have been surprising if the engineers would have agreed to run growth experiments at the expense of the long term product road map if a marketer had asked them. In a bigger company, there are even more organizational barriers to testing across the full customer journey.
One benchmark to consider is that the fastest growing consumer apps generally invest 50% of the product development resources in the first customer experience. It makes sense because there's no second customer experience if you don't nail the first one. Getting permission to run this high impact testing often requires setting up an off-site meeting with the growth team functional leaders, and the CEO. My team can provide resources if you need help facilitating this meeting.
Once you've been given permission to test, it's important to set up specific improvement objectives and track progress against them. This will help your team generate relevant ideas and keep everyone informed about progress. 5, company wide growth culture and mindset. As you run higher impact testing, you should start to see some big wins. These big wins will be critical for driving broader team participation.
At Dropbox, the engineering team quickly got onboard the testing bandwagon when they saw the impact of the tests that they implemented. Keeping a full team in sync around growth is not an easy task, building the habit in the first place is even harder, but the effort is well worth it. No individual growth hacker or even a growth team can outperform a company where everyone is mobilized to accelerate growth. Get started on your path to break out growth here.
For more audio essays from the people who've built companies like Instacart, Facebook, trelloHubSpot Pete Dropbox, visit the founder list at nfx.com Omri subscribe to the n f x podcast at podcast.nfx.com Omri wherever you get your podcasts. I'm Kristin O'Brien, and this is the founder list.