When growth is in your title, you Beller be growing or you're not doing your job right. And so there's a lot of accountability in that role. So you have to find a way to get people across the company on board more through convincing them than commanding them in in a sense. Today, we've got Sean Beller with us. I've known Sean for many years as a guy who coined the term growth hacking.
He was the 1st marketer and the growth person in the earliest days of Dropbox, and Lookout and LogMeIn and Sabni and Eventbrite got a book out called Hacking Growth, which came out about 3 years ago, and he was nice enough to send me a few early reader before the book got published and reviewed that for him. And now he's working on Go Practice. We're gonna talk about in the podcast.
And, you know, Sean has one of the OG growth hacking people along with me and a few other folks, and it's always great to catch up with him. And we thought we would, record our conversation for the benefit of all you early stage startup founders who wanna get more grounding and growth. And I've always found Sean to be so thoughtful, generous, with his time and with his thinking, helpful to other people.
I was thinking about how to teach these growth principles to Pete, so I'm very excited to have you on the podcast today, Sean. Thanks, James. I'm excited to be on with you. It seems to me that the number of people who have what it takes to learn effectively and sustainably drive growth is not that great.
And, you know, the growth hackers, the people who are good at it, it would become the sort of special group of Illuminati, right, and you're one of the priests and but yet you've tried a lot of stuff to help people be better at growth. You've built different software platforms like Canvas or, you know, survey IO or trying to teach people to fit Right? Cause you're good at fishing and you're trying to teach other people to fish.
You wind up, I think, often, just jumping in yourself to do it for them. Am I right? Yeah. To some degree Morgan least jumping on where their biggest challenges are. Yeah. And you'll go Flint as an interim this and an interim that 3, 4, months to help get them going in the right direction. What what's so hard about growth, Sean? What's different about growth now than maybe 10 or 20 years ago is that we just have so much more data to work with.
So it's become this kind of more scientific data driven approach, but at the same time, the sort of empathy and psychology side and even creativity is still really important. And the truth is that most people are strong on one side or the other. And to be effective, you need to be strong on both sides. And I do think that people can be trained to be stronger on the side. Maybe that doesn't come as naturally to them.
And so that's part of the reason why I wrote the book and doing the go practice and got everything that I'm doing. I do if I thought it was a lost cause, I wouldn't be doing those things, I would probably just assume there's a handful of people who can do things and, you know, just focus on interesting businesses, but it's, I feel like that it is actually to get a lot more people in the realm of being effective at how they can drive growth.
So, typically, the people who just sort of popped and were naturally gifted at it were people who were naturally good at both language and empathy and creativity sort of right brain stuff, but also good at the left brain stuff, the data, the iteration, the testing. Mhmm. The discipline just one. Not taking wild swings in directions until they're proven with data. Got it.
And because there were so few people who are naturally like that, we haven't seen a lot of incredible growth people, but you're saying that you can train yourself to be better. And I think that's an important thing for people to understand that, you know, everyone assumes that they can do it. And I think if people are honest with themselves about their own deficits, then they can come to your book. They can come to your go practice.
They can come to various things and get better at the side with their week. I think it's an incredibly important Flint, where are we in terms of the evolution of digital growth at this point? I mean, if we look back, you know, back in the late nineties, the thing to partner with AOL and Yahoo to get distribution. And then it became the sort of instrumented viral stuff that we were doing with emails and whatnot.
And then Facebook, everybody kind of all the traffic goes to Google and Facebook now, and so they put paywalls then it becomes sort of paid marketing. Emails not super effective as a channel. SMS never got really effective. You know, Android and and iOS prevent us from getting the data in the middle parts of these sort of viral paths and growth paths, kind of flying blind. Since everybody's been on mobile, where are we?
Is there a big picture you've got right now, but where we are in the evolution of growth Yeah. I think, you know, in some senses, it's almost come full circle where I think the data and iteration was so powerful that people really leaned into that for, you know, the last 10 years just as more of us started to write about it.
People realized that, you know, if I can optimize morality, I can grow something really fast but, you know, at the end of the day, we don't have value that keeps people coming back. It turns out it doesn't really matter if you can grow it really fast because eventually it's just gonna Pete.
And so I think what we're doing is kind of more more than ever really understanding the physics of growth beyond the tactics of growth and the physics of growth are definitely the data is an important part of that, but at the end of the day, I would say of the companies I've hands on work in the early days of bringing them to Morgan. I think 5 of them reach $1,000,000,000 plus evaluations.
And I would say in each of those companies that the most important growth driver was eventually strong organic word-of-mouth. It's just, you know, when you deliver a great experience, people talk about that experience. And so I think to me, it's more about kind of understanding that flywheel built around value.
And now how do you layer the tactics on that to get more people to the right experience to, 1, you retain them when you get them to the right experience, but, 2, you unlock a lot word-of-mouth. And so when you kind of have a better view of how growth actually works and how you can layer the tactics on, now you can build much more sustainable growth engines over time. Got it. So it's going back to just building a great product that provides so much value that the word-of-mouth helps it grow.
And then we can look back in the last 20 years and look at all the different tactics. And we can layer those on to add 5%, 20% growth, but it's not gonna be adding a 1000 percent growth like we used to see back in 2007, 2012. Yeah. Like, obviously, Dropbox really didn't rely on paid marketing to get to a $1,000,000,000 revenue run Pete. That was mostly done on word-of-mouth was really strong. Obviously, like, paid re so there's paid, like, paid referral program.
There's giving away free space, which costs money, but the benefits of these things are that, you know, you have kind of a monopoly on those channels as opposed to jumping into a channel where you're trying to outbid someone else for that attention. And so I think that there's still those possibilities of virality being a powerful driver of growth. I would say zoom grew mostly through virality as a powerful driver of growth. Not every business has kind of that morality built into the product.
But even when I was at Dropbox, natural word-of-mouth outpaced any of the other things, at least in those early days. It was not so much the file sharing and the folder collaboration that was driving growth. There was people who loved the experience of having their data synchronized across all their devices and telling other people that. And then incentivized referral program was really just pouring fuel on that fire.
And when you add all of those together, you get a really powerful growth engine, but I do think it comes back to really understanding value of all, making sure you have it. If you don't have it, then any growth that you have is not going to last. And then once you have it, really understanding it and building that flywheel around that growth. And then paid marketing can be great. You're not just spending money to get one person. You're spending money to bring Flint feed that flywheel of growth.
And as long as you're spending that money smartly, like, I've never been one to spend for at a loss or even at a really long payback period. But if you have a enough payback period and you can spend that efficiently. That could be really powerful driving growth in a business. Where do you put paid referral marketing? I've had this theory that people do it because it kinda makes sense on face value, but if you actually look at the numbers, it's one of the most expensive channels you can use.
Yeah. I think more often than not, people do it because they don't have much natural referral happening, and I don't think it works that way. Like, I mentioned with Dropbox before we introduced the paid referrals, we had massive word-of-mouth referrals. And so you already had work referrals. It was already networking for people to do. Exactly. It was an Beller on that as opposed to trying to make something happen that's not happening or that's barely happening. So I think that's the differences.
You figure out the engine that already has strong organic growth. And then test to see will an incentive accelerate that Currier? I remember going through the few companies that I was working with, and I was looking at all the different channels and the paid referral was happening anyway, and then they were trying to put gas on it, but it was their most expensive channel. They should've just spent the money on Facebook or Google, but the employees wouldn't have accepted it.
They would have said, how could they stop that? That's so stupid. It's so obvious that we should be doing that. Right. And I think most of the time, they're pointing to other companies when they make that decision. Yeah. That's right. Well, Uber did it. It must make sense. Right. So what's interesting is when I was at LogMeIn, we were spending, you know, 1,000,000 plus dollars every month on customer acquisition, yet 80% of our new customers were coming in through word-of-mouth.
I always thought about Should we introduce, you know, a paid referral program on top of that? And I was always afraid that, like, somehow it was going to break something that was already working really well. And so, you know, and when I got to Dropbox, you know, just a few months after leaving LogMeIn, it was was still early enough where it made sense to test it, and there wasn't a ton of risk in doing it.
But in hindsight, I think LogMeIn probably would have been a great place to add a paid referral program. Mhmm. Mhmm. And when you think back to all the companies you've worked with, what is one big sort of company saving realization you had and What helped you see it? There's a lot of them, but I think, you know, one of the things that I spend a lot of time on today is cross functional, like getting teams cross functionally aligned around growth. That turns out to be one of the biggest blockers.
And I first realized the need of cross functional alignment and cross functional collaboration for growth when I was at LogMeIn and, probably fifteen people is pretty early. We would just come out with the first version of the product. We'd raised $10,000,000 that the team had already taken one company public on Nasdaq, and so we probably could raise money a little bit easier. It still wasn't that easy because it was you know, early 2000. So we'd raised 10,000,000.
I was tasked as the VP of marketing to go out and start spending that money efficiently to acquire as many customers as possible. And it turned out that I was really capped at spending about $10,000 a month with a positive return on investment. We were just really inefficient on our ability to convert people to active users who were coming in through that spending. And so as the marketer, my job kind of ended on, I'd bring them to Pete. Maybe I can work the landing James.
But after that, it's not really my responsibility or even within my scope of power to be able to do something to actually get those people activated. And so it was something that I ultimately shared the data with the CEO and said, we need to figure we need to figure this out. We're gonna have a really hard time scaling beyond that ten Beller a month.
And at that time, I was hoping that maybe the product team would kind of appoint one person from the product team for some time, and we could work on maybe getting that first user experience Beller, but, you know, and then just to put it in context, we were losing 95% of the people who signed up Beller once did a remote control session. So They're signing up. They cared enough to fill out the registration form, but they gave up before the first time they actually used the product.
And so which really a lot of room for improvement there. And So the CEO actually said we're gonna put a complete freeze on the product development roadmap. Me and the couple other people I had working with me in marketing. Stop trying to discover new channels. Everyone's gonna come together and work on this activation problem, and we're gonna try to figure out how to get that higher. And so that was where, you know, lots of serving, lots of user testing, feeding, lots of experiments.
In about 3 months, we were able to get the sign up to usage rate up to 50%. And so from 5% to 50% that's a 1000% improvement that was leveraged through every dollar we were spending on marketing. And so now when I went back and tried the same channels, I had a about a $1,000,000 a month that I could spend on marketing with a 3 month payback on dollars invested. And so and, you know, and then we got to that 80% word-of-mouth.
So really the and the whole business was about figuring out what's preventing us from being able to grow this business. The main thing was I had to step out of my comfort zone into another area and get the overall company to focus on something that was in a way that none of us had done in the past. Got it. And you're saying out of your comfort zone, meaning going deep into that first user experience and what the product actually does. Yeah. I'm a marketing guy. I'm not a product guy.
The idea of messing with code and those kinds of things seem scary to me as a marketer who's more about buying ads and testing ads. And at the end of the day, like, that's the problem that needed to be solved to get growth started.
And so by collaborating and bringing my marketing skill set to a product team that's not used to that high velocity test and using data to make decisions that the combination was pretty powerful, especially when we brought in designers and engineers and the skill set that crossed all of this. And it comes back to what I was saying earlier in the conversation is that in an early stage startup, you might be looking for one person that has all of those skills.
And I would say now after a lot of years of learning, I have much more well rounded skill set, but I didn't have it in the beginning. But you can see even when I didn't have it by teaming up with the people who did and being focused on customer value, were able to drive really good results. Got it. And that's just true.
Even if you've got eight people or fifteen people, we often hear these stories about the fights that go on in large Morgan, like, late stage Dropbox Morgan late stage Facebook about trying to get stuff done, but you're saying, look, this collaboration, this cross functional stuff needs to start early. There's growth is everything. Exactly.
And most startups are set up like mini versions of big companies, you know, like, there's ahead of this, ahead of that, and ahead of the and they have kind of a traditional scope of responsibility that they're used to executing in and, you know, that lack of communication starts pretty early in most companies.
And so, you know, one of the most powerful things I think that you can do to overcome that in the really early days is come up with a single metric that everyone is responsible for growing. And instead of the kind of the more siloed metrics where marketing is about getting, you know, more visits to the site or maybe the better might be more sign ups, but, ultimately, and product team is about driving maybe more engagement.
But at the end of the day, if you've got great engagement, but very few people, you may very little impact as a business. So it's if everyone can really think about how do we actually impact customers in need of this solution and work together to do that and come up with single metric that helps us understand progress, we can then all work much more effectively together to move that metric. I remember going into a company where they had a growth team, and they had been tasked with growing.
But as a growth team, you're really kind of touching every aspect of the business, and so they have to be really good friends and connected to every, you know, functional group. And in the end, the growth team, everybody ended up quitting because the CEO is not willing to give them enough cover for them to go break the eggs that you need to break Yep. In order to accelerate growth. And there wasn't a general buy in from the top that things could go wrong We will break things.
This growth team has the ability to reach into marketing, reach into product, reach into design, reach into engineering, and change things in order to make the thing grow, 100% a year, not a 120% a year, and people weren't on board. And so they were ineffective. And after 3 years, they just disbanded. They're like, oh, no. I can do this anymore.
That's probably the number one issue that I saw from people who read hacking growth that come back in there just like I got so excited about this, but my organization really didn't allow me to apply these in a way where it could be effective And that's the frustration that people have had over the years.
And so, you know, starting 2 or 3 years ago, I really started working on that problem and feel like I actually have a really good solution to that, which is the workshop programs that I think in 2019, I traveled about a 150,000 miles and put, you know, a few 100 companies through work shop, sometimes in group workshops, sometimes individually, but ultimately, it was cross functional leaders, sometimes entire companies and teams getting together for a full
day to really get on the same page around how do we drive success in this business working together and by getting everyone together for a full day and facilitating that collaboration, I was able to see a lot more companies effectively apply the lessons from hacking growth once you had the teams on the same page. It's amazing. It's similar to, like, a change manager. You have to go with cultural architecting.
It took me, like, a little trial and error site when through a period where I tried to, like, embed myself in companies and gradually help them make that change. And I just learned that, you know, I had about a 2 week honeymoon period. And then after that, I was just another pain in the ass, asking people to do things they didn't wanna do. And so really took that, you know, step out of the day to day. Everyone needs to look at the big picture.
And then essentially everything from the that metric that I talked about to getting a shared view of what does the growth model, what does the growth engine in this business actually look and they collaboratively design it together, then once they collaboratively design it together, then they're all on the same page about how does this business grow and then really teaching them the test learn growth hacking process, but, you know, if they're not
on the same page around what's the metric we're trying to grow, what's the value that that flex and how does this business deliver that value, then a systematic approach for driving improvement is gonna almost always fail if you're not starting from the same point. Are there any more recent examples the last 3, 4 years that you've either been involved in or that you've seen externally that have done a really great job? What have you learned from them?
Yeah. I mean, that's that's a big part of the reason why I launched my podcast is literally to find who are those new emerging companies, and I learned from every one of those use that I'm looking at the companies that are growing, like, really, really fast. So in the last couple of weeks, the last 2 of the last three interviews I had where one was zoominfo. So they're the at that point, I think they would beat on this now, but at that point, they were the most valuable IPO tech IPO of of 2020.
I interviewed their CEO Henry Shook. It was really interesting to hear using the same process that I've primarily used in B2C Companies, but he's used it in B2B Companies, and it was definitely a test learn process there. And then my most recent interview was Klarna, and they're out of Europe, the biggest private fintech company over a $10,000,000,000 valuation and interviewed their head of growth.
And it was just for them being able to look at a growth engine that was primarily around through partnerships initially. So embedding, they're in the kind of e commerce space to make it easier to pay for your purchases over time. So they partner with different e commerce sites, embedding on those sites, but then, just in the last couple of years, they've launched an app that separately helps you pay on sites where they may not already be partnered with them, also discover better deals.
And so it's just interesting and Flint to see how they've combined kind of both a b to b to c and then a direct to consumer b b to c approach to build that growth engine. But I think at the heart of almost every company that I've looked at it is the test learn process that's pretty well accepted across the company. Got it.
And getting that cultural acceptance, that language, that communication internally between all the people like head of growth is honestly a little bit like the shadow CEO, aren't they? Yeah. I mean, and they need the CEO profile in the sense that when you're marketing, you can maybe say you're doing a good job if you're not growing that, you know, our awareness is growing, but when growth is in your title, you better be growing or you're not doing your job right.
And so there's a lot of accountability in that role. And you know, essentially, unlike the CEO, you often aren't people bosses. So you have to find a way to get people across the company on board more through convincing them than commanding them in a sense. So I think in some James, probably harder than the CEO job. I would agree. I would agree with that. And I've seen people get stuck in those.
It's so they have all the weight on their shoulder, but none of the power to make it happen and When things go right, it's the CEO gets an interview, not the head of growth. Absolutely. But hopefully, if if they have a negotiated some good equity and some other things that they get well stated for it. You know, what are people getting wrong about growth? I mean, what do people come to you? They ask you the wrong questions where they're talking about the wrong things about growth.
Is there It's changed over time. Like, so it used to be when I first started working with other companies in shorter term roles, almost every CEO said I need someone to help me build awareness. And, like, that drove me crazy. It's like, so you Pete see 3000 advertisements a day and you think that you're going to on your $1000 budget actually break through and build any kind of meaningful awareness.
Like, so for me, it was a bit of an education transition where it's like Beller awareness by delivering experiences that lead to lasting relationships that lead to word-of-mouth. Eventually, you're gonna have great awareness, but focus on ROI driven marketing. Don't focus on spending money just to buy awareness.
Today, I think it's much more of it's everything from you know, just trying to push through a growth process when the rest of the team doesn't buy into it and so not having a strategy of how do I get everyone on board to thinking that you know, a test learned growth process driven by data can overcome a situation when you don't have product market fit. No one who tries the product, loves it enough to come back and use it, you're not gonna grow your way out of that.
You've gotta kinda go back to the fundamentals and think, okay. How do we get this product right before we really focus on growth? Right. So they're thinking that you can come in and slather a fix when, in fact, the issue is really at the core of things. Their mental model about what product is and what it does for people probably needs to shift, then you need to do a different product, reconfigured product, and then go again. And you gotta kinda go back You get it like playing soccer.
You gotta pass the ball backwards before you can pass it forwards. One of the challenges that I also see in companies, though, is less about what they're asking for and more about when I step into a company, the number of people that kind of, present things as facts when they're totally unproven when company is essentially built off of a bunch of unproven assumptions where most of them are wrong. That's a really tough environment.
So one of the first things that I try to do culturally, and I really learned this from Oleg and Go Practice is get people to think in terms of facts and hypotheses everything is a hypothesis until it's proven through experiments or data or you've got, you know, direct customer feedback enough times where you can really make case that that's a, you know, hypothesis is supported with a lot of of data and insights.
And so I think if you can get people in the mode of realizing that everything in the business as a guest, they're gonna be in a lot better position to be more flexible on changing the parts until they have it right and on ultimately figuring out how to drive growth and acceleration through that test learn process. Yep. I get it. And so for our early stage founder audience, If you could grab them by the shoulders and just say 1 or 2 things, what would be those messages for them around growth?
It would be, you know, get your shortlist of your must have users and learn everything you can about them. The most recent kind of hands on role that I had, I made a profile page of everybody who said that they'd be, basically, that they'd be very disappointed. They could no longer use the product and that they had a really high engagement rate as shown by the data, then it was like, okay. What are all the facts about this person? How did they discover the product?
What do they love about the product? And so instead of just showing kinda aggregated survey results, I would literally take the team through slide after slide after slide of these are the people we need to reverse engineer and create a lot more of. Mhmm. Got it. It's sort of the reverse thinking. So often the case, it's counterintuitive, but it's you know, a lot of people think I'll build it, and then I'll stick marketing language on it.
And what realized is, no, you actually think of the language and then you build the product to reflect the language that the customers actually want and your same thing around Pete. Like, find those people who want it and then build the product for them Beller the language for them. And it's a lot about getting those things in sync. So it's not always one thing precedes the other, but it it's about kind of making sure that they're in sync where ultimately it's all rooted in facts.
Yeah. Well, Sean, I really appreciate all of the book writing and the product building and the coaching and the flying 150,000 miles to sort of teach this mental model, this way of thinking to so many people so that they can improve their businesses and their lives, because it's hard to teach. And you are doing a big work to make sure that, as many people can learn this stuff as possible. I certainly from a big sure long term. I've known you now for, I don't know, 15, 20 years now.
It's like you've done a lot of great work to help a lot of people. So Thanks, Jen. Well, you too. I've definitely learned from you and I know you've done a good job of, you know, particularly in the NFX group of just all the companies going through there, how much value they get from that, but but also you've been out on the speakers, circuit plenty of James. Putting lots of important insight into how this stuff works and taught me along the way as well.
So constantly trying to get smarter about this stuff because I don't think you ever have mastery of it. That's right. I totally agree. Alright, my friend. Talk soon. Alright. Thanks, James. You've been listening to the NFX podcast. You can rate and review this show on Apple Podcasts, and you can subscribe to the NFX podcast on Apple Podcast pass, Spotify, Google podcasts, or wherever you get your favorite podcasts. For more information on building iconic technology companies, visit NFX, dotcom.