In a recent live event, my friend Timo Dechau and his collaborator Juliana asked the question: “Is analytics a growth function?” It’s a good question, but it has been bothering me ever since.
In a separate post Elena Verna (of Elena’s Growth Scoop) writes:
Growth is rooted in data. It’s about running activities that are measurable, trackable, and tied directly to user behavior and monetization outcomes. Marketing, on the other hand, includes plenty of things you _can’t_ (and shouldn’t try to) measure in the same way - brand, comms, PR, community.
It took me a while to figure out why it bothered me.
I don’t consider myself a “growth hacker” and I don’t know much about it, but when an executive is asking you for “actionable insights” aren’t they looking for just that? And if that’s the case, does this mean you now have to learn growth hacking skills?
That’s when I figured it out. My answer now? Not necessarily!
I’m not interested in learning growth hacks necessarily. My main interest is figuring out how to help organizations improve. And that doesn’t necessarily mean growth.
Improvement doesn’t always mean growth
The concept of growth hacking comes from the world of Venture Capital. In that world, exponential growth is necessary in order for a single portfolio company’s “exit event” (acquisition or going public) can make up for the entire portfolio regardless of the other company’s successes.
However there are many businesses for whom improvement might mean “become profitable” or “build an enduring company” or “maximize freedom for the founder.” All these companies can benefit tremendously from using data to improve without necessarily requiring growth hacks.
Take Prefect for example, a startup run by Jeremiah Lowin, (a fellow Postgres and SQL hacker) who recently decided to eschew growth in favor of building a sustainable startup.
He writes:
Becoming a profitable business frees us from that [capital] constraint. A startup can do extraordinary things when it doesn’t operate under the shadow of its next fundraise. Our decisions can now flow purely from what creates value for our customers, not from what extends our timeline.
Does this mean they no longer needs data? Absolutely not! In fact data can help them uncover opportunities for serving their existing customers even better, embedding themselves deeper in the customers businesses and building a more solid foundation.
And that’s why analytics needs to start from the top, from the goal of the organziation, the strategy for achieving that goal, and work downwards to figure our success factors, how to measure them and how to drive them.
Articles I’ve been reading
This week’s articles are about growth of which there’s too many to list, but these are some of my favorites
How Superhuman Built an Engine to Find Product Market Fit
A fantastic article on applying analytics to find PMF. My favorite part is the application of good ol’ fashioned segmentation to find and focus on the right audience for Superhuman.
As an early-stage team, you could just narrow the market with preconceived notions of who yo_u think_ the product is for, but that won’t teach you anything new. If you instead use the “very disappointed” group of survey respondents as a lens to narrow the market, the data can speak for itself — and you may even uncover different markets where your product resonates very strongly.
11 hard truths about working in growth
Elena Verna’s Growth Scoop is a fantastic resource for growth hacking ideas and applications.
Here is an example of how it usually looks (seen first hand at one of the companies I worked at): paid marketing would strut into Quarterly Business Reviews bragging about “crushing it” - lower CAC, more traffic, higher conversions. They’ve hit their goals! Everyone give each other high-fives! But wait… The overall business was struggling and (gasp!) shrinking. Even overall acquisition was down.
A Quantitative Approach to Product Market Fit]
Another fantastic, deep dive article on finding PMF for a SaaS business. I especially liked the explanation of accounting for SaaS.
The first technique we use at Tribe Capital when looking at a company is “growth accounting,” which breaks down overall growth in some activity across specific customer segments. The activity can be anything, though revenue and product engagement are the most common examples of growth accounting.
That’s it for now, until next time