How to build a growth model?


(Ivan Kreimer) #1

Hey guys,

As you probably know, the Growth Hacking community is full of people that talk about “growth hacks” and tactics of that sort, but nobody talks about what really maters: processes and systems. I know that may sound a little bit too abstract, but what I mean is what matters to unlocking a company’s growth is understanding their growth processes and systems that fuel that same growth.

This “insight” came from this article I found on OnStartups about Sidekick’s growth approach that explains how a company like Sidekick measures their growth. What it says is that the best way to actually understand a company’s growth is to have a growth model that helps you isolate the different variables and work on each of them separately.

However, that article doesn’t actually explain how to do that, it just shows their model. So my question is, how do you actually build a growth model? Nobody has ever spoken about that, and that’s one of the most important thing of growth hacking.

Any help would be highly appreciated!

Best,
Ivan


#2

Hello @ivankreimer,

I just read the article and found it awesome.

I think is difficult to create a unique model because each one has his own needs. But the point is to define your marketing/sale funnel from visitors (or even impressions) to customers. It has to be as detailed as possible: visit -> signup -> activation1 -> activation2 -> etc -> customer. This will give you a general view about what is failing in your process. Not enough visitors ? focus on acquisition, not enough signup ? check your message/landings… etc.

To do it, you have to break down the funnel step, define a clear and meaningful goal to improve it and work on it.

Everything has to be measured so you have enough data to make correct decisions. And of course, as they say in the article, to know your product.

I love how they measure everything and make their decisions basing on that data.

Bart.


(Ivan Kreimer) #3

Hey @Bart,

Thanks a lot for your answer! You’re right, the key is to start with a very basic model of how a company acquires, activates, retains and charges its users. And from there things can get more complicated or not.

I think knowing about business and financial modelling is important in here, as it helps you visualize your business and your growth better.

Thanks!
Ivan


(Yair Spolter) #4

Thanks for the awesome article.
Brian Balfour did a webinar on this yesterday - it’s fantastic!


(Ivan Kreimer) #5

It’s fantastic indeed! Thanks a lot for sharing it!


(Erik Anderson) #6

@andrewchen actually had a great post on this, and if you download the excel sheet and run your own numbers on it, you’ll figure out very quickly how the formulas etc. work.

I would definitely recommending learning how to use and work with these equations/this model as it will both impress investors and show you very real retention rates based on your “viral coefficient”…of course everyone wants viral growth…but not everyone asks if it’s the best, or even a relevant, model for their business.

When And Why Do Apps “Jump the Shark”?

The model is a great way to estimate potential revenues too… @ivankreimer.


How did you find me?
(Ivan Kreimer) #7

Hey @ErikAnderson , thanks an amazing article! I’ve never seen it before. Thanks for sharing it! And thanks to @andrewchen for writing that amazing article.


#8

Hey @ivankreimer, you can find this new article of @PierreLechelle http://www.pierrelechelle.com/growth-hacking-strategy interesting. He defined in an easy and clear way how you could plan your strategy.


(Ivan Kreimer) #9

Hey @Bart thanks a lot for sharing this article! I will take a look at it. It looks really good and promising. Thanks!


(shawn) #10

Nice post @YairSpolter - This was a great webinar.


(shawn) #11

@ivankreimer

There’s a number of ways to look at building a growth model. Balfour’s process is brilliant. He’s big on OKR, and a few months ago pointed to these lectures from Spark Capital for explaining how to use OKR. You might find them helpful.
Nabeel Hyatt - OKRs and Goal Setting Part 1: https://vimeo.com/92637308
Jon Tien - OKRs and Goal Setting Part 2: https://vimeo.com/92644424

Dan Martell’s take is a little higher concept, but great as well. In his posts, he highlight’s Andy Johns’s growth model method, which shares some ideas with Balfour. Johns is former growth at Facebook, Quora and now Wealthfront: http://www.danmartell.com/category/growth-engine/
Those posts are superb.

Johns also touches on his model process here:

Andy John’s growth model equation is based on Drake’s equation, explained here: https://www.harrisonmetal.com/library/drake-s-equation

Balfour uses a similar concept, which is basically “what are the inputs that make up the output we want?” then “let’s work on the smallest of inputs that will make the biggest positive impact on the output.”

Also, great link from @Bart to @PierreLechelle - this is another solid post.

Also, I would throw in for breadth the book FullScale by Anthony Richardson - http://www.amazon.com/FULL-SCALE-Grow-Startup-Without-Plan-ebook/dp/B00NTC5G28


(Ivan Kreimer) #12

Wow @shawn thanks a lot for the reply! I will take a look at Dan Martell’s articles, and Andrew John’s video, I don’t know why I didn’t look at it before! Also, Full Scale was already in my reading list, but now it’s a priority :smile:

I just have one question, do you think OKRs are a big thing for growth models?

Thanks!


(shawn) #13

@ivankreimer happy to helpful :smile:

OKRs are more for setting the rythym of running the model, achieving goals, etc.

The good thing about OKRs is if you adhere to them, it forces you to take meaningful action. This builds momentum and progress for a growth team (or individual). There’s a reason why Balfour loves them. Momentum is key.

I personally like OKR a lot, simply because even executed poorly, it’s better than no plan at all.

Regarding FullScale, this is a different approach than the others, but a strict adherence to taking meaningful actions still applies.