What is Growth Hacking & How Has it Transformed Over the Years?

As a buzzword, "growth hacking" is on its way out — but in 2010, it changed everything.
Mae Rice
February 22, 2020
Updated: August 18, 2020
Mae Rice
February 22, 2020
Updated: August 18, 2020

“It’s kind of a dirty word now,” Eric Siu told Built In, of the term “growth hacking.” As host of the podcast Growth Everywhere, Siu would know. And as CEO of Clickflow, a company that makes SEO experimentation software, Siu doesn’t make claims he can’t support with data.

eric siu growth hackingIn this case, he turned to Google Trends. “Growth marketing,” he pointed out, has always generated more interest than “growth hacking.” Lately, especially, interest in “growth hacking” has tapered off.

“It’s sort of an outward trend,” he said.

Which is funny, because in Silicon Valley, “growth,” “growth marketing” and “growth hacking” are roughly synonymous.

“It’s all just modern-day marketing,” according to Siu (left).

As a term, though, “growth hacking” has developed a reputation for shoddy quality and ethical fuzziness. Once a popular tech buzzword, it’s been co-opted and overused by people using what Siu calls “shady tactics.” (These tactics include actual black hat hacking, and running ads on porn sites.)

john thornton growth hackingJohn Thornton (left), the vice president of growth marketing at Cars.com, certainly doesn’t see himself as a growth hacker. He described growth hacking to Built In, politely, as “gritty” and “unique” — not appropriate for an industry leader like Cars.com.

“When you have relevance in [your] space,” he said, “you should be a little bit more conscious of how you expose your brand and your inventory across the web.”

That’s not to say Thornton never thinks about growth hacking. “If you’re blind to the ways that someone would try to growth hack the marketplace,” he said, “it exposes you to new competitors.”

The keyword there is “new.”

 

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Image: Shutterstock

What Is Growth Hacking? 

Back in 2010, when the term “growth hacking” was first coined, it meant improvised, innovative short-term growth strategies for early stage startups seeking relevance and, ideally, an IPO or major acquisition. Often funded with venture capital, these companies didn’t need to turn a profit. They didn’t need to protect their brands, because they didn’t have brands. No one knew they existed. They needed only one thing: to grow their customer base.

In the process, early stage startups could afford to break with tradition. In fact, they couldn’t afford not to. Traditional marketing was wildly expensive, and focused on metrics like brand awareness or click-through rates.

These are the metrics at the very top of the sales funnel — a diagram of the customer journey from I’ve never heard of this company to I’m buying in bulk from this company.

These top-of-funnel metrics aren’t so key for startups, though, as PayPal cofounder Dave McClure explains in his talk “Startup Metrics for Pirates” (above). In the early stages, a startup’s key metrics can be abbreviated to the acronym AARRR: [customer] acquisition, [customer] activation, [customer] retention, referrals and revenue.

These metrics are mainly about how customers behave on a company’s website. Marketers focus more on how customers get to a company’s website. But people who arrive on a company site and promptly leave aren’t customers, or likely prospects. For startups with single-digit teams, they’re not worth measuring yet.

So when startups hired veteran corporate marketers, there was an expensive disconnect.

“[T]hey’d spend hundreds of thousands of dollars on billboards,” Hiten Shah wrote. “Seriously. Billboards.”

In 2010, Shah — co-founder of FYI, Crazy Egg and more — coined the term “growth hacking” with two entrepreneur friends: Sean Ellis, founder of Growth Hackers, and Patrick Vlaskovits, author of The Lean Entrepreneur. They’d realized marketing wasn’t what their nascent companies needed — growth hacking was.

“A growth hacker is a person whose true north is growth,” Ellis wrote. “Everything they do is scrutinized by its potential impact on scalable growth.”

What is Growth Hacking?

The term "growth hacking", coined in the late 2000's, usually refers to cash-strapped startups that need to focus on extreme growth. These quick-growing companies need to build massive customers bases quickly and usually with little budgets. Growth hacking helps these companies to find innovative and out-of-the-box ways to market a product, while maintaining a small budget.

They probably don’t rent billboards. A growth hacker might not have a background in marketing at all. The most scalable growth strategies, which bring the cost of acquiring each new customer closer to zero long-term, often involve a new digital product — whether that’s an integration with another, bigger platform or a new free trial sign-up workflow. That meant people with backgrounds in marketing, engineering, product and beyond could succeed as growth hackers, as long as they thought outside the box and took risks.

In its early days in the lexicon, growth hacking solved a recruiting problem for early stage startups. An open “growth hacker” position didn’t bring in resumes from career marketers. It brought in a more technical, scrappy crowd, focused on a new project: growing a startup from a vaporous idea to multi-million dollar reality.

The term didn’t quite transform Silicon Valley though.

“I couldn’t tell you what chair I was sitting in,” Thornton said, of the first time he heard the term “growth hacking.”

He worked in the Bay Area back then, and recalled that “trying to figure out those quick ways to unlock value was really common” — especially among early ventures “trying to grab relevance.” The term “growth hacking” just restated an old aspiration in new, productive language.

“A growth hacker is a person whose true north is growth.”

At least at first.

Out of “growth hacking” came the concept of “growth hacks.” These short-term strategies, designed to attract as many new users with as little marketing spend as possible, proliferated in the early teens. Together, they coalesced into a playbook. This was the opposite of what a growth hacker — as Shah, Ellis and Vlaskovits initially envisioned it — needed. Growth hacking was the antithesis of a set playbook. It was supposed to be about innovation, creativity and spontaneity, like the hack that helped make Airbnb a household name (more on that below).

In a way, growth hacking was its own worst enemy.

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Photo: Airbnb

How Is Growth Hacking Used?

If you haven’t heard of Airbnb, you’re a medical marvel. Today, the company is a global enterprise spanning more than 200 countries. An average of two million people sleep in an Airbnb every night. The company is valued at more than $30 billion.

Once upon a time, though, Airbnb was a struggling startup with three employees. Founded in 2007, the company launched not once, not twice, but three times before it got off the ground (and into prestigious startup accelerator Y Combinator). It wasn’t until 2011 that the company hit its first major benchmark: a million nights booked on its platform.

That happened thanks, in part, to a savvy growth hack: a Craigslist integration, which let Airbnb hosts crosspost their listings to Craigslist in a single click.

This was a “hack,” rather than “a normal product integration,” because Craigslist didn’t particularly condone it. The company didn’t have a public API for outside developers, and presumably didn’t want to offer its competitor free marketing.

Craigslist had exactly what Airbnb needed to succeed, though — a huge audience, many of them seeking quirky, short-term rentals. So Airbnb engineers cobbled together an integration anyway.

The project posed serious engineering challenges. Posting to Craigslist requires filling out a form, so Airbnb needed to build a bot that could auto-populate Craigslist forms with Airbnb listing details. This was especially challenging because Craigslist isn’t one, central website, like Airbnb — it’s a network of regional websites. Airbnb’s bot had to navigate that, autonomously matching Airbnb listing addresses to their Craigslist region.

Ultimately, though, the integration worked for Airbnb. They were the only company using Craigslist as a marketing channel, and as former Uber growth leader Andrew Chen explained, that element of novelty often translates into strong clickthrough rates. (Meanwhile, well-trod marketing channels tend toward consumer ennui and low click-through, a phenomenon Chen calls “The Law of Shitty Clickthroughs.”)

By the time Craigslist blocked the cross-posting feature, interest in Airbnb had exploded.

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Image: Shutterstock

Growth Hacks Evolve Into Endless Experiments

This was a textbook case of growth hacking: Airbnb created an engineering-heavy, scalable marketing tool that boosted its relevance. The integration was a short-term solution, but it had long-term growth implications. To some, it looked like a company pulling itself up by its bootstraps; to others, it looked unethical.

Over the years, growth hacking examples like this one have leaked into the public sphere, and coalesced into a growth hacking playbook. Popular hacks include optimizing your website for search and giving users bonuses for recommending your product to friends.

“I would say like 90 percent of the tactics out there, I saw 10 years ago,” Siu said. “There might be a new channel that comes out every now and then: TikTok, LinkedIn Organic, etcetera. But to me, at this point a lot of the growth tactics are table stakes.”

This has made growth hacking vulnerable to Chen’s law of diminishing returns. Successful growth hacks usually involve some novelty, risk-taking and — most importantly — experimentation, which Siu sees as the key to successful growth.

So does Jeff Bezos. In a 1997 letter to Amazon shareholders, Bezos argued that there are two kinds of decisions: reversible and irreversible. The vast majority are reversible, and Amazon doesn’t overanalyze reversible decisions. Instead, the company tries a likely looking option, and pivots or abandons ship if it doesn’t work.

This has led to some flop products, like Fire Phone, Siu explained, but it also helped Amazon turn that failed phone into its wildly successful virtual assistant, Alexa — and grow from a digital bookseller into the fifth biggest company in the United States.

Now, experimentation may be key to growth, but that doesn’t mean building a constant stream of brand-new stuff. As Dave McClure puts it in “Startup Metrics for Pirates”: “Don’t just build [tons] of features! That’s wrong!”

Instead, McClure recommends startups spend 20 percent of their horsepower on making brand-new things, and 80 percent of it optimizing existing features through smaller-scale experimentation.

“I would say like 90 percent of the tactics out there, I saw 10 years ago.”

This is exactly what Siu’s SEO software, Clickflow, does: it helps users conduct hundreds of A/B and multivariate tests on an existing website to optimize its search rankings and conversion rates. Tweaks to even tiny details of a site, like button color and call-to-action phrasing, can improve key metrics.

Of course, not all experiments are equally worthwhile. Growth teams, especially small ones with limited resources, need to prioritize. One common framework for doing this, Siu noted, involves scoring prospective experiments on impact, confidence and ease. In other words: How much could this impact essential metrics? How confident are we that this impact will come to fruition? How easy is this experiment to run?

The higher the score, the more worthwhile the experiment.

This ethos of constant experimentation generates proprietary, real-time data — which is essential, because what worked for one company might not work for another. And data-driven insights from third parties can get muddled, as any media organization that made the ill-fated pivot to video can tell you.

Constant experimentation also connects “growth hacking” for early stage startups and “growth marketing,” its mainstream doppelganger that has found a home at major corporations.

inside a cars growth experiment
Photo: Cars.com

Inside a Cars.com Growth Experiment

Take Cars.com. The company has been reporting growth percentages in the double digits — “successful traffic,” Thornton said. That’s thanks, in part, to the steady stream of experiments that he and his growth marketing team run on the company website.

Thornton especially values experiments run in controlled environments. These aren’t intended to lead to a full rollout; instead, they “push an idea to the extreme,” Thornton said, and help the company decide where to position itself on a spectrum.

A recent experiment, for instance, helped leadership decide where they wanted their website to fall on the spectrum between “a site riddled with pop-up ads” and “a site with no ads at all.”

To do that, “we took every ad off the site,” Thornton explained. “We got it as fast as possible, reduced any point of user friction.” The growth marketing team created a test version of Cars.com that “you would look at ... from a design perspective and say, ‘That doesn’t look like the websites I’m using today.’”

Users behaved differently on the test site, needless to say. Its streamlined, zippy interface made it so easy for customers to express interest in buying a car, users started expressing interest in cars left and right. It became less likely that a sales lead from Cars.com would translate into a purchase.

There’s a tradeoff, the growth team learned, between the quality of the customer experience (which improved during the test) and the quality of the sales leads Cars.com passes on to car dealerships (which deteriorated during the test).

Ultimately, Cars.com didn’t roll out the super-fast site. Instead, they learned that ads were important to their business in more ways than one. Not only did they bring in revenue, but “adding some healthy friction ... helped us to weed out people who were not serious car shoppers,” Thornton said.

 

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Image: Shutterstock

Why Does Growth Hacking Matter?

Let’s circle back to growth hacking. If the term is losing relevance — if it’s “an outbound trend,” as Siu put it — why does it matter?

Because when it first emerged, it clarified something many startup founders had experienced, but few had articulated: traditional marketing efforts don’t make sense for early stage ventures. The problem wasn’t that some startups were hiring dud marketers — it was that they shouldn’t have been hiring marketers at all.

This saved startups tons of money, but it also led to what researchers call “architectural innovation” — a merging of marketing, product and engineering. No longer were these departments operating in separate silos, evaluating themselves on separate metrics. Instead, they all joined the same growth hacking team, and focused on the same metrics.

“In organizations where engineering is completely separate [from marketing], technology tasks to support marketing are almost always de-prioritized,” writes Brian Balfour, former VP of growth at Hubspot.  “Marketing has to fight tooth and nail just to get a little bit of an engineer’s time.”

He calls this “a recipe for failure.”

Not only does the growth structure prevent that kind of failure — it makes good common sense to merge marketing with product. Thornton noted that product is one of the four Ps of marketing, or the four key factors in whether a marketing effort succeeds or fails. (The other three: promotion, price and place.) If they’re theoretically linked, it makes sense to link them organizationally too.

In fact, since 2010, that link has allowed for a new type of product- and engineering-enabled marketing.

“I think [growth professionals are] always going to be a demand.”

This wouldn’t surprise the writer Tim Harford. An organization’s architecture is intimately linked to its innovation and lack thereof, he argued in the Financial Times. When giant, market-leading companies miss the boat on new trends — say, when Sony missed the boat on the digitization of music — they’re rarely blindsided. Instead, their organizational structure keeps them from acting quickly on what they know. Sony leadership knew digital music would be huge. The company had, in fact, already developed a rough approximation of an iPod: the Memory Stick Walkman. But this product didn’t clearly belong to any one Sony department — so it floundered in organizational no man’s land.

In much the same way, Airbnb’s Craigslist hack might have floundered in organizational no man’s land if product and marketing were two separate departments at the startup. “[A] traditional marketer would not have come up with this, or known it was even possible,” according to Andrew Chen.

But Airbnb engineers — or, rather, growth hackers — knew.

Sure, “growth hacking” is an outmoded term at this point. But its legacy lives on in growth marketing (or just growth, if you’re in a hurry), a major tech field that didn’t exist 10 years ago.

Siu said that, when he interviews a startup founder for a podcast, at the end of the interview he always asks how he can help their ventures. Their frequent response: They need a growth leader.

“I think [growth professionals are] always going to be a demand,” Siu said. “As long as there’s businesses and there is Earth, then I think it will be needed.”

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