Growth Hacker Marketing (Excerpt)

This text is annotated! Click on the highlighted lines to read Ryan Holiday's additional commentary. Nearly two years ago now, on what seemed like a normal day, I got in my car to leave my house, assuming it would be no different from any other workday. I had read the morning news, dealt with a few important employee issues over the phone, and confirmed lunch and drinks meetings for later in the day. I headed to the athletic club—a swanky, century‐old private gym favored by downtown executives—and swam and ran and then sat in the steam room to think. As I entered the office around ten, I nodded to my assistant and sat down at a big desk and reviewed all the papers that required my signature. There were ad designs to approve, invoices to process, events to sponsor, proposals to review. A new product was launching, and I had a press release to write. A stack of magazines had arrived— I handed them to an employee to catalog and organize for the press library. My job: director of marketing at American Apparel. I had a half dozen employees working under me in my office. Right across the hall from us, thousands of sewing machines were humming away, manned by the world’s most efficient garment workers. A few doors down was a photo studio where the very ads I would be placing were made. Excepting the help of a few pieces of technology, like my computer and smartphone, my day had begun and would proceed exactly as it had for every other marketing executive for the last seventy‐five years. Buy advertisements, plan events, pitch reporters, design “creatives,” approve promotions, and throw around terms like “brand,” “CPM,” “awareness,” “earned media,” “top of mind,” “added value,” and “share of voice.” That was the job; that’s always been the job. I’m not saying I’m Don Draper or Edward Bernays or anything, but the three of us could probably have swapped offices and routines with only a few adjustments. And I, along with everyone else in the business, found that to be pretty damn cool. But that seemingly ordinary day was disrupted by an article. The headline stood out clearly amid the online noise, as though it had been lobbed directly at me: “Growth Hacker Is the New VP [of] Marketing.” What is Growth Hacking?The end goal of every growth hacker is to build a self-perpetuating marketing machine that reaches millions by itself.—AARON GINN There’s no business like show business. Yet, when it comes right down to it, that’s the industry every marketing team—no matter what business they’re actually in—famously put it, nobody knows anything—even the people in charge. It’s all a big gamble. Which is fine, because their system is designed to absorb these losses. The hits pay for the mistakes many times over. But there is a big difference between them and everyone else in the world. You can’t really afford for your start‐up to fail; your friend has sunk everything into her new business; and I can’t allow my book to flop. We don’t have ten other projects coming down the pike. This is it. It was only a matter of time before someone smart came along and said, “It doesn’t have to be this way. The tools of the Internet and social media have made it possible to track, test, iterate, and improve marketing to the point where these enormous gambles are not only unnecessary, but insanely counterproductive.” That person was the first growth hacker. A New WayIf that old system is an outgrowth of one hundred years of marketing precedent—designed to fit the needs of twentieth‐century corporations—then the new mindset began at the turn of the millennium. It began and evolved to meet the new needs of a new type of company—with its own kind of marketer. Flash back to 1996, before Hotmail had launched as one of the first free web mail services and became an early example of a product to “go viral.” As Adam Penenberg describes the meeting in Viral Loop, Hotmail’s founders, Sabeer Bhatia and Jack Smith, sat across the table from Tim Draper, the famous venture capitalist. He told them that he thought the product—web‐based e‐mail— was great but wondered how they’d get the word out. Bhatia’s first instinct was that industrial marketing approach we’ve been talking about: “We’ll put it up on billboards,” he said. Draper nixed such an expensive approach for what would be a free product. So they kicked around more ideas. Radio ads? Same problem. What about sending an e‐mail to everyone on the Internet? Draper suggested. That was an equally old mindset— spam doesn’t work. Then Draper happened accidentally on growth hacking. “Could you,” he asked, “put a message at the bottom of everybody’s screen?” “Oh, come on, we don’t want to do that!” “But can you technically do it? . . . It can persist, right? You can put it on one message, and if he sends an e‐mail to somebody else you can put it on that one, too, right?” “Yeah, yeah,” they replied. “So put ‘P.S.: I love you. Get your free e‐mail at Hotmail’ at the bottom.” This little feature changed everything. It meant every e‐mail that Hotmail’s users sent would be an advertisement for the product. And that advertisement was effective not because it was cute or creative but because it showcased an amazing product that many people wanted and needed. Each user meant new users; each e-mail meant more e‐mails and more happy customers. And most crucial, all this could be tracked and tweaked and improved to drive as many users as possible into the service. You have to understand how revolutionary this was at the time. Consider that just a few years later, Pets.com would try to launch with a multicity television and outdoor advertising campaign that culminated in a $1.2‐million Super Bowl commercial and an appearance at the Macy’s Thanksgiving Day Parade. Or that Kozmo.com would blow through literally hundreds of millions of dollars with advertising campaigns featuring the Six Million Dollar Man before collapsing like Pets.com in the burst dot‐com bubble. But after adopting Draper’s suggestion—which the founders resisted for the first few months because it seemed so simple—growth was exponential: one million members within six months. Five weeks after that, membership had doubled again. By December 1997, with nearly ten million users, Hotmail was sold to Microsoft for $400 million. It took just thirty months from its launch for Hotmail to accumulate its thirty millionth user. And though it has now been renamed, Hotmail still exists, unlike the majority of its peers from that era. This is the power of the new approach. A $400‐million brand was launched and built with just a $300,000 investment—what a Hollywood studio or a Fortune 500 company might spend on a decent premiere party or single television commercial. Implemented and executed by people without the slightest bit of marketing experience. And in case you think Hotmail was some fluke of the tech bubble, let me remind you that a few years later, Google launched Gmail—now the dominant free e‐mail service—with essentially the same growth hacking strategies. First Google built a superior product. Then it built excitement by making it invite‐only. And by steadily increasing the number of invites allowed to its existing user base, Gmail spread from person to person until it became the most popular, and in many ways the best, free e‐mail service. Enormous services launched from tiny but incredibly explosive ideas. That’s what we’re going to study in this book.