Sean Ellis: Growth-hacking hard as it needs cross-functional coordination: Sean Ellis

Silicon Valley-based angel investor, founder of software analytics firm Qualaroo, and community platform GrowthHackers, Sean Ellis is famed for coining the phrase “growth hacking” back in 2010 to showcase how technology upstarts rapidly grow their customer base. Ellis’s book ‘Hacking Growth’, co-authored by Morgan Brown, is a playbook for companies pushing for sustainable growth, derived from his experience of working at startups like Dropbox, Eventbrite, Lookout in their early stages. ET sat down with Ellis on the sidelines of Bangalore Growth Fest hosted by marketing services firm IncrementumX to discuss his plans in India, the growth-at-all-cost mindset among startups, and tech valuations. Edited excerpts.

How did you come up with the phrase growth hacking?

Back in 2010, I wrote a blog post where I recommended hiring a growth hacker for startups. Somebody needs to be focused on getting people in the door to have experiences with the product and build a brand. In a startup, you don’t have that luxury, so trying to scrutinise every single activity you do, every single dollar you spend can impact your ability to acquire and retain customers. Then Andrew Chen (general partner and venture capital fund Andreessen Horowitz) wrote a blog post around six months later… where he said growth hacker is the new VP of marketing. That’s when it took off.

What is growth hacking? How has its understanding evolved over the years?

The best way to think about growth hacking is that it is a scientific method to analyse, test, and learn from all your projects. It can be applied at any company. What works changes year to year, but the process by which you figure out what works hasn’t changed. My book Hacking Growth has been read by 750,000 people and yet, it isn’t really acted on by many companies. I think that’s because it’s hard to retroactively implement the strategy. People get excited about it and then they fail because it requires cross-functional cooperation from teams. Most people are not used to working together.

Which are the US startups that have successfully implemented growth hacking?

Amazon is still a startup that is why they continue to be so successful. In my presentation today, I had a quote about the success of Amazon as a function of how many tests it does per day, month, and year. They have this test-driven culture. Facebook is also like that and has a growth team culture. There are obviously new emerging ones, but the commonality is that almost all of them had this in the early DNA of their businesses.

What are your plans for India?

I go back and forth from teaching in academia to doing six months and full-time hands-on roles. I’ll be taking up another one probably in about six or seven months with two companies that I’ve met here. YogiFi— I really liked what they’re doing in the space of yoga, and the second is a startup in the space of football. I liked the entrepreneur; his company is on the brink of getting the product market fit… I’ve not had these conversations with a company in any of the other countries I’ve been onthis tour so far.

What do you make of declining valuations of startups in tech worldwide?

Unfortunately, in the startup world, the company can be the same quality in one period and then next the multiples are way down. It plays out in the cyclical nature. We saw the 2020-2021 period when the Zooms and Pelotons of the world were overvalued and then those companies really suffered afterwards. Now, it looks like they’re a terrible business, but they still can be the same great business.

How do you see the approach of growth at all costs panning out in tech?

Spend-driven growth does not scale long-term. Spending dollars uncontrollably gives a diminishing return. And suddenly, tech that is not growing, fast loses value. If you can figure out how to build a growth engine that is based on passionate users, then it works. This is what got me excited about the two startups I’ll be working with from India.

How does India fare in the tech and startup ecosystem? What about China?

I’ve always thought of India as an IT hub. I would love to see India be super successful with tech. it’s obviously a massive opportunity, but it’s also like an extremely price sensitive market. As for China, it was where you produced cheap gadgets but with the internet, suddenly you had these massively successful companies that came out of China. Which is why it’s not a surprise that my book’s success has been so big in China with 600,000 copies being sold. This experimental mindset drove China further up.

Silicon Valley-based angel investor, founder of software analytics firm Qualaroo, and community platform GrowthHackers, Sean Ellis is famed for coining the phrase “growth hacking” back in 2010 to showcase how technology upstarts rapidly grow their customer base. Ellis’s book ‘Hacking Growth’, co-authored by Morgan Brown, is a playbook for companies pushing for sustainable growth, derived from his experience of working at startups like Dropbox, Eventbrite, Lookout in their early stages. ET sat down with Ellis on the sidelines of Bangalore Growth Fest hosted by marketing services firm IncrementumX to discuss his plans in India, the growth-at-all-cost mindset among startups, and tech valuations. Edited excerpts.

How did you come up with the phrase growth hacking?

Back in 2010, I wrote a blog post where I recommended hiring a growth hacker for startups. Somebody needs to be focused on getting people in the door to have experiences with the product and build a brand. In a startup, you don’t have that luxury, so trying to scrutinise every single activity you do, every single dollar you spend can impact your ability to acquire and retain customers. Then Andrew Chen (general partner and venture capital fund Andreessen Horowitz) wrote a blog post around six months later… where he said growth hacker is the new VP of marketing. That’s when it took off.

What is growth hacking? How has its understanding evolved over the years?

The best way to think about growth hacking is that it is a scientific method to analyse, test, and learn from all your projects. It can be applied at any company. What works changes year to year, but the process by which you figure out what works hasn’t changed. My book Hacking Growth has been read by 750,000 people and yet, it isn’t really acted on by many companies. I think that’s because it’s hard to retroactively implement the strategy. People get excited about it and then they fail because it requires cross-functional cooperation from teams. Most people are not used to working together.

Which are the US startups that have successfully implemented growth hacking?

Amazon is still a startup that is why they continue to be so successful. In my presentation today, I had a quote about the success of Amazon as a function of how many tests it does per day, month, and year. They have this test-driven culture. Facebook is also like that and has a growth team culture. There are obviously new emerging ones, but the commonality is that almost all of them had this in the early DNA of their businesses.

What are your plans for India?

I go back and forth from teaching in academia to doing six months and full-time hands-on roles. I’ll be taking up another one probably in about six or seven months with two companies that I’ve met here. YogiFi— I really liked what they’re doing in the space of yoga, and the second is a startup in the space of football. I liked the entrepreneur; his company is on the brink of getting the product market fit… I’ve not had these conversations with a company in any of the other countries I’ve been onthis tour so far.

What do you make of declining valuations of startups in tech worldwide?

Unfortunately, in the startup world, the company can be the same quality in one period and then next the multiples are way down. It plays out in the cyclical nature. We saw the 2020-2021 period when the Zooms and Pelotons of the world were overvalued and then those companies really suffered afterwards. Now, it looks like they’re a terrible business, but they still can be the same great business.

How do you see the approach of growth at all costs panning out in tech?

Spend-driven growth does not scale long-term. Spending dollars uncontrollably gives a diminishing return. And suddenly, tech that is not growing, fast loses value. If you can figure out how to build a growth engine that is based on passionate users, then it works. This is what got me excited about the two startups I’ll be working with from India.

How does India fare in the tech and startup ecosystem? What about China?

I’ve always thought of India as an IT hub. I would love to see India be super successful with tech. it’s obviously a massive opportunity, but it’s also like an extremely price sensitive market. As for China, it was where you produced cheap gadgets but with the internet, suddenly you had these massively successful companies that came out of China. Which is why it’s not a surprise that my book’s success has been so big in China with 600,000 copies being sold. This experimental mindset drove China further up.