Alex Schultz (part 2): an introduction to growth hacking

Stanford course CS183B: How to start a startup . Started in 2012 under the leadership of Peter Thiel. In the fall of 2014, a new series of lectures by leading entrepreneurs and Y Combinator experts took place:



Alex Schultz ( Alex Schultz ): In the notes to this lecture, I put a lot of references to studies of people who came up with ingenious decisions on how to create a “magic moment” for the subsequent retention of users. Take, for example, the retention curve that I showed earlier - there is such a person, Danny Ferante, who is amazing about the retention curves. As for the “moments of magic”: there are links to two videos in the lecture notes - in one of them Chamat [Palihapitya] talks about the growth of companies - and this person created a team to grow business on Facebook, and in the other I and my girlfriend Naomi [Gleyt] at the f8 conference four years ago also talks about growth. In both of these videos, we mention the very "moment of magic." What do you think when you register on Facebook, what is this “magic” for you?
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Audience: In what you see your friends on Facebook.

Schulz: Exactly. Exactly. I talked to many companies that are trying in every way to complicate their products, but with regard to Facebook “magic” is very simple: you see the first photo of one of your friends on Facebook and immediately understand what the essence of the service is. Zuckerberg told in YCombinator how to help the user find 10 friends on Facebook in the first 2 weeks of using the social network - it is for the sake of this “magic moment” that we focus on this metric. For social media, one of the most important things is the ability to connect with friends, because without it, your news feed will be empty, and you will not want to return to the site. You will not receive any notifications, and none of your friends will tell you what they lack on the site.



So, for Facebook, “moment of magic” is the moment when you see the photos of your friend on the site. Everything we do for the growth of companies is aimed at that, having started registering on LinkedIn, Facebook, Twitter, WhatsApp, you have seen the people with whom the service offers to contact, subscribe to them, write them a message as soon as possible - because within a particular vertical, one of these things is of paramount importance.

Take eBay - for them, it is of paramount importance that you find a unique product that is right for you, even if you are looking for PEZ candies or a broken laser pointer - what you really need and what you want to possess. “A moment of magic” for eBay - when a user sees on the site exactly what is missing in his collection.

For AirBnb, “magic” begins when you see the original list of housing options and find in it the place where you really would like to stay. Similarly, when you put up your own home on AirBnb or some things on eBay, the “moment of magic” is for you - when you are paid for the first time. You should ask Brian [Chesky] about this - they [in AirBnb] created and shared amazing storyboards on the network, dedicated to the user journey of the AirBnb user and how this is an exciting process. He will speak after about 3 lectures, and he tells about these “magic moments” and how to give users a feeling of love, joy and the like.

Think about the “moment of magic” for your product and try to make users feel it as early as possible, because this way you can turn your user retention curve into an asymptote and from the retention rate of 60% easily go to 70%, giving the person what “Tie” it to your product.

Another thing that is worth thinking about, and which many in the Valley do not understand: when we think about growth, we begin to optimize for ourselves. My favorite example is notifications . Again, I talked and consulted many different companies, and a representative of each of them, when it came to notifications, said: “Oh, I myself receive too many notifications, I think it is worth optimizing.” Well, and experienced users of your site - do they leave it because of too annoying notifications? Not. Then why optimize it? These are, most likely, adults who, if necessary, can set up the filters themselves.

What you should think about is your “marginal” customer [or, in this case, the user]. About who did not receive the notification on the selected day, month or year. Creating a terrific product is built around the formation of advanced users, right? Creating an exceptional product naturally implies optimizing it for those who use the product more than others, but when it comes to growth, those who already use your product should not worry you. Danny Ferante’s video also touches on the topic of the growth accounting model that we use to understand growth in our company.

We estimated the number of new users, “recovered” users (those who did not use Facebook for a month, and then returned to the site) and the number of “lost” users. For almost every product I studied, I saw that after several years since entering the market, the number of “lost” and “recovered” users exceeds the number of new customers. And all these “lost” and “recovered” users have a small number of friends , do not find close people among the audience of the social network - all those wonderful things that we create on Facebook are not available to them. Therefore, the number one task we aimed at was to enable them to find their 10 as soon as possible or how many friends they needed there. So think about limiting users, not about your own needs when you are thinking about growth.

To work on growth, you need to remember the main guideline of your company: this is one single metric [more details in the first part ], guided by which and striving to increase which your company will be successful in the long term. Many of these metrics, by the way, are related to each other, so if you choose almost any - the one that you find the most suitable and that relates to your mission and values ​​- you can use it as a guide.

In reality, the contingent of active users in the context of day and month strongly correlates, so that we could take either of these two metrics. The amount of content that users exchange is also correlated with their number, because as soon as you add a user, it begins to distribute the content. Very many things in this regard are interconnected. Choose one metric that suits you and get ready to work with it for a long time. Just set a goal, remember about the “moment of magic”, find out for yourself exactly when the user experiences it, and your metric will bring you closer to the chosen benchmark - while thinking not about yourself, but about marginal users. These are the most important things for working on growth. Everything else should come from this idea.

The last area of ​​our discussion is tactics. As a rule, in Silicon Valley, many believe that marketers are not needed. I also thought so when I studied physics, and since you guys are learning from technical specialties, then you also probably think that we, marketers, are terrible and completely useless personalities.

"Create a product, and users will come themselves." This phrase is repeated in the Valley like a mantra, but I do not believe in it, I believe that it is necessary to work on attracting users.

The first tactic I want to talk about is “internationalization”. Facebook entered foreign markets too late. Sheryl [Sandberg] talked about this in public speeches, and I definitely agree with her.

One of the biggest barriers to our long-term growth, and one of the most difficult things we have come across, are the countries in which Facebook clones have appeared. We had tons of copies - whether it was Vkontakte, Mixie, Cyworld, Orkut - these social networks were created all over the world at a time when Facebook focused only on US users. Entering the world market has become an important barrier that we needed to overcome, and it is very important to remember about overcoming barriers when you are working to grow companies.

Facebook was initially a product only for college students, so every college whose students joined our social network was a “taken” barrier for us. Then Facebook went beyond the product for colleges and began to expand to a level that included high school students. At that time, I had not yet worked for the company, but I know that this was a turning point, people asked themselves whether Facebook would survive, whether the culture of the site already sustained this step.



Later, when Facebook went beyond the scope of the product for high school students and students and became a social network for everyone, the company experienced a huge shock - it happened shortly before I joined our team - the number of users took off to 50 million, and we broke through this wall. " When this happened, there were many existential questions within the company, such as whether a social network could attract more than 100 million users .

Today it sounds silly, but at that time no one in the world has reached that level yet. All ranged from 50 to 100 million users, and we were worried that it would be impossible to go beyond that. At that moment, the team responsible for the growth of the company joined in; Chamat brought us all together. Before a large crowd of people, he announced that he wanted to fire me for many reasons and probably would have done it, but on the other hand, without him, none of us would have stayed in the company: we were a very strange team - but it worked.

Two things that we have done and which, it seems to me, great contributed to our growth, are that we:

• focused on finding a user on the site 10 of his friends in the first 2 weeks
• and tried to "bring" the user to the "moment of magic."

Zuckerberg initiated all this, because everyone else had paralysis of analytical thought, we thought: “What is this: a causal relationship? Or a correlation? ”Zuckerberg said then:“ Do you really think that if a person on Facebook has not a single friend, will he remain our user? Are you crazy? "

The second obstacle was access to international markets. When we launched this project, we, it seems to me, really did two things well: first, even though we were late (and worried about it), we were able to make a scalable product, we moved slowly so that start growing fast. The whole history of this process can be found in the video from Naomi. We collected all site elements that have a string type and, using our translation extraction script, created a platform for the community to translate the site into other languages ​​- not only professional translators worked with us, we can say that all site users worked with us. We received a translation into French in 12 hours. The site has now been translated into 104 languages ​​- this is a localization made on Facebook for Facebook, and translations into 70 of these 104 languages ​​were created within our community. It took us a while to create something that allowed us to scale in the end.

Secondly, we correctly prioritized the localization issue. At that time, the four most popular languages ​​on the Internet were French, Italian, German, and Spanish (and Chinese, but they are blocking us in China). And now look at today's distribution of languages. Italian is no longer among the most popular, French and German are also about to be at the bottom of the list. Last year, the number of Hindi-speaking Facebook users increased 4 times. To create a product for the needs that exist now - a mistake that is very easy to make - other social networks did just that. But we created a scalable infrastructure for localization, which essentially allowed us to cover all languages ​​so that we were ready for any eventuality in the future.

[ The final part of the translation of Alex's lecture ]