How did early viral growth on platforms like Facebook work?

Early viral growth often exploited platform features and loopholes. Ed Baker's 'Zodiac Photo Album' app, for instance, tagged hundreds of friends automatically, triggering widespread notifications and invitations. This strategy relied on exploiting the ease of sharing and tagging inherent in social platforms during their nascent stages.

What marketing channels are currently showing growth potential?

While many traditional channels like Facebook and Google are saturated and expensive, there's potential in exploring emerging platforms. Instagram app install ads are mentioned as potentially underpriced. The speakers emphasize building a great product first, as this naturally drives sharing, and advocating for long-term investment in channels with true scale, supported by engineering and data science.

How did companies like Uber and Airbnb apply digital growth to traditional industries?

Uber and Airbnb applied digital growth strategies, metrics, and experimentation to established industries like transportation and hospitality. They focused on optimizing user experiences, leveraging data, and building scalable organization structures, transforming traditional businesses with a digital-first approach to growth.

What are the key differences in growth for two-sided marketplaces versus single-sided platforms?

Growth for two-sided marketplaces like Uber requires balancing supply (drivers) and demand (riders). The Northstar metric must reflect this balance (e.g., weekly trips). Unlike single-sided platforms where every interaction can be tracked online, two-sided marketplaces involve real-world components that add complexity to measurement and user behavior influence.

What challenges arise when scaling growth internationally?

International growth requires addressing translation to provide localized experiences and identifying 'product gaps' specific to certain countries, such as payment mechanisms or authentication methods. For example, Uber developed a WeChat bot for driver sign-ups in China due to local platform nuances, though this faced challenges with platform ownership.

How do growth teams evolve within a company?

Initially, growth teams might evangelize data-driven decision-making and experimentation. As a company matures, these practices become integrated across all teams, including product, marketing, and brand. The ultimate goal is for the entire organization to operate with a growth mindset, utilizing data and experimentation for all product decisions.

What advice is given for making impactful growth changes?

Often, the smallest tweaks can have the biggest impact, sometimes inversely correlating with the effort invested. A notable example is changing the term 'invites' to 'announcements' in Japan for Facebook sign-ups, which significantly boosted virality due to cultural comfort, demonstrating the power of subtle messaging.

Key Moments

Scaling Growth | Gustaf Alstromer, YC Partner (formerly Airbnb) & Ed Baker (formerly Uber)

Y Combinator

Science & Technology4 min read35 min video

Jun 23, 2017|18,921 views|261|5

YC Y Combinator Gustaf Alstromer Ed Baker

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Key Moments

TL;DR

Growth leaders from Airbnb and Uber share insights on viral growth, experimentation, and building effective growth teams.

Key Insights

Early viral growth tactics, like those on the Facebook platform, were often experimental and sometimes 'spammy' but provided valuable learning.

Mobile growth relies heavily on platform capabilities like push notifications and optimizing user onboarding with friend discovery.

Mature growth teams require a cross-functional structure (product, engineering, analytics, design, marketing) for success.

A clear 'North Star Metric' is crucial for aligning a growth team's efforts towards the company's primary goal.

Real-world components in services like Uber add complexity to measurement and require creative solutions for user behavior.

Paid acquisition can accelerate growth significantly, especially in competitive markets, and should be integrated with product and engineering.

THE HEYDAY OF VIRAL GROWTH

The early days of social media platforms like Facebook offered a unique environment for rapid, viral growth. Pioneers experimented with app development, leveraging platform loops and notifications to acquire millions of users quickly. While some tactics were unconventional, like Ed Baker's 'Zodiac Photo Album' app that tagged hundreds of friends, these experiences built crucial intuition and demonstrated the power of viral mechanics. This era highlighted the blend of art and science required for growth, emphasizing experimentation and understanding user psychology to drive adoption.

MOBILE GROWTH AND NEW PLATFORMS

Gustaf Alstromer discussed the evolution of growth strategies with the rise of mobile platforms. Early mobile messaging apps struggled without key features, but the advent of tools like push notifications and improved address book integration opened new avenues. For Voxer, a walkie-talkie app, optimizing the initial user experience and ensuring the presence of friends upon first launch was critical. This involved significant investment in matching phone numbers with address books, a strategy that, while user-centric, required deep technical integration and user trust.

TRANSITION TO MATURE GROWTH TEAMS

Ed Baker shared his experience moving from viral hacking to a more mature growth environment at Facebook. He noted the shift from user acquisition to retention and engagement, driven by a strong product and a focus on core behaviors like 'friending.' This mature growth team was highly cross-functional, encompassing product, engineering, analytics, design, and marketing, totaling around 500 people. This integrated structure, where all functions collaborate, was a key takeaway that influenced his approach when building growth teams at Uber.

DEFINING AND UTILIZING THE NORTH STAR METRIC

A central concept in growth is the North Star Metric, which represents the single, most important number a team aims to grow. Ed Baker explained that at Facebook, it was Monthly Active Users (MAU). At Uber, it was more complex due to the two-sided marketplace; they settled on 'weekly trips' because each trip requires both riders and drivers. This metric allows for 'growth accounting,' breaking down progress into acquiring new users, re-engaging lapsed users, and minimizing churn on both the supply (drivers) and demand (riders) sides.

NAVIGATING REAL-WORLD COMPLEXITIES

Ed Baker highlighted the unique challenges of growing a business with a real-world component, such as Uber. Unlike purely online products where every click can be tracked, Uber's funnel includes offline steps like vehicle inspections or a driver's nervousness before their first trip. This necessitates creative measurement strategies and interventions to influence real-world behavior. For instance, experiments involved ensuring quicker initial trip requests for new drivers or offering phone support to ease first-time driver experiences.

THE ROLE OF PAID ACQUISITION AND GLOBALIZATION

While early growth often focused on organic and viral channels, paid acquisition plays a crucial role in scaling, especially in competitive markets. Ed noted that Uber invested heavily in performance marketing for both riders and drivers, seeing it as a way to accelerate growth and achieve network efficiencies faster. Gustaf added that growth teams should leverage engineering and data science for paid marketing and consider which platforms best suit their product. For global companies like Airbnb and Uber, localization, translation, and adapting to product gaps in different markets, such as using a WeChat bot in China, are essential.

THE EVOLVING STRUCTURE AND GOAL OF GROWTH TEAMS

The initial concept of a dedicated growth team evangelizing metric-driven decision-making has evolved. Today, great companies aim for everyone to be growth-oriented and use data. At Airbnb, the goal is for all larger teams and the data team to enable everyone to use experimentation frameworks. Uber merged its product and growth teams to better focus on engagement and retention. The ideal state sees marketing and brand teams aligning with growth objectives, rather than working in silos or having contentious relationships.

EMBRACING EXPERIMENTATION AND CULTURAL NUANCES

Growth is fundamentally about experimentation, often challenging intuition. Both speakers emphasized the importance of not being afraid of experiments that fail or yield unexpected results. A key takeaway was the 'experiment review' process to predict outcomes; the disagreement among team members highlighted the difficulty of forecasting. Gustaf shared an example of tweaking copy from 'invites' to 'announcements' in Japan, drastically increasing virality by respecting cultural norms around not intruding on friends. This underscores that subtle, context-aware adjustments can have massive impacts.

Mentioned in This Episode

●Software & Apps

●Companies

●Concepts

●People Referenced

Common Questions

A Northstar metric is the single most important metric that a growth team aims to increase. It serves as a guiding principle for all growth initiatives, ensuring that efforts are aligned towards achieving the primary goal. For example, at Facebook it was Monthly Active Users, and at Uber it became Weekly Trips.

Topics

Technology & Innovation Business & Entrepreneurship Product-market Fit Customer Retention Growth Hacking User Acquisition Paid Acquisition Viral Growth Experimentation Frameworks Two-sided Marketplaces

Mentioned in this video

Companies

Airbnb

Online marketplace for lodging and tourism, where Gustaf Alstromer worked on the growth team.

Herson

A company Gustaf Alstromer co-founded in 2007 that focused on mobile messaging.

Voxer

A walkie-talkie app on iOS and Android where Gustaf Alstromer worked on growth strategies, particularly involving notifications and invitations.

Uber

Global ride-sharing and logistics company where Ed Baker started the growth team and Gustaf Alstromer later contributed.

Friendly

A company started by Ed Baker in 2008, which was later acquired by Facebook.

WeChat

A dominant Chinese multi-purpose messaging, social media, and mobile payment app, used to build a bot for driver sign-ups in China.

Facebook

Social media giant where Ed Baker worked after his company was acquired, and where early viral growth strategies were honed.

Amazon

E-commerce giant suggested as an example for keeping users logged in.

Tencent

A Chinese multinational technology and entertainment conglomerate that owns WeChat and had invested in Uber's competitor.

Concepts

Weekly Trips

The Northstar metric adopted by Uber, encompassing both rider and driver activity to balance the two-sided marketplace.

Monthly Active Users

A key metric used by Facebook to measure user engagement, which was a primary focus for their growth team.

Locations

Japan

A country where a small tweak in messaging ('invites' to 'announcements') dramatically increased viral growth.

People

Ed Baker

Former VP of Product and Growth at Uber, previously worked at Facebook and started a company called Friendly.

Mark Zuckerberg

Founder of Facebook, who was tagged in the viral Zodiac Photo Album app.

Gustaf Alströmer

YC Partner and former member of the Airbnb growth team, also previously worked at Friendly, Herson, and Voxer.

Software & Apps

SMS

Short Message Service, used for sending text messages, mentioned in the context of invite mechanisms.

Zodiac Photo Album

A highly viral Facebook app created by Ed Baker that tagged hundreds of friends, leading to rapid user growth.

Android

Mobile operating system developed by Google, a platform where Voxer and other early mobile apps focused on growth.

People You May Know

A Facebook feature designed to help users find and connect with friends, a key focus for retention and engagement.

Facebook Connect

A single sign-on feature from Facebook that allows users to log into third-party websites and applications.

iOS

Mobile operating system for Apple devices, a platform where Voxer and other early mobile apps focused on growth.

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