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 experts of Y Combinator took place:



Alex Schultz ( Alex Schultz ): The notes to this chapter, I put a lot of references to studies of people who invented ingenious solutions on how you can create a "magic moment" for the subsequent retention of members. Take, for example, the retention curve that I showed earlier - there is such a person, Danny Ferante, who speaks amazingly about retention curves. As for the “moments of magic”: in the notes to the lecture there are links to two videos - in one of them Chamat [Palihapitiya] talks about the growth of companies - and this person created a team to ensure business growth on Facebook, and in the other I and my friend Naomi [Gleyt] f8 conference four years ago and tellabout growth. In both of these videos we mention that “moment of magic”. What do you think, when you register on Facebook, what is this “magic” for you?


Audience: In what you see on Facebook your friends.

Schulz:Right Exactly. I talked with many companies that try to complicate their products in every way, but with regard to Facebook the “magic” is very simple: you see the first photo of one of your friends on Facebook and you immediately understand what the essence of the service is. Zuckerberg told YCombinator how to help the user find 10 friends on Facebook in the first 2 weeks of using the social network - it’s for the sake of such a “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 won’t 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, the “moment of magic” is the moment when you see your friend’s photo on the site. Everything that we do for the growth of companies is aimed at starting to register on LinkedIn, Facebook, Twitter, WhatsApp and see people with whom the service offers to contact, subscribe to them, write a message to them as quickly as possible - because within a particular vertical, one of these things is of paramount importance.

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

For airbnbThe "magic" begins when you see the initial list of housing options and find in it the place where you really would like to stay. Similarly, when you exhibit your own housing on AirBnb or some things on eBay, the “moment of magic” is for you when you get paid for the first time. You should ask Brian [Chesky] about this - they [on AirBnb] created and posted amazing storyboards on the AirBnb user journey and how exciting this process is. He will speak in about 3 lectures, and he speaks amazingly about these “magical moments” and how to give users a sense 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 a retention rate of 60% it’s easy to go to 70%, giving the person what “Binds” it to your product.


Another thing that is worth considering, and which many in the Valley do not understand: when we think about growth, we begin optimization "for ourselves". My favorite example is notifications . Again, I talked and consulted a lot of different companies, and the representative of each of them, when it came to notifications, said: “Oh, I get too many notifications myself, I think it’s worth optimizing it.” 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 configure the filters themselves.


Who you should think about is about your “ultimate” customer [or, in this case, user]. About who did not receive notifications on the selected day, month or year. Creating an amazing product is built entirely around the formation of experienced users, right? Creating an exceptional product naturally involves 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, which we use to understand growth in our company.

We estimated the number of new users, “recovered” users (those who had not used 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 from the moment of entering the market, the number of “lost” and “recovering” users exceeds the number of new customers. And all these “lost” and “recovering” users have a small number of friends, they don’t find close people among the social network audience - they don’t have access to all the wonderful things that we create on Facebook. Therefore, the number one task that we aimed at was to give them the opportunity to find their 10 or how many friends they needed there as quickly as possible. Therefore, think about marginal users, not about your own needs, when you talk about growth.


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

In reality, the contingent of active users in terms of day and month is strongly correlated, so that we could take any of these two metrics. The amount of content that users share also correlates with their number, because as soon as you add a user, he begins to distribute the content. So 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”, understand for yourself exactly when the user is experiencing it, and your metric will bring you closer to the chosen landmark - think not about yourself, but about limit users. These are the most important things to work on growing. Everything else should come from this idea.

The final 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 studying in technical specialties, you too probably think that we, marketers, are terrible and completely useless individuals.


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

The first tactic I want to talk about is internationalization. Facebook entered foreign markets too late. Cheryl [Sandberg] talked about this in public speaking, 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 is the countries where Facebook clones appeared. We had tons of copies - be it 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 on the growth of companies.

Facebook was originally 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 of colleges and began to expand to a level that includes high school students. I did not work at the company then, but I know that this was a turning point, people asked themselves whether Facebook would survive, whether the already formed culture of the site would withstand 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 - this happened shortly before I joined our team - the number of users skyrocketed to 50 million, and we broke through this “ the wall. " When this happened, there were a lot of existential questions inside the company, like whether any social network could attract more than 100 million users .

Today it sounds silly, but at that time no one in the world had reached that level yet. All ranged from 50 to 100 million users, and we were worried that going beyond that would be impossible. At this moment, the team responsible for the growth of the company joined the work - Chamat gathered 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 remained in the company: we were a very strange team - but it worked.

The two things that we have done and which, it seems to me, have greatly contributed to our growth are that we:

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

All this was initiated by Zuckerberg, because everyone else had a 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 does not have a single friend, then he will remain our user? Are you crazy? ”The


second barrier was access to international markets. When we launched this project, I think we really did two things well: firstly, even though we were late (and worried about it), we were able to make a scalable product, we moved slowly, so that later start growing fast. The whole history of this process can be found out.from the video from Naomi. We collected all the 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 users of the site worked with us. We received a translation in French in 12 hours. To date, the site has been translated into 104 languages ​​- this is the localization made on Facebook for Facebook, and translations into 70 of these 104 languages ​​have been 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 issue of localization. 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). Now look at today's language distribution. Italian is no longer among the most popular, French and German are also about to be at the end of the list. Last year, the number of Facebook users speaking Hindi increased by 4 times. Creating a product for the needs that exist now is 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 turn of events in the future.

[ The final part of the translation of Alex’s lecture
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