Why Do Startups Need a Growth Hacker?
So you might have been wondering.. what is a growth hacker and why are so many startups posting jobs looking for growth hackers? Lets first look at what Paul Graham has to say about the importance of growth within startups, in his essay called Startups = Growth.
If you want to understand startups, understand growth. Growth drives everything in this world. Growth is why startups usually work on technology—because ideas for fast growing companies are so rare that the best way to find new ones is to discover those recently made viable by change, and technology is the best source of rapid change. Growth is why it’s a rational choice economically for so many founders to try starting a startup: growth makes the successful companies so valuable that the expected value is high even though the risk is too. Growth is why VCs want to invest in startups: not just because the returns are high but also because generating returns from capital gains is easier to manage than generating returns from dividends. Growth explains why the most successful startups take VC money even if they don’t need to: it lets them choose their growth rate. And growth explains why successful startups almost invariably get acquisition offers. – Paul Graham
The process through which startups grow tends to be left to chance on many occasions. Founders many times focus on having an incredible product, assuming that along will come the users and the recognition. Thats not always the case. Its something that can happen, specially if you’re within a strong startup hub, but its not always a successful process. Many times that flurry of attention provoked by media drowns out and leaves a vacuum within a startup. Therefore, to achieve sustainable long term growth, its important to have someone on the team who understands the ways in which growth is achieved and retained.
Lets have a look at Andrew Chen’s definition of what a Growth Hacker is. His article defining a growth hacker was the first piece regarding the subject that gained widespread notoriety. He defines:
Growth hackers are a hybrid of marketer and coder, one who looks at the traditional question of “How do I get customers for my product?” and answers with A/B tests, landing pages, viral factor, email deliverability, and Open Graph. On top of this, they layer the discipline of direct marketing, with its emphasis on quantitative measurement, scenario modeling via spreadsheets, and a lot of database queries. If a startup is pre-product/market fit, growth hackers can make sure virality is embedded at the core of a product. After product/market fit, they can help run up the score on what’s already working. – Andrew Chen
Thats a great definition, then again I feel as though a great growth hacker should have very strong strategies and channels through which to funnel a big audience towards any product. Those channels should ideally not represent any cost to the growth hacker. When I develop growth campaigns for startups, I set up a whole retention funnel on a series of landing pages. Those landing pages are engineered to decrease bounce rates and elevate conversions. Then I use my different channels to quickly send the first seven hundred or so users towards that funnel. My channels are a FB fan page with 3 million fans, a Youtube channel with 2 million views, HackerNews (when carefully crafted posts of high value are written) and very specific SEO/SEM strategies. So to me, a growth hacker should also have tools at his or her disposal to quickly generate growth without having to spend marketing dollars on it.
How much should a startup pay to have an effective growth hacker within the team? The easy answer is this: pay whatever is necessary to get that person who will give you a 2x or 3x return on your investment. If the growth hacker is doing his job correctly, you will have very specific data with regards to how much revenue and profit is being funneled through his whole campaign. You will know how much he’s having to pay to create a dollar’s worth of profit. According to Angel.co, startups in Silicon Valley are offering growth hackers salaries within the 80k and 130k a year range. It seems to be a fair and competitive compensation.
What do you believe makes a great growth hacker?