Lenny's Podcast: Product | Career | Growth
00:43:56 · Elena Verna
[00:43:56] S0: All right. So next one. Next one is a little spicy one too. And that is as part of growth, you owning some channels. A lot of growth teams own acquisition. So owning channels and growth prioritizing SEO, SEM, social is one of the biggest mistakes I think a growth team can do. Now, obviously, I'm not saying don't do SEO or don't do SEM, so organic search or paid search. I'm saying that. However, as a growth team, your number one priority is to create your owned or your earned channel. So channel that you've earned and that nobody else can compete in but you. What do I mean by that? When you're doing organic search or paid search, you're making Google richer. Great for Google. Google is an incredible company, but by dumping money into paid marketing, you are paying them and you're paying for their distribution and access to their distribution. If you're doing social too, like you're doing, let's say, Instagram or whatnot, paid advertising in Instagram, that's great. But all of that works on algorithm. An algorithm can giveth, but algorithm can also taketh away at any point. And you have no control because you don't own those channels. You are playing with other players and you're competing against them in somebody else's channel. Now, on the other side, there can be your own earned channel. What is an earned channel? This really goes into the concept of product led growth acquisition, which means you're relying on virality, on word-of-mouth, on user generated content in order to attract new acquisition through top of the funnel. So why is that earned? And why do I put that above, let's say, organic search, which is SEO obviously is wonderful. But again, search just goes to Google. That's great. Versus if you build your own user generated content and your own community, nobody else can compete with you in that. That is yours. Your competitors cannot buy their eyeballs. There are people who are going to be attracting other people. Referrals from people to people are everything. So, Lenny, if I, let's say, I sign up for, say, Superhuman and I invite you into it, that is much stronger acquisition tactic versus you looking for and finding Superhuman, let's say, on paid marketing advertisements.
00:46:33 · Elena Verna, Lenny Rachitsky
And especially with our age right now where search as an interface is changing towards AI interface, and the AI interface is giving a lot less credit to all of the content. Content is almost becoming a database. And there's a new UI that is being developed on it. Before it was Google was the UI, and now AI is coming in with a new UI, and there's not as much control that you have over this new UI that is being developed. Focusing on these earned channels that you own becomes the utmost priority. And if you don't have them on your growth roadmap, you are going to be in some really big trouble over the next year to two years because your cost of acquisition is only going to go up, your competition in those channels is only going to go up, you're constantly going to be praying to algorithm gods to giveth your way, but again, they can take it at any point. And it's really one of those fundamental growth team failure points if they don't spend enough time on virality and user generated content to create their own earned acquisition. [00:47:47] S1: Wow. Okay. This is incredible. This is its own podcast episode in theory that we could do of how to actually do this. We're not gonna cover the strategy. Also, this may not necessarily work for every company. Your point is that's... You can grow other ways, but this is by far the most powerful, most effective, cheapest, most likely to succeed if you can figure this out.
00:48:07 · Elena Verna, Lenny Rachitsky
[00:48:07] S0: It's not cheapest. It's actually cost a lot of product and engineering and even marketing resources to stand up. So it's just... It's not the cost of a budget, but it's cost of people that will have to work to create your own channel, so to speak, for acquisition. And you're right. Maybe that's not for everybody, but it's actually applicable to more products than people realize because every single product has some sort of team functionality, some sort of roles that they need to do. Every product can drive word-of-mouth loop. Not all loops, actually, that's not true. Not every product can drive word-of-mouth loop, but they can drive recommendations and they can create user generated content. One of those tactics usually applies to at least one product. So there is an opportunity to create some sort of earned channel, even though it might feel unnatural at the beginning, depending on how you reach PMF and how you've scaled in the first couple of stages of it. But if you're not exploring it and if you're not investing into it or at least trying and failing within it, I think that you are really leaving too much of your growth future into the hands of somebody else that you have no control over. [00:49:19] S1: So the advice here is your growth team, it's okay if they work on SEM, paid growth basically, and SEO, but most of your effort and investment should be in earned channel... Own channels, specifically virality user generated content.
00:49:19 · Lenny Rachitsky, Elena Verna
[00:49:19] S1: So the advice here is your growth team, it's okay if they work on SEM, paid growth basically, and SEO, but most of your effort and investment should be in earned channel... Own channels, specifically virality user generated content. [00:49:35] S0: Diversify. Just diversify your strategy so not all of it is reliant on somebody else giving you access to their distribution. Now, for example, at Dropbox, over 50% of acquisition comes through sharing. So, I load something into my Dropbox, maybe I need to send it out for signature, maybe I need to just share this file to transfer it to somebody, maybe I just need to share this file as a final delivery to my clients that I was working with. Well, that recipient then is now aware of Dropbox, so it solved the brand awareness. By that action of sharing, you actually almost activated that recipient too. So you don't need to educate them anymore on how the product works and whatnot. And the percentage of those recipients sign up to become Dropbox users. And that accounts for 50% of acquisition. That is a stable earned channel that nobody can compete with. And it's only for Dropbox to lose, so to speak. And we actually had our own growth pod focused on it because to optimize both sender experience and the recipient experience, because it was such a powerful growth loop and growth engine that driven the company. And every business should have an attempt at one of these. [00:50:51] S1: I think this is gonna be a really good push for a lot of growth teams to think about what can we do here. Okay. Number seven. Four to Number
00:50:59 · Elena Verna
[00:50:59] S0: seven. We've talked about this at least a little bit, in our last podcast too, but, I see this as a question that comes up all the time and something that people are afraid of, to invest, which is a mistake. Every single company starts with their growth efforts focused either on product led growth. Hey, I'm going to have everything being done self serve. Or on sales and marketing, I'm going to have sales team and then they're going to have marketing team and they're going to do all of the work and my product is just going to create the functionality. And that's good and fine for a while, depending on how long that while is. But not overlaying every single way that you can grow through product, through marketing, and through sales as an evolution is a huge mistake that a lot of growth teams fail to iterate on and innovate on. The way that I'd best be comparing it is if product has a product market fit, which is great, that product market fit is not going to last that product forever. They're always going to have to have a second horizon. They're always going to have to have a product market fit expansion efforts in order to continue to grab as many people and solve as many people's problems as possible and increasing their TAM. Well, the same comes with growth. If you have a growth model that works for you, that's wonderful. Good for you. Optimize it, grow it, scale it, create a team that will be nurturing it and that will be amplifying it. But you're going to need to evolve it. And that evolution needs to come through overlaying other growth models on top of it. So, A, you are diversified away from just one growth model failing because a lot of times you're going to get into a situation of law. I love Andrew Chen's article here. It's called A Law of Shitty Click Throughs, where you just, if you over optimize the same thing over and over again, it's just, it has minimal returns. And some growth models have very limited time span. Some of them are huge, some can grow for like sharing loop at Dropbox. It's seventeen years in the making and it's still firing. Good for it. Like, that's amazing. But that's very much an anomaly. Most of growth loops spin out their ability to produce meaningful results for you within the first five to six to seven years. So, continuously overlaying those different growth models.
00:53:27 · Elena Verna, Lenny Rachitsky
And what I'm specifically talking about is product led growth, marketing led growth, sales led growth, and introducing it into this ecosystem constantly is what really separates companies that can continue growing for long periods of times versus the ones that can see a really big blip, potentially even unicorn type of growth rates of 70, 80, whatever plus percent, and then it starts to slow down. And don't wait till that slowdown happens. You need to really start thinking about different ways that you can attract people to grow so you are not leaving a gap in the market that somebody else can enter and own, as opposed to you playing in every way and where you can interact with your customer. [00:54:11] S1: The way I think about this is like the S curves of every growth model and growth lever, right? Eventually it'll help and then slow down and so you wanna find the next S curve on things that'll grow your business.