Lenny's Podcast: Product | Career | Growth
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.
00:54:11 · Lenny Rachitsky, Elena Verna
[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. [00:54:24] S0: Yes, absolutely. Way that I see it often is that especially when growth teams, they hit a really big result out of some initiative, they just like keep trying to focus on that over and over again. And sometimes that focus is warranted. Like I said, our sharing loop at Dropbox has its own growth team against it. Great. But at the same time, that's not warranted for all of the... Or you need to realize that there's no more juice to squeeze out of this thing, and then you need to go and you need to move on. Which actually brings me to my, like a little bit of a next thing too, is you'd need to do it every eighteen months because a lot of them are going to fail. And every five years or so, you for sure need a new channel, new growth loops, new tactics, new engines, so to speak, to power your growth engine, whether it's overlaying sales on top of self serve, whether you're doing a lot of, let's say, virality right now in terms of acquisition and you're going into marketing a lot heavier. But every five years, something big has to start taking a big portion of your volume. And for that, every eighteen years, you need to introduce something Sorry. Yeah. For every eighteen months, you need to introduce something new in order for it to, continue evolving.
00:54:24 · Elena Verna, Lenny Rachitsky
[00:54:24] S0: Yes, absolutely. Way that I see it often is that especially when growth teams, they hit a really big result out of some initiative, they just like keep trying to focus on that over and over again. And sometimes that focus is warranted. Like I said, our sharing loop at Dropbox has its own growth team against it. Great. But at the same time, that's not warranted for all of the... Or you need to realize that there's no more juice to squeeze out of this thing, and then you need to go and you need to move on. Which actually brings me to my, like a little bit of a next thing too, is you'd need to do it every eighteen months because a lot of them are going to fail. And every five years or so, you for sure need a new channel, new growth loops, new tactics, new engines, so to speak, to power your growth engine, whether it's overlaying sales on top of self serve, whether you're doing a lot of, let's say, virality right now in terms of acquisition and you're going into marketing a lot heavier. But every five years, something big has to start taking a big portion of your volume. And for that, every eighteen years, you need to introduce something Sorry. Yeah. For every eighteen months, you need to introduce something new in order for it to, continue evolving. [00:55:49] S1: And it was that number eight of the list we're going through or that's like a bonus piece of advice? [00:55:54] S0: No. That's just a bonus piece