How Silicon Valley startups hack their way to growth

Posted on by Guy Cookson

In Silicon Valley little matters more to startups than their ability to quickly grow.

Demonstrating you can get people to sign-up to your product or service in large numbers, and at an accelerating rate, is a way to attract attention and investment, and is an early sign that your business has potential to become something truly significant.

But making that happen is not easy, especially when traditional forms of marketing are too expensive or simply not effective.

And so it is fascinating to see the innovative, experimental, and crafty low cost techniques – known as growth hacks – that entrepreneurs have used to increase their customer base in the early stages of what have become very successful businesses.

Hotmail is a good example. When they launched their free web-based email service in 1996 the company attracted just a few thousand users until the founders came up with an idea.

They added a simple line to the end of all outgoing messages: “Get Your Free Email at Hotmail” with a link to the signup page. Within six months the business had grown to 1 million users, and within a year it was acquired by Microsoft.

Founded just ten years ago, Dropbox now has over 500 million registered users for their cloud-based file storage. One way they achieved this incredible growth was to incentivise customer referrals.

Inviting friends to the service instantly unlocked additional free storage for both the current user and their recipient when they signed-up.

Airbnb took a different approach and grew by piggybacking on the success of another company, specifically Craigslist, which in the States had become the dominant place for classified listings.

Airbnb figured out how to send a message (known less politely as spam) to landlords on Craigslist inviting them to create an ad for both sites in one go, thereby populating Airbnb with properties while reaching the huge existing audience on Craigslist.

It worked brilliantly, and helped Airbnb get to where they are now, with over 2 million listings in 191 countries.

YouTube also rode on the coattails of websites with an existing large audience by making it easy for people to embed their videos on any page.

Soon YouTube videos were everywhere, and less than two years after starting the company it was purchased by Google for $1.65 billion.

If you are interested in growth hacking read this post by Andrew Chen (currently responsible for growth at Uber).

This post was originally published in the Lancaster Guardian where I write a weekly column.

 

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