This article is a guest post from Bronson Taylor. Bronson is a co-founder and host of Growth Hacker TV, the only educational platform focused exclusively on helping startups grow by acquiring, retaining, and monetizing users. They have over 60 episodes, with guests from Twitter, Facebook, LinkedIn, DropBox, and many more. Image above from Toban Black.
Founders sometimes assume that they need an influx of cash to truly grow a product. Luckily, this isn’t true. The confusion arises because we fail to make a distinction between the growth strategies that are relevant to venture backed startups as opposed to the strategies that are relevant to bootstrapped startups. These strategies overlap, but the differences are immense.
You can grow without money, but only if you stop imitating the startups that have closed a round of financing. As the host of Growth Hacker TV I have become keenly aware of these two parallel worlds, and this article is my attempt to outline the primary ways to think about growth when you are building a product without investment capital. There are plenty of blog posts for the funded so let’s even the score a bit.
Think Product. Not Distribution.
Alongside growth hacking there is another buzz phrase titled distribution hacking. Growth hackers generally tend to focus on product centric growth mechanisms, while distribution hackers focus on distributing a product using paid channels (i.e. pay-per-click, retargeting, etc.). Distribution hacking takes money to test, money to execute, and money to optimize. Paid channels can lead to incredible growth, but let’s be honest, they require at least some capital to do well.
Growth Hacking, however, focuses on the product itself, and is therefore extremely cost effective. Here’s the bottom line: if money is tight then stop worrying about paid channels even though they’re working for other startups that have 18 months of runway and 10 employees. Here are some the product features you should focus on:
-
Funnel – Since you’re not purchasing traffic, you must ensure that you’re optimizing the traffic you do receive. You need to define your funnel, track the conversion rates for each step of your funnel, and then adjust and optimize the funnel accordingly until you’ve reached acceptable conversion ratios.
-
Emails – Email has been, and will be, one of the most powerful tools in a growth hacker’s arsenal. There should be three primary aspects to your email strategy. First, you need to collect email addresses from visitors. Incentivize people to give you their email through giveaways, early access, discounts, free ebooks, or anything else you can think of. Second, set up a drip campaign that automatically emails people at predefined intervals (Day 1, Day 7, Day 15…) with relevant information about your product. Third, send out event-based emails that correspond to certain actions that users take (or don’t take) from within your product. If they haven’t logged in within a month, ping them. If they just reached the top ten in a leaderboard, ping them. If you master collecting emails, sending drip emails, and sending event-based emails, while maintaining a sold funnel, you’ll make the most of the traffic you have.
-
Referrals – This is where you try to spread your product via the networks of your existing users. Some of the people that use your product would gladly tell their friends about it if you give them a reason and make it easy. What could you unlock in your app in exchange for a Facebook post. What would make someone want to share a friends email address with you? Can you ask for the referral at a certain moment in their usage that has a higher success rate? Can you auto populate a tweet for your users and allow them to post it with a single click? Simply having social icons on your site is not really utilizing referrals because there is no reason to share your product and it’s not easy enough to do so.
Think Inbound. Not Interruption.
There are two ways to attract attention. You can either interrupt people that are consuming interesting content, or you can be the interesting content. Inbound marketing is all about providing value to people instead of annoying them while someone else provides value to them. Inbound marketing costs time, while interrupting people costs money. If you’re bootstrapping it’s an obvious choice. Here are some ways to generate attention through inbound marketing:
-
Guest Blogging – Of course, you could just start your own blog, but then you also start without any readers. Why not leverage someone else’s hard won audience by providing massive value to them through a guest blog post. Meta warning: this is what I’m doing right now. I know that by spending an entire day writing this post for Rob that I’ll get some people to visit Growth Hacker TV as a fair exchange of value. Don’t be afraid to ask someone if you can guest blog for them, but please remember: it is not a pitch for your product, it’s about providing value for their audience. Period.
-
Podcast Tour – The audio version of guest blogging is a podcast tour. Get booked on podcasts that are relevant to your product. This is beneficial because it creates a unique bond between yourself and others. If they hear your voice (or see your face) it’s different than just reading your words. If you can effectively guest blog and go on a podcast tour you can create deep connections with people.
-
Guides and Ebooks – Writing a complete guide on a topic may seem like a lot of work. Well, that’s because it is, but who said that growth hacking was easy? If traffic matters enough to you then why wouldn’t you spend a week (or more) spilling your insights and crafting something meaningful. And why wouldn’t you give it away for the sake of inbound traffic, instead of trying to make a few miniscule dollars on the front end?
Think Partnerships. Not Competition.
When you’re bootstrapping a startup, try to align yourself with other relevant companies through partnerships. Avoid seeing everyone as a competitor because when companies cooperate amazing things can happen. All partnerships are different, but here are some questions to ask yourself as you develop bonds with other companies:
-
What other companies serve a similar audience to your own?
-
What value could you provide another company’s users without being seen as a threat?
-
How many resources would the proposed partnership require (money, time, energy, etc.)?
-
Is the value you’re providing another company equal to the value you are receiving?
Here are some ideas for possible partnerships:
-
Could you find another company to do a simple cross promotion with? You could trade tweets, blog posts, or ad space.
-
Could you integrate products with another company through an API to deepen each other’s feature set?
-
Could you exchange introductions with another company to open doors for each other?
-
Could you offer your product at a discount to the users of another product for strategic reasons?
-
Could you swap internal data with another company in order to learn from each other’s analytics?
Think Cash Flow. Not LTV/CAC.
It has become very popular to talk about the LTV>CAC equation. It basically states that you want the LTV (lifetime value of the customer) to be greater than the CAC (customer acquisition cost). While this is a helpful way to think about your numbers, there is a hidden variable that is sometimes overlooked, which is “time”. Even if LTV is greater than CAC you may still have negative cash flow for a few months. It takes time to recoup the cost of acquiring a customer before you actually make a net profit. Remember, it’s the “lifetime” value of a customer, not the “instant” value of the customer.
If you have venture capital in the bank then you can afford to go upside down on CAC for a few months, but if you’re bootstrapping your startup then this is probably not an option. Therefore, despite how helpful this equation is, you must be very realistic about how the CAC affects your cash flow and how much “time” you’re willing to let lapse before you are in the black.
Think Creatively. Not Dogmatically.
The tried and true startup advice that is passed around amongst founders is sometimes not applicable to startups without venture capital. You must keep this in mind when reading blogs, or taking courses, or attending conferences. Good advice applied to the wrong context can destroy a startup. You must think creatively about how you are going to acquire, retain, and monetize users, because there simply isn’t as much wisdom available to guide you when you’re bootstrapping. Don’t be afraid to develop new strategies, try new tactics, and chart your own path to growth. It might be your only option.
Special Bonus
Since you made it to the bottom of the article, here is your reward. Use the promocode “rob” to get a free month of Growth Hacker TV.
