JayWeintraub.com - Internet Advertising Analysis and Growth Insights

Tech Didn’t Invent Growth Hacking—It Just Popularized It

Though it might have been called something different back in the day, growth hacking has been around for quite some time. A lot of us just mistakenly pair the term with today’s tech ethos.

 

Despite what you might think, growth hacking has been an integral part of business for at least four decades—and probably a lot longer.

 

How do I know that?

 

Over the July 4th weekend, I was able to spend time with my family, including an uncle I have not seen but a handful of times, as traveling with infant twins is not the most fun for me. He has great stories and life experiences.

 

I love listening to stories from different generations because there always seems to be a parallel that spurs thought. And it turns out that through this conversation with my uncle, I ended up finding out about some unexpected truths of growth hacking, or as I now define it, the process of investing time and energy to produce non-linear yields.

 

Growth Hacking in the Past

My uncle had to attend college at night in order to support his ill parents, my paternal grandparents whom I never met. He ended up turning a family tchotchke shop run out of their garage into a 27,000 square foot fine china store and the go-to place in town for high end offerings. The business and brand became so strong that he ultimately sold it.

 

In the late 1970s and early 1980s, my uncle’s shop was collocated with a jeweler. At the time, my uncle knew a sales rep who worked for a now-well-known brand that was struggling back then. Jewelers didn’t want to carry the, at the time, unknown and presumably unpopular brand.

 

Rather than giving up, the rep devised a pretty slick scheme to make sure jewelry stores started carrying his watches. He hired a bunch of people to pretend to be customers and call area jewelry stores telling them they saw people wearing the brand’s watches and asking whether they carried them.

 

The stores told the faux customers they didn’t carry the brand. But eventually, shop owners asked the rep whether they could indeed sell the brand.

 

Today, we’d call this growth hacking.

 

Growth Hacking Isn’t New

As mentioned at the start of this piece, we tend to think of growth hacking as internet-driven phenomenon. But it’s really not. If anything, an understanding of tech helps, e.g., the watch sales rep leveraged phones and understood caller ID workarounds.

 

But it wasn’t the primary driver.

 

Growth hacking, in the truest sense, is not an internet or tech mechanism. It’s not about a viral coefficient. To drive business, you need to understand your market, your product, and growth. You also need an innate understanding of how people react.

 

Once you realize your product isn’t seeing success on the market, turn to growth hacking to try and figure out how to make it work. But you need to remember that no growth hack is going to catapult a terrible product to the top. You need to have a solid product in the first place.

 

Back to the watch sales rep: The watches weren’t in stores, but the rep knew they were great. Thanks to his growth hacks, stores started carrying them and they took off. But that never would have happened, on any sustained basis, if the watches were terrible products.

 

Real Growth Hacking is Timeless

In the end, there is a timeless to growth hacking. But it also means we need to get beyond the term “growth hacking”—which is often associated with quick wins and unscalable models. I had that connotation, which meant I missed that perhaps growth hacking is so popular is because it’s been going on forever.

 

The tech industry just decided to give it a name.

 

It bears repeating: Growth hacking will only work if the product deserves the fit. You can’t hit scale with a bad product. The only reason the term is so sticky is due to the fact it describes smart, savvy people building businesses. It is about more than “grit” and “hustle.” It is also about market insight and strategy.

 

So, while technology didn’t create growth hacking, it certainly made it more accessible by lowering the bar—which is both a blessing and a curse. That is why, today, anyone can become a “growth hacker.” But, not everyone has implemented any real growth hacks.

The New For-Profit Education Paradigm

In 2002, if you took a look at the lead generation landscape, it would have consisted of one main vertical - mortgage and one up and coming vertical, for-profit education. A dozen years later, the lead generation has undergone some radical transformations, from sector diversification to smart uses of technology to connect users with companies more efficiently.

Both mortgage and education exist, each, though looks very different today than before. On the former, we can argue that the recent financial crisis set the industry back. Consumer demand remains strong, but the legislation changes along with interest rate sensitivity, mean that companies cannot come close to fulfilling the consumer demand.

The changes that have taken place in the education space are equally fascinating, and the issues equally charged. It's a topic that I certainly have thought about since going from first-hand marketer to industry organizer. As the operator, I understand the marketer's maniacal focus on demand generation. As a semiofficial liaison for the industry, I understand the macroeconomic and political factors that have translated into not just increased scrutiny but inappropriate labeling of the industry.

I'll admit the slight stretch, but in many ways the business of education is not dissimilar from medicine. At their core, they are helping people live better lives. Like any large, complex, and emotionally charged sector, it is very easy for those on the inside and on the outside to form divergent opinions. And, it is possible for both to be correct. We are seeing it in medicine and certainly within the education sector.

For the uninitiated, the for-profit education sector contains both degree granting institutions and non-degree granting institutions. Of the two, the degree granting institutions are the ones that have garnered the most attention. They include institutions with no central campus, like University of Phoenix, that began with a specific focus on underserved students (working adults) to partnerships between your traditional schools and companies who help them leverage the brand to create an online, profit generating division of the "non-profit" school.

As I've learned by being around education industry, once you attach for-profit to something, it becomes charged, and even more so in education. The term is really a misnomer, and it's unfortunate. Currently, though, the discussion surrounding education has become so embroiled in partisanship that having a meaningful discussion about it can be difficult.

The government loan issue is a tricky one, and for better and worse, it makes innovation trickier because the degrees must conform to accreditation guidelines. It's the same issue surrounding all traditional education and the debate whether what is taught at traditional higher education institutions prepares people for the jobs.

Flying under the radar in some respects are the non-degree granting institutions - the scammy ones being mail-order fraud but the real ones providing skills training, e.g., truck driving. It's a segment of the market that has escaped debate primarily because it is typically private pay, that is, students do not qualify for government backed loans.

The under the radar area is anything but under the radar with respect to their impact, not just on the traditional jobs but some of the most in demand fields, programming and user design for example. Getting a job here does not require a full degree. It requires very specific skills, ones that are able be distilled and taught in a condensed period of time.

Programming was and is taught at degree institutions. With the volume of shared data online - most importantly libraries allowing programmers to quickly use pre-written code - the timeframe for learning has decreased and ability to do things with that training has taken a leap forward. Instead of four years, a person can spend three months of intensive training and be qualified enough to be the equivalent of a paralegal or better depending on the student.

These programs, referred to as immersives/intensives, seemingly have sprung up from nowhere. The first was General Assembly in New York, and today the field contains 70+ institutions, more than half of whom have formed in the past twelve months. Like any new education discipline, it just sort of happened, but the more business savvy realized that they were on to something.

The course fees are anything but trivial, averaging $10,000 or more for the three months. But, the current market demand for the skill and subsequent placement rate means that the $10,000 becomes a pretty calculable ROI for students, many of whom upon getting placed will earn back the money in the first year. Even if they earn back the money in three year's, that far exceeds the ROI of most other education.

What I saw watching the space was something akin to the education industry in the 90's and early 2000's. I had a scratch pad of a site that would compare the schools and aggregate the information to assist with the student discovery process. Two years later, not having actually done anything with that paper, I decided instead to back a startup that had the same idea. It is called CourseReport.com, and for hard core lead gen folks, it's directly approach will appear familiar, but instead of just aspiring to be a discovery platform, they want to help be an end to end play for the student.

It will be fun to see where this space goes. No doubt the "big guys" of for-profit education are already hard at work at looking into this space. More than anything, I hope this space will continue to do what it has started to - providing education that is actionable and employable.

The Vast Majority of Startup Ideas Don't Suck

Something about Angel List reminds me of my recent visit to an animal shelter. There are always too many wonderful animals (companies in this case) for any one person to help, and the process can become quickly overwhelming. What's worse, if you are slightly obsessive, you might be tempted to not bite off more than you can chew, i.e., taking home too many animals or committing to too many investments. The reason is simple. The vast majority of ideas aren't actually that bad.

If you have ever watched a reality talent show, you see the same surplus of positive play itself out. America's Got Talent just finished, but with The Voice and X Factor competing head to head, my week is full of singers who unfortunately are pretty good. There are always those for whom their ambitions and self-awareness do not match their actual talent, but for the unlucky majority, their fates have less to do with how well they sing.

Startups are at least luckier than those in music. Discovery is no less tricky, the competition no less crowded, but you can succeed easier based on factors within your control. A friend close to the music industry was telling me about an artist we will all know in the near future. He wanted to get a certain performer to join him on his track. He wasn't any better or more deserving, but he knew the right person, and so he ultimately will have that artist on his track. There just isn't an API or viral coefficient for that. It doesn't make startup success ultimately easier.

There is was an article in Business Insider recently that described Google's record acquisition year. They bought a startup every other week basically. Including Facebook's purchases and Apple's the total acquired still numberred fewer than 50. Even if we look at every strategic buyer, and lucky for all us, Terence Kawaja has created such a Lumascape, we have a universe of 1500 companies. Checking Angel List, there are 90,000 startups listed. Each company would have to acquire 60 companies for everyone to have an exit. Sticking to just the likely strategics in digital, more companies are produced by the top accelerators in a single batch than are likely purchased in a single year. 

We can democratize so many things, and that has lead to improved discovery. I feel it has it has helped the edges. We can now cut the crap faster and expedite the top 0.01%, but we're a long way from helping the vast majority where it's not how good they are that will ultimately determine success. It's a blend of how well they execute, luck, and who they know, where the latter two can go a long way with the former but the former can rarely ever be enough to do without any of the latter. 

Political Global Warming: SOPA - The Internet in "Hot Water"

Kevin Rose's tweet about SOPA was one of the funniest, "didn't shower today, avoiding all things SOPA sounding." I have to give my chemist mom credit, though, for coming up with the non-obvious, Mexican soup angle. (Tangentially, I'd like to thank every incubator, tech blog, and startup for having me misspell "angle" half the time.) 

Until yesterday, I could not adequately describe SOPA or PIPA - this, despite the amazing efforts of the Electronic Frontier Foundation, noted bloggers, and even a few more mainstream publications willing to risk corporate wrath for expressing views against the bills. That is why this post focuses less on a topic about which I am absolutely unqualified to voice a meaningful opinion and more on my thanks for not just the connected universe but some of the largest platforms deciding to get together to help educate and raise awareness en masse (as well a way for me to memorialize said appreciation.)

Yesterday, was eye opening and inspiring. The internet got together to defend itself and to make us aware of what it does for us. It got together to show us how lucky we are, how the internet is the Constitution 2.0, how it is a framework that enables innovation, helps keep us all in check, and despite the glaring power controlled by a few, still promises the American dream of anyone being able to create a better life for themselves and others.

 

Of the articles I read about SOPA and PIPA, I like the explanation/opinion given by MythBuster's Adam Savage in a December 20, 2011 article in Popular Mechanics, where he says:

Make no mistake: These bills aren't simply unconstitutional, they are anticonstitutional. They would allow for the wholesale elimination of entire websites, domain names, and chunks of the DNS (the underlying structure of the whole Internet), based on nothing more than the "good faith" assertion by a single party that the website is infringing on a copyright of the complainant. The accused doesn't even have to be aware that the complaint has been made.

Wikipedia, on their page explaining the blackout says:

SOPA and PIPA represent two bills in the United States House of Representatives and the United States Senate respectively. SOPA is short for the "Stop Online Piracy Act," and PIPA is an acronym for the "Protect IP Act." ("IP" stands for "intellectual property.") In short, these bills are efforts to stop copyright infringement committed by foreign web sites, but, in our opinion, they do so in a way that actually infringes free expression while harming the Internet.

The Electronic Frontier Foundation adds:

• The “vigilante” provision, which would grant broad immunity to all service providers if they overblock innocent users or block sites voluntarily with no judicial oversight at all. Intermediaries only need to act “in good faith” and base their decision “on credible evidence” to receive immunity. The MPAA and RIAA to create literal blacklists of sites they want censored. Intermediaries will find themselves under pressure to act to avoid court orders, creating a vehicle for corporations to censor sites—even those in the U.S.—without any legal oversight.

• PIPA and SOPA also still allow copyright holders to get an unopposed court order to cut off foreign websites from payment processors and advertisers. As we have continually highlighted, copyright holders already can remove infringing material from the web under the DMCA notice-and-takedown procedure

• PIPA and SOPA would also give the Attorney General new authority to block domain name service. The Attorney General would also be empowered to de-list websites from search engines.

As Reddit co-founder Alexis Ohanian explained, PIPA and SOPA are “the equivalent of being angry and trying to take action against Ford just because a Mustang was used in a bank robbery.” Adding that, "Congress Is Going To Obliterate An Entire Tech Industry."

 

Reading the descriptions of the bills and opinions of business and tech thought leaders (these stories are a mix of fact and opinion), makes me sad.

I'm said because the fight around SOPA & PIPA further illustrate that while the past two administrations have completely screwed up this country... yet, but were that their job, they are performing admirably. At least I know who to thank in 20 years time, when we are no longer the preeminent country in the world. I will thank them for their political global warming. Well done guys. Well done.

The government’s love of publishing and acronyms and publishing acronyms has a somnorific effect on the nation’s populace, ensuring that we ignore much of what is put out. Nor do we understand what the wordy mix of legalese and erudite phraseology is about, often because of the self-pleasing name it was given. Such is the case with SOPA and PIPA.

More cynically, and perhaps more accurately, these two bills represent specific big businesses, aka old Hollywood, who got clobbered by innovation, trying yet again to compete. Yet again, they are doing so through the continued corruption of our political system. It’s ironic that the framework that has allowed for the country’s success is being attacked when it doesn’t work in the favor of certain businesses. For me, this battle is not just about the internet. It’s a new battle of church and state, not religion and politics but money and politics and the American dream turning into a nightmare.