Lesson: Growth From User 0 with Morgan Brown

Step #3 Growth Studies: Learning growth from the unicorns

I have two favorite growth studies. The first is GitHub, and the thing that's fascinating about GitHub is now it's kind of a standard workflow tool but it wasn't always like that. There wasn't really an easy way to manage code repositories, open source projects, and that type of thing, and now GitHub is the standard.

What's really interesting about GitHub is, one, kind of how they thought about the problem and saw a need for it. Two, to build a product that has become so ubiquitous. Three, that they have multiple growth engines. One, is they're a huge code repository, a free code source. Two, they're a social network. Three, they're an identity system now for developers. Now, people don't ask a developer for a resume, they ask to see your GitHub repo. Then, four, of course, they're this massively critical workflow tool.

Then, also how they thought about their product from a monetization standpoint. They are freemium, but their free product doesn't cannibalize their paid product because they drew the line around repo privacy and that is something that companies would gladly pay for. I think all of those elements make it really fascinating.

I think my second favorite one is WhatsApp. WhatsApp is really fascinating because, back in the late ’90s, Josh Kopelman wrote a really seminal piece about this notion of the penny gap in consumer services. At the time he was talking about online music sharing services, so the difference between Napster and Kazaa versus a paid program at the time.

Basically, what he said is that traditional economic theory says that the lower the price goes on something, the more the demand is, but that online, that's actually not the case. That it's true to a point, but that when you get between the difference between free and one penny, there's a massive difference. By being free, these companies could grow to a size that they couldn't grow to otherwise. Being free is actually less expensive than being paid and trying to acquire customers via a paid model.

You look at the app store today on the top charts and that's true through and through. The highest grossing apps are all free with in-app purchases except for Minecraft. So, if you're not Minecraft, you need to be free. I thought what WhatsApp did was really interesting is that most free products are either in-app purchases or ad supported and WhatsApp didn't want to be ad supported. They are completely anti-ads. So, the WhatsApp team was able to put a twist on the penny problem by making a year long free trial. It's a paid product, but you get to use it for so long, that there's such user lock-in, that by the time you get to the year, of course you're going to pay a dollar for it because it's a key part of your everyday life.

I think that that focus, along with the international first focus of, “We're going to build for every phone. We're going to build for Android, feature phones, not the iOS first.” Those were some really smart decisions that they made very early on. Those two are probably my favorite.

Some of the best products get created because the founder saw a need and built the product for themselves, and that's very much the case with GrowthHackers. I think like any good marketplace, GrowthHackers is like hacker news for growth marketers. Any good marketplace needs supply in order to create demand. Sean and I talked a lot about like what the single-player mode is for GrowthHackers. We're going to aggregate content from a bunch of different sources, but there's should be a mode where people can come and get inherent value out of the site even if the content supply isn't amazing from third parties. We really started talking about uncovering companies’ growth engines as a way to create kind of the [inaudible 04:04:00] content that didn't exist.

If you googled around for things like, “How did Airbnb grow?” or, “How did Square grow?” and all these types of companies, you didn't find much. You found a couple of core threads, maybe a couple of random blog posts, a wikipedia entry, but there was no economical like, “Here's the story of this company's growth engine.” He and I and the rest of the team, we love sitting around and talking about it, trying to reverse engineer it, and try to figure out what actually is in the DNA of these companies that made them grow.

Really, it was kind of a personal fascination, and also, you know, a bit selfish. Like, hey, how did the fastest growing SaaS businesses grow? How do companies that focus on this market grow? How do mobile apps grow? And really understand what the core building blocks of those engines were. So, we decided to start writing them.

For me, they were just fascinating. I don't have a lot of hobbies. Growth is my hobby, to my wife's dismay. She's like, “That is not a healthy hobby.” But, it's my hobby. I don't collect anything. I don't have any vinyl records. I study growth companies.