Growth frameworks

Alex Schultz is VP of Growth at Facebook. In this talk, he shares some of the growth frameworks which his Facebook team uses.

My key takeaways from the talk are:

  1. Retention, not acquisition, is what matters most for growth. Only after you’re able to sufficiently retain your existing users to justify their customer acquisition costs should you look to scale by acquiring new users.
  2. Every company should have a north star. This is a single metric that serves as the most meaningful measure of the company’s performance. And it’s not just the company’s founder who should know this metric. Everyone in the company should know this metric because this will ensure that the company works together towards the same outcome even when the founder isn’t in the room, which is most of the time.¬†For example, Facebook’s north star is the number of monthly active users. It’s not a vanity metric like the number of registrations because Facebook believes that if a user isn’t logging into Facebook at least once a month, they’re not getting meaningful value from the product. Depending on its value proposition, each company will have a different north star.
  3. Each company has a magic moment. This is the moment at which the user recognizes the value that the company’s product is delivering. For example, Facebook’s magic moment is when a user sees their friends. This is when the user understands that Facebook is about seeing what your friends are up to and connecting with them. Once again, each company will have a different magic moment. You need to identify your company’s magic moment and get as many users as possible to experience that magic moment as soon as possible after they start using your company’s product. Delivering your magic moment will help you progress towards your north star.
  4. A viral action attempt’s success is determined by its payload, frequency, and conversion rate. The higher the action’s performance in each dimension the better, but it needs to perform very strongly on at least one of these dimensions to achieve virality. The payload is how many people a company can reach with its viral action attempt. The frequency is how often the company can repeat that viral action attempt for each person. And the conversion rate is how often someone who is a recipient of the viral action will convert to become a user. For example, when Hotmail added a link to the bottom of each of the emails which its users sent which said “Sent from Hotmail. Get your free email here”, the payload was relatively low. This is because you email one person at a time so it takes time for the message to reach everyone in your address book. However the frequency was high because the people that you do email, you likely email multiple times a day. So they see the same message over and over again. The conversion rate was also high because, prior to Hotmail, people were tied to their paid internet service provider’s email service. They welcomed the freedom to choose a free independent service.

You can watch the full talk below.