Saturday, March 1, 2014

3 Reasons Why Growth Hacking Won’t Help You – Part 1

3 Reasons Why Growth Hacking Won't Help You – Part 1 image town explosion

Question of the day.


Suppose you’re standing above a big tub of jetfuel enough to fill a 747 jet, and for some crazy reason, you decide to throw a lit match into it.


Which of the following pictures describes the level of intensity of that fire?


A) Fire big enough to be on the news



B) Fire big enough to destroy a small scale farm


3 Reasons Why Growth Hacking Won't Help You – Part 1 image funny mad cows fire meme


C) End of the world, apocalypse


3 Reasons Why Growth Hacking Won't Help You – Part 1 image end of the world


D) Fire big enough to please the Chacho, the arson monkey


3 Reasons Why Growth Hacking Won't Help You – Part 1 image fire monkey


The answer?


E) Nothing.


3 Reasons Why Growth Hacking Won't Help You – Part 1 image bored cat


In fact, jetfuel, like most other low volatility fuels, won’t burn with just a match.


The story told by Ben Rich in his book Skunk Works is that a lit match can be dropped in a bucket of JP-7 and the fuel will not ignite, and the match will be extinguished (although this is common in any low-volatility fuel including diesel).



Growth hacking is JUST like jet fuel.


Your business is the flame, and growth hacking is like adding jet fuel to the flame.


If you don’t have the proper flame (including the proper temperature, the air mixture, and of course, all the team support you need to grow & keep the fire), your “growth hacking” will kill your business.


Here are the 3 reasons why growth hacking WILL NOT work for you


1) You have no product market fit.


If you find that growth hacking isn’t working for you, 99% of the time is due to the fact that you do not have product market fit.


You can google what product market fit is, but to give you a summary, it basically has to satisfy


  1. Your product / service solves a real problem (either need or want)

  2. Your product / service is monetizable

If your product has no fit in the market, that means there is no reason for its existence.


Suppose you sell water to a town that’s thirsty in the middle of the dessert.


Do you have product market fit?


Of course. You solve a real problem (people die without water) and you can monetize (sell water).


Suppose, you expand your operations to a town that’s located next to a clean and large river.


Do you have product market fit?


Well, you satisfy the problem (whether or not they live near water, they still have to drink it) but you cannot satisfy monetization (free and abundant is the worst competitor on the planet).


But it doesn’t have to be a no. (For example, premium bottled water that’s marketed as “clean spring water” that’s better for your skin.)


Let’s Rewind


Remember the dot com bubble bust in 2000/2001?


3 Reasons Why Growth Hacking Won't Help You – Part 1 image pets.com sock puppet


WebVan, Pets.com, Flooz, Kosmo, WebVan…. and endless stream of VC funded companies that went belly up.


There the problem wasn’t that they could not monetize (in fact, Pets.com did generate over $600k of revenue in its fiscal year).


Problem was…


  1. They were trying to outspend their competitors and relied way too much on expensive TV ads. This is exactly what David Ogilvy told people NOT to do 100 years ago, but i guess these people didn’t get the memo.

  2. Some of their ideas were too far fetched for the time. Remember, having product market fit means that the market has to understand what you’re trying to do. At the time, online grocery shopping was still a strange concept (if you ask me, it’s still strange).

They were trying to growth hack too fast.


They applied the fuel to the flame but the flame wasn’t strong enough, and the fuel ended up killing the flame.


Hell, they would have had better results dealing with shady affiliates driving sales to their sites. Or better yet build a HUGE email list with that money and try to monetize that way.


So did people learn from this mistake?


Nope. This STILL goes on today.


Ever hear of Color.com and them raising ridiculous $41 MILLION bucks without a freakin’ product, and then flopping?


Why Early “Growth Hacking”/Investing is Bad


Steve Blank said it best – raising money for a company that has no product market fit = GUARANTEED death.


Why?


If you have no product market fit, that means you’re still in search mode (and this is where most startups die).


Your job is to seek & search until you find it.


BUT if someone gives you a check for your business, he/she is endorsing your plan. Even if you’re on the WRONG plan, you are psychologically being rewarded that you are doing something right.


So if you have the WRONG plan, you’re gonna keep executing on that wrong plan to try and make it work.


Why? Because your investor “blessed” you, so you must be on the right course.


You’re not going to seek alternatives. You will hire AND fire whoever is necessary to make that plan work.


(Steve Blank suggest that this is why sales people should never work for startups that have no product market fit because they get canned and lose their reputation but in fact, they just joined a bunch of idiots.)


Remember, investment is literally the fuel to your rocket.


But if you have no product market fit, your rocket is pointed into a big brick wall.


Forgive me


I made this mistake too.


Many many times.


Created a product (that no one wanted), invested in bunch of PR, SEO, linkbuilding, JV programs/blah blah, and learned that I was just spinning wheels.


For example, I did this with a pet site (PawshPal.com) that originally started out as e-commerce site that sold pet driver’s license as pet tags.


3 Reasons Why Growth Hacking Won't Help You – Part 1 image pawshpal pet tag


(Hey, I thought it was an awesome idea but at least I don’t blow $300m bucks like pets.com did. Though, that would’ve been nice.)


I even invested into some machinery to make these things quick & fast thinking that I was going to flood the market with these things.


How did it go?


Well..


Let’s just say, i just a couple of months trying to unload these stupid machines.


Yes, this is a VERY very common reason why most startups die: they create the most perfect solution or product to a problem that does not exist.


In this case, no amount of SEO, PPC, etc. can help you.


Hell, not even blackhat marketing.


Let me ask you… ever hear of stories like this? Would love to hear yours.


Source: B2C_Business



3 Reasons Why Growth Hacking Won’t Help You – Part 1

No comments:

Post a Comment