Growth hacking is now a mainstream term in tech circles, particularly those that are consumer-focused. Growth hacking definitions abound, but generally emphasize a data driven, creative and flexibly opportunistic approach to customer acquisition. Many would argue that growth hacking is simply a new term for an old concept – marketing. While the functions, tools and skills require for growth hacking may be essentially the same as “marketing”, the psychology and mission of growth hacking feel totally different to me. When I hear “marketing”, I think soft, fuzzy, ambiguous, and cost center. When I hear “growth hacking”, I think maniacal focus on growth, scrappy, data driven, tech/tool savvy, and creativity bordering on irreverence. The difference in psychology isn’t an indictment of traditional marketers; most of the marketers I know have a growth hacking mentality. But in the broader context of what it takes to be successful in a growth stage businesses, the difference in psychology and mission matter.
Growth Equity and Growth Hacking: A Symbiotic Relationship
Growth equity and growth hacking enjoy a symbiotic relationship. Although there are capital efficient ways to growth hack that don’t require growth equity, some growth hacks absolutely require capital. Growth equity investors who understand customer acquisition costs, lifetime customer value, customer success and customer retention strategies are well suited to provide the right kind of capital for growth hackers. Growth hackers and growth equity investors are kindred spirits and although we look at the world through a slightly different lens the philosophy and objectives we’re passionate about are similar.
A Common Predicate: Product-Market Fit:
Growth equity investors and growth hacking require a common predicate; product-market fit. Without product-market fit, growth hacking is a fruitless exercise and could actually do more harm than good. For the same reasons, without product-market fit, a growth equity investment is useless as the proceeds are likely to be spent unwisely trying to force growth for a product in search of a market.
A Passion for Constant and Conscious Experimentation
Growth equity investors and growth hackers understand that the path to repeatable and scale-able growth comes out of a process of constant and conscious experimentation. Generate a thesis, test, measure, re-calibrate and repeat. The desired result is profitable growth. If the experiment works and produces the desired result, spend more on the experiment, but remain committed to testing, measuring and re-calibrating in a process of constant improvement and optimization.
Not all growth hacks require capital to execute. But most do, particularly in enterprise sales oriented organizations. That being the case, growth hackers and growth equity investors are fanatical about measuring results, keeping in mind the only authentic growth objective that matters; profitable, repeatable and scale-able growth. The need to measure stems from a common focus on efficiency. In the case of the growth hacker, the goal is to optimize the ratio of growth to input (whether the input be capital, effort or reputation). In the case of the growth equity investor, the same desire to optimize the ration of growth to input expresses itself though the desire for capital efficiency.
Growth hackers and growth equity investors should hang out more often. We’ve got a lot in common, including an appreciation for humor.