Why small communities lead to big growth
Growth Hacker, Entrepreneur, Marketing Exec
Not all ideas deserve to grow.
Do things that don’t scale, but build things that do.
Take advantage of the network effects and density of small, focused communities.
Lesson: Growth From User 0 with Morgan Brown
Step #2 Growable: Why small communities lead to big growth
It's hard to know when something isn't going to work, but not everything is growable and some ideas don't deserve to grow. Some companies, there isn't a big enough market for it or the product is not the right fit for the market, so lots of people have talked about product-market fit. But, really that's about finding a big enough market with a big enough problem and really nailing that need. Sure, there are lots of ideas where you can bring in the best growth people on the planet and they can maybe get initial traction and initial growth, but not sustainable long-term growth. I think you saw that a lot.
Some great examples of that are back when Facebook was really open to viral apps. So, you have apps like BranchOut and VIDI and those types of things where some of the best growth teams in the world were working on those products that went incredibly viral but fell of a cliff because there's no long-term core product value to it. The viral engine was exceptional, but the product to value just wasn't there. Yeah, I think there are lots of products that will either grow unsustainably or just can't grow because they don't have lasting value to the user.
One of my favorite axioms as a growth person is to do things that don't scale, but build things that do. What I mean by that is, very early on, you don't know what's going to work. Instead of building a product feature that's going to take three weeks of downtime or have a lot of technical debt associated with it or just take a long time to get into the market, try to figure out a way to do it in an unscalable way where you can execute on it and try to get some learning around it first before you go on to build out a whole system.
An easy kind of example is say you want to build an affiliate or influencer program. One approach would be, “Hey, we’re going to build out an affiliate program. We’re going to go sign a big contract with affiliate software or maybe write our own affiliate module tracking in our product, build out an admin area, build out unique tracking codes and all these types of things.” Or, you can say, “We are going to set up really simple coupon codes or Bitly short links or whatever it is, and we're going to track it manually in a spreadsheet for a couple of weeks and see if we can even get traction in this channel. Then if we do get traction, then we can turn around and start to get more thoughtful and really build it out.”
It's very similar to the MVP concept of the lean start up, but instead of a minimum viable product, you talk about maybe a minimal viable test that you can get out there into the market and run really fast. If there is signal, you can double down and make a smarter investment on that tactic or channel or program.
Being laser-focused on a niche is super critical. I actually think that people make a mistake of thinking that they're focused on a niche and actually are still really way too broad. So, for example, one of the companies we researched was New Relic. Everyone thinks that they did an amazing job marketing to developers, which they did. But, that's only a part of the story. They actually started with the Ruby on Rails community. Developers wasn't the niche, it was Ruby developers and the advocates in the Rails community, and so they got really laser-focused on that very specific niche.
When people talk about niches, often, they're talking about really big markets. The best companies get really way down into the weeds on that. When you get down into these very small communities, you really can take advantage of network effects and the density of those communities to gain some initial traction and some critical mass before you kind of expand on. It was very easy, for example, for New Relic, once they had kind of won in the Rails community, since Rails people are very vocal, very opinionated. You have David Heinemeier Hansson from 37signals and the like who have huge audiences. They could speak very convincingly about the power of New Relic and it spread to a larger developer community.
That's one of the big learnings for me is that when people talk about niches, they're usually way too broad already. You almost have to get hyper-focused and then say, "Is this narrow enough?" and then go another click and that's kind of where you want to be.
You have to walk in and you have to stand there and there’s a $100 million dollar market. There are these huge markets. Everyone in half the world is going to use this technology or whatever, but the reality is to get started, you need just a very tight community of users because when you focus on a very small set, you can really nail the product market fit for them. You can really solve a real need for them and then from there, it's about figuring out how your product morphs to be more inclusive for more and more people.
One of the most exciting things in growth is when you see something actually working and trying to figure out, “Okay, is this something that we can scale or is it just a false positive or is it something else that we can't really scale and grow?” I think what you're looking for is those signals where you have high conversion rates, or things that are performing that are outlying other things. You might have a Facebook ad campaign or something like that that is doing 10x better than all the other ones, then you can really hone in on something like that. Or, maybe it's 3x, but it kind of is an outlier and then you can start to think about, “Okay, how can we scale this up?”
Some of the things that we do — just to kind of continue the Facebook ad example — is we’ll set up a landing page where we are just capturing email addresses just as an easy test to see if we can get conversion off of that channel. But, that's not really creating active users or really building your user base. But, you don't want to invest in wiring up landing pages and the whole account creation and really impacting product making that happen. Once you get a performing campaign or something that is really outperforming itself, then you can say, "Hey, this might be a channel. Let's invest some resources. Instead of collecting emails, let's create accounts and that type of thing." You can look for those signals and then make investments based on that.
One of my favorite sayings in growth, I think Brian Balfour said it, but it’s, "Double down on what's working." Make a bunch of small bets where you can to try and learn a bunch of things and then when you see something with some signal, double down on that and put the investment in to see if you can scale it up. When we capture early email addresses from people where we are testing out campaigns with smoke test landing pages or that type of thing, we will always try to put a conversion email loop on the back of that. So, if we get an email address, we will send a series of direct emails to try and convert them to create or complete their account. Then once we have that channel working, we will switch from email capture to account creation.