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Why Growth Hacking Won't Work for Every Company Growth hacking is a hot term in the world of startups, because if done correctly, it can quickly provide a lot of growth for a young company. That said, if done wrong, it can cause a huge headache.

By Raad Mobrem

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.


This article is included in Entrepreneur Voices on Growth Hacking, a new book containing insights from more than 20 contributors, entrepreneurs, and thought leaders.

The big new trend in the tech world and now in all industries is the cleverly coined term "growth-hacking," which basically means the ability to quickly scale a product in creative ways outside of traditional marketing tactics. Think virality.

Companies like AirBnB, Dropbox and Facebook are famous for it, as they used specific hacks to grow their companies to a massive size. For example, Dropbox -- now valued at $10 billion -- created a program that rewarded both the inviter and the invitee 1GB of free online storage if the invitee signed up. This "hack" heavily contributed to the growth of Dropbox.

Despite the allure of a quick method that will lead to rapid scaling, growth-hacking is not a fit for every company. The biggest misconception around growth-hacking is that if your company puts some effort into it and test different methods of "going viral" then your company will have the chance to become huge. This isn't always the case

How do I know this? As the co-founder of Lettuce, an online inventory and order-management system, I tried this strategy and made a few mistakes.

Related: Want to Thrive Like AirBnB and Uber? Build Growth Into Your Company's DNA.

Here are a few growth-hacking misconceptions and how to overcome them.

1. Growth hacking can happen at any stage. You can't grow a company that has an underdeveloped product or does not yet solve the problem of your target customer.

At Lettuce we tried to force the growth of a solution that had not yet achieved product-market fit by developing a referral program too early in our company's life. We had seen a similar model work for other companies that growth hacked their way to success and thought that we could accomplish this as well. We chose to ignore the red flags.

At the time, our product was not yet great, and we did not have a large enough customer base to even help drive the initial viral growth. However, we were so excited by the chance of incorporating a distribution hack into our system that we went ahead and implemented it. As a result, the entire referral program ended up yielding us zero customers and we wasted critical developer time.

Before you consider growth hacking, make sure you have achieved product-market fit.

2. A single growth hacker is the ultimate solution. Something every company needs to understand is that growth is not the job of a single "hacker," but should be the responsibility of the entire organization.

Related: Finding Growth By Changing Your Mindset

Initially, we made the mistake of hiring an employee whose sole role was to drive all of our growth. It ended up being a terrible situation for both sides. The creative hacks developed to drive leads did not yield sales, and thus wasted time and money we could have spent on enhancing our product. We knew we needed to make changes.

We decided to put into place clearly defined goals our company was working towards -- reducing the amount of leads lost, increasing revenue and driving customer growth. To do this effectively, our marketing, sales, support and product teams needed to come together to tackle these problems. We encouraged getting input from all departments to see which features -- big or small -- would help us reach our goals as quickly as possible.

Through learning from our mistakes, we no longer rely on the abilities and skills of a single person. Rather, we utilize and align the strengths of our entire team around common goals, focused on first achieving product market fit and then growth.

Everyone in your company should be thinking holistically about growth, because it is a cross-functional endeavor.

3. Growth hacking can work for every company. When we started brainstorming various hacks we could implement, we first looked at all the successful companies that experienced fast and sustainable growth through a viral-product mechanism. In doing this research, we realized each one of these products mimics everyday occurrences where communication is involved.

Related: The Hurdles of Scaling Globally

For instance, sellers on eBay would promote their store to their friends and network and then those people realized that could sell on Ebay too. This worked so well was because everyone sells (or wants to sell) various things at some point in their life. Ebay was only mimicking this real-world occurrence with its tech platform and this caused incredible virality.

On the flip side, if we look at a company that sells complex airplane parts, it is unlikely they will have this type of virality.

What every company needs to understand is that the foundation of your solution needs to be able to tap into the power of a network to have growth hacks work in a substantial way. Working on growth mechanisms when the network related foundation is not there will only bring small amounts of growth (at best).

Building these growth mechanisms is a long and hard journey but definitely not impossible. Just stay realistic about where your product is and whether you can tap into the network. Then figure out where you can drive growth in the funnel (starting from the bottom).

When you have achieved a comfortable conversion rate, or product-market fit, and your product can use the network, get creative and increase the top of the funnel with some clever hacks.

Related: The Race to Scale: How Fast Should You Accelerate?

Raad Mobrem is the CEO and cofounder of Lettuce, inventory-management software designed for small to medium inventory-based businesses. Lettuce consolidates the entire order, processing, accounting, inventory, forecasting, fulfillment and shipping process into a single click.

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