Sean Ellis - Hacking Growth: How Today’s Fastest-Growing Companies Drive Breakout Success

W hen I (Sean) got a call from Dropbox founder Drew Houston in 2008, I was immediately intrigued by the predicament the one-year-old start-up was in. The companys cloud-based file storage and sharing service had built up a good early fan base, concentrated primarily among the tech-savvy community centered in Silicon Valley. Even before the product was completely built, Houston had pushed a video prototype online illustrating how the service would work, which had earned him the backing of the powerful Y Combinator start-up incubator and drawn a flood of early adopters.

It became pretty clear that Houston was on to something when the waiting list he was keeping for the beta version grew from 5,000 to 75,000 in a blink of an eye when a second video was posted on news aggregator site Digg and went viral. The next wave of users who signed up after the public launch were happy with the service, but Houston was still running into a wall trying to break out beyond the tech elite. And he didnt have much time. The competition was fierce. One start-up, Mozy, had a three-year head start, while another, Carbonite, had raised $48 million in fundingversus the $1.2 million in seed capital raised by Houston. Meanwhile, behemoths Microsoft and Google were gearing up to enter the cloud storage arena. How could Dropbox grow their customer base in the shadow of such formidable competitors?

When Houston called me, he wanted to explore what I could do to help them grow beyond their very solid but not-yet-big-enough pool of early adopters. I was just wrapping up an interim VP of marketing role at Xobni, a start-up run by Drews good friend Adam Smith, when Adam suggested that we meet to discuss Dropboxs challenges. I had developed a reputation in Silicon Valley as someone who could figure out how to help companies take off, particularly those facing fierce competition and limited budgets such as Dropbox was. Id first had success driving growth at the online game pioneer Uproar, growing the site to one of the 10 largest on the Web, with more 5.2 million gamers at the time of IPO in March of 2000, all in the face of an aggressive push into gaming from Sony, Microsoft, and Yahoo! Id then moved over to work on growth initiatives at LogMeIn, an innovative service started by the Uproar founder. There Id managed to help turn the company into the market leader despite a massive marketing campaign waged by its main competitor, GoToMyPC. What was the secret? I worked with the engineers to utilize technology for what was, to them, an unconventional purpose: to craft novel methods for finding, reaching, and learning from customers in order to hone our targeting, grow our customer base, and get more value from our marketing dollars. I knew nothing about software engineering when I started my career in 1994 selling print ad space for a business journal at a time when businesses were just starting to move to the Web. But I saw the promise of the future in Web business, and so when I got to know the founder of Uproar, I decided to invest some of my hard-won sales commissions and hop over to work for the gaming portal, once again, selling ads. It wasnt long before I caught on to the dangers of relying only on traditional marketing methodseven the newer, Internet-era versions of old methods, like online banner adsto drive growth. My big wake-up moment was probably when the leading advertising firms I was trying to sell to, such as Saatchi and Ogilvy, declined to recommend banner ads on Uproar to their clients, on the grounds that the site didnt have a large enough user base. Short on cash and in danger of missing out on much-needed sales commissions, I suddenly found myself tasked by the founder with figuring out how to bring in more users, fast. My first approach was paid advertising on Internet portals, like Yahoo!, and that stoked growth nicely. But it was costly, and, just as Drew Houston later discovered with Dropbox, the ads werent bringing in enough bang for the buck. Meanwhile, Sony, Yahoo!, and Microsoft started making their big push, flooding the Web with gaming ads, and as a young start-up, Uproar didnt have anywhere close to the money needed to compete with them head to head. I knew I had to find another way.

Thats when I got the idea of creating an entirely new type of advertisement that allowed Web proprietors to offer Uproar games for free on their site, meaning the site got fun new features to offer their visitors, and Uproar got exposure to everyone who visited those pages. The founder gave the go-ahead, and within a few weeks, the engineers and I had created a new single-player game that could be added to any website, with just a small snippet of code: one of the first embeddable widgets. The site proprietors would become Uproar affiliates, paid just $.50 for each new game player the company acquired through their sites. The low cost made it highly affordable for us and, because the game was so engaging, the affiliates were happy to feature it. In addition to sending new gamers to Uproar, we experimented with adding an add this game to your site link, which made it easy for other website owners to make the game available on their sites, too.

As we saw the game start to take off, we tested different versions of the copy, calls to action, and which free game we offered to find the most potent combination. The result for Uproar was explosive growth; the free games were soon on 40,000 sites and Uproar shot to the top of the online gaming world, beating out the behemoths and their splashy marketing campaigns. Many other companies have since used the same strategy to grow, the most famous example being YouTube, who later supercharged its growth by creating its embeddable video player widget, which landed YouTube videos all over the Web and turned online video into a phenomenon.