Startup Growth Engines: Case Studies of How Today’s Most Successful Startups Unlock Extraordinary Growth

by Sean Ellis

In 2010, I coined the term ‘growth hacker’ to define a new type of marketer leading a new type of growth-oriented marketing organization for startups. After five years of working with some of the fastest growing companies on the Web—such as Dropbox, Eventbrite and Lookout —it was clear that the most successful companies today are ones who are able to effectively scale their user base, revenue and ultimately value in a way that is fundamentally different from their competitors and that creates outsized audiences and value in the process.

Growth came from product innovations, unique acquisition channels that their competition hadn’t considered, and rigorous optimization driven by analytics and a deep understanding of their customers.

The new growth organizations have created billions of dollars in value in incredibly short time frames. These companies have acquired massive audiences—in the tens and hundreds of millions of people—in the process. The punchline? Most of it has been accomplished with very little traditional paid advertising and marketing. Instead, these companies use virality, freemium business models, untapped acquisition channels, unique hardware and software design, and memorable experiences that when combined, create a flywheel of growth that catapults these companies past competitors who stick to traditional marketing methods.

we’ve assembled arguably the most detailed breakdowns on how successful companies are growing today.

we’ve attempted to identify two main elements of growth: what helped the business gain early traction, and what is fueling the business today.

While each of these companies traveled different paths to their current success, they share many things in common. The first, and most critical shared element is that they all have a highly valuable product that has become essential in their customer’s lives. In other words, they’ve all built ‘must-have’ products or built a large network to become ‘must-have’.

Without their must-have product experiences it is almost guaranteed that you would not be reading about them or...

Beyond the shared must-have nature of their products, each of these companies has used a deep understanding of their customer and a rigorous analytical approach to growth that enables them to be hyper-efficient in acquiring, retaining, and monetizing their customers.

All of these companies make growth a priority across the company—it’s part of who they are.

Growth is not just a concern of sales and marketing, but of product, engineering and support too. It is this organization-wide commitment to growth that ultimately sets these companies apart.

the new marketers (the growth hackers I called for nearly four years ago) are leading cross-functional growth teams, are steeped in data and creativity, scientific thinking, and are immersed in the product as much as the promotion.

you must remove the walls between your sales and marketing organization and product development. You must move quickly to an integrated growth organization and foster a culture that prioritizes growth across the company.

Growth hacking is not anti-marketing, it is the evolution of marketing, it is pro-growth.

“I was an active member of the Bay Area Yelp Elite so we were rewarded pretty well in the beginning. Not monetarily, but through rank and recognition. Yelp does a good job of finding ways to reward people, again not through monetary means, but little perks … At regular Yelp Events, Elites often got first-chance to RSVP and even got in an hour before everyone else. There are specific events just for Yelp Elite that offer free food and drinks and swag.”

One of the most important traits for Yelp Community Managers was the ability to throw a party, and they did a great job throwing cool, exclusive events for Elites.

These events fostered a sense of community among Elites and a sense of loyalty to Yelp as it expanded into new cities. The company emphasized to Elites the importance of their reviews, further reinforcing this sense of loyalty.

“the new generation of Web workers took Yelp to be their entertainment bible, and that helped generate enough critical mass that others joined in.”

Yelp had isolated a series of metrics that helped them determine which cities had grown enough to warrant a Community Manager—which, as we’ve already discussed, only served to further increase growth in those areas by fostering loyalty among the local Yelp community.

Unlike Citysearch, which displayed professional reviews more prominently than normal user reviews, Yelp leveled the playing field by eschewing professional reviews altogether. They also put users before businesses, which helped to foster a friendly environment, encouraging users to contribute even more reviews. So long as they were within the guidelines, Yelp even made it difficult for businesses to have negative reviews taken down.

While most companies in and outside of the review industry would bow to advertiser pressure to remove negative reviews, Yelp made it a point not to.

Staying true to the users kept the community engaged and participating, while differentiating Yelp from other review services. Yelp became known as the place to get real, unfiltered information about local business.

“I had never heard of Yelp before, and somehow ended up finding the most amazing sushi restaurant through it. The sushi restaurant I found, via google’s municipal wifi in Union Square (SF), was called ‘Sushi Zone’, hardly visible from Market Street, only open 5pm to 10pm, and the line starts forming before 5, what a treat. The person I was standing in line next to said he had lived in San Francisco for several years before he found this place, and I had only been there for 2 days, and it was brilliant. Interestingly Sushi Zone garnered 77 reviews on yelp and a 4.5 out of 5 star rating, Citysearch on the other hand had only had 17 reviews, and although still a healthy 9.5 out of 10 rating.”[2]

Yelp was not only good at making something old new and delivering a fun service. It is perhaps as integral to their success that they also understood what users didn’t want, and the importance of pivoting to deliver what they did.

Yet another area in which Yelp has tried, failed, and moved on is paying for content. Early on, the company experimented with paying for reviews to help encourage activity in cities other than San Francisco, emulating competitors like InsiderPages and Judysbook by offering small compensation like $5 Starbucks or gas cards.

the company no longer pays “for reviews directly anywhere anymore” [3], choosing to focus on review quality over quantity, and letting the built-in social perks serve as incentive (more on those in just a minute).

There’s no denying that Yelp has made it easier for local spots, which couldn’t afford to out-spend chains when it came to advertising, to thrive based on word of mouth from happy customers.

Thus, as Yelp has increased in popularity, so has their authority as a local guide, meaning that yet another factor we must consider is how the positive relationship between a high Yelp rating and good business has led to restaurants actively promoting Yelp in order to gain positive reviews, further driving user engagement with the site.

The “People Love Us on Yelp” stickers have become ubiquitous in the windows of small businesses everywhere, driving a positive cycle of marketing and awareness for the site.

Yelp has a ton of high-quality reviews and in-depth profiles, all of which generate an endless supply of fresh, indexable content for Google.

Yelp’s business pages are structured well for SEO. Yelp augmented this core content with their own, launching local blogs, city pages, user generated lists and other content all aimed at reaching more users through search.

As with both YouTube and SlideShare, the embed feature can be a powerful traffic driver, and Yelp’s embeddable review widgets were no different. Businesses added the widgets feature to show off their Yelp ratings, an...

the “Nearby” feature means that a great cup of coffee or bite to eat is always within reach—to making reservations and appointments while out and about.

Many businesses offer users who check in via Yelp promotional codes (like a free glass of wine or $5 off). And Yelp continues to invest in mobile. Finally, after five years, Yelp finally allowed reviews to be submitted direct from mobile devices in August 2013.

The mobile explosion hasn’t just been good for user engagement—it has also meant increased ad revenue for Yelp.

We hope that this analysis will be instructive for startups attempting to find traction in a market saturated with similar products or services. Yelp not only proves that it’s what you do differently that matters, but also that having guts—to pivot your entire company around a hidden feature and spurn a big buyout—can really pay off.

Git makes collaboration “possible,” but not “easy,” which is how GitHub began to take shape—as a solution to the problem of collaboration via Git.

GitHub’s “forking” feature allows users to copy any public repository to their own account and modify it from there. Users can then share those changes with the repository’s owner via a “pull request.” If the owner likes the changes, then he or she can merge them with the original repository.

GitHub customers with private accounts and repositories can leverage the same functionality across their teams, allowing software teams to develop and manage proprietary code with the service as well.

Network Effect + Marketplace The aforementioned features and functionality are what attracted the first users to GitHub, and create a powerful reason to join and participate for other developers. This center of talented engineers and their public repositories helped to contribute to a network effect that continues to pull in new users every day.

GitHub is driven by both network effects and marketplace dynamics.

The result of this dual growth engine is the creation of two massive assets: 1. The most important and vibrant social network for computer engineers on the web 2. A massive code repository for people seeking out code elements for their projects.

These two assets are the sustainable drivers of their growth. New users are pulled in through multiple channels—either via searches for code, invitations from existing GitHub users, or through collaboration on open source projects.

“The network effect is awesome. There are standards now based on GitHub, so everybody can come in to a new project and immediately know how to get the code, how to contribute code, how to review the code, how to submit issues to the code base…. The more people do that, the stronger the effects and the gains from having a uniform, well-known, standardized system. And that’s happening really, really rapidly.”

the more projects on GitHub, the more valuable it becomes for everyone.

The key to generating word of mouth, he says, is being surprising, delightful, and helpful.

“One thing Tom [Preston-Werner] had learned at his previous venture, Gravatar, was that offering a resource intensive service for free was a losing proposition. In that case it was high traffic image hosting, but in GitHub’s case it was git hosting. Storing and transferring code was going to stick us with a large server bill. We needed a way to recoup costs.”

“At this point we realized GitHub could probably do more than just recoup costs. It could be a real business. We decided to continue to offer unlimited public repositories for free, but we’d charge for private repositories. In other words, we’d charge the people asking to be charged.”

This avoids the common issues that plague freemium businesses where no compelling reason to upgrade exists. The desire to keep things private while using the tools provided by GitHub makes the paid plan a no brainer for companies who wish to use it.

GitHub’s collaborative structure doesn’t just make working on existing open source projects easier—it makes it easier to open source new projects. Now companies and individuals can open up previously private projects to the public, where they can be improved upon by the community. It’s hard to understate the significance of this change. If a private company wanted to open source a particular project, they’d face all of the versioning and patching issues mentioned earlier. With limited time and bandwidth, most companies chose not to invest the time and resources needed to support that open source opportunity.

This new reality has led to a series of highly visible, open source projects released by companies, including Bootstrap by Twitter, and Ink by Zurb, for the community to use for free and improve upon. GitHub has created an outlet for these companies to contribute back to the community in a way that wasn’t possible before, fueling the interest and participation by private companies to the open source movement in a meaningful way.