Hacking Growth: How Today's Fastest-Growing Companies Drive Breakout Success

by Sean Ellis

customers.2 Before Sean and the team at Dropbox implemented the referral program, the company was spending nearly $400 to acquire each new user and the premium subscription price was just $99. Drew Houston smartly recognized that the expense-to-payoff ratio was unsustainable, but unfortunately, not every company comes to that realization in time. Take, for example, Fab, a flash-sale site for specialty designer goods. Once lauded as the “Amazon for design,” and feted as the latest Silicon Valley unicorn, the company was growing its customer base at breakneck speeds; the only problem was, it was spending $40 million a year on advertising and customer acquisition costs to do so—more than 35 percent of its revenue.3 Suffice it to say, excessive spending quickly caught up with them, leading to the start-up’s dramatic implosion and sell-off at a fire-sale price.