Slack Growth Case Study

Before it became a beloved and well-known team collaboration tool, Slack (which stands for Searchable Log of All Conversation and Knowledge) was known as Tiny Speck, and was used by a group of developers working on an online game called Glitch. However, it wasn’t long before Stewart Butterfield (co-founder of both Slack and Flickr) and the rest of the team started to become more interested in further developing Tiny Speck, and less on the (now defunct) game.

Slack as we know it was officially launched in February 2014, and after only a short while (in October that same year), it set a record as the fastest-growing startup ever, with a $1 billion valuation. Today, Slack has $200 million annual recurring revenue (according to data from 2017), 8 million daily active users, and 2 million paid accounts, with 500K organizations using Slack as their collaboration tool of choice.

Image Source: slack.com

The burning question on everyone’s mind was (and probably still is): how did they do it? After all, Slack wasn’t the first app to be used for team chat within a company—Skype, Campfire, and HipChat had already been available for quite some time at that point. So what made Slack stand out from its competition?

In Slack’s early days, Butterfield was clever to notice that a lot of companies were using different tools, for different purposes, and constantly jumping between emails, Skype, IRC, Hangouts, and other apps in order to manage their teams and workdays. With so many apps in play, things were bound to get incredibly chaotic, really fast.

However, that’s not the (only) problem Butterfield was focused on solving.

Selling the Innovation

As Butterfield said in an interview, “Somewhere between 20 to 30% of our users—and this is just an estimate—come from some other centralized group-messaging system like HipChat, Campfire, or IRC. When we asked the other 70 to 80% what they were using for internal communication, they said, ‘Nothing.’ But obviously, they were using something. They just weren’t thinking of this as a category of software.”

Slack and similar messaging systems hadn’t been around for all that long at the time, so people didn’t really understand why they needed them at all. Because of this, in addition to selling their solution, Slack’s main focus was on helping their users realize that they had a problem that needed solving and why they actually needed something like Slack.

As you can see, Slack achieved its early growth by doing two things:

  1. Creating a market where there wasn’t one before,
  2. Making people aware of a problem they didn’t know they had and then selling their solution to them.

As far as growth techniques go, Slack’s most effective one was concentrating on “selling the innovation, not the product”. Although this concept wasn’t anything new, it was critical to Slack’s success. So, instead of simply selling a software product, they sold “making decisions, faster”, “75% less email”, and “all your team communication, instantly searchable, available wherever you go”.

However, seeing that more than half of Slack’s user base didn’t think they needed internal communication software, Butterfield and his team had to find a way to appeal to this group. They did this by creating a high-quality product that’s easy to use, simple to set up, and compatible with a wide range of other tools, and that would help teams and companies be more productive, organized, and less stressed out. This attention to detail and dedication to making a truly useful product was just as important a factor as “selling the innovation”.

Perfecting the Most Important Features

This is a concept that really inspired Butterfield and the Slack team while they were working on the app. Basically, Buccheit’s point was that there was no need for every little thing to be perfect, as long as you did a couple of things really well. Keep your focus on important features, and move on to minor ones at a later date.

Naturally, this didn’t mean that Slack didn’t care about its minor product features—they simply chanelled their energy into perfecting a few core features first. They were convinced that their users wouldn’t notice what was missing from Slack’s early version if they managed to deliver the key features perfectly, which were (in their case) search, file sharing, and synchronization.

Why these three features? As Butterfield put it, people had come to expect a lot from search, thanks to Google. People wanted to know that they didn’t have to worry about labeling or storing certain files after they’d read them. They wanted to be sure that they could find them again, later, when they needed them.

When asked about synchronization, Butterfield commented that the main problem with other platforms was that they couldn’t function across multiple devices, which is how Slack came to the idea of “leave-state synchronization”. The aim of this feature was to allow users to continue working on their tasks exactly where they left off, no matter the device they were using.

Last but not least, the reason Slack opted for focusing on file sharing was that they wanted their users to be able to have everything in one place and share important files with the rest of the team. A simple, intuitive UI was meant to please everyday users, helping them quickly paste images or drag and drop their files.

Preview Release and the Importance of User Feedback

Image Source: web.archive.org

By March 2013, the team behind Slack was using the platform for themselves, but they were keenly aware of the fact that they needed to see how other people would react to it, which is why in May that same year, they recruited a number of companies to help them test their product. Butterfield said that this included a lot of “begging and cajoling friends at other companies”, but that ultimately they were able to observe how Slack functioned for teams of different sizes and needs. This gave them enough feedback to be able to work out the initial kinks.

Butterfield and his team finally shared Slack with a larger audience in August 2013. They didn’t want it to be referred to as a Beta, because they were under the impression that people would believe their platform was unreliable, so they simply called it “Preview Release”.

On the very first day of their “Preview Release”, Slack got 8,000 invitation requests. In the next two weeks, that number had grown to 15,000 requests. This Beta phase lasted for just over six months, and in that time, Slack received a lot of press coverage, from a number of famous online news portals and magazines, including TechCrunch and VentureBeat. The platform was even referred to as “email killer”, and it’s this buzz from news sites and fans on social media networks (Butterfield attributed a great deal of positive buzz about Slack to Twitter) that helped the company gain this large number of initial requests.

Of course, it wasn’t just about getting users to sign up for their platform and start making the most out of it within their own companies. Slack new that the key to improving their product and overall user satisfaction depended a lot on listening to, learning from, and responding to the feedback they received. So, this influx of first users was what truly helped them become what they are today.

Image Source: https://bit.ly/1ESVVTf

Butterfield and the team all looked at their customers as testers, and when these users reported that something wasn’t working, Slack’s top priority was to fix the problem as soon as possible. When the platform launched, three of Slack’s team members were solely in charge of “customer experience,” and they dealt with everything from reading and analyzing customer feedback to making the right people know which bugs needed fixings.

Other Factors That Contributed to Slack’s Success

Believe it or not, “selling the innovation”, listening to user feedback, and focusing on perfecting core features of their product were not the only factors that helped Slack get to where it is now. Effortless user onboarding, hooks and rewards, and a freemium business model all played huge roles throughout Slack’s history.

  1. Freemium—Just like a number of other SaaS companies (e.g. Dropbox), Slack is a freemium platform, which means that you can use basic services for free, and those more advanced ones for a certain fee. Despite the free option, by November 2014, more than 73,000 Slack users were paying for the premium service, which came with a full message archive. At 22 cents per day, the ability to find specific details and conversations via search was more than worth it. In November 2014, Slack’s free-to-paid conversion rate was 30%.
  1. User Onboarding—Simple and rather effortless onboarding was one of the key factors that contributed to Slack’s tremendous success. All a new user had to do was enter their email address, click on the link they receive, and fill out a registration form. Afterwards, new users were prompted to add other team members and other apps to Slack.
  1. Hooks”—Changing user behaviour isn’t easy, so instead of trying to do just that, Slack created a habit-forming product which simply made the existing habits and behaviours of their users easier. They achieved this with the so-called “hooks”, i.e. triggers and consequently rewards. It was these rewards and their sporadic nature that hooked Slack’s users to the platform. The finishing touch was having users invest in Slack, e.g. having them send invitations and messages to coworkers, add integrations, and at some point, pay for Slack.

As you can see, Slack’s journey over the years has been nothing short of remarkable, and it can definitely serve as an example for other SaaS companies looking to succeed in the harsh world of startups. By focusing on being great at three things alone, listening to their users, selling the solution to the problem and not simply features, and making their product as user-friendly as possible, Slack managed to achieve fantastic growth in a short span of time, and become what it is today: a company worth $5.1 billion.

Lean Analytics Book Summary

Each startup has a mission to search for a good business model that’s both scalable and repeatable. Eric Ries wrote Lean Startup, a book that came before Lean Analytics. It’s about efficient product and business development as a framework, or to be more clear, about:

  • Customer Development,
  • Agile Software Development methodologies, and
  • Lean Manufacturing practices.

Startups were the target of this process, but it’s become so popular with time that now companies of all sizes use it for improvement. What makes it so popular is that it isn’t about being small or cheap, but making quick and efficient changes without leaving waste. That makes Lean Startup great for any company out there, big or small.

The core concepts of Lean Startup are:

  • Build.
  • Measure.
  • Learn.

KickAssGrowth Build Measure Learn

With Lean Startup, you can create and work on a fully established vision by developing marketing strategies, and Lean Analytics is what takes it to the next level. Lean Analytics focuses on measuring. For any organization following this concept, it’s important to go through the cycle as quickly as possible, because it leads to quick results.

It makes sense—if your product scales faster and better, it has a higher chance of being a success. However, don’t think of this cycle as a simple way of improving your product; it’s much more than that. Innovation accounting is what gets the minimum product together, thus providing an actual measure of how well you’re doing.

Lean Analytics is what quantifies your innovation and gets you one giant step closer to your goals. Being viral requires focus.

Let’s take a look at how several companies managed to hack their way to the top.

Airbnb

leananalyticsimg2

In the beginning, Airbnb‘s main focus was on the quality of their photos, because the team had an idea that high-quality pictures would make an impact on the number of rentals per month. With that in mind, they hired 20 professional photographers to take pictures of all hotels and apartments Airbnb offered, and put the Concierge MVP* concept to the test. This required little to no effort, yet it gave Airbnb outstanding results.

Once their experiment showed good results, Airbnb made it live for all visitors. Their photographers were available to anyone, and within a year, Airbnb went up to 10 million nights booked.

Lean Analytics—Lesson Learned:

Most of the time, you cannot expect what your main source of growth will be. Once you find your test idea, make sure to invest as little money and time in it as possible. Make a firm definition of what your success story should be before testing. If your idea is the right one, plan on what you’re going to do with it.

*A Concierge MVP is a Minimum Viable Product that creates value you promised to your audience. It doesn’t necessarily scale, but for the short term, it’s easy to create. Why “concierge”? Because when creating a startup, you’re the main man in engaging your first batch of customers—most often in person.

Circle of Moms

leananalyticsimg3

Circle of Friends was founded as an independent social graph app when Facebook’s API started allowing web devs to integrate their own apps, but it came with one huge issue. It was targeting the wrong market, even though it went live at the right time.

A simple, yet effective analysis of each user’s engagement/behavior was ultimately what led to a good solution. As soon as they found their target, Circle of Friends changed its name and purpose to Circle of Moms. It was a huge risk, but one that brought significant changes. Be prepared to burn some bridges.

Lean Analytics—Lesson Learned:

Circle of Moms was willing to dig deep into their data and find patterns that meant the most to them. Their leader, Mike, stumbled upon an “unknown area” that led to a complete makeover—one that focused on a more specific niche. What’s important is that it was focused on data itself. Although Circle of Moms faced retention issues, it’s always better to have an easily searchable, but small target audience you can work on.

SEOmoz

leananalyticsimg4

Ever since its inception, SEOmoz has been all about metrics, but that does not necessarily mean it has to swim in data. Back in 2012, SEOmoz relied on so many KPIs that it was counterproductive. One of their investors suggested to rely on one metric only, and make it more valuable than all others: Net Adds.

This KPI was the best option for SEOmoz, because it’s nearly impossible to improve on various KPIs at the same time.

Lean Analytics—Lesson Learned:

Tracking many metrics can often be a great thing, but you can lose focus quickly. A good solution is to pick as few KPIs as possible, because that’s the best way to organize your team.

Clearfit

leananalyticsimg5

In its early stages, Clearfit focused on revenue that was based on subscriptions. Their own customers misinterpreted their move, as they thought low price tags were a weak offer.

When the paid listing model was introduced, sales increased by ~300%, making the revenue ten times greater. This means the problem was in the pricing itself, rather than the business model.

Lean Analytics—Lesson Learned:

If you consider SaaS a recurring service, then it doesn’t have to be priced like one. Your job posting platform should offer more transactional price tags—as the book says, “pricing is a tricky beast”. Obtain customer feedback whenever you can, because for Clearfit, a low price does not always mean something valuable is up for grabs.

Lean Analytics: What Makes a Good Metric?

Drawing business formulas: chart

First of all, let’s define what a good metric is.

A good metric is something comparative and understandable. A metric is basically a ratio or rate, and it aims to change how you behave.

Prior to choosing the right metric, here’s what you have to know:

  • Qualitative metrics are not structured and, most of the time, very hard to aggregate. Quantitative metrics are those that involve numbers and statistics. They give you the numbers you need, without any concrete insight.
  • Vanity metrics don’t impact the way you act. The ones that change your behavior are actionable metrics. Their mission is to help you pick a course of action.
  • Leading metrics give you an insight into the near future, whereas lagging metrics give more info about the past. The ones that are better here are leading metrics, because you can still make impact on them.
  • Finally, if two metrics change in parallel, they are correlated, causal otherwise.

Also, use the One Metric That Matters. Why? Because:

  • It answers the most important question you have.
  • It forces you to draw a line in the sand and have clear goals.
  • It focuses the entire company.
  • It inspires the art of experimenting.

Conclusion

businessman leaning against a concrete wall with color city concept

Make Things Simple to Digest

A good metric can be interpreted with ease; there’s absolutely no need to provide an abundance of unnecessary numbers. This frustrates people, and to make things worse, it can mislead them. Once they’re looking at the wrong numbers, you know something’s not right. Metrics are often very valuable, but when not used right, they can lead you in the wrong direction.

Don’t forget the One Metric That Matters. Use it to ease people into your analytics.

Ask Good Questions

Startup or not, it’s mandatory to know your market. Each click, subscription, like, share, or purchase counts from the moment they hear or read about you, all the way to them ditching your services for good. You can start making changes when and if you have data on your consumers. For you, that data is an exclusive insight into their needs and lifestyles.

Times have changedfrom a leader telling others there’s no use in consumer data, to having so much valuable data up for grabs. This change tells us to focus on the most important metrics only. A disciplined approach helps identify and overcome all risks. Nowadays, leaders only have questions they can ask their consumers, so go ahead and ask good questions!

 

For the full, 400+ page version of Lean Analytics, click here to purchase it and crush your competition!

Facebook Inception: More Precise Facebook (Re)Targeting

The inspiration for this technique came from the movie Inception. This technique is a part of a deeper marketing philosophy where you use ads in a more complex way. Basically, what you do is build a more concrete audience inside an existing audience you thought you couldn’t segment more. Can you see the connection with the ‘dream within a dream’ movie reference?

For every Facebook marketer, this is a reality inside a reality, and a possibility to achieve killer ad results. By the time our KickAssGrowth team got around to creating this blog post, this technique had already found its place in the world and become known as Inception. There was no disagreement on it. As movie buffs, we decided to use Christopher Nolan’s movie as the inspiration for the name. Those of you who watched the movie know that we had a good reason for doing that.

Prepare yourself to go deeper and think much bigger as we delve into the secrets of the Facebook Inception technique. Learn all the rules of the dream world of Facebook CA (Custom Audiences) and adopt this elegant and thought-provoking solution for an audience-in-an-audience trick.

inception-facebook-technique

What will you get here?

The Facebook Inception Technique is a technique we, the KickAssGrowth team, developed and adopted to deliver great results for our clients. We used this technique in order to reduce CAC and increase CTR. This article will show you how to implement this technique into your FB campaigns, reduce CAC and increase CTR. If you have any questions, feel free to reach out to us.

The lives of many Community Managers and Ad Specialists have been saved since Facebook implemented Pixel retargeting, because it helped them reduce CPC (cost per click) and CPA (cost per acquisition) much quicker. However, people are still struggling with structuring Facebook campaigns that will target the most converting audience. That’s why we want to share the most effective strategy we implemented. Thanks to this strategy, our clients have only words of praise for our team: ‘Guys, you’re geniuses!’, ‘I don’t know what you are doing, but we’re very satisfied with the results.’, ‘You guys kick ass!’.

This Facebook Ads technique is named Facebook Inception (kudos to our awesome Social Media team leader for being the godfather), because there are many campaigns inside campaigns inside campaigns… inside campaigns…

The first thing you’ll need to implement is Facebook Pixel. Standard Facebook Pixel has standard event codes for different AARRR funnel steps:

  • View Content
  • Search
  • Add to Cart
  • Add to Wishlist
  • Initiate Checkout
  • Add Payment Info
  • Make Purchase
  • Lead
  • Complete Registration

Facebook Pixel

*You can check out the Facebook Pixel Implementation Guide here.
**And you can learn more about the AARRR funnel here.

It really depends on what type of product you have, but standard Facebook Pixel events cover most of the steps an e-commerce site can have. If, for example, you’re a social network, then you will probably need just a few events such as View Content and Complete Registration. We suggest you cover most of the events in order to get more detailed tracking. After you prioritize which part of the funnel you want to track, you should paste the Facebook Pixel script into your website (a little bit technical, but it’s very easy).

The next step is to create a Custom Audience in Facebook Ads Manager or, like we did, in AdEspresso (a very popular tool for running Facebook Campaigns and tracking Facebook ads analytics and data).

The Facebook Inception technique has four steps for optimizing your ads to get the most converting audience:

  1. Custom Audience (Re)Targeting
  2. Lookalike Audience Based on Interests or Job Titles
  3. Lookalike Audience
  4. Interest Data

1. Custom Audience (Re)Targeting (Current Users Vs. Email List)

How to Create Custom Audience (AdEspresso): Go to Tools → Custom Audiences → Create Custom Audience → Data File Custom Audience or Custom Audience From Your Website

Facebook Targeting Options

Facebook Custom Audiences

 

Custom Audience Data

There are two main types of Custom Audiences:

  • Your Current Website Visitors/Users
  • Potential Users from Email Lists

The visitors who didn’t convert in the past (buy, subscribe or give you an email address) have the most potential to convert in the future. They have already shown an interest in your product/service and are planning to buy it. So, when you’re targeting these audiences, you can expect very low CPC and CPA.

If you are looking for potential new users and already have an email list, or you have bought one,  you should create your Custom Audience from that email list. Not only will you achieve low CPC and CPA (if you have the right list), but you will also find an audience that converts well.

2. Lookalike Audience Based on Interests or Job Titles

How to Create Lookalike Audience (AdEspresso): Go to Tools → Custom Audiences → Create Custom Audience → Lookalike Audience from Conversion Pixel

Facebook Lookalike Audience

A Lookalike Audience (LAL) based on Interests or Job Titles (depends on personas) is the second most converting audience, because we get to target those users who are the most similar to people that we obtain from a Custom Audience. We suggest that you create LAL audiences 1%, 2%, 3%, 4% and 5% (similarity optimized) in order to test the most converting ones. Look at this as some kind of A/B testing for the most converting audience. When you create these audiences, you should specify the audiences by using Interests or Job Titles based on your personas (useful personas template).

3. Lookalike Audience

This is similar to the aforementioned LAL audience based on Interests or Job Titles, just without the interests and job titles. This is useful if you’re targeting a B2C audience for e-commerce shops, and because an LAL audience based on Interests or Job Titles is small and narrow. However, for some products, it can be better to target an LAL audience without Interests, Job Titles or any specification. You might be skeptical about this, but this audience will convert far better than the one where you just targeted random people based on Interest data.

4. Interest Data

We create campaigns based on the personas we have and their interests, job titles and other detailed specifications Facebook provides. To get the most converting audience from these campaigns, it’s very important to have very detailed information about your personas. It’s best if you can create personas from your existing data, but if you’re just launching your product, then focus on Customer Research and Competitors’ Audiences. Also, when you target audiences based on the Interest Data only, and assuming you have already tried to target Custom Audiences and LAL Audiences, make sure you exclude Custom and LAL audiences, because there is a possibility you will target the same Facebook users you have already targeted with those campaigns.

Exclude Facebook Custom Audience

Ad Creatives

At KickAssGrowth, we have a starting point for Ad Creatives where we test 3 different images vs. 3 different Ad texts vs. 3 different headlines (3 X 3 X 3= 27 different ad sets).

Usually we A/B test:

– Product Images VS. People Images
– Long VS. Short text
– Direct VS. Indirect Call to Action in Headlines
– Symbols VS. No Symbols in Ad Texts

Because of these A/B tests, we know exactly what types of campaigns convert in which country after a few weeks of testing. For example, we tested a cartoonized image of Joey from Friends in the UK and Sweden. The CTR in the United Kingdom was more than 5%, but in Sweden it was pretty poor, so we had to turn off the ‘Joey’ ad set in that country.

Optimizing Results

AdEspresso shows the most relevant data for all campaigns and ads you are running. In order to compare your results, you can use AdEspresso’s standard ad-comparing feature that gives you a quick insight into which metrics are good and which are bad (you can data pause bad metrics directly from that feature). We use Ads data from ‘All Ads’, where we can compare more and quickly optimize our campaigns for the most converting images, texts, ad sets or placement (depending on what you choose to track , right before starting your campaign).

We always make sure we have enough data (enough impressions and clicks) before we pause a campaign and optimize it for the best results. It really depends on the campaign, but it often takes around 5 days until we have some relevant data for optimization.

Quick Facebook Ads Data Tips

  • In AdEspresso, you can split campaign tracking and see the best results by different categories (Interests data, Gender, Placement, Device etc).
  • Always check your frequency stats. It’s very important to keep the frequency below 5, otherwise your ads will be shown too often and your clicks will be more expensive.
  • Test different visuals, texts and headlines in order to find the most converting one. We always create 27 different ads in AdEspresso (3 texts X 3 images X 3 headlines).
  • Track your best periods and create Dayparting if you see huge differences in conversion and click time.
  • Compare Ads data—some important differences can surprise you.
  • Track and document your changes and findings from Facebook campaigns.

inception-facebook-technique-2

Don’t forget, this blog post does not represent a dream within a dream. This is just an online version of our team’s real-life brainstorm.

What do you think: is Inception a fitting name?

Is it all just a dream? Is the top still spinning for you? 🙂

Square Growth Case Study

By orchestrating a series of remarkably strategic and atypical moves, Square quickly rose through the ranks and established itself as one of the most popular small business payment processors. Additionally, it managed to do so despite being on the market for a relatively short period of time.

From the moment they entered the scene in 2009, Square devices clearly displayed a potential to completely disrupt the credit card payments industry. Right from the get-go, the company made it clear that their intention was to make credit card processing more accessible to small businesses everywhere.

As you’re about to see, their climb to the top has been swift, effective and profoundly strategic. Yet, even though some impressive tactical moves were made, Square actually managed to make it big by doing a (fairly) simple thing—solving a real, widespread problem while also making sure that people got more than they asked for.

The remainder of this text will examine precisely how Square gained traction, and outline everything up-and-coming entrepreneurs can learn from this company’s incredible growth.

Image source: Wikimedia Commons

How the Stage Was Set for Square to Disrupt the Market

Before Square caused a disruption with its revolutionary service, card payments were an expensive and difficult process for retailers. Owners of small venues had to set minimum purchase limits and their commissions were too low, so a fairly limited few had the luxury of accepting credit card payments. Unfortunately, most people were carrying plastic instead of cash by that point, so small businesses were losing out on a lot of revenue.

As with most fast-growth products, such as Slack, Square started out by identifying and addressing a far-reaching need with an effective solution. However, their aspirations were not a result of a deep market analysis or anything of that nature. Jim McKelvey, the founder of Square, learned about the restrictions of credit card payments while participating at an art fair, of all places.

McKelvey wanted to sell a piece of glass, but ran into a problem when someone requested to pay for it with a credit card. The inability to receive a payment that way cost Jim about $2,000, which spurred him into thinking about possible solutions that could have helped him receive credit cards on the spot. He came up with a concept of a small device that would be able to receive credit card payments through an app, once it was attached to a mobile phone device.

And so, the idea behind Square was born.

It didn’t take long for McKelvey to develop a checklist of what his device for receiving credit cards needed to cover in order to make it in the current market climate. It had to be cheap to maintain, practical to use, user-friendly and reliable.

After coming up with the idea, McKelvey wasted no time—he decided to quickly start reaching out to potential investors before someone else formulated a similar concept.

Fortunately for McKelvey, he was able to pair up with a dream partner. Jack Dorsey, the co-founder of Twitter, promptly accepted to join the ambitious quest for making credit card payments affordable and practical.

140 Reasons Why Square Will Fail

Many often argue that Square’s turning point had everything to do with Jack Dorsey’s celebrity status and the fact that he got onboard as soon as he did. However, while Jack’s reputation did play a major role in the company’s earliest stages, Square’s powerful and sustainable growth engine had a lot more to do with an incredible strategy the two co-founders devised.

The first thing Dorsey and McKelvey did was write “140 Reasons Why Square Will Fail,” a now notorious text that was sent out to potential investors and clients. This text presented a total of 140 problems the two founders identified as issues many would point out as a problem of the Square implementation. However, what the title held secret was that they also prepared counterpoints for every single issue on the list.

Armed with both all the questions and the right answers, Square’s founders were prepared for every single conversation they needed to have with potential investors. And, to no one’s surprise, the two co-founders had no trouble finding investments. Furthermore, “140 Reasons Why Square Will Fail” also received huge attention from the tech press, so the company started creating a buzz even before it was officially formed.

Through a clever tactic and a bit of charisma, McKelvey and Dorsey pulled off one of the most memorable startup beginnings in recent history. However, that was only the beginning of their growth hacking strategy. An impressive start, but a start nonetheless.

Image source: Flickr

How the Square Company Took the Credit Card Industry by Storm

After garnering early notice from the tech press and investors, funds started coming in from all sides and the new company was quickly ready to see the light of day. And, just like the two co-founders were promising all along, Square made credit card payments accessible to the average small businesses from the moment it hit the market.

As an additional way of boosting the initial phases of the company, Dorsey promoted Square through demonstrations held with selected vendors. The goal behind this move? Showing just how easy it was to use the product and establishing it as a reliable option for venues. This not only got Square early clients, but it also set a customer-oriented tone that only built further on the product’s already encouraging initial reputation. Dorsey and McKelvey also used this opportunity to fully optimize their product in accordance with the feedback they received from the first customers.

All the effort Dorsey and McKelvey put into building up Square paid off almost instantly. They put their product on the Apple store, charging only $10 per order. Once a user would activate an account, the company would automatically ship out a free card reader that would arrive within 7 to 10 business days. Looking back at it now, it’s apparent that Square’s rapid growth was also in part due to its app’s eye-catching design. Its interface served to only further emphasize how different of a product Square is when compared to its limited competition, which naturally resulted in a surplus of word-of-mouth recommendations.

Between an affordable price and the user-centered experience they offered, Square got a large number of downloads on the iOS platform. This resulted in a significant partnership with Visa that allowed Dorsey and McKelvey even more room to grow their new company.

In what seemed to be a blink of an eye, Square became an integral part of small businesses which were finally able to start accepting credit card payments and start growing as a result.

And, in return, Square became a leading figure of the credit card payment industry.

Image source: The Verge

What We Can Learn from Square’s Rise to Fame

In January 2014, about five years after Jim was unable to sell his glass art at a fair, Square was estimated to be worth about $5 billion. The new company asserted itself as a must-have for small businesses craving for a solution to a long-unmet need. And you know what? Square didn’t get there by accident.

First and foremost, Square solved a real problem that related to the number one priority of their target customers—and it managed to do so while allowing clients to make more money.

The two co-founders also made sure that the product reached all the right customers and that the onboarding process was as easy and low-risk as possible. There was no hassle or friction. Square did not require a contract or monthly service bill, and it didn’t ask for a merchant service fee. Just compare this to the traditional payment processor model which required a detailed application, a phone call audit and an expensive equipment purchase and/or lease, and you’ll see how little of Square’s success depended on chance.

After figuring out a perfect product for what they had hoped to achieve, co-founders of Square set in motion a series of highly unorthodox moves. They started out by seemingly pointing out 140 problems their product had. They made unusual partnerships that drove distribution and credibility, fueling growth among their target customers. They built Square around the goal of solving a problem, not earning money. They sent out free products during the initial phases. They didn’t ask for fees or outlandish prices for their product.

And, ultimately, they delivered on their promise to solve small business credit card challenges.

As you can see, Jim McKelvey and Jack Dorsey not only nailed the obvious problem on the head, but they also took it a step further and gave customers more than they ever thought was possible.

That, combined with an impressive series of all the right and out-of-the-box moves, was Square’s recipe for success.

Warby Parker Growth Case Study

When Neil Blumenthal, Andrew Hunt, David Gilboa, and Jeffrey Raider founded Warby Parker back in 2010, they probably didn’t imagine that the company would be worth $1.75 billion in the future (according to data from 2018). With almost $300 million raised in total, WP now has 65 retail shops, along with its thriving online business, and expects to end 2018 with almost 100 retail locations.

However, before their huge success, Blumenthal & Co. definitely had their work cut out for them when it came to building their business from scratch. The competition was pretty tough—Luxottica, a company that owns almost every glasses or sunglasses brand under the sun, was at the top of its game—and Warby Parker needed to come up with a strategy that would put it ahead of the competition and in the hands of its customers.

So, how DID they achieve the $1.75 billion valuation?

In this case study, we’ll reveal some of the secret ingredients of Warby Parker’s success sauce that will not only provide you with the answer to the question above, but perhaps also inspire you to apply their tactics to your own startup.

Using Word of Mouth to Create a Buzz

What a lot of people tend to forget in the early days of running a business is that word of mouth marketing is completely free. Here’s the deal: if you get people to make a buzz about you, you won’t have to spend a whole lot of money on growing your business fast. Warby Parker took advantage of this fact and made sure to create that buzz.

While Warby did launch in 2010, its founders had been keeping it under wraps for a year prior to the big event, which had given them plenty of time to come up with strategies that would help their product go viral.

So, by the time WP went live, Blumenthal, Hunt, Gilboa, and Raider had done a couple of useful things that would ultimately ensure the success of their company:

1. They priced their glasses at $95—Let’s make one thing clear: the band behind Warby didn’t want to sell bargain glasses. They wanted to create a premium brand, which is why they decided to price their products at $95 rather than, say, $99. The former sounded like a premium price, the latter as if you were shopping for glasses at a discount. Yet despite the “premium” price, this was still a fraction of the price you’d find with traditional retailers.

2. They gave Warby Parker a social mission—Whenever the company sold a pair of glasses, they would give a pair to someone who really needed them. Not only was this the right thing to do in terms of helping people, but it was also a great business move for Warby. After all, who wouldn’t want to buy from a company with such a great cause?

Warby Parker Buy a Pair, Give a Pair

Image Source: Warby Parker

3. They made sure the press followed the launch—At the time of its launch, an article about Warby Parker was published in the GQ magazine. The fact that the event was closely followed by the press right from the start gave the company credibility, and attracted a large number of interested people to WP’s business.

4. They ditched a beta launch completely—When it was time for Warby to see the light of day, the company decided to go “all in”. That meant no beta versions and test phases, and in combination with the GQ article, this brought them the traffic they needed. Remember: people like to be informed when it comes to great, new brands, and they are always willing to tell their friends all about them.

5. They promoted Warby as the “Netflix of glasses”—Warby’s value proposition was as simple as it could be. Blumenthal and the rest of the co-founders highlighted only one of the features—the Home Try-On program, which allowed you to order a pair of glasses and try them for free from the comfort of your home—making it easier for people to accept the brand and share the whole thing with the people they know.

Warby Parker Home Try-On

Image Source: Warby Parker

6. They paid attention to brand consistency—When you think about McDonald’s, the first colours that come to mind are yellow and red. When you think about Coca-Cola, you remember the red logo. In the same manner, Warby opted for a blue shade for its brand, and used it not only on the company’s website, but also all social media channels. It achieved its desired purpose and got people to connect this colour to this particular brand.

The Power of Hiring a PR Firm

When we launched Warby Parker, we only spent money on three things: purchasing our initial inventory, paying external developers to build our website, and hiring a PR firm.” – Dave Gilboa

As Dave Gilboa elaborated in his Quora answer, the Warby team didn’t spend any money or marketing or customer acquisition efforts in the first two years of the business. They did, however, recognize what a PR firm could do for them in the long run. In the words of Gilboa, “we were launching a fashion brand—and you can only do that once—so we wanted to make sure we did it with credibility.”

In fact, Gilboa credits their PR firm for the majority of their success—it helped Warby make connections with all the key editors in the world of press, and ensured they were featured in big-name magazines, such as Vogue and GQ. What’s important to remember is that the reach of PR is so enormous that by using relevant press placements consumer companies can acquire tons of traffic. Press is also one of the most cost-effective ways for startups (especially ecommerce ones) to boost their growth, which is exactly what pushed Warby so quickly to the market.

Thanks to the publications done by their PR firm, Warby achieved some pretty impressive results for a startup. The hit their first-year sales target in just three weeks, sold out their 20 best-selling styles in four, and ended up with a waitlist of 20,000 customers. As Gilboa says, they worked non-stop in order to meet the demand, and were terrified of disappointing their customers, which is why they did their best to show their shoppers that they really cared about them and their orders.

Can you take a guess at what this resulted in? That’s right, further amplification through word of mouth.

Buying Glasses Becomes Fun and Engaging

Aside from showing their customers that they care and offering the Home Try-On program, Warby also wanted to reinvent the entire shopping experience by making it more fun and engaging for all of the brand’s fans. By using the so-called “miracle moments”, Warby managed to do just that, and turn a huge number of first-time buyers into lifetime customers.

One example of these magic moments is their make-a-snowman kit, which they included in every purchase that was made around the holidays. It was cute, it was different, but most of all, it thrilled Warby’s customers, and inspired them to show their appreciation and share this memorable moment on their social media channels.

Make a snowman by Warby Parker

Image Source: Warby Parker

Needless to say, this made Warby Parker even more popular in no time at all.

Another example of the magic moments has to be the email sequence Warby used for its Home Try-On program. There were nine emails in total, all of which were written very carefully and meant to engage people at the other end of the emails. The design was beautiful, the messages short and to the point, and they carefully guided you through the entire process of your order.

The emails even encouraged the customers to take photos with their glasses on and share the photos online.

In the early days of running an ecommerce business, thrilling your customers is everything, not only because they are all you have, but also because they’re the ones who will eventually spread the good (or bad) word about you.

Conclusion

Growing your business is never an easy task, but if you play your cards right and figure out how to offer your consumers something different, something that might just prompt them to stay with your brand, you can become a success story—just like Warby Parker.

Plus, as you can see, not every business will need huge amounts of money to achieve their goals. Warby mostly focused on word of mouth and engaging their customers (both of which are pretty affordable), and they managed to get pretty far. Add to the mix hiring a PR agency (and recognizing the importance of doing so), and what you get are results that you might not even expect from a startup.

Most of all, however, the key to Warby’s success lies in offering something completely different to the masses. They sold glasses online (which was a brand new concept at the time), at the price of $95 (which was a lot less that what other retailers were charging then), offered a Home Try-On program (which was one-of-a-kind), and gave away a pair of glasses for every pair sold.

In short: they had an incredibly unique idea, which is what got both the press and Warby’s future customers excited, ensuring the success of this $1.75 billion company.

Udemy Growth Case Study

Udemy (pronounced: you-duh-mee) is an online learning and teaching platform where students can pick and master new skills with the help of video courses taught by experts. Founded in 2010 by Eren Bali, Oktay Caglar, and Gagan Biyani, Udemy now offers over 80,000 courses (as of 2018) across a plethora of categories, including language, music, business, academics, photography, health and fitness, and technology. As a member, you can either join the 24 million students already using it to improve their skill set or become an instructor yourself and earn money through the platform.

However, before Udemy became a known name in the world of online education and the go-to platform for teachers and students alike, Bali and his co-founders needed to figure out a way to push their product to the market, fund their project, and (ultimately) grow it to the business it is today.

The Idea That Gave Life to Udemy

We can trace Udemy’s humble beginnings to 2007 and Turkey, where Bali was living at the time and where he came up with and built software for a live virtual classroom. As Bali explained in an interview, the idea to build such software came from watching his classmates in Turkey struggle to get to school on a daily basis, determined to learn what they can and improve their lives, despite the bad weather and miles they had to walk to do so.

However, neither Turkey nor the year 2007 were able to support this software (liquidity was one of the main problems, as were other issues such as bandwidth, audio, etc), and Bali had to shut it down for a while. Despite this, Bali was determined to see his idea see the light of day, and he soon moved to Silicon Valley with his Caglar, where they founded their own company and went on to pitch the idea to various investors in order to get capital funding.

According to Gagan Biyani, the investors were not impressed and the live virtual classroom project was rejected more than 50 times.

50 rejections still weren’t enough to discourage the group from pursuing their goals—instead of pursuing the development of the teaching tool that sparked their move to the US, they simply redirected their focus and launched Udemy in May, 2010.

Since Bali’s main goal was to create a place where anyone could learn anything they wanted, he realized that a marketplace model was the best and most realistic way to achieve this goal. The idea was to make it easy for experts to not only teach courses, but also exchange ideas and learn from one another, and to be able to monetize and digitize their expertise.

But in order to get to the point where this marketplace of his would thrive, he first needed to face and overcome a number of challenges in his way.

Raising the First $1 Million

Udemy’s main obstacle in the beginning was creating content quickly (they needed content if they wanted to move forward with their development, but there simply wasn’t enough time to do that), so what they did was use a strategy similar to the one Quora had already implemented.

They took the courses from the OpenCourseWare, because their materials were free to use online, and said that the first 100 courses had come from prestigious universities like Stanford, Yale and MIT. This strategy was a great way to attract attention of the tech world and its press, such as Mashable and TechCrunch, and thanks to this initial press coverage, Udemy was up by approximately 10,000 users within a few months, with 1,000 instructors who had created about 2,000 courses.

By August, 2010, Bali and his co-founders had managed to raise $1 million in venture funding—their first successful round of financing—which was enough for them to get professional instructors and academics onboard.

Raising Capital for Startups

However, while the problem of instructors and academics might have been solved, Udemy still needed something catchy that would attract users and investors alike to their marketplace. They overcame this obstacle by deciding to film meetings with their investors, and created a course named “Raising Capital for Startups”, in which 7 top founders and CEOs explain how you can raise money for your startup.

The course was released in different formats, and each format brought between $30,000 and $50,000 to Udemy. The platform got real traction and showed their investors its true potential. From May 2014 to May 2015, Udemy saw a 300% growth rate and raised $48 million in funding, and in June 2016, the company raised $60 million from Naspers Ventures.

After the success of the “Raising Capital for Startups” course, Udemy’s Instructors started earning more money, and in May, 2013 Udemy reported that its top 10 instructors had earned more than $1.6 million by selling their courses.

Thanks to its huge success, Udemy launched an app for Apple iOS in 2013 (the Android version was released in 2014), which allowed its students to take classes directly from their iPhones. Since 2014, the iOS app had been downloaded over 1 million times, and 20% of Udemy users now access their courses via mobile.

Conclusion

Although Udemy is incredibly successful now, Bali, Caglar, and Biyani definitely had to face many challenges along the way, and building a highly scalable online learning platform was the biggest one for sure. A combination of site optimization, A/B testing and different referral programs was what helped them find the best growth channels and strategies for their business.

These strategies got them a high level of customer satisfaction and a word of mouth that increased their LTV. Udemy is just one great example of how you can stand out from the crowd even if you have very strong competitors.