Lecture 6 - Growth (Alex Schultz)

thank you for oversold thank you um cool so you guys uh this is awesome I've been watching the lectures in this course isn't it absolutely amazing the content and now you're stuck with me today we'll see how that goes um so uh unlike Paul when he was talking in the Q&A and and you guys asked him what he'd do if he was at college today and he said physics I actually indulged myself I went and I went and did physics did physics at at Cambridge and I think physics is an amazing class to give you

transferable skills that are really useful in other areas is but I guess that's not uh that's not why you're listening to me today like physics isn't the class like so I paid for college doing online marketing direct resp marketing I started with SEO in the 1990s I created a paper airplane site I had a monopoly in the uh small niche market of paper airplanes globally which you know when you want to start a startup also see how big the market could be in the long term it wasn't great but what that taught me was how

to do SEO and back in those days it was out of Vista and the way to do SEO was to have text on a white background five pages below the fold and you would rank top of Al of Vista if you just said paper airplanes 20 or 30 times in that text and that was how you won at SEO in the 1990s like it was a really easy easy skill to learn um when I went to college being a physicist I thought paper airplanes would make me cool and I was actually the most nerdy person

in the physics class so I created a cocktail site which was how I learned to to program and that grew to be largest cocktail site in the UK um and that really got me into SEO properly when Google launched so with Google you had to worry about page Rank and you had to worry about getting links back to your site which basically at that stage meant one link from the Yahoo directory got you to the top listing in Google if you had white text on a white background below the fold as well um when Google

launched AdWords that's when I really started to learn how to do online marketing and that was buying paid clicks from Google and reselling them to eBay for a small margin uh of like 20% um using their affiliate program and and that was what really kicked me into over drive into doing what everyone nowadays talks about as growth or growth hacking or growth marketing and in my mind it's just internet marketing uh using whatever Channel you can to get whatever output you want and that's how I paid for college and how I ended up going from

being a physicist to uh marketer and transitioning to the dark side of the force so what do you think matters most for growth you've had loads of lectures and people have said it over and over so what do you guys think matters most for growth someone give me an answer great prodct great product I agree great product what does great product lead to customers customers and what do you need those customers to do read the word someone said stay on your site someone said that that's it retention retention is the single most important thing for

growth now we have an awesome growth team at Facebook and I'm super proud to work on it but the truth of the mat is we have a fantastic product the getting to work on growth at Facebook is a massive privilege because we're promoting something that everyone in the world really wants to use which is absolutely incredible if we can get people on and get them ramped up they stick on Facebook so many times like I've advised multiple startups my favorite was working with Airbnb but I've worked with corsera I've worked with other ones that haven't

done as well as those guys but the one thing that is true over and over and over again is if you look at this curve percent monthly active versus number of days from acquisition if you end up with the retention curve the asmp tootes to align parallel to the x-axis you have a viable business and you have product Market fit for some subset of Market but most of the companies that you see fly up who talk about growth hacking and virality and all of this other stuff going to try so hard not to swear but

uh it'll happen um their retention curve slopes down towards the x-axis and in the end intercepts the x-axis now when I show this chart to most people they say that's all well and good you had a million people a day in terms of growth when you started uh the growth team at Facebook or you were at 50 million users you had a lot of people joining the site so you had a ton of data to do this we use the same methodology for our B2B growth getting people to sign up as self-service advertisers we used

this analysis to understand how much growth we were going to have in that market as well and in that place when I joined Facebook the product was 3 days old and within 90 days of the product launching we were able to use this technique to be able to figure out what the one-year value of an Advertiser was and we predicted it for a the first year to 97% of what the number turned out to be so I think it's very important to look at your attention curve and this is how we did it if you

see here this red line is number of users who have been on your product for a certain number of days so a bunch of people that should say zero but a bunch of people will have been on the product all of your users will have been on it at least one day but if your product's been around a year or whatever you will have zero users who've been on it 366 days make sense the cures sensible cool so what you then do is look for all of your users who have been on your product one

day what percentage of them are monthly active 100% for the first 30 days obviously because monthly active they all signed up on one day but then you look at 31 every single user on their 31st day after registration what percentage of them were monthly active 32nd day 33rd day 34th day and that allows you with only something like 10,000 customers or whatever to get a real idea of what this curve is going to look like for your product and you're going to be able to tell does it ASM toote and it'll get noisy out towards

the right hand side like I'm not using real data it'll get noisy out towards the right hand side but you'll be able to get a handle on does this curve flatten out or does it not if it doesn't flatten out don't go and do growth tactics don't go and do virality don't hire a growth hacker focus on getting product Market fit because in the end as Sam said at the beginning this course idea product team execution if you don't have a great product there's no point executing well on growing it because it won't grow number

one problem I've seen inside Facebook for new products number one problem I've seen for startups I've advised has been they don't actually have product Market fit when they think they do so the next obvious question that people ask over and over and over again is okay what does good retention look like sure I can have 5% retention but I'm guessing that Facebook had better than that so that's not going to be a successful business and I get really pissed off when people ask me that question because I think you can figure it out and I

love this story and this is like my one gratuitous story that I love that I'm throwing in here so the rest of it may not be as as gratuitous but this is a picture that was published in Life magazine in 1950 of one of the Trinity nuclear bomb tests and there's a guy Jeffrey Taylor Who's heard of Jeffrey Taylor awesome yes someone's heard of him Jeffrey Taylor was a British physicist who ended up actually winning the Nobel Prize and he was able to figure out from looking at this picture what the power of the atomic

bomb was the US Atomic Bomb and Russians were publishing similar pictures just using dimensional reasoning and dimensional reasoning is I think one of the best skills that I learned during my time studying physics back in the UK and what dimensional reasoning is is you look at the dimensions that are involved in a problem so you want to figure out energy Newtons meters Newtons are kilog met seconds Theus 2 so you've got kilog M squ seconds Theus 2 and then you try and figure out how you can get each of those numbers from what data you

have so the mass is the volume of this sphere so that's a meter cubed you throw in there so you got meters 5 over seconds minus 2 and he was able to use that to just figure out what the power of this atomic bomb was what the ratios of the power were between the Russian and US Atomic Bomb and essentially reveal one of the top secrets that existed in the world at that time that's a hard problem figuring out what Facebook's retention rate is is not a hard problem how many people are there on the

internet give or take someone throw something out 2.4 billion 2.3 billion something like that right okay Facebook's banned in China so what now bilon about two billion two billion so two billion people on the internet Facebook in our last earning School said something around 1.3 billion in terms of number of active users you can divide those numbers by each other and yeah that won't give you the right answer of course it's not going to give you the right answer but it's going to give you close enough to a ballpark figure of what the retention rate

looks like for Facebook if we've signed everyone on the internet up and then you will know it's higher than that similarly if you look at whatsapp they've announced 600 million active users how many people have smartphones you can figure out that number that number's out and knocking around it can give you an idea of how many users there are Amazon has had a pop at signing up almost everyone in the United States you know how many people are online in the US and you've got a good idea of how many customers Amazon are from the

numbers they throw out different verticals need different terminal retention rates for them to have successful businesses if you're in e-commerce and you're retaining on a monthly active basis like 20 30% of your users you're probably going to do pretty well if you're you're in social media and your first batch of people signing up to your product are not like 80% retained you're not going to have a massive social media site and so it really depends on the vertical you're in what the retention rates are what you need to do is have the tools to think

about who out there is comparable and how you can look at it and say am I anywhere close to what real success looks like in this vertical so retention is the single most important thing for growth and retention comes from having a great IDE a and a great product to back up that idea and great product Market fit the way we look at whether a product has great retention or not is whether or not the users who install it actually stay on it long term when you normalize on a cohort basis and I think that's

a really good methodology for looking at your product and saying okay the first 100 the first thousand the first 10,000 people I get on this will they be retained in the long run so now how do you attack operating for growth let's say say you have awesome product Market fit you have built an e-commerce site and you have 60% of people coming back every single month and making a purchase from you which would be absolutely fantastic how do you then take that and say now it's time to scale now it's time to execute was the

last thing in your four right and that's where I think growth teams come in like my contrarian Viewpoint or whatever is if you're a startup you shouldn't have a gr you shouldn't have a growth team damn it so close uh halfway through and I I failed um you shouldn't have a growth team um startups should not have growth teams the whole company should be the growth team the CEO should be the head of growth you need someone to set a North star for you gr a shot of the you know NASA page you need someone

to set a Northstar for you about where the company wants to go and that person needs to be the person leading the company in my opinion from what I've seen and Mark is a fantastic example of that back when Facebook started lots of people were putting out their registered user numbers right you'd see registered user numbers from Myspace you'd see registered user numbers for contact you'd see registered user numbers Mark put out monthly active users as the number both internally he held everyone to to and said we need everyone on Facebook but that means everyone

active on Facebook not everyone signed up to Facebook so monthly active people was the number internally and it was also the number he published externally it was the number he made the whole world hold Facebook to as the number that we cared about if you look at what Yan has done with WhatsApp I think it's another great example he always published send numbers if you're a messaging application send is probably the single most important number if people use you once a day maybe that's great but they send one message they you're not really their primary

me messaging mechanism so Yan published the send number right inside Airbnb they talk about night's booked and they also publish that in all of the like infographics that you see inside Tech crunch they always Benchmark themselves against how many nights booked they have compared to the largest hotel chains in the world they have each of these companies a different Northstar the Northstar doesn't have to be monthly active users for every different vertical for eBay when I was there it was gross merchandised volume how much stuff did people actually buy through eBay everyone externally tends to

judge eBay based on Revenue actually Benedict Evans has done this amazing breakdown of Amazon's business which is really interesting to look at their Marketplace business versus their direct business eBay is all Marketplace business right so eBay is being judged by its Revenue when it actually has 10 times or whatever more gross merchandised volume going through the site and that was the number that eBay looked at when I was inside there and optimized for so every different company when it thinks about growth needs a different Northstar but when you are operating for growth it is critical

that you have that Northstar and you define it as a leader the reason this matters is the second you have more than one person working on anything you cannot control what everyone else is doing right I promise you having now hit a 100 people I'm managing I I like have no control it's all influence yes I can say to one person do this one thing but then the other 99 are going to do whatever the hell they want and the thing is it's not clear to everybody what the most important thing is for a company

it would be very easy inside eBay for people to say you know what we should focus on Revenue or you know what we should focus on the number of people buying from us or you know what we should focus on how many people list items on eBay and Pierre and Meg and John those guys as various leaders always said no it's the amount of gross merchandise volume that goes through our site it's the percentage of e-commerce that goes to our site that is what really matters for this company which means when people are having a

conversation you're not in a room or when they're sitting in front of their computer screen and thinking about how they build this particular product or this particular feature in their head it's going to be clear to them that it's not about Revenue it's about gross merchandised volume or it's not about getting more registrations registrations don't matter unless they become long-term active users a great example of this was when I was at eBay in 2004 we changed the way we paid our Affiliates for new users and affiliate programs are a bit out of fashion these days

but the idea of an affiliate program is essentially you pay anyone on the internet and a referral for sending traffic to your site but it's mostly about getting access to like big marketers who do it on their own like separately and some really good stories from this we were paying for confirmed registered users so all of our Affiliates were aligned without getting confirmed registered users to the eBay site we changed our payment model to pay for activated confirmed registered users so you had to confirm your account and then bid on an item or buy an

item or list an item to become someone that we paid for overnight when we made that change we lost something like 20% of confirmed registered users that were being driven by the Affiliates but the acius only dropped by about 5% the ratio of CIU to aciu went up and then the growth of acius massively accelerated the cause of this was if you want to drive cius if someone searches for trampoline you land them on the registration page cuz they think they have to register and confirm before they get that trampoline if you want to drive

ACR use you land them on the search results page within eBay for trampolines so they can see the thing they want to buy get excited about it and register when they want to buy it and if you drive just cus people don't have an amazing magic moment on eBay when they visit the site and that's the next most important thing to think about is how do you drive towards the magic moment that gets people hooked on your service so in the lecture notes for this course I've stuck in a bunch of links to people I

think are brilliant at all of this stuff that retention curve I showed earlier there's a link to this guy Danny fante who's incredible talking about retention curves the magic moment there are two videos linked one is chamoth talking about growth who was the guy who set up the growth team at Facebook and one is uh my friend Naomi and I talking at f8 four years ago about how we were thinking about growth back then and in both of those both of those videos we talk about the magic moment so what do you guys think the

Magic Moment is for when you're signing up to Facebook you hit that big green button what is the moment when users are like aha Mark even talked about it at the startup School a few years back see your friends see your friends simple as that and usually it is very simple I talk to so many companies and they try and get incredibly complicated about what they're doing but it is as simple as just when you see that first picture of one of your friends on Facebook you go oh my God this is what the site

is about and Zuck talked at y combinator about getting people to 10 friends in 14 days that is why we focus on that metric the number one most important thing in a social media site is connecting to your friends because without that you have a completely empty Newsfeed and clearly you're not going to come back you'll never get any notifications you'll never have any friends telling you about things they missing on the site so for Facebook the Magic Moment is that moment when you see your friend's face and everything we do on growth and if

you look at the LinkedIn registration flow or you look at the Twitter registration flow or you look at what WhatsApp does when you sign up the number one thing all these Services look to do is to show you the people you want to follow connect to send messages to as quickly as possible because in this vertical that's what matters when you think about Airbnb or you think about eBay it's finding on eBay that unique item that Pez dispenser or broken laser pointer um that you really really cared about and wanted to get hold of like

when you see that collectible thing that you were missing that is the real magic moment on eBay when you look on Airbnb and you find that first you find that that first listing that's like a cool house that you can stay in and when you go through the door that's a magic moment and similarly on the other side when you're listing your house the first time you get paid is an amazing moment when you're listing an item on eBay the first time you get paid is a magic moment you should ask Brian what he thinks

because they've done these amazing story boards which I think has been shared of like the journey through a user's moment life on on Airbnb and how excited it is and he's talking in like three lectures time the guy's awesome aome at talking about the magic moment and getting his users to feel love and joy and all this stuff so think about what the Magic Moment is for your product and get people connected to it as fast as possible because then you can move up where that blue line has ASM tooted then you can go from

50% retention to 60% retention to 70% retention easily if you can connect people with the thing that makes them stick on your site the second thing to think about is everyone in the valley gets wrong that we optimize when we think about growth for ourselves so my favorite example is notifications again talk to lots of companies advise lots of companies every single company when they talk about notifications goes oh I'm getting too many notifications I think that's what we need to optimize for on notifications okay are your power users leaving your site because they're getting

too many notifications no then why would you optimize that they're probably grown-ups and they can use filters what you need to focus on is the marginal user the one person who doesn't get a notification in a given day or month or year our experience of our products and by the way like building an awesome product is all about thinking about the power user right building an incredible product is definitely optimizing for the people who use your product the most but driving growth people who are already using your product all the time and not the ones

you have to worry about so in this Danny frante video there's also that's linked from the lecture page there's also talk about our growth accounting framework that we used to think about for growth and we looked at new users resurrected users people who weren't on Facebook for 30 days and came back and churned users and the resurrected and churn numbers for pretty much every product I've ever seen dominate the new user count once you reach a sensible point of growth a couple of years in whatever and all those users who were churning and resurrecting had

low friend counts and didn't find their friends and so weren't connected to the great stuff that was going on on Facebook and so the number one thing we needed to focus on was getting them to those 10 friends getting them to whatever number of friends they needed so think about the user on the margin don't think about what yourself when you're thinking about growth so operating for growth what you really need to think about is what is the North Star of your company what is the one metric where if everyone in the company is thinking

about it and driving their product towards that metric and their actions towards moving that metric up you know in the long run your company will be successful and and by the way they're probably all correlated to each other so it's fine to pick almost any metric whichever one is like the deepest like that you feel the best about that aligns with like your mission and your values probably go for that one but realistically daily active users fairly correlated to monthly active users we could have gone with either one amount of content shared also very correlated

to how many users there are because guess what you add a user they share content so lots of things end up being correlated pick the one that fits with you and that you know you're going to be able to stick with for a long long time but have a Northstar have a Northstar and know the magic moment that when a user experiences that they will deliver on that metric for you on the North Star and then think about the marginal user don't think about yourself those are I think the really important points when you're operating

for growth everything has to come from the top so the last area here is tactics and My Hope was that um I could hit a few of these and then I've got a list of tactics I want to go through that I'm better talking with a whiteboard and whatever on but you can ask me questions as I'm going through on those about how they work and what goes better but the important tactics that you need to think about are this is great guy by the way Tom Fishburn he he lives in the Bay Area and

he does these really cynical cartoons that I love so let's say you found your your niche market that you're going to have a monopoly on inside the mous Trap Market it's a silenced mouse trap for sitting under bed so that if the mice come to your bed overnight like they can be killed without waking you up so that's your niche market and your your mous trap is better than anybody else for that market what typically happens in Silicon Valley is everyone think thinks marketers are useless like I thought marketers were useless when I was a

physics student so I'm sure as engineering students you must think we're awful awful people who aren't useful to have around like build it and they will come that is something that is very much the Mantra in the valley and I don't believe it's true I believe you actually have to work there's a good article again in the lecture page from interviewing Ben Silverman where he talks about how the growth of Pinterest was driven by marketing and it's a really good article to read into un biased of course so the first tactic I want to talk

about is internationalization Facebook internationalized too late Cheryl said it broadly in public and I definitely agree with that one of the biggest barriers to our long-term growth and one of the biggest things we had to deal with was all the countries where there were clones famously study F said had fake book. CSS in in their in their HTML and there were a ton of sites like that out there whether it was study out said as a clear clone contacta Mixie Sor orcut there were all these different social networks around the world that grew up while

Facebook was focused on the US and so internationalizing was an important barrier we needed to knock down and knocking down barriers is often very important to think about for growth Facebook started off as College only so every college that it was launched in was knocking down a barrier when Facebook expanded Beyond colleges to high schools I wasn't at the company but that was a company shaking moment where people questioned whether or not Facebook could actually survive the culture of the site could survive then expanding from high schools to everyone that was like just before I

joined and that was a shocking moment and that spurred the growth onto 50 million and then we hit a brick wall and when we hit that brick wall that was the point when a lot of existential questions were being asked inside Facebook about whether any social network could ever get to more than 100 million users which sounds stupid now but at the time no one had ever achieved it everyone had kind of tapped out between 50 and 100 million users and we were worried that it wasn't possible and that was the point at which the

growth team got set up chth brought a bunch of us together it was uh he said very publicly that he wanted to fire me on multiple occasions and he probably should have done but without chth I think none of us would have stayed at the company we were a really weird bunch of people but it worked out and the two things we did I think that really really drove growth initially was number one one we focused on that 10 friends in 14 days and getting users to the magic moment and that was something Zuck drove

cuz we were all stuck in analysis paralysis saying is it causation is it correlation Z was like you really think if no one gets a friend that they'll be active on Facebook are you crazy the second thing was internationalization it was knocking down another barrier and when we launched it I think there were two things that we did really well number one was even though we were late and we were stressed about being late we took the time to build it in a scalable way we moved slow to move fast and you can actually hear

the full story from Naomi in one of the videos linked from the lecture uh page but what we did was we wrapped all the strings in the site in fbt uh which is our translation script and then or translation extraction script and then we created the community translation platform so that we didn't just have professional translators translating the site we could have all of our users translating the site and we got French translated in 12 hours but we managed to get to this day we're now 104 languages translated by Facebook uh for Facebook 80 uh

70 of those are translated by the community and we took the time to build something that would enable us to scale the other thing is we prioritized the right languages so back then the right languages the big four languages were French Italian German and Spanish figs and Chinese but we were blocked in China so we focused on French Italian German and Spanish now look at that list that's today's distribution of languages Italian isn't on the list anymore French and German are about to fall off in the last year we quadrupled the number of people on

Facebook in Hindi quadrupled and so building for where the world is today is an easy mistake to make and it's what a lot of the other social networks did we built a scalable translation infrastructure that actually enabled us to attack all of the languages so we could be ready for where the future is going to is going to be and you'll probably be able to see some stuff from our internet.org Summit in India about where we want to go with language translations later today because I think they're talking about that stuff there so these are

the tactics I want to go through now and I'll stick with the Whiteboard for that stuff but I'd really encourage you guys as I go through these if you've got any questions about them let me know I think this should be like a more free form time anyway but I think some of these tactics are quite interesting so virality yes I think there are two ways to look at virality there's a great book uh whoops the book on the right here by Adam pennenberg viral Loop goes through a bunch of case studies of companies that

have grown through viral marketing and I strongly encourage you if you're interested in viral marketing to get that book I think ogan advertising is great as well because chapter 7even he's like if you can't think of anything else stick a car to a billboard with uh superg glue and people will buy your superg glue and he's got some really he's got some really good creative tips in there like the guy's been dead 20 years and I think he's still I I buy everyone of my team gets both of these books um when they start on

my team um so virality so Shawn Parker has this model that he Tau uh or he told us about when he when when I joined Facebook which is to think about virality for a product in terms of three things first is payload so how many people can you hit it with any given viral blast second he had cooler words for these I'm not quite as cool um uh second uh is conversion rate and third is frequency payload frequency and conversion rate whatever that order so how many people can you hit at once is payload how

many times can you hit them per blast is frequency and what are they going to convert at and that gives you fundamental idea of how viral a product is so Hotmail is the like canonical example of brilliant viral marketing right back when Hotmail launched there were a bunch of mail companies that had been funded and that were throwing huge amounts of money at traditional advertising how many people know the Hotmail story about virality awesome great new audience sorry um there two or three people will be bored but Hotmail um back in back at that time

people couldn't get free email clients clients they had to be tied to their ISP and Hotmail and a few other companies launched and their clients were available wherever you went you could log in Via Library internet or whatever School internet and be able to get access to that which was a really big value proposition for everyone who wanted to access it most of the companies went out there and did big TV campaigns and billboard campaigns and newspaper campaigns and things like that bought a lot of advertising off Yahoo all of those things but the Hotmail

team didn't have as much funding and so they had to Scrabble around figure out how to do it so what they did was add that little Link at the bottom of every email that said sent from Hotmail get your free email here now the interesting thing is that meant the payload was low right you email one person at a time not necessarily going to have a huge payload maybe you send around some of those viral spam emails but then I'm not sure I'll click on your link the frequency is high though because you're emailing the

same people over and over and over which means you're going to hit them once twice three times a day with that same link and really move up The Impressions and the conversion rate was also very high because people didn't like being tied to their ISP email and so Hotmail ended up being extremely viral because it had high frequency and high conversion rates another example is PayPal PayPal um PayPal is interesting because PayPal has two sides to it PayPal has the buyer and the seller side um the other thing that's interesting about PayPal is its mechanism

for viral growth was eBay and so you can use all kinds of things for virality that may not look necessarily obviously viral so PayPal if you sent money if you said to a seller I am going to send you money like I can't think of a higher conversion rate frequency was low payload was low but PayPal did this thing where they they gave away money when you got your friends to sign up for PayPal and so that's how they went viral on the consumer side they didn't have to do that for sellers because if I

said I am going to send you money via this you will take that and even on the consumer side they went viral because someone said sign up for this thing and you'll get 10 bucks why wouldn't you so they were able to go viral but in both cases it was because their conversion rate was incredibly high on the buyer and the seller side not because their payload and frequency was high make sense so this is a really good way to look at virality if you want to say is this product viral Facebook was not viral

via email sharing or anything like that Facebook was purely viral by a word of mouth because the interesting thing about PayPal and Hotmail is to use them the first person had to send an email to someone who wasn't on the service with Facebook there's no native way to contact people who aren't on the service and everyone thinks of Facebook as like viral marketing success and that's actually not how it grew it was word of mouth virality because it was an awesome product you wanted to tell your friends about how's everyone doing is this interesting great

question yes so when you're talking about this uh low payload in both those examples in the later rounds as this sort of campaign or whatever you want to call it gets going are you going to have a much higher payload as more and more people are sending hot mail and more and more folks and that way your payload grows and grows and grows uh so the question is in the first round it makes sense that it has a low payload but in later rounds aren't you going to have higher payloads as people send more and

more and more emails I guess in my head well first and foremost I think you actually only send emails to a small number of people so compared to the massive viral engines that exist today where you import someone's entire contact book and send them all uh send them all an email or where you post to everyone's friends on Facebook the actual payloads are still very small even if it's everyone that you email on a frequent basis you hit and I'm also thinking really per um email sent out how many people are on it but it's

a fair point like yeah as more people get on get on Hotmail they'll send more emails as more people use email the product actually grows more and more successfully so that's a fair fair point go for it doesn't like point of conversion also matters so like when just click and you sign up but if you see a billboard add it's it's more more resistance to signing up completely agree that's why oh sorry uh doesn't point of conversion matter as well so on Hotmail um you click to sign up but on a billboard you have to

remember the URL go to the website type it in find the registration button click register and sign up yes yes anything you can do to move friction out of the flow and going from an offline ad to an online ad removes huge amounts of friction from the flow obviously totally agree with that one more more at the back aren't frequency and conversion related aren't frequency and conversion related absolutely if you hit someone with the same promotion uh I I repeat to that aren't frequency and conversion rate related if you hit someone with the same email

over and over and over again or the same Banner ad this is one of the things that's fundamental about online marketing the same rules apply to every channel if you hit someone with the same Facebook ad over and over and over the more times you hit them with the same ad the less they'll click that's why we have like creative exhaust you have to rotate creatives on Facebook same with banner ads same with Newsfeed Stories the 50th time you see that IQ story in your newsfeed you are not going to click on it if you

haven't clicked on the 49 before you're not going to click on the 50th the same is absolutely true with these emails so if you send the same email over and over and over to people for an invite then or if you send the same little Link at the bottom over and over and over to people for Hotmail or I mean the PayPal one's different cuz people just signed up but yes you will get lower conversion and that imp the more you hit someone with the same message the less they convert is fundamental across every online

marketing channel every online marketing channel cool second way to look at virality which I think is awesome is by this guy Ed and Ed runs the growth team at Uber now he was at the growth team at Facebook and he was a Stanford MBA student and did a a class similar to this where they talked about virality and they all went and built viral products and there was there was a bunch of press about that actually and he's brilliant at this stuff the interesting thing about Uber is if you look at their growth team they're

incredibly focused on drivers because as a two-sided Marketplace they need drivers that's a huge huge chunk of their focus as a team even though they've got like probably the best viral guy in the world at the company so with virality you send out uh you get someone to contact import let's say then the question is how many of those people do you get to send Imports then the question is to how many people the then how many click and you can put extra steps in this you could put how many open how many click whatever

how many click how many sign up and then how many of those import so essentially you want people who sign up to your site to import their contacts you want to then get them to send an invite to all of those contacts you want to get it to all of those contacts not just one of them then you want to get a percentage of those to click and a percentage those sign up if you multiply out the percents at every point in this this is essentially where well this isn't a percent this is a number

um if you multiply those out that's essentially the point where you get to the question of what is the K Factor so if you have when someone Imports if on average they uh send invites to a 100 people um sorry doing that wrong let's say 100 people get an invite per person who Imports and then of those 10% click that gets you to 10 and then of those let's say 50% sign up that gets you to five and then of those only 10 to 20% actually subsequently import you're going to be at a point where

you're at 0.5 to one as your K factor and you're going to not be viral so a lot of things like vidy are very good at pumping or were very good at pumping out stories that got the K Factor over one and it's perfectly doable to get the K Factor over one but if you have something that doesn't have high retention on the back end it doesn't really matter so you should look at your invite flow and say okay what is my equivalent of import how many people per import are invit sent to how many

of those receive clicks how many of those convert to my site how many of those then import to get an idea of your K Factor but the really important thing is still to think about retention and not to think about virality only do this after after you have a large number of people retained on your product per person who signs up so couple more things we were going to touch on uh SEO email SMS and push notifications so on SEO there are three things you need to think about first one is keyword research people do

this badly all the time so I launched this cocktail site that I talked to you about I spent a year optimizing it to rank for the word cocktail making turns out in the UK no one searches for cocktail making about 500 people a month I dominated that search term it was awesome got 400 visitors a month it was amazing everyone searches for cocktail recipes in the UK and in the US which is the biggest Market everyone searches for drink recipes so I optimized for the wrong word so you've got to do your research first about

what you're going to go after so research consists of what do people search for that's related to your site how many people search for it how many other people are ranking for it and how valuable is it for you supply demand and value simple economics I guess so you do your keyword research you figure out which keywords you want to rank for there are great tools out there to enable you to do that honestly the best is quite often the Google AdWords keyword plan at all really once you've done that the next most important thing

is links so page rank is how all of uh SEO essentially is driven and Google is based on Authority now there's a lot of other things in Google's algorithm now like do people search for your website there's a lot of stuff about the distribution of what the anchor text is that's sent to your site so that if you abuse it and spam it they can pop up with Spam white on a white background five pages below the fold doesn't work anymore but the single most important thing is to get valuable links from high Authority websites

for you to rank in Google most important thing then you need to distribute that love inside your site by internally linking effectively and when I Jo joined Facebook we'd launched SEO in September 2007 which was before I joined I joined November 2007 and we launched it and we were getting no traffic from the the pages we'd launched public user profiles so when I went in and looked at it the only way you could get to any public user profile was to click on the footer of the page for the about link then click on one

of the blog articles then click on one of the authors and then spider out through their friends to get to all their friends turns out that Google was like they've buried these Pages they're not very valuable I'm not going to rank them we made one change we added a directory so that Google could quickly get to every page on the site and we 100x SEO traffic very very simple change drove a lot of upside about Distributing the link clove internally and then the last thing is there's a bunch of table stake stuff XML sit Maps

making sure you have the right headers it's all covered really well online for what you want to do I'm going to stop now and make sure because we had a few questions but what other questions are there go for it can we go into email actually let's go into email okay great um email email is dead for people under 25 in my opinion right young people don't use email they use WhatsApp they use SMS they use Snapchat they use Facebook they don't use email if you targeting an older audience email is uh pretty successful email

still works for distribution but realistically email is not that great for teenagers especially and even people at University you know how much you use instant messaging apps and how little you use email and you guys are probably on the high end of the scale for email because you're in Silicon Valley that being said on email the things to think about email SMS and push notifications all behave the same way they all have questions of deliverability so to finish first first you have to finish your email has to get to someone's inbox so if you send

a lot of spam and you end up with dirty IPS or you send spam from shared servers where other people are or you send email notifications from shared servers where other people are sending spam from you are going to end up being put in the spam folder consistently and your email will fail completely you may end up being blocked and have your email bounce there's a lot of stuff around email where you have to look when you receive feedback from the servers you are sending email to 500 series errors versus 400 series errors you have

to be respectful of how those are handled if someone gives you a hard bounce retry once or twice and then stop trying because if you are someone who abuses people's inboxes the email companies spam fold you and it's very hard to get out if you get caught on a Spam house link or anything like that it's very hard to get out it's really important with email that you are a high class citizen that you do good work with email because you want to have deliverability for the long run that counts for push notifications and SMS

too with SMS you can go and buy SMS traffic via gray roots with people with having uh phones strung up attached to like a computer and pumping out smss that works for a time but it always gets shut down and I've seen so many companies make these mistakes where they think they're going to grow by using these kind of tactics if you can't get your email your SMS or your push delivered you will never get any success from these push you spam your power users I know that's slightly different to what I said earlier but

you actually spam your power users and give them notifications they don't care about and make it really hard for them to opt out so there's no settings where they can opt out and they start blocking you you can never push them once they've opted out of your push notifications and it's very hard actually to prompt them to turn them on once they've turned them off so number one thing to think about about email SMS and push notifications is you have to get them delivered beyond that it's a question of open rate click through rate so

what is the compelling subject line you can put there so that people are going to open your email and how can you get them to click when they visit everyone focuses towards doing marke emails that are just Spam in my opinion newsletters are stupid don't do newsletters because you'll send the same message to everyone on your site someone who signed up to your site yesterday versus someone who's been using your product for 3 years do they need the same message no the most effective email you can do is notifications so what are you sending what

should you be notifying people of and this is a great place where we're in the wrong mindset as a Facebook user I don't want Facebook to email me about every like I receive because I receive a lot of likes because I've got a bunch of Facebook friends but as a new Facebook user that first like you receive is a Magic Moment turning on that notification across all of our channels increased the click-through rate on our emails SMS and push notifications but we only turned it on for low engaged users who weren't coming back to the

site so it wouldn't be spamming for them spamming them so it was a great experience so think about that what notifications should you sending is the first thing that you need to think about on email SMS and push and then the second thing you need to be thinking about is how can you create great triggered marketing campaigns so when someone created their first crossb trade transaction was one of the best email campaigns I was ever part of at eBay in terms of clickthrough rates it was awesome because it was really timely really in context the

right thing to do for the user so I'd say make sure you have deliverability most important thing focus on notifications and Trigger based email SMS and push notifications beyond that so I think we're out of time there's one thing I wanted to finish with which is um and if you guys have any questions I guess like you can reach me and if I get spammed I just won't reply um we have great spam filters no uh my my favorite quotes is from General Paton and it's so cliched it's crazy but it's awesome a good plan

violently executed today is better than a perfect plan tomorrow and one of the things chamoth instilled in us and Havey still instills in us and mark instills across the whole of Facebook is this move fast and don't be afraid to Break Stuff ethos if you can run more experiments than the next guy if you can be hungry for growth if you fight and die for every extra user and you stay up late at night to get those extra users to run those experiments to get the data and do it over and over and over again

you will grow faster Markus said he thinks we won because we wanted it more and I really believe that we just worked really hard it's not like we're crazy smart or we've all done these crazy things before we just worked really really hard and we executed fast and I strongly encourage you to do that growth is optional thank you