“Growth hacking” has become a favorite term of startup entrepreneurs, angel investors, marketers, and digital gurus everywhere. But at its core, growth hacking doesn’t seem terribly distinguished from a conventional marketing strategy.
Is there something that sets it apart? Or is growth hacking just a glorified term for a certain type of marketing?
Even more importantly, is growth hacking the right strategy for your startup to grow?
What Is Growth Hacking?
Let’s start with a basic definition of growth hacking. Growth hacking is often categorized as a subfield within marketing, but it employs a collection of different marketing, sales, and advertising strategies all focused on one ultimate goal: fast growth.
More than that, growth hacking relies on a form of exponential growth, accelerating the acquisition of new customers while maintaining a current audience and tapping new markets with existing customers via referrals. It also relies heavily on an ongoing cycle of experiments and innovation.
There are many tactics that can be used as part of a growth hacking strategy, including guerrilla marketing, search engine optimization (SEO), social media marketing, and even customer reward programs.
Growth hacking is commonly used by small, emerging startups who need to build an audience as quickly as possible to compete in a certain industry, or to achieve a scale that can support profitability. The bottom line is fast growth – all other considerations are secondary.
The Key Differences
So what are the differences between growth hacking and marketing?
- The origins. First, you need to think about the origins of the strategies. Traditional marketing has, in some ways, always been around. Since the early 20th Century, most marketing strategies have depended on mediums like print, direct mail, radio, and video – all of which are somewhat limited in terms of reach. Growth hacking emerged in part because of the boundless power of digital marketing; if you have the money and time to spend, you can generate more value. The scalable nature of startups also made it more necessary to engage in growth hacking techniques.
- The pace. It’s also important to address the pace of these strategies. In the traditional marketing world, the pace isn’t usually important; fast strategies are advantageous, but not strictly necessary to succeed. But in growth hacking, speed is everything. You need to get started as soon as possible, start generating new customers as soon as possible, and start growing at a rapid pace.
- The overall approach. Growth hacking centers on experimentation. A traditional marketing strategy usually has a definite beginning, middle, and end, with research, planning, and execution handled in a straightforward way. By contrast, growth hacking forces you to try a wide variety of different tactics, utilizing different channels. If something doesn’t work, you toss it. If something does work, you double down.
- Dependence on data. Traditional marketing often utilizes data to inform and improve the campaign. But for growth hacking, data is an absolute necessity. Data is the map that allows a growth hacker to navigate; without it, there’s almost no hope for an effective strategy.
- The pirate funnel. In traditional marketing, there are really only two phases to consider when it comes to reaching new customers: awareness and acquisition. Your sales and customer service strategies might complement this, and you might have a bigger sales funnel to consider, but as far as your marketing strategies are concerned, this is it. Growth hacking relies on a broader funnel, known as the “pirate funnel” due to the acronym AAARRR: Awareness, acquisition, activation, retention, revenue, and referral. It’s not just about finding and attracting new people; it’s also about keeping those customers and using them to find even more customers.
- Skills required. Traditional marketers need to think creatively. They need to control costs carefully, plan campaigns with the future in mind, and identify failure points so they can improve. Growth hackers need these skills, but they also need to be skilled at measuring and interpreting data, launching and evaluating experiments, and picking up new tactics regularly.
- Departments involved. While growth hacking is typically considered a marketing approach, it actually involves a number of other departments. If things are running smoothly, your growth hacking engine will involve people from sales, marketing, advertising, customer service, and even product development. Everyone needs to be working together for the common goal: growth.
- Channels involved. Traditional marketing can manifest in a number of different channels, but most companies that engage in traditional marketing end up focusing on one or two primary modes. Additionally, traditional marketing channels typically include things like print, radio, and TV ads. In growth hacking, it’s vital to work with a number of different channels simultaneously both for experimental purposes and to broaden your reach. Typically favored channels in the growth hacking world are ones with high ROI and high potential to scale, like content marketing, search engine optimization (SEO), and social media marketing.
- Tools involved. To growth hack effectively, you need the right tools. Notably, tools that aid in data analytics and automation are key. Experimentation and analyses are the core of any growth hacking strategy. Accordingly, you’ll need a suite of tools to help you plan and launch new experiments, as well as analyze your past efforts. In addition, it’s exceptionally helpful for growth hackers to have access to automation-focused tools. Automation sharply reduces the manual effort required to manage a campaign, reducing costs, and makes your overall campaign much more scalable.
- The recursiveness. Growth hacking can be considered to be a “recursive” strategy, in the sense that it builds upon itself. The information you glean from your growth hacking tactics can be used to build, replicate, refine, improve, and change those tactics. After a few months of self-sustaining transformation, you can end up with a radically different (and more powerful) growth hacking vision.
- The budget. Traditional marketing often operates with a fixed budget and attempts to use that budget as wisely and efficiently as possible. By contrast, the ultimate goal of a growth hacking strategy is growth; and if that means spending a lot of money to do it, so be it. The streams of incoming new customers and high rates of user retention are designed to sustain this aggressive spending model.
Is Growth Hacking Better?
There are many advantages of growth hacking, when compared to traditional marketing. But does that mean that growth hacking is strictly better?
Not necessarily. Growth hacking is suitable for some types of businesses, but not all businesses. You’ll need to consider:
- Product scalability. Growth hacking is better for companies that have a scalable product. In fact, it’s downright vital for them. If your product or service isn’t easily scalable, all the new customers you generate with growth hacking will be unsupported. By contrast, scalable product models are dependent on their ability to attract new customers fast.
- Long-term business plans. What are the long-term plans for your business? If “growth” is somewhere in your list of top priorities, growth hacking is advantageous for you. If you’re more concerned with building the right reputation, making an impact in a specific area, or evolving to offer the best possible product, growth may be a secondary concern.
- Current stage. Typically, growth hacking is an early- to mid-stage strategy. It serves as the bridge between your company’s humble beginnings and its peak as an engine of profitability. If your company is already effectively attracting new customers and retaining them, growth hacking may not be especially valuable.
- Budget limitations. Growth hacking often requires exhaustive spending. Growth hacking strategies tend to be intense, demanding, and persistent – and there are many strategies to manage across multiple channels. If you’re trying to operate as lean as possible, minimizing your budget, growth hacking isn’t the best move.
Growth hacking isn’t the right approach for every startup, but if you’re looking to snowball your number of customers as quickly and efficiently as possible, growth hacking could be ideal. If you understand that growth hacking isn’t an automatic guarantee of success, and you’re willing to invest some serious time and effort into developing an effective strategy, you can make it work for your business.
Fintech Kennek raises $12.5M seed round to digitize lending
London-based fintech startup Kennek has raised $12.5 million in seed funding to expand its lending operating system.
According to an Oct. 10 tech.eu report, the round was led by HV Capital and included participation from Dutch Founders Fund, AlbionVC, FFVC, Plug & Play Ventures, and Syndicate One. Kennek offers software-as-a-service tools to help non-bank lenders streamline their operations using open banking, open finance, and payments.
The platform aims to automate time-consuming manual tasks and consolidate fragmented data to simplify lending. Xavier De Pauw, founder of Kennek said:
“Until kennek, lenders had to devote countless hours to menial operational tasks and deal with jumbled and hard-coded data – which makes every other part of lending a headache. As former lenders ourselves, we lived and breathed these frustrations, and built kennek to make them a thing of the past.”
The company said the latest funding round was oversubscribed and closed quickly despite the challenging fundraising environment. The new capital will be used to expand Kennek’s engineering team and strengthen its market position in the UK while exploring expansion into other European markets. Barbod Namini, Partner at lead investor HV Capital, commented on the investment:
“Kennek has developed an ambitious and genuinely unique proposition which we think can be the foundation of the entire alternative lending space. […] It is a complicated market and a solution that brings together all information and stakeholders onto a single platform is highly compelling for both lenders & the ecosystem as a whole.”
The fintech lending space has grown rapidly in recent years, but many lenders still rely on legacy systems and manual processes that limit efficiency and scalability. Kennek aims to leverage open banking and data integration to provide lenders with a more streamlined, automated lending experience.
The seed funding will allow the London-based startup to continue developing its platform and expanding its team to meet demand from non-bank lenders looking to digitize operations. Kennek’s focus on the UK and Europe also comes amid rising adoption of open banking and open finance in the regions.
Featured Image Credit: Photo from Kennek.io; Thank you!
Fortune 500’s race for generative AI breakthroughs
As excitement around generative AI grows, Fortune 500 companies, including Goldman Sachs, are carefully examining the possible applications of this technology. A recent survey of U.S. executives indicated that 60% believe generative AI will substantially impact their businesses in the long term. However, they anticipate a one to two-year timeframe before implementing their initial solutions. This optimism stems from the potential of generative AI to revolutionize various aspects of businesses, from enhancing customer experiences to optimizing internal processes. In the short term, companies will likely focus on pilot projects and experimentation, gradually integrating generative AI into their operations as they witness its positive influence on efficiency and profitability.
Goldman Sachs’ Cautious Approach to Implementing Generative AI
In a recent interview, Goldman Sachs CIO Marco Argenti revealed that the firm has not yet implemented any generative AI use cases. Instead, the company focuses on experimentation and setting high standards before adopting the technology. Argenti recognized the desire for outcomes in areas like developer and operational efficiency but emphasized ensuring precision before putting experimental AI use cases into production.
According to Argenti, striking the right balance between driving innovation and maintaining accuracy is crucial for successfully integrating generative AI within the firm. Goldman Sachs intends to continue exploring this emerging technology’s potential benefits and applications while diligently assessing risks to ensure it meets the company’s stringent quality standards.
One possible application for Goldman Sachs is in software development, where the company has observed a 20-40% productivity increase during its trials. The goal is for 1,000 developers to utilize generative AI tools by year’s end. However, Argenti emphasized that a well-defined expectation of return on investment is necessary before fully integrating generative AI into production.
To achieve this, the company plans to implement a systematic and strategic approach to adopting generative AI, ensuring that it complements and enhances the skills of its developers. Additionally, Goldman Sachs intends to evaluate the long-term impact of generative AI on their software development processes and the overall quality of the applications being developed.
Goldman Sachs’ approach to AI implementation goes beyond merely executing models. The firm has created a platform encompassing technical, legal, and compliance assessments to filter out improper content and keep track of all interactions. This comprehensive system ensures seamless integration of artificial intelligence in operations while adhering to regulatory standards and maintaining client confidentiality. Moreover, the platform continuously improves and adapts its algorithms, allowing Goldman Sachs to stay at the forefront of technology and offer its clients the most efficient and secure services.
Featured Image Credit: Photo by Google DeepMind; Pexels; Thank you!
UK seizes web3 opportunity simplifying crypto regulations
As Web3 companies increasingly consider leaving the United States due to regulatory ambiguity, the United Kingdom must simplify its cryptocurrency regulations to attract these businesses. The conservative think tank Policy Exchange recently released a report detailing ten suggestions for improving Web3 regulation in the country. Among the recommendations are reducing liability for token holders in decentralized autonomous organizations (DAOs) and encouraging the Financial Conduct Authority (FCA) to adopt alternative Know Your Customer (KYC) methodologies, such as digital identities and blockchain analytics tools. These suggestions aim to position the UK as a hub for Web3 innovation and attract blockchain-based businesses looking for a more conducive regulatory environment.
Streamlining Cryptocurrency Regulations for Innovation
To make it easier for emerging Web3 companies to navigate existing legal frameworks and contribute to the UK’s digital economy growth, the government must streamline cryptocurrency regulations and adopt forward-looking approaches. By making the regulatory landscape clear and straightforward, the UK can create an environment that fosters innovation, growth, and competitiveness in the global fintech industry.
The Policy Exchange report also recommends not weakening self-hosted wallets or treating proof-of-stake (PoS) services as financial services. This approach aims to protect the fundamental principles of decentralization and user autonomy while strongly emphasizing security and regulatory compliance. By doing so, the UK can nurture an environment that encourages innovation and the continued growth of blockchain technology.
Despite recent strict measures by UK authorities, such as His Majesty’s Treasury and the FCA, toward the digital assets sector, the proposed changes in the Policy Exchange report strive to make the UK a more attractive location for Web3 enterprises. By adopting these suggestions, the UK can demonstrate its commitment to fostering innovation in the rapidly evolving blockchain and cryptocurrency industries while ensuring a robust and transparent regulatory environment.
The ongoing uncertainty surrounding cryptocurrency regulations in various countries has prompted Web3 companies to explore alternative jurisdictions with more precise legal frameworks. As the United States grapples with regulatory ambiguity, the United Kingdom can position itself as a hub for Web3 innovation by simplifying and streamlining its cryptocurrency regulations.
Featured Image Credit: Photo by Jonathan Borba; Pexels; Thank you!