Growing a Monetized User Base (Full Talk) - Growth Hacker Conference 2013

Growing a Monetized User Base

Ivan Kirigin [email protected] @ikirigin

Hi, I’m going to talk about growing a monetized user base. Please email me with questions and feedback, and follow every burrito I eat on tweet. I’m going to talk a bit about my background, how I came to work on growth, a lot about Dropbox, and a little bit about my new startup, YesGraph.

Robots YC Dropbox

I started out in robotics putting sensors on bomb disposal robots. I didn’t think there were many product to be built in robotics, so I did a startup called Tipjoy. We were in the W08 class of YC, and overall we failed completely.

I had such a chip on my shoulder about it that I became obsessed with growth. This was around the time of startup lessons learned, the lean startup, and Facebook’s meteoric growth, so there was obviously a better way.

I went to work on Credits at Facebook, and learned that they applied the same user growth strategies to credits that they did to the normal user base. The same is true of the advertising user base. So if you’ve ever gotten a newsletter after running an ad, consider that just like being tagged in a photo: a re-engagement mechanism.

This is fascinating! There was clearly an approach that worked, a process, and it could be applied to really different products. So when I went to go work at Dropbox, it was a natural fit to work on growth.

Freemium

Let’s review Freemium. Having a paid product is actually a really big barrier to adoption. People are asked to pay without really knowing the value of the product.

Instead, you cast a wider net by making part of your service free, and eventually people pay for it. One common mistake is putting engaging features in the paid tier. If the whole point is getting more people, losing them because they didn’t stay engaged means they won’t stick around to pay you money.

Dropbox had a great arrangement here. With the space you have in your Dropbox, the free tier is small but enough for just getting started. Then as you get more into the service, you want more space. There is no feature that is cut off from you on the free tier.

This is more nuanced than a funnel from free to paid with the enterprise tier, called Teams. Many free users have Dropbox at work, and having them there means it is far more likely to get the enterprise sale done. The inside sales problem is much easier.

Referrals PRODUCT

I want to talk about referrals, but before we do, we need to talk about product. You can’t talk about a way to boost word of mouth spread of your product without highlighting that you need to have a great, noteworthy product to talk about. It is essential.

Dropbox has an amazing product. It solves such an important problem with no confusing configuration and with an incredibly low error rate. The team there worked really, really hard to get here.

This is great news! You don’t need a da Vinci designer to glean your product from the ether. You just need to put in the time and hard work to smooth out the rough edges to make something people want.

Referrals

The way the Dropbox referral program works is that one user sends a link to a new user to sign up. When they do, they both get a space bonus.

This referral invite might go through email or over by posting a link to Facebook or Twitter.

Only after the new user actually starts using Dropbox does the bonus gets triggered. They each get a 250Mb bonus, which was updated to 500Mb.

Norms Symmetry 2 / 0.25 / 50 Lifecycle

There are a few reasons that aren’t so obvious why this program works so well.

Norms. When you’re dealing with a virtual currency like GB, you keep the user thinking in terms of social norms, not market norms. If you assigned a price like $2 per referral, the user wouldn’t be nearly as eager to sell out their friends for so little money.

Symmetry. Both the old and new user get a bonus. The reason the new user signs up isn’t the bonus (though it might help), but that there is an invite in their inbox telling them to join Dropbox. The real reason the symmetry matters is so that the sender feels like they aren’t spamming their friends. Instead, they are giving a gift.

2/0.25/50. The ratio of free, referral bonus, and paid matter. If the bonus is too small, no one cares. If it is too little compared to the free tier, no one cares. 250Mb is enough to store a lot. If the bonus gets you too close to the paid tier, you’re going to cannibalize subscriptions.

Lifecycle. The user is asked to make referrals, but not right away. It is when they are deep into Dropbox and run out of space that they are prompted to send referrals. This is great, because they love the product and want to get referrals to get space. Then they might use the bonus up and send referrals again, and again, and maybe subscribe. The vitality isn’t early in the user lifecycle and it isn’t just once.

messaging /gs P.S. /edu /spacerace

Messaging. Dropbox is really conservative with messaging. They only send really high quality messages. Where are the newsletters, or promotion of platform apps, or weekly notifications of what others changed in your shared folders? Those would be awesome! But Dropbox doesn’t do that unless the quality can be high enough. As a marketer, this stinks. I think most of the promotions we ran around referrals were effective simply because users that didn’t know about the referral program learned about it from incidentally broader messaging.

/gs. This is a page new users see after they sign up. It is a guided tour that takes users through the different parts of Dropbox. It introduces referrals. It also introduces getting a bonus for doing something, because if you finish the quest, you get extra space.

P.S. You need to weigh the benefit of a growth effort by the engineering cost. The single biggest boost to referrals when normalized by the effort was adding a P.S. to transactional emails that promoted referrals. So you get a notification saying Bob Trevins joined your shared folder, and P.S. Get extra space free.

/edu /spacerace. Dropbox loves students. They are super social and super cheap, so they fit really well with referrals. Dropbox doubled the amount of space students get and then doubled down on that effective strategy with the Space Race. The former worked really well because they messaged everyone with an @*.edu email address. Yay for more messaging!

Let’s talk about Dropbox for Teams. At one point, this promotion on the signed in home page was a huge source of leads for teams.

Think about that. There are a huge number of best practices around lead generation and qualification for SAAS products. Ads and PR should be included there too. And here we have Dropbox getting ahead with a house ad. This really highlights how much freemium matters. That wide net catches many people in companies, and those companies want more control while also enabling the agile sharing and collaboration Dropbox provides.

Remember those awesome social students? It turns out they get jobs when they leave college, and they continue to use the tools they love at work. It isn’t as simple as free to paid to enterprise. It is much more exciting than that.

/photos !

Samsung & /gs

I know only one “Growth Hack”. Everything else is a tactic that might not apply to what you’re doing. Here it is:

If you want something to happen more, ask. If you want something to happen a lot more, automate it.

Asking might mean a bigger call to action, or an email notification. Automating is where it gets interesting.

Dropbox made it so every time you plug in your phone, camera, or SD card, the desktop client sucked up all your photos and videos. Awesome! That dramatically increased the amount of stuff you care about in your Dropbox. For mobile, it’s even better. Every photo and video you take is in Dropbox.

This experience enabled an awesome integration with Samsung, where Dropbox was part of the out of box experience. The problem was that Samsung wanted to give lots of free Dropbox space to do the integration, but those users might not become good Dropbox users.

The solution was to couple the getting-started tour with the bonus space. Now only good users would get the bonus. It’s a win-win, and really highlights the interplay of awesome product experiences, really agile BD, and simple tools like an effective onboarding tour.

YesGraph

Let’s see how some of these ideas are being applied at my new startup, YesGraph.

YesGraph helps companies scale referral recruiting. We make it easy to get your whole team involved to recommend people you know are good.

We take your contacts on Facebook, email, and LinkedIn, and organize them according to the role you’re looking to fill. You know which of your contacts are good, and make it easy to recommend them.

Freemium

The core product value is referrals. We don’t want any barrier to sending referrals, so individuals can sign up, invite connectors, and get referrals for free.

People will pay once they get their whole team involved, to review referrals and invite others to make recommendations.

This also changes the social graph reach. Your whole team can invite people to make recommendations outside the company, which is much broader than the individual tier of inviting people you know to make recommendations.

Signup Job Invite Signup Refer

For us, we don’t have a referral system like Dropbox, but our invites are really important. They are a core part of the product.

A user signs up, creates a job, invite people they trust. Those people signup, connect, and make referrals.

There is a social network within companies that the market has largely ignored. Not all invites are created equally. We want to help improve this by finding the right people in their network to invite. Maybe they have many mutual contacts, maybe they work at the same company, many they know many people appropriate for the job.

This is going to be a bottomless well of optimization.

Signup Job Invite Signup Refer

How is this viral?

If you ask people outside your company for help, they’ll go and create a job on YesGraph and go through the invite process as well. This is the most direct version.

This makes sense if the person invited is a hiring manager or recruiter.

Signup Job Invite Signup Refer Share

But it might be more subtle than that. If you’ve curated your contacts on YesGraph, but you’re not hiring, sharing those contacts could be a better way to grow.

Knowing your role within your company and the roles of your friends will help make this invite process much smoother.

This really highlights how early we are at YesGraph. The correct answer is that we’re going to do a bunch of experiments to find out what is the most efficient way to grow virally. We’ll do the same for all our growth channels.

Questions

Send email to [email protected] if you liked this talk. I’d be happy to talk about growth.

If you’re looking to hire, you should try YesGraph. We’d love to get your feedback:

yesgraph.com