As budgets get tighter, product-led growth becomes more important.

Here are the most important concepts I've learned from growing consumer startups.

1. Build a growth model

Growth isn't about a bunch of hacks. Hacks get arbitraged.

Instead:

- Brainstorm key levers around acquisition, retention, and monetization.

- Understand the psychology of users behind those levers.

- Develop hypothesis-driven experiments to drive these levers.

- Analyze, iterate, repeat.

h/t @RoadIslandSteve

2. Loops over funnels

Loops are the key to growth. In a growth loop, every retained user leads to more new users.

This is how companies reach escape velocity.

Because of this, match your growth loop with your product.

Network based product? Virality is key

Users create unique and valuable content? Try SEO

Have positive unit economics? Paid acq. can work

3. Retention first, acquisition second

Investing heavily in acquisition without retaining users will cause your CAC to be higher than LTV.

This is not true growth. This is a VC ponzi scheme (as @chamath would say).

Improve the core product instead.

So, how do you know if your retention is high enough?

- Retention curve flattens over time

- CAC is lower than LTV

- At least 40% of customers would be "very disappointed" if your product shut down

4. Optimize your activation flow

A user is activated once they've developed a habit around your product.

Every activation flow has three steps:

- Setup moment
- Aha moment
- Habit moment

h/t @bbalfour

Habit moment is when a user completes an action that leads to long-term retention (e.g. user visits each week in first 4 weeks)

Aha moment is when a user experiences the core value prop for the first time

Setup moment gathers the minimum data needed to create the aha moment

5. Analyze growth holistically

Growth isn't just about data. But it helps.

Key analyses:

Growth Accounting (new + existing + resurrected - churn): tracks flows between user states

Quick Ratio (new + resurrected / churned): how many users do you gain for every one you lose

Cohort Analyses: how are your metrics trending over time

Retention Curves: shows your level of product-market fit

Segmentation: how do different types of users engage with the product

A/B testing: for iterating on product features

6. Understand product-channel fit

Choose your acquisition channel based on your product.

Then mold your product to the channel. You control the product, not the channel.

h/t @bbalfour

Originally, Pinterest was a social network so it grew virally by sharing through the FB API.

Then, the FB API shut down. Growth stalled.

Pinterest pivoted to a personal utitlity product and changed their acquisition channel to SEO which fit their new product. Growth continued.

7. Invest in infrastructure and process early

As your growth team scales, infra. quality will be the main constraint for shipping quickly.

The following tools are helpful:

- Clean data sets
- Tools for segmenting customers and their activity
- Experiment dashboard for analyzing results
- Peer review process to discuss and analyze findings

To recap:

1. Build a growth model
2. Loops over funnels
3. Retention first, acquisition second
4. Optimize your activation flow
5. Analyze growth holistically
6. Understand product-channel fit
7. Invest in infrastructure and process early