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Sean Ellis

Episode #263

Author of 'Hacking Growth', Founder of GrowthHackers

Former Growth Lead at Dropbox, Eventbrite, LogMeIn

🎯Product Strategy📈Growth & MetricsExecution

📝Full Transcript

18,967 words
Lenny Rachitsky (00:00:00): The Sean Ellis test, such a seemingly simple idea that has had such a profound impact on the startup world. Sean Ellis (00:00:07): The question is, how would you feel if you could no longer use this product? Once you got a high enough percentage of users saying they'd be very disappointed, most of those products did pretty well. If you felt too low, those products tended to suffer. Lenny Rachitsky (00:00:19): Say someone is listening and they're like, "Okay. Man, I'm getting like 10%. I don't know what to do." What do you find often works? Sean Ellis (00:00:25): Just ignore the people who say they'd be somewhat disappointed. They're telling you it's a nice to have. If you start paying attention to what your somewhat disappointed users are telling you and then you start tweaking onboarding and product based on their feedback, maybe you're going to dilute it for your must have users. Lenny Rachitsky (00:00:41): Moving retention often is really hard, but I guess it sounds like there's often something you can do. Sean Ellis (00:00:45): It's usually much more function of onboarding to the right user experience than it is about the kind of the tactical things that people try to do to improve retention. Lenny Rachitsky (00:00:53): What are like three or four things that you think people should definitely try to help improve activation? Sean Ellis (00:00:58): In my experience- Lenny Rachitsky (00:01:03): Today, my guest is Sean Ellis. Sean is one of the earliest and most influential thinkers and operators in the world of growth. He coined the term growth hacking, invented the ICE prioritization framework, was one of the earliest people to use freemium as a growth strategy, and maybe most famously developed the Sean Ellis test to help you understand if you have product market fit, which a large percentage of founders use today and profoundly impacted the way startups are built. Over the course of his career, Sean was head of growth at Drop...

💡 Key Takeaways

  • 1The 40% 'Very Disappointed' threshold is the leading indicator of Product-Market Fit.
  • 2Do not scale customer acquisition until you have fixed your activation and retention leaky buckets.
  • 3Ignore 'somewhat disappointed' users initially; focusing on them dilutes value for your 'must-have' users.
  • 4North Star Metrics should measure value delivered to the customer, not revenue.
  • 5Qualitative research (asking 'why') is often the key to unlocking quantitative roadblocks.
  • 6Growth Hacking is not about 'hacks'; it's about a disciplined process of high-velocity testing.
  • 7Focus first on the users who love your product and understand deeply why they consider it a 'must-have'.

📚Methodologies (3)

🎯 Product Strategy

A survey-based framework to quantify PMF by asking users how they would feel if they could no longer use the product. The magic threshold is 40% answering 'Very Disappointed'.

Core Principles

  • 1.Ask the Magic Question: 'How would you feel if you could no longer use this product?' (Very/Somewhat/Not disappointed).
  • 2.Target the Right Segment: Survey active users who have experienced the core value (e.g., used twice in the last two weeks).
  • 3.Focus on the 40%: Deeply analyze the 'Very Disappointed' cohort to understand the specific value they derive.
  • +1 more...

"The question is, how would you feel if you could no longer use this product? Once you got a high enough percentage of users saying they'd be very disappointed, most of those products did pretty well."

#ellis#survey)#strategy
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📈 Growth & Metrics

A strict hierarchy of growth priorities. You must fix the 'leaky bucket' (Activation/Retention) before pouring water in (Acquisition).

Core Principles

  • 1.Activation First: Optimize the 'Time to Value'. Ensure users experience the 'Aha Moment' immediately.
  • 2.Engagement & Retention: Build loops that bring users back naturally based on the product's usage frequency.
  • 3.Monetization: Ensure the business model works and unit economics are sound.
  • +1 more...

"If you're not really efficient at converting and retaining and monetizing people, you're going to really struggle on the customer acquisition side."

#sustainable#growth#sequencing
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Execution

Choosing a single metric that captures the core value delivered to the customer. It aligns the entire company around long-term sustainable growth.

Core Principles

  • 1.Reflect Value Delivery: The metric must represent the user getting value (e.g., 'Nights Booked' not 'Booking Revenue').
  • 2.Up and to the Right: It should be an absolute number (cumulative or rate) that can grow indefinitely, not a ratio/percentage.
  • 3.Time-Bounded: Include a frequency component (e.g., Weekly, Daily) to drive engagement habits.
  • +1 more...

"Revenue should be a product of doing things right. It shouldn't guide your day-to-day actions."

#value-based#north#metric
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