#50 - Growth Office Hours with Anu Hariharan and Gustaf Alstromer

**Craig Cannon** (0:00)
Hey, this is Craig Cannon, and you're listening to Y Combinator's podcast. Today's episode is with Anu Hariharan and Gustaf Alstromer. So Anu and Gustaf are both partners here at YC, and this episode is kind of a follow up to Anu's growth guide, which came out in July.
And if you have more questions about growth, we're going to do a round two, so you can just tweet those our way, and we'll add them to the list. All right, here we go. All right, Gustaf, probably the best place to start here is, let's just differentiate growth from growth hacking and all these buzzwords that people talk about.

**Gustaf Alstromer** (0:34)
Sure. So the growth hacking term, to me, is a marketing term. If you... It's kind of like the new social media manager. Okay. If you want to make people believe you work on growth, you call yourself a growth hacker. And if you actually work on growth, you call yourself a product manager working on growth or an engineer or a designer.
That's the simplest definition.
I think a more kind of deeper explanation might be that you can't hack your way to true sustainable growth. You have to invest long term. And the term growth hacking somehow give the idea that there's a one small thing you can do and just look for that one thing and then you're done. And that's just not how it works.

**Craig Cannon** (1:16)
So maybe the best entry point into this then is to talk about the growth posts and talk about how someone actually might go about investing in growth. So Anu, where would you start?

**Anu Hariharan** (1:27)
Yeah, before I start on the framework for growth, the reason we actually wrote the post was because a lot of growth state CEOs come to us and ask the number one question, which is what does a growth team do and why should we set up a growth team? Because let's be honest, it's a relatively new concept. It didn't exist a decade ago and Facebook was the first to pioneer that.
I think, as Gustaf mentioned, rightfully, growth pros don't like the term hacking because it sort of implies a gut driven approach. So that's where a growth team comes into play. It is a very data and scientific approach to scaling growth.
And right after you achieve that product market fit, which we call the zero to one phase, to accelerate growth, you have to use a data driven approach, and that's when a growth team comes into play. But before you set up a growth team, the number one step you need to check is whether you have strong retention. Because too often, most companies form a growth team and then wonder why they're not growing fast. Well, you have a leaky bucket at the bottom.
And so the most important step is retention. And so even if you look at the post, the framing is first check whether you have good retention. So you want to check whether your users that you acquired in the long term, there is stable retention, which is parallel to the X axis. And also it's good retention. So for example, if you're a social network, and you have less than 10% retention and it's stable, it's meaningless. Because as a social network, you need to have at least 50 to 60%. So it's more important to also benchmark whether your stable retention is good versus benchmarks or better than benchmarks before you start focusing on growth.

**Craig Cannon** (3:23)
So Gustaf, when you were at Airbnb, how did you decide on that number? What retention number were you shooting for?

**Gustaf Alstromer** (3:29)
Good question.
You like to give the impression that you did everything right from the beginning. And when I got to Airbnb, we were just kind of like trying to figure things out. So I don't think that that was the very first thing we looked at. We were just kind of trying to figure out where are the metrics, like what are the things, like how does the funnel look like?
If you have great metrics and measure your entire kind of user funnels through a product, it's pretty easy to figure out your attention rate. It's pretty easy to figure out where people are dropping off and where are the opportunities. When I joined Airbnb, we were just kind of scrambling to get all the different places we had the metrics together. And that's kind of where we started, just like making sure that we are tracking kind of our user base and our hosts and our guests in like one single place. And there was like one single source of truth that we can all agree on. And from that, it gets easier to start measuring some of these things.