new user registrations, user engagements, test new variables, and optimize growth. He said Web-based companies don’t need to run cohort-style analyses over two to three months. Merely diverting 1 percent of the new visitor traffic for a few days—assuming that site traffic already is a big number—can generate statistically significant results, he said.
Driving growth can be an intrusive process early on, Johns added. If a team has developed a new product or a new set of features, the growth team assesses how the new product would affect overall growth. Would it actually, meaningfully change anything?
For example, Johns said user engagement begins to suffer if a new feature takes more than a few milliseconds to load. “You have to respect the people, but you can’t give terrible ideas or opinions a long shelf life,” he said. At the same time, software developers have to embrace the fundamental concept that growth is their mission too, and to accept the fact that numbers rule.
“If our rate of following is down 30 percent, I don’t care if TechCrunch thinks some new feature is great,” Johns said. When it comes to driving Web traffic, he added, “TechCrunch can’t see what we’re doing. They don’t know.”
As the imperative for growth becomes more pervasive within a company, Johns said developers begin to coordinate their efforts with the growth team.
The challenge for a growth team, Johns said, is akin to maximizing the yield on an investment. “If I give you $100,000 to invest and get a 10 percent return, I’m pretty stoked,” he said. “That’s what growth is when you have a good product.”
The mission of a growth team, then, is to drive a company’s internal expansion by maximizing the increase in new users (and in reactivating dormant users) while minimizing the rate of user deactivation. It is a bit like modern portfolio management theory, Johns said.
“If your rate of growth is 1 percent a week, you won’t get [venture] funding,” Johns said. “You’ll only get funding if your net organic growth rate meets or exceeds 3 percent a week.”
Most of the Web companies out there are not even close to that kind of growth, he acknowledged.
Our luncheon discussion, part of a continuing conversation about the tech startup community in San Diego, was presented by Xconomy and San Diego Tech Founders. It was sponsored by the Cooley law firm, EY, the Kauffman Foundation, and the San Diego Regional Economic Development Corp.
In attendance were Mike Alfred of Brightscope, David Becerra of Mellmo/Roambi, Ryan Bettencourt of Blurtopia, Wolf Bielas of Wolfpack Ventures, Reid Carr of Red Door Interactive, Tom Clancy of Tao Venture Partners, Brant Cooper of San Diego Tech Founders (and co-author of The Lean Entrepreneur), Mark Fidelman of Evolve, Steve Gal of the UCSD Rady School of Business, Melani Hunter of Bevato, Austin Neudecker of Yealthy, Michel Kripalani of OceanHouse Media, Allison Long of Crescent Ridge Partners, Chuck Longanecker of Digital-Telepathy, Micha Mikailian of eBoost Consulting, Nik Souris of The Backplane, Jonathan Sills of Battery Ventures, Joaquin Silva of On-Ramp Wireless, Arie Trouw of Sambreel, Mitch Thrower of Bump Network, Matt Wickstrand of Kareer.me, Doug Winter of Seismic. Also in attendance were sponsors Eric Otterson and Steve Przesmicki of the Cooley law firm, EY partners Doug Regnier and Tim Holl, and Matt Sanford of the San Diego Regional EDC.
