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Lecture 6 - Growth (Alex Schultz)

Lecture Transcript: http://tech.genius.com/Alex-schultz-lecture-6-growth-annotated Alex Schultz gives an overview of Growth for startups, speaking from a position of authority as the VP of Growth at Facebook. View the readings Alex refers to, his slide deck, at http://startupclass.samaltman.com/courses/lec06/ Discuss this lecture: https://startupclass.co/courses/how-to-start-a-startup/lectures/64035 This video is under Creative Commons license: http://creativecommons.org/licenses/by-nc-nd/2.5/

Alex Schultzhost
Oct 8, 201447mWatch on YouTube ↗

At a glance

WHAT IT’S REALLY ABOUT

Retention-first growth: find magic moments, pick metrics, execute fast

  1. Retention is the defining signal of product-market fit, and growth tactics are wasted if your retention curve trends toward zero instead of flattening.
  2. A simple cohort-based retention curve lets even small products estimate long-term viability and compare “good retention” using dimensional-reasoning-style benchmarking against market size and peers.
  3. Startups shouldn’t create a separate growth team; the CEO should own a clear North Star metric that aligns the entire organization’s decisions and tradeoffs.
  4. Growth work focuses on accelerating users to a product’s “magic moment” and optimizing for marginal users (those most likely to churn), not for power users’ preferences.
  5. Key tactics discussed include internationalization done with scalable infrastructure, practical virality models (payload/frequency/conversion and K-factor funnels), SEO fundamentals (keywords, links, internal architecture), and deliverable, triggered notifications over generic newsletters.

IDEAS WORTH REMEMBERING

5 ideas

Retention is the growth gatekeeper.

If your cohort retention curve doesn’t asymptote (flatten) and instead slopes to zero, you don’t have durable product-market fit—so virality, ads, and “growth hacking” will only amplify churn.

You can forecast long-term value early with cohort math.

By measuring what percent of users are active on day 31, 32, 33, etc. after signup, you can infer the retention shape with relatively small samples (e.g., ~10k users) and make surprisingly accurate value predictions.

Define “good retention” by benchmarking, not asking for a universal number.

Retention targets differ by vertical; use back-of-the-envelope market sizing (e.g., internet users vs. actives) and comparable companies to triangulate what “successful” terminal retention must look like.

The CEO must set and publish a North Star metric.

Once teams scale, control becomes influence; a single metric (MAU, sends, nights booked, GMV) prevents local optimization and keeps product, marketing, and engineering aligned.

Design the product to rush users to the magic moment.

Activation isn’t abstract: for Facebook it’s “see your friends” (operationalized as ‘10 friends in 14 days’), and for marketplaces it’s finding the unique item or getting paid the first time.

WORDS WORTH SAVING

5 quotes

Retention is the single most important thing for growth.

— Alex Schultz

If it doesn't flatten out, don't go and do growth tactics… Focus on getting product market fit.

— Alex Schultz

Startups should not have a growth team. The whole company should be the growth team. The CEO should be the head of growth.

— Alex Schultz

A good plan violently executed today is better than a perfect plan tomorrow.

— Alex Schultz (quoting General Patton)

Growth is optional.

— Alex Schultz

Retention curves and cohort analysisProduct-market fit vs. growth tacticsNorth Star metrics and organizational alignmentMagic moment and activation (e.g., 10 friends/14 days)Marginal users, churn, and resurrected usersInternationalization and community translationVirality models (payload/frequency/conversion; K-factor)SEO: keyword research, authority links, internal linkingEmail/SMS/push: deliverability, triggered notificationsExecution speed and experimentation culture

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