- The speaker emphasizes the importance of honesty in company updates and asks for clear updates without exaggeration.
- The graduation requirement for the course has changed to 8 out of 9 updates, but there is an option to do 10 updates for consideration for a grant.
- Weekly updates are due every Sunday at 11:59 p.m. Pacific Standard Time.
- Questions can be sent to startupschool@ycombinator.com.
- The speaker encourages participants to launch their products to determine if there is demand.
- The first speaker, Gustav Hallströmmer, discusses growth and its importance for startups.
- Growth strategies can be applied to a wide range of companies, not just consumer or social network companies.
- It is important to have product-market fit before focusing on growth to avoid negative consequences.
- The speaker shares a story about Facebook's growth and the impact of their growth team.
- Facebook's growth was accelerated by opening to high school students and implementing translations.

- Facebook implemented automatic translation into hundreds of languages to continue scaling growth
- The shift to mobile in 2010-2011 required Facebook to make large changes and focus on mobile development
- Facebook faced a growth ceiling due to limited internet access, leading to the creation of Internet.org to get more people online
- The initial forecast for Facebook's growth was 400 million users, but it now has over 2 billion users
- Understanding product market fit involves finding a metric that represents customer value and measuring repeat usage of that metric
- Graphs can be used to analyze product market fit and determine if a company should focus on growth
- Examples of companies with good product market fit include Shopify and Netflix, while Blue Apron has a less clear fit
- Measuring retention is important for determining product market fit, and smaller companies can gather feedback from users to assess retention.

- The traditional model of separate product and marketing teams is outdated
- There are three types of organizations that can drive growth: product growth, performance marketing, and brand marketing
- Startups should focus on product growth and performance marketing before considering brand marketing
- Product growth involves optimizing the different steps in the product funnel, such as translation, authentication, onboarding, and purchase conversion
- Performance marketing involves using scalable growth channels like Google and word of mouth referrals to drive growth
- Startups should also consider doing sales if they can create a list of potential customers
- The importance of high customer lifetime value (LTV) should be considered in growth strategies.

- Referrals are a way to engineer word-of-mouth marketing and can be optimized through various steps in a funnel.
- The referral program at Airbnb utilized financial incentives and optimized the process over time.
- Pay growth should only be pursued if there is revenue, and important concepts include customer acquisition cost and lifetime value of users.
- Attribution is important for understanding the effectiveness of paid growth channels like Facebook, Instagram, Google, and YouTube.
- Search engine optimization (SEO) still matters, as Google is a major website, and there are basics to get right and two types of optimizations: on-page and external links.

The video discusses the importance of keyword analysis and research for ranking highly on Google. It also emphasizes the significance of off-page optimization and acquiring authoritative links. The speaker mentions the role of press coverage in off-page optimization. The video then moves on to discuss growth teams and the balance between making everyone responsible for growth and having a small team dedicated to it. The speaker highlights the importance of clear goals and dividing lines in the product. The video also emphasizes the importance of data and experimentation in making decisions, using A/B testing to determine the true outcome of decisions. The speaker describes Airbnb's use of Experiment Review meetings to evaluate the success of features and make product decisions.

- The speaker discusses the importance of experimentation and A-B testing in making product decisions.
- They mention a control test involving different sharing options on an Airbnb listing, with different icons and button styles.
- The speaker highlights that both the icons and the square buttons were winners in terms of user preference.
- They emphasize the need for startups to focus on growth and measure user attention before implementing growth tactics.
- A-B testing should be used for difficult decisions, but only when there is enough traffic to see meaningful results.
- The speaker also discusses applying growth strategies to high barrier entry markets and using non-scalable tactics in the early stages of a startup.
- They mention the use of incentives and subsidies, noting that they can be scalable if ROI is carefully calculated.
- Lastly, the speaker addresses the challenge of finding features that users enjoy but are not willing to pay for.

- The speaker is discussing the challenge of finding the right balance between free and premium features for a product.
- They mention that 70% of users use the free features, with 30% of them using it for more than 2 hours a day.
- The speaker raises questions about how to invest in growth and find the limits of subscription to achieve growth.
- They suggest looking at the retention rates and usage of paying and free users to determine the value and conversion rates.
- The speaker also mentions different ways to implement freemium models or free trials for user conversion.
- Experimentation can be difficult, especially for marketplaces, but it is necessary for making data-driven decisions.
- Different products have different levels of difficulty for experimentation, but it is important to invest in infrastructure for data analysis.
- User research and studying successful products can help generate ideas for experiments.
- The frequency of experimentation should be minimized to reduce costs, but it is important to continually test and improve.

- The importance of honesty in company updates is emphasized, with a request for clear updates without exaggeration.
- The graduation requirement for the course has changed to 8 out of 9 updates, with an option for 10 updates for consideration for a grant.
- Weekly updates are due every Sunday at 11:59 p.m. Pacific Standard Time.
- Questions can be sent to startupschool@ycombinator.com.
- Participants are encouraged to launch their products to determine demand.
- Gustav Hallströmmer discusses the importance of growth for startups and how growth strategies can be applied to various types of companies.
- Product-market fit should be established before focusing on growth to avoid negative consequences.
- Facebook's growth was accelerated by opening to high school students, implementing translations, and focusing on mobile development.
- Facebook faced a growth ceiling due to limited internet access, leading to the creation of Internet.org.
- Understanding product market fit involves finding a metric that represents customer value and measuring repeat usage of that metric.
- Graphs can be used to analyze product market fit.
- The traditional model of separate product and marketing teams is outdated.
- There are three types of organizations that can drive growth: product growth, performance marketing, and brand marketing.
- Startups should focus on product growth and performance marketing before considering brand marketing.
- High customer lifetime value (LTV) is important in growth strategies.
- Referrals can be optimized through various steps in a funnel.
- Pay growth should only be pursued if there is revenue, and attribution is important for understanding the effectiveness of paid growth channels.
- Search engine optimization (SEO) is still important, and keyword analysis and research are emphasized.
- Experimentation and A/B testing are important in making product decisions.
- Startups should focus on growth and measure user attention before implementing growth tactics.
- A/B testing should be used for difficult decisions when there is enough traffic.
- Growth strategies can be applied to high barrier entry markets, and non-scalable tactics can be used in the early stages of a startup.
- Finding the right balance between free and premium features is a challenge, and different ways to implement freemium models or free trials are mentioned.
- Experimentation is necessary for making data-driven decisions, and user research and studying successful products can generate ideas for experiments.
- The frequency of experimentation should be minimized to reduce costs, but continual testing and improvement are important.

YC Partner Gustaf Alströmer, who was most recently a growth expert at Airbnb describes strategies for scaling your user base. Startup School is YC's free online program for founders. Sign up to access the full curriculum and over $100k in deals! https://www.startupschool.org/

And if you make them clearly crazy, like we're never ever launching, we're launching in 4 million years, We'll get the hint.

There have been a lot of questions about the graduation requirement which was that you had to submit 9 out of 10 weekly updates.

This course was originally a 10-week course, and things changed around a little bit, and it's actually more of a nine-week course now, and it was a little bit difficult for some groups to get going because of our little snafu in the beginning of the course so so here's the deal 8 out of 9 updates is just fine but we're also going to extend the class Oh actually really 2 weeks beyond the last lecture, so that there will be plenty of time to do 10 updates if you so choose, and you choose to do 9 out of 10, but 8 out of 9 will be the absolute requirement for consideration for the $10,000 grant.

So we'll be flexible, but make them good updates.

Another reminder, those weekly updates are due 1159 p.m.

There's been some confusion about that and we've written it a number of times but please recall when that is.

Questions again about anything, about your moderators, about your groups, about your updates, please send to startupschool at ycombinator.com.

And My very last note is a reminder to launch if you haven't already.

The only way to find out if you've made something that people really want is to have people really use it.

So get your products out there if you haven't.

Now I'm going to introduce our first speaker who is my esteemed partner at Y Combinator, Gustav Hallströmmer, who in 2012 was part of the group that built the growth team at Airbnb.

And if you know anything about Airbnb, you know from 2012 for the next 5 years, they grew an enormous amount.

This is something that Gustav knows better, or at least as good as anyone in the entire world.

So I'm thrilled to have him talk today about growth.

Before I begin, thank you so much to Stephen, Jeff, Adora, Bill for putting all this together so we can be here and do this today.

My background before joining YC last summer was being 1 of the first person on the growth team at Airbnb and then growing that team from, I think we were 3 people in the beginning.

We then grew to 100, 120 people or something like that.

Almost everything I'm talking about today here, I owe this group.

That's sort of what I learned all this stuff.

Some of the best ways to learn to work on user growth is actually work on a growth team.

And I was fortunate to do that for almost 5 years at Airbnb.

So before I start, 1 of the questions that might be obvious, the answer might be obvious for some people, but not for everyone, is sort of like, why should we do this?

And I'm surprised how often I actually get this question, but it might be worth thinking about it for a second.

So when you make a product, some people think that if you just put that product into the market people will come and people will start using that product.

In my experience, that's not really how the world works.

If you start a startup or a company that's aimed to be a startup, growth is important because that's actually what a startup is.

If you make something that has the potential to be really big, then making that really big is sort of what startups are all about.

There's actually a post that Paul Graham wrote that is called Startup Equals Growth, where he talks about specifically why growth is so important for startups, and why it's not important, why not every company is a startup, and why growth isn't important for every company, but for startups it's really, really important.

And I'll talk in a second sort of like what it means to be intentional about growth, But the first question you kind of have to answer yes to is sort of like, I have a startup, I want to grow.

In my experience, the kind of things you work on when you work on user growth started with consumer companies.

Those were the companies that started embracing a lot of the tactics and strategies and technologies that growth teams were doing.

Now, I would argue that almost every company that sells anything online or get users online should be or could be using a lot of the skills and knowledge that I'm gonna talk about today.

So you don't need to be just a consumer company.

You don't need to be just a social network to apply these things.

These are applicable to a wide range of companies.

If you are a B2B company and are excellent at growth, you have a massive advantage to other companies in your space because they are probably not going to spend as much time doing growth as you are.

Now there is 1 type of companies who this is relevant for but too early.

And that actually might apply to most of you right now.

Because working on growth the wrong time in your company's history can be detrimental, like really really bad for you.

It's sort of like when you are kind of off to the races a little bit too ahead of time.

So the most important thing, which is what a lot of the lectures here at Startup School is about, is how you make something people want, and how you actually find product market fit.

If you apply a lot of the things that I'm gonna talk about here to a company that hasn't built something people want or haven't actually found product market fit, really bad things happen.

You will very often, and this is a very common graph, grow like crazy in the beginning, but then when you realize that fuel that you had isn't fueling anything, it's just fuel that evaporates, you come straight down.

So that's why it's dangerous, and I can go into more detail about that in a second, of applying some of these things before you actually have product market fit.

So the first thing I'm talking about today is going to be around measurement around product market fit because that's actually the most essential part for continuing growth.

Now do growth teams have impact or are growth teams sort of like, how do you know that growth teams actually matter?

How do you know that these things matter?

Before I get there, I want to tell you a story from Facebook.

This is not a story I came up with myself.

I found it on 1 of the talks from Facebook.

And I think it's so essential for describing the level of impact you can have if you are applying these kind of skill sets to a company.

So this is the timeline of Facebook from 2004 to 2015.

Some of this is public, some of this wasn't.

The 1 thing Facebook had, they had an excellent data science team from the early days.

They were really good at measuring, sort of like, forecasting how big Facebook was going to be.

So back in 2006, 2007, when Facebook had just started the girth team, they had a bunch of data scientists doing this sort of forecasting.

And they looked at all the type of metrics that Facebook had, and they came to the conclusion that Facebook will be roughly 400 million users by 2015.

That was their forecast, by using all the data that they had.

They actually started growing really fast in 2008, 2009.

And this actually, as a result of something that the growth team came up with.

Anyone here had an idea what would make Facebook grow so fast in 2000, 2008, roughly 2007, 2008?

Did they open it to high school students?

Yes, they did, but that wasn't as big of a growth.

That's sort of like the growth story all across.

So this is surprising for many of you, maybe, but this is actually a core part of many growth teams, is that you want to make your product available for as many people in the world, and Facebook started sort of hitting the limit on people that spoke English, and they assumed that people, just because Facebook was in English, and sorry, the content were in a local language and Facebook were in English, it would continue to scale.

So they implemented this new platform that automatically translated Facebook into hundreds of languages and the growth re-accelerated.

Now the same thing started to happen again.

I think they call this lockdown, but they were doing very important things.

In 2010, 2011, something very big was happening, and Facebook had to make some really large changes, to some extent also driven by sort of like using data to figure out these things.

So actually what's happening is that the data scientists at Facebook were forecasting Facebook to be about 700 million users, or something like that.

And because most of those people are using Facebook on computers, they hadn't intended this massive shift that was happening in 2010, 2011, which was people getting on smartphones.

And Facebook switching an entire team, they didn't even have large training classes for engineers, to start learning mobile.

So this was the big change that happened then.

And then actually 1 more thing happened, sort of like in 2013, 2014, where they made a forecast, they were Kind of not hitting the ceiling of growth again, but then something again happened.

Any idea what happened sort of 2013, 2014?

Instagram and WhatsApp could be good answers.

So Facebook actually running into the ceiling of the Internet, the number of people actually that were online.

So they started this thing called Internet.org, which was intended to get more people online.

And they went to carriers and they basically worked with carriers to get people online to get free Facebook.

And this actually was very important for sort of the continuous growth of Facebook.

Well, we can learn that the initial forecast of Facebook's growth was about 400 million people.

But Facebook today is a 2.1, 2.2 billion user platform.

So it's a very large platform, and the forecasts were wrong.

It just didn't intend to take into account everything great that the company was going to do.

So if there's anything we can learn from this, is that if you're intentional about growth, and you're really trying to break through these forecasts and these ceilings, you can grow really, really fast.

And I show this graph to everyone that joined Airbnb and be like, hey, why don't you join the growth team at Airbnb and try to get them to think in the same way.

So natural adoption, which is sort of like that initial forecast of how fast your product is growing without any of that work, is always going to eventually slow down.

But if you do the things that you do as a growth team, you can continue to push the growth of your company.

Having growth teams before you find product and market fit isn't really useful.

It's an important term, but it's hard to exactly define what it is.

So 1 way that I think about measuring product market fit is these 2 things.

You can do this for yourself after this talk.

Find the metric that represents the value that your customers get from your product.

And then you measure the repeat usage of that metric.

It sounds pretty simple, and we'll see if it works.

You can make this kind of table if you want, where you have the company, the metric that represents sort of the value you should get from your product, and then you have the ideal frequency.

So you get value from Airbnb when you are booking and staying.

So when you're actually traveling Airbnb, that's when you find that Airbnb is really valuable.

Unfortunately, people don't do that more than annually.

So if you wanted to figure out the product market fit of Airbnb, you can always ask people after the first day, but you wouldn't really know until they book again, when they come back and book again.

So because the booking cycles for travel is so slow, and it will be a good metric here.

So Facebook, if you come back to Facebook, being voluntarily come back to Facebook as an active user, you're doing that because you find value.

There's something that makes you come back to Facebook or Instagram or anything like that.

And the question then is how often should I come back?

Well, probably daily or hourly or something like that.

They started looking monthly and then they went down to daily.

I think they might be even going more than that.

What's the product value as a customer of gusto that you get out of using gusto?

Well, when you run your payroll, which is sort of a gusto do for your employees, that's 1 of the best ways to measure the value you get out of Gusto.

Well, you run payload every other week or every month.

I'm not gonna go into details of all of this, but for Lyft, it might be rides.

For Checker, it might be background checks.

Now, for your company, you should figure out, what is the 1 metric that I can measure easily, every day, or every time it happens, and what's the ideal frequency through which that should happen?

If you can answer those 2 questions, you can make a cohort analysis of your own company right now.

And you can start trying to figure out if you have product market fit.

So then you want to measure these things.

And the other 1, you have the metric that we just decided.

And from that, you can try to figure out if you have high product market fit.

So this company is measuring this on a weekly basis.

The ideal use case of this company is using this product on a weekly basis.

So every week here there's a dot, which is the percent of people that use this product on week 0, the first time they used it, they used it again.

So let's take Startup School as an example.

So I joined Startup school, and in week 1, only 60% would come back to startup school.

And then in week 4, only 30% will come back.

Well, that would suggest that startup school wouldn't be a very good product.

But that would be a good way to measure if startup school is actually a good product, people come back to all the content they were creating.

This is kind of like a normal product, a normal product would look like, because almost always you have a little bit too many people in the beginning of the product, and then it will go down over time.

But it will sort of flatten out, where you keep measuring these events of your metrics.

This might sound technical, but it's actually just a representation of how many people, each dot is how many people that's using your product for that metric that you decided on that time window.

So these are examples that are based on payment retention.

So this is a company that you have all heard of that retains 10% after 1 month, and then 12% after 12 months.

So Shopify have this product where a lot of people sign up, not that many people continue in month 2, but then they kind of stick on forever.

Well, if this curve would go down to 0, or sort of keep going down, then Shopify would be a bad product.

It wouldn't be something that actually found product market fit and should be working on growth.

In this case, they have good product market fit and they should be working on growth.

They should do all they can to continue working on growth.

They should do something about sort of like the initial onboarding here where they lose a lot of people in the beginning, but they should be working on growth.

Here's another company, 50% retention after 1 month, and then 10% after 24 months.

So it's similar to Stripe, or similar to Shopify, but they continue to lose users all the way down to even 24 months.

Maybe there's some flattening out at the very end here, but even 12 months after people start paying for this product, there's every month fewer and fewer people pay for the product.

Hard to say, but it's not an obvious case that they have found product market fit.

So 70% retention after 12 months and then 30% after 7 years.

This company definitely have product market fit.

Any ideas of which company this might be?

Amazon, I heard Amazon but it wasn't the right 1.

So 70% of people that start paying for Netflix pay for Netflix 7 years down the line.

That's definitely a company with private market fit that should spend every time everything they can working on growth.

So raise your hand if you're measuring your retention right now.

Well there are other ways to figure out retention.

If you're really small, you should go out and talk to your users.

You should ask them questions such as, how would you feel if you can no longer use my product?

And you should sort of like say as close as you can to your users.

This is like measuring retention like this.

But when you have 10 users, This is not the way to do it.

You can actually go and just talk to all of them in person.

So there are other ways to measure it, but you sort of have to know that you have a product that's retaining.

Otherwise, you shouldn't be working on growth because you're going to end up burning a lot of cycles on things that doesn't matter.

Okay, so a lot of people might be wondering, how does growth and marketing relate to each other?

Is it the same thing or how should I think about it?

Historically, the way you had a company 20 years ago is you had a product team that made the product and then you had a marketing team or a product marketing team that marketed the product.

And a lot of the sort of like hierarchies and companies or sort of organizations are still based on this idea that you have a product team that's separate from the marketing team.

And these are different teams and different skill sets and engineers work over in the product team and then the marketing people work over the marketing team.

Actually, it's not how things work anymore.

So the way you should think about this is that, I'm going to come to this in a second, is that there is 3 different types of people that can, organizations that can drive growth.

There is what I call a product growth or growth engineering.

This is effectively product managers, engineers, data scientists, and sometimes marketers that work on growth.

But they work on growth using technology.

So they're actively changing the product to drive more growth.

And much of this work here is about people that already arrived to your product, but haven't really found the value of your product yet, and they're changing the product to make it grow faster.

Conversion optimizations fall into this group.

Some of the growth channels actually fall into this group.

Now, there's this big other group here, performance marketing, which is effectively Google and Facebook marketing, which is also super technical and super data driven.

I would argue that these things are very, very, very similar.

So 5 or 10 years ago you would go to a company, you would see these being very different groups, maybe different floors in the office.

Now they, in my opinion, should sit together.

So engineers should sit together with performance marketers and vice versa because they actually are doing very similar things.

Now there's this fifth button, fifth thing should be number 3 here, which is brand marketing.

Brand marketing is sort of like the hardest to measure, the hardest to measure type of marketing, where you're not really having a direct response, you're not having someone directly giving you feedback on how that marketing is perceived.

So this is not something that startups should be doing in the early days.

In my opinion, startups should not be doing brand marketing until way down the line, when they hit the limits on these 2 things.

So startups should be doing these 2 things, and there's some qualifications to which you can do this.

If you're a startup, you have engineers, you can do product growth or growth engineering or things like that.

All right, let's talk about that first part, product growth.

Your product has many, many, many steps between the first user and the person sort of like completing what they're trying to do on your product.

Let's say I'm on an e-commerce store and I'm trying to buy something.

There are many, many steps in that funnel and what the product growth team is working on is funnel optimization or conversion rate optimization.

So if you look at what we did at Airbnb on the growth team, many of those growth teams were conversion rate optimization teams that work in a specific part of the funnel.

The funnel could start with SEO, it could start with performance marketing, it could start with referrals of morality, but it would jump through a number of different steps.

Or if you're an e-commerce site, payment conversion or buying conversion.

All of these steps are things that as a conversion rate optimizing part of the growth team should be working on.

And these are some of the easiest things to get working on.

And I'm going to be a little bit high level here, because to go into depth about every single area here, we're going to go on for hours.

See all Y Combinator transcripts on Youtube

Gustaf Alstromer - How to Get Users and Grow