3 Growth Engines for Startups

3 Growth Engines for Startups

Our next stop in our growth journey after the product/market fit, is the stage of advancement to growth. In this stage, we need to be through with solving product related problems and should be researching methods for growth. For this specific stage, we’ll be discussing the three fundamental growth engines for startups that Eric Ries discusses in his book Lean Startup: 1. Sticky Growth Engine 2. Viral Growth Engine 3. Paid Growth Engine

Eric Ries

Sticky Growth EngineThe first of the 3 engines we will be discussing is the sticky growth engine. Some products, because of the nature of the problems they solve, as well as their methods of interaction, eventually form some kind of a “sticky” dependence on their user base. Some very efficient examples of that are Gmail and Evernote, both of which have a focus on B2B, and require a certain degree of technical integration, and are thus ideal for this kind of growth engine. The most important advantage to these types of products is the fact that they retain their users for extended periods of time.

With the stick growth engine, the entrepreneurs need to study how much of the user base they are missing (which will be detailed in the “Retention” chapter, with detailed churn rate information), and they also need to have good knowledge of how many new users they have gained in the same amount of time. As long as the number of users gained trumps the number of users lost, the product keeps growing. Since the users spend a large amount of time using the product, this could provide some very useful opportunities in terms of gaining new users.

Viral Growth EngineSocial products and content platforms are the most typical examples of viral growth engines. The main mechanics of this growth engine is based on reaching new users by using the existent user base. If the average user is able to add one or multiple users to the existent base, that starts the viral growth process. The growth rate depends on the number of new users that are brought in by the existent users. Users do not always share all the products they use. In order for a product to grow virally, there needs to be an impressive experience in it. While this experience might be the content itself, as in the case of BuzzFeed and Upworthy, for a technical application, it might also be the main features and performance of the application. For ventures looking to use viral growth engines, the virality rate for the product/application in question needs to be carefully studied.

Paid Growth EngineThe most fundamental growth engine. A lot of SaaS applications use this type of engine to reach a certain user segment. A large portion of users can be reached by using search engines and targeted ads. Ventures that use this type of growth engine need to work very diligently with alternative channels to get the optimum price for adverts and user segments. Since the prices for advertising can vary greatly due to the existence or constant inception of of similar applications in the market, the ventures need to be working on alternative routes to advertising, as well as ideas on how to gain new users.

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Learn more with my bookIntroduction to Growth Hacking!

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