20Growth The Inside Story to Uber's Hypergrowth Scaling; What Worked, What Did Not Spending a $1BN Budget at Uber and Why China was the Wild West for Uber Why You Do Not Need a Growth Team with Adam Grenier

In this episode of "20 Growth," host Harry Stebbings discusses the intricacies of growth strategies with Adam Grenier, a seasoned growth expert with experience at Uber, Masterclass, Hotel Tonight, and Lambda School. Grenier shares insights from his career, highlighting the importance of understanding user psychology, the art and science of growth, and the significance of data-driven marketing. He emphasizes that growth is not just about customer acquisition but also involves product evolution and marketplace dynamics. Grenier also touches on the challenges of international expansion, particularly in China, where Uber faced unique obstacles such as data privacy concerns and the need to adapt to local platforms. The conversation delves into the role of growth teams, the potential pitfalls of hiring a head of growth prematurely, and the need to embed growth throughout an organization. Grenier advises on structuring hiring processes, identifying North Star metrics, and the balance between paid and organic growth strategies. He concludes with his perspective on the future of platforms like TikTok and the impact of investing on his approach to growth.

• Uber spent a significant amount of their budget on growth in China.
• The competition in China was fierce, with rivals having access to Uber's data.
• The Chinese government and competitors like Dee Dee were privy to Uber's operations.

"At Uber, we were spending a billion dollars a year at one point that included China and that was more than 50% paid. Drove a ton of our growth in China. It was just wild. It became very clear that Dee Dee knew everything we were doing, definitely had our data. The Chinese government has it. Beat Dee Dee has it. Everybody that wants to compete with us has it. It feels like the Wild West here at times."

Adam Grenier describes the intense competition and lack of data privacy that Uber faced in China, which involved substantial spending and challenges due to rivals and government entities having access to Uber's data.

• Adam Grenier is recognized for his expertise in growth and marketing.
• He has experience with companies like Uber, Masterclass, Hotel Tonight, and Lambda School.
• Adam serves as a growth advisor and has a wealth of practical growth knowledge.

"And I'm so thrilled to welcome Adam." "Grenier, Og of the growth world." "Having led growth and marketing teams across the likes of Uber, Masterclass Hotel tonight, and Lambda School."

Harry Stebbings introduces Adam Grenier, highlighting his extensive background in leading growth and marketing initiatives in several notable companies.

• Growth is a blend of art and science, involving user psychology and data systems.
• Understanding the customer and the peak of perceived product value is crucial.
• The process includes building technology and systems to replicate success.

"The core of growth really dives into user psychology and understanding customers, making sure that you're actually connecting with people when the perceived value of your product or your offering is at its ultimate highest, and then building technology and building systems around that to soak it up and actually be able to manipulate it and do it over and over and over and over again."

Adam Grenier explains that growth is both an artistic and scientific endeavor, focusing on connecting with customers at the point of highest perceived value and leveraging technology to sustain and amplify this connection.

• Adam's background in digital marketing gave him a data-centric approach to marketing.
• He focused on helping clients adapt to emerging media and technologies.
• At Uber, the term "growth" was formally used, influenced by Facebook's growth structure.

"Uber was the first place that we called it growth. I was hired by Ed Baker. He brought over the kind of Facebook structure that they had built at Facebook. And so that was the first time I had a title and thought of myself as part of a growth team instead of just a marketing team or part of the business."

Adam Grenier discusses his transition from digital marketing to a formal growth role at Uber, where he adopted a structured approach to growth similar to that of Facebook.

• At Hotel Tonight, the challenge was to grow without SEO, leading to innovative mobile growth strategies.
• Uber's challenge involved balancing growth in a hyper-local, dynamic marketplace.
• Lambda School's focus shifted from student acquisition to job placement.
• Masterclass had to adapt to changes in ad targeting and consumer behavior post-COVID.

"Lambda school was similar, where it was like, hey, how do we get more students into our school? And then we quickly realized that Lambda lives and breathes on getting people jobs, not getting people into a school. And so we shifted all of our product and marketing work to the job placement side."

Adam Grenier reflects on the strategic shift at Lambda School from student acquisition to job placement, emphasizing the importance of aligning growth efforts with the core value proposition of the business.

• A growth CMO is a "full-stack" marketer who uses data and technology across all aspects of marketing.
• The role involves blending performance marketing with brand and content creation.
• Growth should be infused throughout the business, not isolated to a growth team.

"To me, a growth CMO is actually like a full stack CMO, but actually leverages the idea of, hey, let's bring in data experimentation and product and engineering to help us drive the entire system, everything from your performance media to brand and pr."

Adam Grenier articulates his view of a growth CMO as a marketer who integrates data-driven methods and cross-functional collaboration to enhance all areas of marketing and growth.

• Not all companies need a dedicated growth team; growth should be integrated into various functions.
• Uber's growth team evolved and eventually merged back into the core business.
• Growth functions can be distributed within associated teams like marketing and product.

"I actually don't think most companies need a growth team. Growth, again, should be infused throughout the business."

Adam Grenier argues that a separate growth team is not essential for all companies, advocating for the incorporation of growth responsibilities within the existing structure of the organization.

• Growth is inherently a priority for product and marketing teams, regardless of having a dedicated growth title.
• Teams often deprioritize growth due to distractions, market trends, or immediate issues that need fixing.
• Building a growth team involves creating a full-stack team with various expertise to focus on core growth levers.
• Growth teams should be adaptable, moving from one growth area to another as needed.
• The concept of a separate business unit solely for growth can cause organizational friction.
• Growth teams are most beneficial in hyper-growth scenarios to manage and sustain growth.

"I've never actually been on a product or a marketing team that didn't care about growing their business even if didn't have the title growth."

This quote emphasizes that growth is always a concern for product and marketing teams, regardless of specific titles or roles dedicated to growth.

"A full stack team with product, with marketing, with design, with data, with engineering that can go and dive deep into the core point of leverage for your business to grow."

The quote highlights the importance of a multidisciplinary growth team that can focus on key areas for business expansion.

"Growth teams come from when you have hyper growth and you need to control it and contain it and understand it."

This quote explains that growth teams are particularly necessary when a company experiences rapid expansion and needs to manage that growth effectively.

• Founders may rush to hire a head of growth when experiencing slow growth, but this can be a mistake.
• Slow growth is often a sign of a lack of product-market fit, not the absence of a growth leader.
• Hiring a head of growth prematurely can lead to "hacky" growth tactics rather than addressing fundamental product issues.

"Yes, I would say so. Because again, I think that founders are like, we're not growing fast enough. I should hire ahead of growth."

This quote suggests that hiring a head of growth is not always the solution to slow growth and can be a premature decision by founders.

• Scoping the hiring process is crucial, considering the current team and future needs.
• A common mistake is hiring one growth person instead of building a full-stack growth team.
• Hiring should be strategic, with a long-term view of how the growth role will integrate with existing teams.
• A growth mindset is not limited to a single role but should be a consideration across the hiring process.

"So let's look at what team do you have right now? And let's say, what do we want the team to be a year from now?"

This quote emphasizes the importance of planning and scoping the hiring process with a forward-looking approach.

• Interview questions should challenge candidates to think through complex problems and demonstrate a growth mindset.
• Questions about customer lifetime value (LTV) and engagement strategies can reveal a candidate's ability to work with data and understand customer needs.
• Red flags include a lack of customer focus or merely replicating strategies from past roles without adaptation.

"So probably the two most common. So one is I have an exercise that came from Uber, which is how do you determine what you're willing to pay for a rider or a driver in any given market."

This quote introduces an example of an interview question designed to assess a candidate's analytical skills and understanding of marketplace dynamics.

• The North Star metric should be a rallying point for the entire company.
• In marketplaces, the metric should help identify which side of the market requires more attention.
• The North Star metric should be rooted in the customer problem and reflect the frequency of product use that aligns with customer needs.

"I like to look for a couple things. So one is, what is something that can rally as much of the company as humanly possible?"

This quote underscores the importance of a North Star metric that unites the company's efforts and focus.

• Growth models should be straightforward and adaptable, especially for early-stage companies.
• A basic growth loop model can help ensure efforts are impactful and aligned with business growth.
• The growth model should reflect whether the business can grow virally (k factor) or requires more traditional growth strategies.

"Here's like the four step process that you're going to grow, you're going to get more customers."

This quote describes the simplicity of a basic growth model, which can guide a company's growth efforts effectively.

• Concentrated supply bases are easier to manage than fragmented ones.
• Fragmented supply bases, although more challenging, can be more rewarding to operate.
• The approach to driver growth at Uber involved numerous strategies and new channel discovery.

"Easier to run is the concentrated. I find it incredibly more fun to run the distributed long tail supply."

This quote compares the ease of management between concentrated and fragmented supply bases in marketplaces.

• Uber aimed to scale driver acquisition, treating it like Google rather than a job classified.
• They did extensive customer research to understand the diverse array of drivers.
• Professional drivers, part-time workers, stay-at-home parents, and retirees all had different motivations for joining Uber.
• Marketing initially focused on the potential to make money, but later shifted to other aspects such as flexibility and social interaction.
• Customer research was incorporated early in the growth team to identify and unlock new segments of the driver market.

"We actually have to just be the snowplow here and go and find and create and identify ways to get drivers on board."

This quote emphasizes the proactive approach Uber took in driver acquisition, likening it to clearing a path to make it easier for drivers to join the platform.

"Initially we were able to just go market the heck out of, hey, you can make $1,000 a week, okay? Everybody wants that."

The initial marketing strategy focused on the financial benefits, which was a strong motivator for many potential drivers.

• Many growth experiments at Uber did not work, with a memorable failure being the shift in messaging from earnings to flexibility.
• Drivers valued flexibility, but new customer acquisition was driven by the promise of earnings.
• The timing and context of messaging were crucial for its effectiveness.
• Insights from active customers did not necessarily apply to attracting new customers.

"Flexibility. When stack ranked, money was like number three."

This quote reveals the importance of flexibility to existing drivers, which was a key insight but did not translate well into acquisition messaging.

"The messaging, the point of time for the messaging, really mattered."

The timing and context of messaging were critical, and the switch to focusing on flexibility was not effective for attracting new drivers.

• Uber used a pyramid messaging structure to market to a diverse customer base.
• Broad messages about making money were used for mass media, while more specific messages, such as safety for women, were targeted through appropriate channels.
• The messaging would get increasingly specific for sub-segments, such as safety in a particular city.
• Data and research were used to refine and target messaging effectively.

"Both. So I typically try to build some type of pyramid messaging structure."

This strategy involved layering messages to appeal to the broadest audience at the base and getting more specific as the pyramid narrowed.

"Safety is a pillar that we can tackle, but safety for retirees in Boca Raton is probably, there's just not enough market there for us to build an entire creative flow for that."

The quote discusses the need for balance between targeted messaging and the size of the market segment, avoiding over-specialization for small segments.

• Data played a key role in understanding the effectiveness of marketing strategies.
• Uber could quickly learn from ad tests due to their high spending.
• For longer funnels like Lambda School, signals and qualitative research were more important due to the extended timeline.
• Cohorting and understanding the natural use case of a product were essential for defining retention.
• Data teams should provide proactive insights for product and marketing strategies.

"The data matters. So at Uber we can learn pretty quickly."

This illustrates the advantage of having a large budget and high volume of data to rapidly test and learn from marketing efforts.

"I think cohorting is really important when thinking about retention."

Cohorting allows for more accurate analysis of user behavior and retention, tailored to specific user segments and their expected usage patterns.

• Post mortems are important for understanding successes and failures, ideally conducted regularly after each sprint.
• Including the right stakeholders and using structured templates can improve the effectiveness of post mortems.
• Growth teams often face challenges from other departments, necessitating collaboration and support.
• Autonomy within local teams at Uber sometimes led to inefficiencies, which had to be managed strategically.

"Good post mortem health would say that you're actually doing it every time."

Regular post mortems help identify both what works and what doesn't, contributing to continuous improvement.

"My biggest challenge were the operations teams, because every city team would build a small operations team, including marketing."

This quote reflects the internal challenges of managing a decentralized structure where local teams had their own marketing efforts, sometimes conflicting with central strategies.

• Paid marketing should be a tool, not a crutch, used strategically to add fuel when necessary.
• The balance between paid and organic growth is important for sustainable business development.

"So ultimately you want to make paid a tool, not a crutch."

This advice suggests that while paid marketing can be effective, it should not become the sole means of growth for a company.

• Adam Grenier suggests that in certain urgent market conditions, companies might aggressively invest in paid marketing, even up to 90%.
• However, maintaining a 0% investment in paid marketing is not advisable, as it may lead to missed opportunities.
• A 30% investment in paid marketing is recommended as it indicates a healthy balance, allowing for continuous refinement and relevance without over-dependence on paid channels.
• Exceeding the 30% threshold should trigger discomfort and prompt evaluation of marketing spend efficiency.

"In that moment, you should probably be willing to make it 90% to have a refined tool... I usually tell people 30% tells me that you're not dependent on paid, and it tells me that you're doing it enough to have a need to keep refining and improving it, being relevant in the moment and those types of things."

This quote emphasizes the flexibility required in paid marketing investment, suggesting a typical benchmark of 30% as a balance between agility and over-reliance on paid channels.

• Uber's growth mix fluctuated around 50% paid marketing during its rapid growth phase, especially in China where paid marketing was a significant driver.
• Over time, Uber became more efficient and reduced its reliance on paid marketing.
• In China, Uber had to adapt to a completely different marketing landscape due to the absence of familiar channels like Facebook and Google.

"So we probably floated around 50% when we were hitting that... Now it's probably way more efficient than that. They pulled back significantly."

Adam Grenier describes Uber's historical reliance on paid marketing and its subsequent evolution to more efficient strategies.

• In China, Uber faced unique challenges due to the absence of commonly used Western marketing channels.
• The App Store market in China is fragmented, requiring relationships with various App Stores for visibility.
• Data security was a major issue, with competitors like Didi having access to Uber's operational data.
• Marketing strategies had to be culturally tailored, with different creative approaches and a heavier reliance on out-of-home advertising.

"None of the channels that we've used are there... You literally had to take everything you know about media buying and planning and marketing and throw it out the window."

This quote highlights the drastic shift in marketing strategy Uber had to adopt in the Chinese market, where established Western practices were inapplicable.

• Adam Grenier and Harry Stebbings discuss the limitations of CAC as a metric, acknowledging its inherent inaccuracies due to the impossibility of fully attributing channel effectiveness.
• Despite its flaws, CAC remains a useful tool for media buyers when informed by a media mix model focused on optimizing confidence rather than perfection.
• The effectiveness of CAC varies between B2B and consumer markets, with B2B offering clearer CAC to LTV (Lifetime Value) correlations.

"I agree. I think it's bullshit. The expectation it's going to be a consistent metric across channels and having a full view of everything that could be included in that is impossible."

Adam Grenier agrees with the sentiment that expecting CAC to be a consistent and fully comprehensive metric is unrealistic, highlighting the complexity of attributing marketing channel effectiveness.

• Investing allows Adam Grenier to focus on existential business problems rather than day-to-day operational issues.
• He believes that growth challenges often stem from a lack of product-market fit or strategic misdirection, not just undiscovered marketing channels.
• His investment experience enables him to bridge big-picture thinking with operational directives for the teams he works with.

"The thing I love about investing is that because I'm working with the founder with an expectation of how to scale this, a venture scale to this, I get pulled into what I think of as existential problems of the business, not the day to day operational problems."

Adam Grenier explains how his role as an investor allows him to engage with the fundamental challenges of scaling a business, which differ from operational concerns.

• Adam Grenier reflects on his past belief that every company needs a growth team, which he no longer holds.
• He suggests that the necessity of a growth team depends on the specific circumstances and stage of each company.

"What did you believe about growth five years ago that you no longer believe? That everybody needs a growth team?"

This quote reveals Adam Grenier's change in perspective on the universal need for growth teams, suggesting a more nuanced approach to their implementation.

• Adam Grenier discusses the unique challenges and strategies required in different markets, such as China and the consumer market.
• He emphasizes the importance of cultural understanding and adaptation in marketing strategies.
• The conversation touches on the complexity of measuring growth and the varying effectiveness of CAC in different markets.

"The one thing you just highlighted is that your b to b larger corporate audience enterprise is a lot easier of a puzzle to solve from a cactl tv perspective, whereas a consumer, especially mass consumer marketplace, et cetera, just adds all of this noise and complexity and things like that into it."

Adam Grenier points out the differences in complexity between B2B and consumer markets when it comes to calculating and relying on CAC as a growth metric.

• Angel investing has provided Adam Grenier with insights into the high-level, existential challenges that founders face.
• This perspective allows him to connect strategic vision with operational tasks, providing actionable guidance to companies.
• He finds this dual focus on big-picture and operational issues rewarding and beneficial for his work with founders.

"Being able to both tie that existential opportunity with what are the operational asks that they're giving to their teams right now has just been really rewarding for me."

Adam Grenier explains how angel investing has enriched his ability to address both strategic and operational challenges in growing businesses.