Revealing The 4 Paid Growth Strategies Used By Big Tech

In this episode of Marketing against the Green, I'm going to break down the four ways that you can use acquisitions to accelerate the growth of your company. And stay tuned because I have an example of a company who has spent 1.5 billion on just a single one of these tactics. I'm Kieran Flanagan, the CMO over at Zapier and I'm here with this episode of Marketing against the Grain. Okay, so we have a solo show. I am flying solo for the first time in the history of Marketing against the Green. Kip and I couldn't find a single hour to get our calendars aligned to do the show. We love the show, so hopefully it gives you an indication of just how busy we are. I'm here with one of my favorite topics to talk about and that is distribution. Where would any company be if it could not master customer distribution? We know that over time product will continue to get commoditized. We've talked about it to death in AI. I've read your comments. I know people on YouTube are saying, hey, like we love the AI, we get it, it's important. There's going to be a lot of changes in the future because of this AI, but what about some good old fashioned marketing? And so that's what we're going to do in this show. Of course have to mention it because AI going to continue to commoditize product, which means distribution becomes more scarce, distribution becomes more important. Distribution just becomes the thing that you have to actually solve for. Distribution remains undefeated. If you can figure this out, you are going to be an incredible company. If you can figure this out as a marketer, you're going to have a really good career. Believe me, lots of people need people who can do distribution. So I'm going to break down like four things that you can acquire to actually accelerate your distribution. Now maybe you don't have the budget to do any of these, but they will spark some ideas. And no one ever talks about this. No one ever talks about how you can do acquisitions and M and A deals to accelerate your marketing. It's always to accelerate your product strategy. Well, I'm going to give you the marketed minded view of how you can think about acquisitions for your company. Now, number one is the most straightforward and I've done versions of these or done deep analysis in trying to do these in previous companies. Number one is basically I'm going to acquire a single creator, right? I'm going to acquire someone who has an incredible newsletter. I'm going to acquire someone who has an incredible YouTube channel or an incredible podcaster. Now, why would I do that, right? Do I really want to own the YouTube channel? Do I want to own the newsletter? Do I really want to own this podcast, like this podcast thing? This person does? Probably not. But you want the creator. Because I am telling you that the future belongs to brands who are able to have marketers within them that are just as good as creators at creating content. Now, let's have a moment of honesty. Let's have a moment of empathy. Let's have a moment of transparency. There's not a lot of great technology content teams. There's just not. Right? Most content created by technology companies is really brand, is really bland. Creators are really good at growing audience, at creating content that's engaging because their actual success depends on it, right? They grow audience and they monetize audience through products that they build. Their success depends on it. And so they're really good at mastering these channels. And I think in the future brands are going to have to do the same. We've talked about it on this podcast. Search the blue links, they get eroded over time by AI. AI is just a much better experience. I'm sure you've done a search through AI recently, whether that's Bard or ChatGPT or Bing or Perplexity AI. And you've done a search and it's come back with the information, clear, concise, formatted, and you've went, wow, this is way better than me clicking back and forth in the blue links. So blue search, blue links get eroded over time. The AI is harder to figure out how to get distribution from. We'll have a future episode where we think we can give you some tips and tricks, but it just is paid advertising continues to get more competitive. We've seen this over the past four years now, 50% of all money that gets invested in companies, I don't know if you know this through VCs goes to Google and Facebook because they use pay to accelerate their growth. Now more companies can get it started. There's less channels overall, more companies are funneling money to these platforms. And so really the thing you start to compete on is budget. And the algorithms are getting really good, so they're able to do all the optimization for you. And so over time, the leverage gets eroded away to just, I have to compete in budget. And then you have all of these other channels like Substack and Twitter and TikTok and YouTube and all of these other. And even X has creator payments that really favor creators because creators know how to have an opinion point of view say something upset some people, some people agree with them. They're okay doing that because they don't have to worry about the legal team and the brand given out to them, or the PR team and the brand given out to them, or the CEO and the brand going, while you're making my life much, much more difficult. Well, that's the Internet today. If you want to grow an audience, you have to have point of view. Creators have that. They know how to use these channels, they know how to grow audience in these channels. So I'm sitting back and I'm like, wow, I really need to get good at YouTube. Like that is the thing I need to really master to be able to continue to grow my distribution engine. Well, I can acquire this YouTuber who has a channel in a space that's related to my customers. I can get that channel. Maybe I can use those assets to accelerate the growth of my channel or to kick off my channel. But I really want the creator, I want the creator to be able to up level how we think about YouTube within the company. I want the creator to be able to uplevel the kind of content we put out for our customers. I want the creator to be a magnet of talent so other people will want to come in and work with this person and see that I'm building a team where you as a creator can excel and do cool stuff. So number one is you can actually acquire a creator. And I will tell you this, what most people would say is, wow, I'm not going to overpay. This person is just going to be working on my team. I got my really going to overpay for that person because I have to kind of buy the asset and do a deal for the creator. I will tell you, someone who's worth 10x in terms of that, someone who brings in 10x the skills, is really worth overpaying for. Number one, you can buy the creator. Number two is you can buy something, you can buy assets where you can expediate the growth of those assets because you have a point of leverage or a point of unfair advantage, right? So number two is things that accelerate your unfair advantage. Let me give you an example from HubSpot. Now, both HubSpot and Zapier are somewhat similar in that they have incredible content search engines, right? HubSpot predominantly through the blog, Zapier through the blog and our app directory. When we were at HubSpot, we built an incredible content and SEO engine. It's very similar to how Zapier have built theirs. When you have a system, you have unfair advantage. And so the unfair advantage that HubSpot had was domain authority. Right? We put content into the system. It ranks really rapidly. And sometimes we would look at the content we are creating, it would start to rank in the top of Google within 24 to 48 hours at times. Right? That's how quickly we were able to start to scale the traffic through all of the content we were creating. So we have this system, we have unfair advantage where we have domain authority and things rank pretty rapidly when we actually create that content. And so we looked at all of the topics where we had keywords relevant to our customers, where we were not already ranking and thought about, wow, if we could just acquire the content versus waiting for us to like publish all the content, we would be able to accelerate our growth. And so we would look at sites and we would say, okay, this site is getting. We did. The first one was an experiment, right? This site is getting a hundred thousand visits to this content. Let's see what happens if we put into the system, do all the internal link and edit it so it meets our standards. What happens with that content? And what happened is we were able to 10x the amount of visits that that content got within like three to six months. Because again, it's going into a well oil system that just outputs content with high in this site domain with like high domain authority. And so we're able to start to acquire all these informational sites and roll up that content into that system. So what are we doing here? Like, what is the thing that you should take away from that? Well, if you have any kind of unfair advantage in terms of how your distribution engine works, doing an acquisition that accelerates that unfair advantage is a really great use of your capital. Right. For us it was, wow, domain authority, the content and SEO system, let's acquire those assets, put them into the system. We can just accelerate the growth of those things. Now, it's not easy. It is not easy to have an unfair advantage. But the thing that I always think about in terms of distribution is number one, what is your first principles? Right. We talked about it on the show before Kip and I, for HubSpot, it was to give away 10x the value for free. And the second is, what are your unfair advantages? Like at Zapier, we have an unfair advantage where we built the app directory, where we could own all of the ways that people could integrate things and all of these workflows. We could own that search base before anyone else and again build up the domain authority to make it fully hard to usurp us. So very strong similarities between two of those things. But you always want to remember is like, what is my first principles, what is my unfair advantage? And if you can acquire something to accelerate your unfair advantage, probably going to be doing better than most other companies. All right, third, I've got a cool brand name for this. As a marketer, quick side point. If you can like brand your techniques, it always performs really well. So that's a content tip. Like always think throughout. Like what is the one liner for this? Brian Halligan X CEO, co founder of HubSpot was always good at this. When he was talking about how HubSpot would win over the next three years. He always had a brandable term. And so it sticks in your head, right? Like it really sticks in your head. So I've come up with one for the third one you can put in the comments whether you like this or not. This is the one where we've seen a company actually spend $1.5 billion actually playing out this technique, playing out this tactic. So this is build front doors, monetize onto side doors. Right? Build front doors, monetize on the side doors. And this sounds like it could be an episode of some sort of DIY show or some sort of real estate show where I'm out there trying to help people rebuild their homes. But no, it's an actual distribution technique. Right. What do I mean by this? Well, when I was at HubSpot, and not just at HubSpot, but like any kind of advisory work, I do like the biggest challenge to high growth companies, every company. This is not unique to any company. Not HubSpot? No, not anyone. The biggest problem or the biggest challenge you have to overcome at some point is customer acquisition growth, right? Just the ability to acquire new users and new leads into your demand engine, into your distribution engine. Same for all companies. And that's why all companies eventually will go up market, right? Because those companies still have to grow. And so how can you grow if the new acquisition part is actually still undone? Well, I can build higher plans, increase my prices, improve my net dollar retention. It is a tale as old as Sass. The other thing you can do is you can buy these front doors. So what are these front doors? Well, I can own these single point solutions. Point solution means the product solves one thing. Like it's usually a tool that does one thing and that tool has some sort of inbuilt mechanism to scale its own growth. Right. So the two examples I'M going to give. You have to have the same thing, right, so what do I mean by this? Let me give you an example. So Atlassian, an incredible company, just an incredible company, one of the poster childs for product led growth. They bought in 2017 a company called Trello. Trello is a point solution, a project management tool. At the time it had 19 million registered users. That is a lot of users for a B2B tool. Since then it's grown 30%. Six more million users. Today they stand at 25 million registered users. That's a great front door, right? Just users coming in to use this product because their teammates are asking them or they're sharing it with the colleagues. It has great word of mouth. Just an incredible front door, having six more million users over that period of time. And what Atlassian does is monetize onto side doors, right? They have an existing product set, they have Jira and all these other products and so they integrate these products into Trello and then they obsess over how do I cross activate Trello's user base onto our products and how do I cross sell Trello's user base on our products, right? I'm monetizing on my side door. I buy my front door Trello and then I obsess over how to monetize on my side, side door Jira. Now does this, does this work? Right? I was obsessed about this at HubSpot. I was looking at point solutions all the time. Like how can I actually get point solutions to plug into our platform, acquire those point solutions and be able to monetize on our CRM, which was the platform was a great strategy, was trying to like figure out the right, the right tool sets and talk to a bunch of companies to figure out if we could do something that would make sense. And so Atlassian is a really interesting example because although I believed in it, it was still theoretical at that point because I hadn't seen companies really use M and A as a way to acquire demand. It was always to acquire a product to accelerate their product vision. But I truly believe Lassian looks at this like a great front door. And they just recently repeated the trick with Loom. Loom also has 25 million registered users, very single point solution, record videos, I use it all the time, lots of virality because I send those videos to other people and those other people then get exposed to Loom. So it actually is able to sustain its own growth. So I would posit that the deal for Atlassian, for Trello has gone very well because why would they do another deal at 975 million Trello to spend 425 million double the size if the first version of it had not gone well. So Loom, now they can integrate all of these products into Loom, integrate Loom into their products and be able to monetize that Loom user base onto those existing products. If you take the Trello and loom, that's 50 million registered users. But the thing that really matters is how many of them are active, which means how many of them come into the tool and did something meaningful to show that they actually used the tool in a meaningful way. We call that an active user. Now, on average, a point solution like a Trello or a Loom would have around a 20 to 30% active user rate, right? So that means about 20 to 30% of the signups actually came in and used a product in a meaningful way. That's the base that you can use to cross sell your products into. So now they have 10 million users. If I take the lower end of that, which is 20%, 20% user activation rate on that 50 million gives me 10 million. I have 10 million users to be able to figure out how do I cross sell my side door into them, how do I cross sell my product? And it's not just that 10 million users, those users, those products are still acquiring users each and every month. Just a great, great strategy. I love this strategy. It is the buy the front door to monetize on the side doors. Love it. Congrats to you all at Atlassian. Congrats to Loom, one of my favorite products. We were the one of the first users of Loom back in the day to HubSpot. I'd say the founders come in and talk to us. So it's great to see that product go all the way and nearly sell for a billion dollars. Congrats to the founders. Okay, last but not least, the fourth is Buy because it accelerates the future. Now you have to have conviction about something if you want to accelerate towards the future you want to live in. This is the reason we did the Hustle deal. I remember when I we did that deal and I led that deal. I was in all of the kind of PR articles about that deal and people would hit me up and say, oh, like smart, smart for you guys. Now you can like generate more leads from that newsletter. That is not the reason we did that deal. We did not do the deal to generate leads. We did not do the deal to capture demand from the Hustle newsletter. We did the deal because we had conviction. In three years time we wanted to have a media network akin to any other media network in business. Right. We wanted to think of ourselves like a media brand. It is basically a far larger version of the first one I talked about. Which is why you want to have singular creators join your team. Well, we didn't want to wait around for that. We wanted to buy an entire company of incredible creators and build out something we call the HubSpot Media Network. So from the very outset we wanted to accelerate our growth to a hundred million media engagements which was someone viewing the blog, a video or downloading the podcast. That, that is the thing we cared most about. So we knew what the end goal was. We did the deal because we believed it would accelerate our way to that end goal. Because we believe in the future. Distribution is part of distribution is the audience and engagement you can create through all of these creator led channels, newsletters, podcasts, video. And so to do that you have to have deep conviction about something and you'd have to know how you're going to leverage that asset to accelerate towards that future. Right. In three months of buying the Hustle, Kip and I had built a podcast network around the my first million podcasts that came with that deal. Within three months prior to buying the Hustle, we had zero podcasts. I think we had one that was, it was like good but smallish. In three months we had a podcast network with 10 other creator podcasts or 10 other podcasts as part of that podcast network. After 12 months we had a podcast network that got millions of downloads each and every month that we owned. After six months of buying the hospital, like after six months we launched our first version of the creator program, right? We used the team and the Hustle to help us create a creator program. The Creator program allows HubSpot to invest in creators to create podcast shows for them, to create YouTube shows for them. And HubSpot Co owns those things with those creators. And so you have to know how that assets helps you to accelerate towards the future you want to live in. Right. I think they're probably somewhere on journey to get in that hundred million media engagements. I'm sure they're very close because it's gone really, really well. The podcast network, they've done really big on YouTube. The Creator Program continues to grow in success. And this is where most deals fail, right? Marketing led deals, this is where they fail is because it's not clear how that thing helps you accelerate towards the future you want to live in or it helps you to lean into the unfair advantage you have. You kind of do the deal because it looks like it makes sense and you're like, ah, don't really know what I want to do with it now. Like let's just leave it there and see if something good happens. No, if you think about the three that I've talked to, they have a ton of intent behind them. Think about intent. The first one is I acquire their creator because I know there's a creator LED channel that I need to excel at as a brand. So I'm going to bring that person in and I will overpay for that person because them being 10x at this is worth it to me because I'm going to get 10x better at this. The second is I have an unfair advantage, right? We talked about the content and search engine, the domain authority and I want to buy assets that I can just put into that unfair leverage and helps me to accelerate more rapidly right by the content, put them into the engine, 10x, the growth in that content and we get that nearly immediately, like within three months versus if we have to create all our content for ourselves. It would take months and months and months and months. The third is, well, I have incredible existing product set. My growth might be starting to like plateau or we're struggling to find ways that we can just re accelerate the top end growth. I'll just buy a front door and be able to cross, activate, cross sell that front door onto my side doors. Very intentful, know exactly what I'm going to do with this asset. The fourth is I have a vision, right? We know that to be the brand we want to be in the future, to have the distribution engine we want to have in the future, we need to have an incredible media network, right? We want to have an immediate network that is up there and competitive with any other business that creates content. And most of them are media companies. Very few technology companies invest in this way. Well, we're by this company the hustle and that will give us the people and the assets to accelerate towards that three year vision. We have launch the podcast network, creator network and a bunch of other things. Have to have conviction, have to know what you're doing or the deal will go wrong. More deals fail than they succeed for this very reason. That's the four things that people will never tell you about acquisitions to help accelerate the marketing portion of your business, the growth portion of your business. And that is how you can think about that. Hopefully it sparks some ideas. I'll be back as always with my co host and future shows. Until then, this is marketing against the grain. I hope you dig it.

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