"Growth Hacking" Will Disrupt Internet Advertising Says CEO of CoEfficient Labs
The 21st Century needed a new model for an internet advertising agency. Call it a Growth Hacking Agency
July 2, 2018
Excerpts of an interview with Sean Goldfaden, a Member at WeWork in Santa Monica, the CEO of CoEfficient Labs. CoEfficient Labs is a Growth Advertising Agency for Series-A Startups. It's based at We Work's offices on Third Street and Arizona in Santa Monica.
While there are many definitions of growth hacking, mostly it's a mindset. I call it a "funnel mindset." Conceptually, internet sales pass through a big funnel.
People first have to become aware of your business for them to convert. Say a Potential New Client first hears about you on Facebook, from a sponsored post. If the PNC decides to click on your link, it brings them one step closer, they're on your website. Then they add to cart. Finally, they make a purchase.
Whether you're Amazon or a law-firm, the internet client experience starts very wide and gets very narrow.
Over the last 5 years there has been a fundamental shift in how businesses grows on line. There are basically 2 vehicles for online growth: One is free. The other is paid.
The free route is familiar to most people who use social media. One day they say, ,I'm going to start an Instagram page, and eventually I'll get customer and I'll get paid
They use their own time and creativity. Social media is free. The problem with free is it is very unpredictable, and it takes a long time. When am I going to get 1,000,000 followers? Takes a long time to build that
When I was 16 I worked at ABC-TV and fell in love with the advertising department. My boss said: Sean you have to listen to me. Don't focus on Radio or TV, but on the internet.
I had my eye on this new type of site where a person could post his own stuff. Myspace, Friendster, I was fascinated by the way you would kind of link them back. Over time, I came to really understand the elements of how you build a community on Facebook and Twitter. As a result of that expertise, I went to work for 1800-Dentist. I was only 17 at the time
Boy, I miss the early wild- West days of the internet! There were no restrictions in the early days of Social Media. Now it's much harder. Facebook greatly altered their algorithm, around 2010. They said, you want to reach everyone, you have to pay to play. Previously, it had been free.
Now there are rules to our game. Paid acquisition, Google Adwords, affiliate marketing, all get paid to put the clients message into cyber space. Now at last it's predictable, if I pay $100, they will put a prepaid funnel, that ROI positive funnel.
For a business you could literally dump $100,000 in the top and predictably get millions in income.
Growth hacking is a mindset, there's lots of ways to grow anything.
So now I work for CoEfficient Labs. We help startups unlock different channels of growth, we are an "in the weeds team." I went to school, and I learned about entrepreneurship
Once I got to college and started to sell these sunglasses, it was my time to sell them online
I'm from California. When I flew to Miami University for school, I saw someone wearing a fedora hat.
That was the coolest thing I had ever seen, and I thought, what if I were to sell Fedora hats? How would I get the word out. I bought 20 fedoras, and I thought I'll sell them on Ebay
I immediately realized that none of them fit my head right. The business opportunity was really customizable fedora's. I developed an idea for customizable sunglasses that I called "Play Fair."
I entered it into the University of Miami business compete in the I was studying Advertising and Psychology. I took first prize and U of M funded my business $25,000 in order for me to get started.
So where does growth hacking come from? A guy named Sean Ellis at Dropbox, along with Eric Reiss of Lean Startup, came up with the idea of scrum development, agile development. The theory was to Divide product development into a weekly sprint. This is called "Agile product development."
Growth hacking is very similar. Closer to the Scientific method than what you would learn in traditional marketing school.
No one knows if an hypothesis is going to work. You need to have a Team that tests that your idea, e.g. adding a green button to your site, will perform better than a blue button. Over the course of the time, you see little optimizations make a big improvement.
By the time I graduated from College, I had more experience selling sunglasses than Rayban did.
I knew that I was a good salesman and marketer, I joined Insta-canvas (which became Twenty20), started as their first growth apprentice.
They had no budget and they brought me in in the early days, and ran on an agile methodology.
I was watching these little people move the backlog forward into the review stage.
While I was watching this time, it really made me think of advertising.
When I was going to school, you thought of one giant campaign, and you had to hire actors and actresses, how can you apply the product agile approach to advertising? That thought stewed in my head.
I was recruited out of 20/20 to be the director of Creative Circle, Inc, and my job was manage all the media buying for a $200 Million company.
Criticism of the Traditional Advertising Agency Model
In the course of interviewing ad agencies, I discovered all of them had 24 month minimum contracts. That was their first problem. A 24 month contract is just not appropriate for all clients.
The second problem is they don't actually design the creative in-house. They buy facebook or google ads themselves, they're just a media buying team.
Have you ever had to work with a freelance designer? They're always late.
Their third problem: They charge companies on a percentage basis, a percent of ad spending. They keep, say 15% of a one million dollar budget. So the goals of a media buying team are clear: get the client to spend more money.
Another problem is all the $ gets spent in quarter one and two. The second half of the year, at the traditional advertising agency, they're just waiting for the year to end and the next year's budget to begin.
The traditional advertising models therefore just weren't working for most startups. "Why are people even paying these guys?" I wondered.
The 21st Century needed a new model for an internet advertising agency. We call that model a Growth Hacking Agency
CoEfficient Labs is a growth hacking agency for startups. WeWork in 90 day sprints, 3-12 moth engagements, we design all the data
How do we get paid? We charge a performance based fee. we only charge on a performance basis if we get a result.
We are about conversions. A conversion asks, what is your goal? Are you trying to get people to click on your website, or call you, or what? And we achieve that goal in 90 days or less.
CoEfficient Labs started with one client, my mentor, we worked out of my apartment, a couple of my younger brothers friends, we got our second third and 4th client, we continued to grow the business, we now have 2 offices here in WeWork.
We help small one to five people, venture backed series A-E startups, they need specialists to go in there and work on short 90 day sprints.
Our clients include Capital One and Scott's miracle grow. To them, we're an accelerator. They think of us as a Swiss army knife, a versatile way for them to test a new product.
Why are you at WeWork?
I would say that the vibe here is really good, there are people here all the time. We use the patio for lunches, we walk on the beach. Even though we're a small company, the feel here is like working at the Google-plex. You feel cool, you feel like you're a part of a community.
It feels like going to college again, like my play fair days, walking around to the sororities and fraternities handing out sunglasses
Member at WeWork in Santa Monica
CEO of Coefficient Labs
CoEfficient Labs is a Growth Advertising Agency for Series-A Startups.
Contact Number: (310) 600 5132