How to Grow in the Age of AI, Great Products Dominate Scaled Channels - Tactician #0052

"Isn't it funny how AI knows you better than some of your friends? It's like, 'I heard you sigh from across the internet. Here's a coupon for ice cream.' It's thoughtful... and a bit of an overreach."

07/02/2024

How to Grow in the Age of AI

Adam Fishman, Growth Consultant, explores how artificial intelligence will influence the growth focusing on the impact of AI on various acquisition loops: viral, content, paid, and sales in “How to Grow in the Age of AI”

• Viral Loop and AI's Impact

  • Invites and Incentivized Invites: "Feed in a small amount of information about the recipient and I can create a very customized recommendation and message for you...Opens, clicks, and ideally signup conversion (from a highly personalized and individual landing experience) should all improve."

• . Content Loop's Looming Challenges

  • Impact on Company Generated Content: "The rise of LLMs will collapse the cost and time associated with a lot of company generated content to zero...But, it may not matter what Google thinks...The reason it may not matter is because Google could get disintermediated entirely."

  • Search Engine and Content Discovery: "The one thing keeping this at bay for now is the monetization model...And just last week the Browser Company, makers of the Arc Browser, demoed a new version of Arc that skips Google altogether."

• Transformation of Paid Loops

  • Fishman highlights potential commoditization of ad creative, which could reduce the effectiveness of paid loops: "The audience and impressions available for ads are not growing as fast as the ability to create them...It’s bad enough that every direct-to-consumer clothing brand looks identical to each other in advertising."

• Sales Loops and AI Efficiency

  • AI's Role in Sales Productivity: "Standalone tools like Clay or new AI functionality added to existing tools...promise to increase rep productivity and automate away a lot of repetitive tasks."

Great Products Dominate Scaled Channels

Andrew Chen, General Partner at Andreessen Horowitz, emphasizes the necessity for startups to have both a strong theory of product/market fit and a solid distribution strategy in “Startups need dual theories on distribution and product/market fit. One is not enough”

• The Importance of Figuring out Distribution:

  • “Because technology differentiation is no longer a real factor today for startups, it turns out that most products are succeeding or failing due to core product/market fit followed by the distribution strategy. There are over 9 million mobile apps. There are a billion websites. Figuring out distribution is key."

• The Challenge of Achieving Effective Distribution:

  • “…distribution, is often super difficult because once you onboard your friends and family, and look to expand the next set of hundreds of customers, you then dive into the world of growth marketing strategies and tactics which are its own very particular learned skill set."

• The Journey from Channel to Channel:

  • "Thus starts the journey of startups to grow and expand their portfolio of distribution channels, beginning with small and highly relevant ones, into the biggest channels. Early channels are often very low volume. But you want that. The reason is that they are highly relevant and they are small enough that larger companies do not focus on them."

• Moving to Volume-Driven Channels:

  • "Eventually you want to move [...] towards volume. There are only about a dozen large scale distribution channels that can propel a product to scale. Advertising is on that list, SEO too, and so is viral growth. But these larger channels, by their nature, are both highly scaled but also have low responsiveness."

• Great Products Dominate Scaled Channels:

  • "Ironically, this is where great products begin to dominate... The reason is the following — the ability for a company to operate out in these most expensive and highly scaled channels comes from having a great product that generates a ton of word of mouth. More natural usage, the less marketing that has to be done. And the marketing costs that do exist end up being blended in with the large number of organic users."

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