Now that we've covered the new products, let's move to growth products. Growth products is probably the most exciting space because by this time, your product has already initial traction, and you just want to conquer the world. So let's talk about how you do that. First thing, it's really important before you hit the growth stage, it's critically critically important to have a great product. Sometimes founders start getting into the growth stage before they see the real traction, right, they see some early traction but the product is not perfect yet. Which means sometimes it's not ready for growth yet before you start the growth stage, your product needs to be really perfect.

So do spend more time and effort to make your product great before you start growing it. How do you grow the product? So what are the key levers you have to grow your product? The two most important levers for growth growth are new customer acquisition and retention and the more mature your product is, the more important retention becomes because the number of customers you lose is a function of the total number of active customers in your product. So like for Facebook, for instance, when you have a billion customers, it's really, really important for you to retain those customers. Well, when you're really small company, and your retention problem is does not exist, you really need to be focusing more on new customer acquisition, let's talk about both.

How do you do new customer acquisition, there are three ways to acquire new customers three best ways to acquire new customers that I'm aware of, and I can share those with you. One is organic growth. And the good example of organic growth could be people find your company somehow it may be a Google search, it may be it may be a forum or it may be some other medium. And a good example of the organic growth strategy can be search engine optimization is just one example which many people know and this is a large enough market. So let's basically use it in this example. So search engine optimization is basically you make your product more easy to find.

So people find you organically more this way you grow organically. Second way to develop new customers and to grow through new users is paid channel. How do you Develop a channel, you can start buying ads. And Google is one of the examples where you can start by Nazis, lots of other companies and in genuine ads is probably one of the proxies to paid. Third, and probably the most tricky way of acquiring new customers is viral a word of mouth. And let's spend more time talking about this.

What does it mean? What is viral customer acquisition strategy? In talking about viral growth? Let me refer to the viral growth framework, which is centered around the K factor. It's a mysterious k factor. What does it mean?

Basically, viral growth is all about inviting, like your customers, inviting their friends in their friends becoming their customers. So the key factor has two components. One is how many invites each of your customers cents, and two is how many of those invites end up becoming your customer? Basically, what's the conversion? What's the percentage of those invites that become customers, and every framework you can think of around viral growth will always rely on those two things. Sometimes it may get more complex sometimes and talking about conversion from invites To the new customer, you may be splitting and making it more granular.

For instance, you may be talking about how many people open the email, how many people click the link in this email, how many people sign up, and then how many people pay. So this conversion is a more tricky concept. It may be a multiple of say, four or five other things. But it's absolutely critical that every single framework that talks about viral user acquisition must mention number of invites you sent in the conversion from those invites into customers. So this defines the K factor, k factor is a multiple of number of invites and conversion from invites to customers. To conclude this section about the growth product, let me give you a couple of examples like really interesting examples about viral growth, which I personally enjoyed, and you will probably also enjoy them by reading books, in stories on growth.

One of them is Hotmail. It's probably one of the earliest viral growth success stories on the web, the Hotmail, hotmail was able to grow through adding a link on the bottom of each email like hey, join hotmail and using hotmail please join. Basically, it's such a simple idea which caused a very, very fast viral growth for this company because every single email you send goes to your friend and your friend trusts you in the friend clicks the link and becomes a hotmail customer. That's one perfect example of Wild Growth. Second example of viral growth is PayPal, which is way trickier than hotmail because PayPal was able to grow virally through eBay, which is a absolutely different company and PayPal was able to become a best preferred way for people who use eBay auction. And by becoming preferred way of using eBay.

Those people used use PayPal and their customers use PayPal. So PayPal became a universal way of paying on eBay and eventually became the biggest, biggest digital money platform in the world. And the final example to not just talk about the digital product, which I personally loved was the Mentos and coke campaign, which you probably have seen the videos tremendous, was able to produce a huge huge amount of morality in the video where they put Mentos and coke and made this bottle pretty much explode. So that's that's the final example of viral growth which you may enjoy So to conclude this section on growth product, let's spend a couple minutes talking about retention. We just covered the new user acquisition, but retention is becoming critically important as your product grows. And again, I mentioned the Facebook example, when your company has a billion active customers, it's really critical for you to retain them well because if you start losing even 10% of your customers per year, it becomes hundred million people.

So it's pretty serious. And retention. Like many people believe that retention is the absolute key to success for more mature growth products. The more product approaches maturity, the more attention you spend on retaining customers relative to acquiring new customers. That's the importance of retention during growth stage of the company.