In a world where 90% of startups fail, those that succeed often leverage unconventional strategies known as growth hacks to rapidly scale their businesses. Growth hacking, using creative and cost-effective methods, has enabled some of the most iconic companies to achieve extraordinary growth in remarkably short timeframes. Companies like Hotmail, Airbnb, PayPal, Dropbox and LinkedIn have not only disrupted their markets but rewritten the rules of engagement for marketers and entrepreneurs alike. Although today’s growth hacking requires even more innovative thinking, these classic examples offer foundational insights and inspiration for today’s marketing leaders.
Hotmail: The Email Signature Hack
In 1996, email was still relatively new to the consumer market. Hotmail founders Sabeer Bhatia and Jack Smith had limited resources and needed rapid growth without large advertising expenditures.
Venture investor Tim Draper proposed a daring yet straightforward idea – include a clickable promotional tagline at the end of every user’s email. Initially, the founders worried users might reject it as spammy or intrusive. However, Draper persisted, and the team decided to test it. The message initially read “P.S. I love you. Get your free email at Hotmail”. This small tweak transformed every email sent into an automatic advertisement for Hotmail. Eventually, the “P.S. I love you” was dropped, and the line became simply a branded call to action.
User growth skyrocketed, reaching 1 million users within six months and 12 million users within 18 months. Microsoft subsequently acquired Hotmail for around $400 million. The takeaway: embed virality directly into your product experience to turn ordinary user interactions into powerful growth drivers.
TechCrunch explains in more detail how Hotmail’s email signature sparked viral growth in this article.
Airbnb: The Craigslist Growth Hack
Airbnb initially struggled to solve the classic marketplace problem – attracting enough hosts and guests simultaneously.
Recognizing Craigslist’s dominance in online classifieds, Airbnb founders Brian Chesky, Joe Gebbia and Nathan Blecharczyk devised an ingenious (though unofficial) integration. They created a seamless tool allowing Airbnb hosts to automatically cross-post their listings on Craigslist. The approach wasn’t supported by Craigslist, but the Airbnb team reverse-engineered its posting forms to enable automated submissions.
The unconventional method initially stirred internal excitement but also caution regarding potential legal and reputational risks. Ultimately, the risk paid off dramatically, bringing an immediate influx of users who discovered Airbnb through Craigslist’s massive audience.
This strategy significantly increased Airbnb’s visibility and provided the initial user base necessary to jumpstart its growth. Airbnb quickly scaled globally, eventually becoming a household name. The takeaway: identify and leverage existing platforms where your target audience is active, even if it requires inventive methods.
GrowthHackers wrote how Airbnb used Craigslist to generate early traction in this case study.
PayPal: Paying Users to Join
PayPal needed rapid user growth to make its payment network viable but found traditional marketing costly and ineffective.
Co-founders Peter Thiel and Elon Musk decided on a radical approach – directly incentivizing users with cash bonuses for signing up and referring friends. New users received $10-$20 simply for signing up, and existing users received the same for each successful referral. This tactic was seen internally as risky and expensive, but the goal was to outpace competitors and reach critical mass quickly.
The referral system was easy to understand and quick to execute, and it resonated strongly with users. Users enthusiastically adopted the system, spreading PayPal virally through email and early online communities. Within a few months, PayPal grew to millions of users, becoming the preferred payment method on eBay auctions.
PayPal’s cash incentives drove exponential viral growth, and the company was eventually acquired by eBay in 2002 for $1.5 billion. The takeaway: if user lifetime value is high enough, bold incentives can rapidly drive exponential growth.
Peter Thiel reflects on PayPal’s incentive strategy in this Yahoo Finance article.
Dropbox: The Referral Program Masterstroke
Early on, Dropbox faced steep acquisition costs, nearly $300 per user through paid advertising which was unsustainable for the startup.
CEO Drew Houston, inspired by PayPal’s referral strategy, launched a program in 2008 that was “double-sided” – both the referrer and the new user received 500 MB of free space. The incentive was simple, product-related and scalable. It didn’t involve handing out money, just more of the product people already valued.
Internally, Dropbox initially worried about fraud and the potential for gaming the system. But the team decided the benefits outweighed the risks. The integration was built into the app interface, making sharing intuitive and frictionless.
The referral program dramatically accelerated Dropbox’s growth, expanding its user base from 100,000 to over 4 million users within 15 months. Referrals eventually accounted for 35% of daily sign-ups, significantly contributing to Dropbox’s valuation, which eventually reached $10 billion. The takeaway: craft incentives aligned closely with your product’s core benefits, making sharing a win-win for everyone involved.
Viral Loops provides a detailed breakdown of Dropbox’s 3900% growth through referrals in this article.
LinkedIn: Mastering SEO for Growth
Initially, LinkedIn grew slowly due to unfamiliarity with professional online networking.
LinkedIn’s leadership identified an opportunity to leverage search engine optimization (SEO) by making user profiles publicly searchable. The decision was met with caution internally due to privacy concerns. However, after introducing clear privacy controls, LinkedIn enabled public indexing of member profiles by Google.
As people searched for colleagues, clients or job candidates, LinkedIn profiles started ranking highly on search engine results pages. This passive discovery funneled millions of users into the platform.
Organic traffic dramatically increased LinkedIn’s user base, from 4 million in 2005 to 70 million by 2010, eventually surpassing 900 million users. The takeaway: utilize user-generated content strategically through SEO, positioning your platform prominently where your audience naturally searches.
Benchhacks offers a comprehensive analysis of LinkedIn’s SEO-driven growth in this study.
Closing Thoughts: Embracing a Growth Hacking Mindset
These stories illustrate an essential truth – the best growth hacks leverage existing user behaviors, networks or platforms creatively. Each example demonstrates how constraints like limited resources and initial skepticism can become catalysts for innovative growth solutions.
Today’s growth hacking requires even more innovation due to increasingly sophisticated users and crowded markets. Nevertheless, these iconic stories remain powerful inspirations for marketers and growth leaders. Embrace this innovative mindset, and you may unlock your own legendary growth story. Remember, every user interaction has the potential to drive exponential growth – it’s up to you to creatively harness it.