Hockenmaier: Paid marketing degrades quickly if used as a primary growth strategy
Dan Hockenmaier · Advice on Organizing and Running Growth Teams from Dan Hockenmaier and Gustaf Alströmer · Y Combinator · Jun 26, 2019 · at 37:04
Dan Hockenmaier, founder of Basis One and former growth director at Thumbtack, explains why relying purely on paid acquisition causes compounding unit economic problems.
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“If it becomes your primary channel, it's a very hard thing to sustain because it's expensive but also because it degrades pretty quickly, actually. So, like, you know, if you look at the DTC companies or Blue Apron, I think, you know, they grew really quickly on the back of paid marketing, and then they realized later cohorts got more expensive, they retained less well, and so this kind of, like, has this compounding negative effect and it can be a scary place to be. And so, I think if you're thinking about paid marketing more as an accelerant rather than the growth strategy, it's a much healthier place to be.”
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