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Facebook's VP of Growth: If Your Retention Curve Does Not Flatten, Stop Everything

By Alex Schultz · Leadership · 1 min read

Alex Schultz says retention is the single most important thing for growth. If your retention curve doesn't flatten out, don't do growth tactics. You don't have product-market fit.

Key Points

Retention is the single most important thing for growth
If your retention curve asymptotes to a line parallel to the x-axis, you have a viable business
If it doesn't flatten out, don't do growth tactics — focus on product-market fit

If your retention curve doesn't flatten out, don't go and do growth tactics. Don't do virality. Don't hire a growth hacker. Focus on getting product-market fit.

Retention Is Everything

Schultz: What matters most for growth? Great product. What does great product lead to? Customers. And what do you need those customers to do? Stay.

Retention is the single most important thing for growth. We have a fantastic product at Facebook. If we can get people on and get them ramped up, they stick.

Retention is the single most important thing for growth.

The Curve That Tells You Everything

Schultz: If you look at this curve — percent monthly active versus number of days from acquisition — if you end up with a retention curve that asymptotes to a line parallel to the x-axis, you have a viable business and you have product-market fit for some subset of market.

But most of the companies that fly up, who talk about growth hacking and virality — their retention curve slopes down towards the x-axis. In the end it intercepts the x-axis.

If your retention curve asymptotes to a line parallel to the x-axis, you have a viable business.

You Can See It Early

Schultz: For all your users who have been on your product one day, what percentage of them are monthly active? 100% for the first 30 days obviously. But then you look at day 31, day 32, day 33.

With only something like 10,000 customers you can get a real idea of what this curve looks like. You'll be able to tell — does it flatten out or does it not?

When I joined Facebook, the advertising product was 3 days old. Within 90 days of launching, we predicted the one-year value of an advertiser to 97% accuracy using this technique.

Within 90 days of the product launching, we predicted the one-year value to 97% accuracy.

If It Doesn't Flatten, Stop

Schultz: If it doesn't flatten out, don't go and do growth tactics. Don't go and do virality. Don't hire a growth hacker. Focus on getting product-market fit.

If you don't have a great product, there's no point executing well on growing it because it won't grow. Number one problem I've seen inside Facebook for new products. Number one problem I've seen for startups I've advised — they don't actually have product-market fit when they think they do.

If you don't have a great product, there's no point executing well on growing it. It won't grow.