We’re excited to announce that we have acquired our first company, Growth Engine! This officially makes Ladder one of the biggest growth marketing agencies in the world, with 38 talented growth marketers across New York, Austin, and Denver in the US, London and Manchester in the UK, and Wroclaw and Opole in Poland (and we’re hiring!).
To give you a better idea of how this acquisition came to be, I’ll have to go back a little bit, to how Ladder (and Growth Engine) got started in the first place.
Why I Founded a Growth Marketing Agency
Before co-founding Ladder, I was a marketing executive, then digital marketing manager, and eventually when I leveled up my technical skills, product manager for marketing.
In fact, for a while even I didn’t even know what I was doing was called growth hacking. I just thought it was ridiculous for me to spend millions of dollars a year on Facebook ads if my landing pages and onboarding flow were flawed.
It was around that time that I stumbled upon an online course on a topic I had never heard of, “Growth Hacking”, on Udemy.
I immediately fell in love with the material: it reminded me of the Japanese lean manufacturing methods like Kanban and Just in Time production that were the most interesting part of my Economics degree. Being a technical marketer, I felt like I’d found home.
I started reading materials from the most renowned growth hackers: Sean Ellis, Andrew Chen, Aaron Ginn, Noah Kagan, and Hiten Shah, to name a few.
If you want to go on the same journey, here are some materials I highly recommend:
- Find a Growth Hacker for your Startup – Sean Ellis
- Growth Hacker is the new VP Marketing – Andrew Chen
- Defining A Growth Hacker: Three Common Characteristics – Aaron Ginn
- How I Grew Mint.com from Zero to 1 Million Users – Noah Kagan
- Growth hacking was invented with a mint julep and two beers – Hiten Shah
Of all of the materials I read, there was one post in particular that caught my attention.
Bryan Balfour’s “Building a Growth Machine”.
It was genius! It contained a process for prioritizing the highest-impact growth experiments in a more scientific way, which was just what I needed to cut through the politics and get tests shipped.
Keeping meticulous track of the performance of those experiments helped me make better decisions, and eventually got me promoted more than once.
So when I quit my job to start my own business, I could think of no better way to run the business than according to growth hacking principles, using an adapted version of Balfour’s ‘Growth Machine’ as our process.
First Contact with Growth Engine
Fast forward three years and Ladder is a 20 person company in New York and London with some proprietary technology we built to keep track of our growth experiments and manage the process inspired by Bryan Balfour.
According to Adam from Growth Engine, he found our website after looking for a solution to create an experiment backlog in Microsoft Excel–which is now a popular practice among growth marketers. He then read our Growth Hacking blog post and signed up for our newsletter! That same day, our HubSpot integration immediately tells us we’ve got a new lead.
I remember seeing that lead and thinking three things in quick succession:
- Growth Engine… that’s kind of like Balfour’s ‘Growth Machine’
- …oh and there was that Lars Lofgren post on ‘Engines of Growth’
- Ha, an .xyz domain, these guys must be Silicon Valley fans (or serious Googlers)
These are my people.
It’s funny how, as humans, just a quick couple of references and word choices that would mean nothing to anyone else can help us identify our tribe.
I got distracted by client emergencies and thought nothing more of it until our CTO jumped in Slack the next day.
So this guy is not just a consultant, but works for an agency — uh oh, is this guy signing up to try and steal our ideas?
Then, I reminded myself one of our core values is transparency. All of our best ideas were already stealable on our blog as a result.
So we jumped on a call.
It went well, we mostly just geeked out on growth marketing. Adam had worked at Google (hence the .xyz domain) and had read the same blog posts about growth hacking that I had.
Checking out Growth Engine’s website, I saw we had even tested a lot of the same copy on our site.
Growth Engine had grown in a similar way to Ladder–by educating people on how to do what they do. We taught technical marketing at Startup Institute, and they had built the only Growth Hacking meetup in Poland.
When I showed Adam the Ladder Planner, it resonated with him–he even said this is the product he was eventually planning to build for himself!
Instead of seeing each other as competitors, we both agreed that inertia was the real enemy: the vast majority of marketers still do marketing the traditional way, with very little measurement, optimization or scope to make technical changes. We should work together to change that.
I thought it was a super weird coincidence that he was in Poland, in Wroclaw no less, where our CTO lives.
Then the coincidence got weirder.
Of all the coworking spaces in all of the cities in all of the world, they just so happened to work in the same space as our CTO!
This was too much of a coincidence to pass up, and since I was going to Poland anyway, I thought we might as well meetup.
Within four days, we all immediately hit it off, and right away both sides were talking about whether it made sense to team up in some way.
Test and Learn
We’re all about experimentation in marketing, so of course, our approach to a potential M&A was no different–with a series of tests.
The process worked like this:
- We signed a mutual NDA so we could share client information needed for strategy, and ensure that we could be fully open with each other.
- We agreed to a retainer for ½ the time from 2 different Growth Engine strategists to work as support for two of our strategists at Ladder.
- We agreed to a separate retainer for ½ the time of Tomek (co-founder) to work directly on one of our US clients as the strategist on the account.
- We set a time in one month when we’d formally review the two experiments and see how it worked out, and what needed to be changed.
- We assigned two internal champions, two of our most senior strategists, to own the project day to day and give us all clear feedback.
- We completed our full ‘hell week’ training schedule with their two strategists as if they were new Ladder employees: that’s 35 hours of training!
We worked out any kinks as the time went on and it gave us extremely valuable information about the team. Because we were open with our information and generous with our time to train the team from the very beginning, we all but ensured it would be successful.
It can be tempting to under-commit in a situation like this, and of course, it felt risky to spend 35 hours training employees that aren’t even Ladder’s! But like the old adage goes:
CFO: What happens if we train them and they leave?
CEO: What happens if we don’t and they stay?
We found the arrangement extremely valuable because we found holes in our own process that we previously thought was solid. It’s only when you shine an outside light on these things that you catch issues you were previously blind to.
Because we tested the relationship in two different ways, we made the strategic call to go for the more scalable ‘buddy’ system of pairing a U.S. strategist with a Polish strategist.
That approach allows the U.S. team to be more ‘front of house’, working directly with the client in a more account management and strategic role, while their Polish counterpart gets the technical work done and handles reporting and analysis without getting interrupted by the client.
We quickly ramped up resourcing with Growth Engine as we had a spurt of new clients, and through that trial by fire we got to the point where we had full confidence in our relationship. We had proven to each other that both sides could add equal value, and that the whole was bigger than the individual parts.
With Growth Engine’s access to high-quality talent in Poland and our access to the lucrative U.S. market, we both felt that we had more of a chance together to make a dent in the traditional marketing world, fight the inertia, and take the guesswork out of how companies grow.
Now came the hard part.
The Boring Legal Stuff
First, we had to convince our board. Given that our board is just 3 people, 2 of them co-founders (1 of them is me), that was technically pretty easy. But, we wanted to really make sure the business case was there.
So we put together a 1-pager on the strategy, which included:
- A case for growth by acquisition for Ladder in general
- The specific case for acquiring Growth Engine
- Founder bios for credibility with links to their social profiles
- How culture fit is solved through growth hacking interest
- The cost in terms of shares in Ladder and valuation
- Outcomes of the tests we ran, both quantitative and qualitative
Even if you don’t have anyone on your board, I recommend doing this exercise. It helps to tease out the reasons you’re making the decision and display them all on one page. It’ll either make you much more confident in the deal (like it did for us), or it’ll make you rethink it entirely.
Now onto the lawyers.
If you aren’t a lawyer by trade, you have no idea just how valuable a good one is until you go through a process like this.
Thankfully, we had good people in place, and managed to get everything done in the space of a month with only 190 total emails! Note to anyone looking to try this at home: budget at least 10% of the total deal value to be taken up by legal costs.
The hardest part to figure out was the service agreements. It’s easy to forget that you’re not just buying a company, you’re hiring all their people too — including the founders!
In the final stages of the process, Ladder’s CEO and Managing Director Jon Brody flew out to Poland (fun fact: if you’re buying a Polish company you have to do it in person) running on less than 5 hours sleep, and while they were in the air, hastily making last minute amendments to Polish legal documents.
It came down to the wire, but in front of a Polish notary — who probably just wanted to go home–documents were signed to make Ladder the proud owners of Growth Engine!
And, of course, no acquisition would be complete without a friendly light-hearted on-brand jab.
We’re looking forward to some pretty aggressive growth together over the next 12 months, and there will definitely be more updates as we go.
Hopefully, this was useful to anyone who was considering acquiring a company, and maybe we inspired some people to join forces as a new growth strategy.