Lessons in growth hacking: Stockholm based Wrapp shows how it’s done

We wrote about growth hacking yesterday. “Growth hacking” is a marketing approach that is very product and analytics-driven, and that’s especially interested in using other products and services (like API’s of social networks) to speed up distribution and customer acquisition.

Good examples of growth hacking are Yammer and Pinterest, but it’s probably a good idea to take notes about how Stockholm-based Wrapp became a giant in social gift gards.

CEO and co-founder Hjalmar Winbladh told CNET that in the busy weeks of the past Christmas shopping season, his company was sending Wrapp gift cards at a rate of 1 million a week , of which 100 000 were redeemed each week.  That’s not shabby for an app that was launched in early 2011.

The distribution model of Wrapp seems largely taken from the Pinterest playbook.

When you sign up, you have to connect with your Facebook account information, so Wrapp nestles itself into your social graph. Automatically, the app notifies you of big events in your friend’s lives: a birthday, an engagement, whatever. The Wrapp recommendation algorithm suggests gifts from its 180 or so retail partners – based on the demographics and interests of your friend.

Some of the gift cards are offered for free by the retail partners, because they know you won’t give a $ 6 H&M gift card to your friend and you’ll probably want to add a bit to make the gift more substantial. If you want, you can ask your friends to chip in on your gift cards.

Then, when you hit the ‘Give’ button, your gift turns up on your friend’s timeline and in the news feeds of mutual friends, which no doubt encourages your other friends to follow suit. In order to receive the gift, the receiver also has to download the app.

So every time anyone uses the app, they can invite others to join in on the action, and by default the receiver is forced to become a user too. If the product is compelling enough, that’s a great way to give your app traction.

The model squeezes every last drop of juice out of the Facebook social graph. It’s is a perfect example of what David Sacks of Yammer  calls ‘transactional virality’, and if you can find it, it does wonders for your distribution.  It allows you to take full advantage of network effects.

At this time, it looks like Wrapp found a winning combination of product and distribution, both for users and B2B customers. Wrapp works with 180 brands, like Banana Republic, Toys R Us and Zappos. A recent deal with the Canadian loyalty card company Givex gives the brand access to new partners like Nike, McDonald’s and Marriott.

“In terms of competition, we’re quite alone,” said Winbladh on CNET. “We don’t have direct competitors in any scale like we have.” The next goal, he says, is to integrate Wrapp into e-wallets like PayPal, Google Wallet, Square and Apple Passbook.

Hjalmar Winbladh was named the first ‘Perfect Entrepreneur’ in a Swedish competition in October 2012. It’s not hard to see why.

About Wrapp

Wrapp was founded in 2011 with a team of alumni from companies like Spotify, SoundCloud, Groupon, Rebtel and Stardol. It also has a has an all star board of directors which includes top talent like Niklas Zennström (Skype co-founder), Reid Hoffman (LinkedIn co-founder) and Fabian Månsson (former global CEO of H&M and Eddie Bauer).  To date Wrapp raised $ 10,5 million in funding from Atomico and Greylock partners.

via CNET, photo: Wrapp team page

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About the author

Raf Weverbergh

Editor of whiteboard. Raf Weverbergh was a magazine journalist whose work appeared in magazines like Rolling Stone, Playboy, Mail on Sunday, Publico and South China Morning Post. He is the co-founder of FINN, a corporate communications agency where he advises startups and multinationals on their PR and Mustr, the easiest media database for PR professionals. You can contact him on Twitter, Linkedin or Skype (rafweverbergh).

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