Growth Hacking to Trust Cracking : Lessons for Today’s Consumer Internet businesses
Posted on December 5, 2024 by Dharmic Network
Prashant Singh’s thread is a sharp critique of unethical practices in consumer internet businesses, framed through vivid personal anecdotes and reflective industry observations. It examines how seemingly small lapses in ethics can snowball into catastrophic outcomes, harming industries and professionals alike.
1. Opening Warning:
- Prashant begins by comparing unethical practices to a bad movie he’s seen before, with a predictably unhappy ending. He expresses surprise at how obvious red flags are ignored, and in some cases, even celebrated as “progress.”
- He equates these behaviors to “glorified pickpocketing” in the digital age, made possible by advancements like better Wi-Fi.
2. Unethical Growth Hacking:
- He critiques how companies stumble into unethical behavior, not through grand conspiracies but through small, unchecked actions. It often starts with a single overzealous growth hacker crossing ethical lines to hit a short-term target, only to be tolerated (and eventually celebrated) by the organization.
- This tolerance creates a culture where questionable practices become normalized.
3. The VAS Era Anecdotes:
- Drawing from his own career, Prashant shares insights from the telecom industry’s Value-Added Services (VAS) era, which he labels as the “OG growth hackers” of unethical billing practices.
- These companies activated caller tunes, ringtones, and other subscription services on users’ accounts without consent. Once activated, these services were nearly impossible to unsubscribe from.
- He shares a vivid memory of lending his phone to an elderly man at the Delhi Cantt railway station. The man had just spent his last ₹150 on a recharge to call his son, but his balance vanished due to unauthorized VAS charges. The man, shivering in Delhi’s winter, stood helpless because a “growth hacker” needed to hit a KPI.
4. Fallout of VAS Practices:
- The unethical practices of VAS companies grew so rampant that India’s telecom regulator, TRAI, had to intervene, acting like an “angry school principal.”
- Ultimately, the VAS companies collapsed into irrelevance, becoming “zombies” in the market.
- Former employees of these companies, once celebrated as growth hackers, are now stuck in dead-end jobs. Prashant notes that he occasionally meets these individuals, who reminisce about the “good old days.” He finds it ironic that they view those unethical days fondly, which he says underscores the root of the problem.
5. The Dehumanization of Users:
- Prashant highlights how consumer internet companies often treat users as abstract numbers rather than real people. Metrics like LTV (Lifetime Value), CAC (Customer Acquisition Cost), and churn probabilities reduce users to spreadsheet data.
- He contrasts this with real-life examples of consumers:
- An elderly man trying to call his son with his last phone balance.
- A working mother scrambling to make lunch for her kids, realizing she’s out of butter, and depending on quick commerce to save the day.
- He stresses that such trust from users is “sacrosanct” and cannot be hacked or faked. Once lost, it’s gone for good—just like the money lost in the VAS era.
6. Parallels to Today’s Industries:
- Prashant draws clear parallels between the VAS era and current trends in fintech, e-commerce, and quick commerce. With the widespread adoption of UPI and e-payments, he warns that consumers are now even more vulnerable to unethical practices.
- He cynically notes how cutting out middlemen, such as telecom companies, has made theft “more efficient,” as every rupee directly lines the pockets of the perpetrators.
7. Byju’s and the EdTech Fallout:
- He calls out similar trends in edtech companies, particularly Byju’s, which has faced criticism for aggressive sales tactics and unethical behavior.
- Prashant shares how former employees of Byju’s are now treated like “radioactive waste” in the job market. Despite their skills, they struggle to find opportunities because of their association with the company’s unethical practices.
- He sees similarities between Byju’s alumni and former VAS professionals—both reminisce about their “good old days,” unaware of how their actions contributed to industry-wide reputational damage.
8. A Dire Prediction:
- Prashant warns that industries indulging in unethical practices will face the same fate as the VAS and Byju’s ecosystems. He predicts:
- Stunted growth: Industries will lose trust and fail to mature.
- Half-baked products: The focus on short-term gains will harm long-term innovation.
- Unhappy customers: Consumers will rebel against exploitative practices.
- Regulatory crackdowns: Authorities will step in, stifling the industry further.
- Tarnished professionals: Employees involved in unethical practices will find their experience devalued in the job market.
9. Final Reflection:
- He concludes by emphasizing the importance of trust in consumer businesses. Trust cannot be hacked—it is earned. And once lost, it disappears faster than a phone balance drained by VAS charges.
- His parting thought is a cautionary tale: unethical behavior might bring short-term success, but it ultimately leads to a collapsed industry, disillusioned professionals, and a loss of consumer faith.