replace variable in grep string

How do I use a variable in the grep search string?

foo="he"
echo 'hello' | grep $foo

returns what I expect (namely hello).
However

echo 'hello' | grep '^$foo'

returns empty. I guess the variable is not placed in the string, but how do I get it to work?

>Solution :

Use double-quotes, otherwise you are looking for the literal string $foo not the variable contents. It is also a good idea to escape the variable for clarity:

echo 'hello' | grep "^${foo}"