Archive for October, 2012
In every startup’s pursuit of growth, it’s important to remember that first and foremost we’re looking to create something that’s sustainable. Building something big and impactful takes years, and your distribution strategy will need to weather the passage of time. If you slash and burn your customers, your platform, or your product design, it’s a matter of time before your active users curve jumps the shark.
This means that your growth strategy has to be “polite” and be considerate of all the parties involved:
Customer-friendly
If people love your product, it’ll growth more quickly and be more viral. Ultimately if you put the same viral mechanics on a photo-sharing product versus a tax returns-sharing product, the former will always do better because no one wants to share their tax returns, not even presidential candidates. Tapping into an emotional desire to share and communicate is a prerequisite for building a long-term product.
Don’t try to force people to do what they don’t want to do, all in the first session. You’ll burn out your audience, fail to retain an active userbase, and while that might look good in the first few months, over time your churn will beat your growth rate. That leads to a rapid decline, which you don’t want.
Platform-friendly
This decade has been amazing for platforms. 20 years ago, it was just Windows. Today, you can build for iOS, Android, Facebook, Twitter, and many other emerging platforms are coming out. Each platform wants something different from you, and you have to learn to play by the rules to have a lasting relationship with them.
Obviously this means you can’t burn their users – that’s the worst thing to do. Dumb, too. Some platforms want more engagement and user-generated content, and others want ad revenues. Learn what it is that they want, and make sure your product helps them as much as it helps you.
Product-friendly
And finally, it’s important that your growth mechanics don’t compromise the design of your product. When you first started writing your product, I’m sure there were big aspirations about what it could do and what good it would ultimately accomplish for the world. Halfway along the way, when it’s time to work on marketing and growth, it can be easy to overreact and compromise your core design. Products meant for classy audiences suddenly turn into quiz apps. Ultimately, to stay excited about your product over the course of years, it’s gotta stay in a sweet spot – you can’t let growth destroy that.
There’s a lot more I want to write about on getting sustainable growth- everything from how to use A/B testing not to make a number go up, but how to make a number stay unchanged while you iterate on the feature qualitatively. I’d also like to write about the quantitative effect of overusing notifications because spam tests well short-term, but destroys your response rates long-term. Those, and many other topics, coming up soon.
Also, if you’re interested, I’ve written before about the importance of balancing growth and other factors in previous posts: You don’t need a growth hacker, How do I balance user satisfaction versus virality?, When does high growth not imply product/market fit?, and Know the difference between data-informed and data-driven.
One of the frequent points I try to make on this blog is that metrics are a reflection of your strategy you’ve chosen, not the other way around.
This is particularly important in the context of comparable numbers, like +1 day or +1 week retention, DAU/MAU, or the plethora of other metrics that are used to assess a business. It’s not a good idea to just blindly try to hit a certain set of metrics – different kinds of products have different sets of healthy numbers. The best example is something like tax software, which has a DAU/MAU of essentially zero but you can still build Intuit out of it. On the other hand, if you compare favorably or unfavorably in your category, all the better. I previously wrote about this in the context of DAU/MAU and “nature versus nuture for products”
On this note, Flurry recently updated their retention versus frequency chart for different mobile app companies and it’s worth checking out.
The outliers are super interesting:
- Communication is both super retentive and high frequency, but man, what a busy space :)
- Streaming Music, Games, and Dating have a lot of frequency while you’re using it, but you soon abandon the app and go somewhere else. Probably a good argument for products in this category to try to make money right away, since you won’t keep them for long
- News, Sports scores, Reference, Weather have high retention, but not necessarily high frequency. Probably some great businesses to be built here, especially when you can tie it to some kind of transaction – sports and reference, in particular. Weather, not so much?
- Retail is probably apps put out by brands that aren’t super useful. The other stuff in that corner all sounds junky
- Photo and Video surprisingly has terrible stats for something so important. Maybe outside of Instagram, it’s sort of an overrated category?
Anyway, worth reading the article and looking at the diagram more closely. Thanks again to Peter Farago at Flurry for putting this together.
UPDATE: Nabeel Hyatt of Spark Capital (previously GM Zynga and serial entrepreneur) wrote some excellent commentary on this chart as well. Worth reading.
Some blog posts work, some don’t. Why?
I’ve been blogging over 4 years, and after writing nearly hundreds of posts, I’ve developed a high-value niche audience of over 15,000 blog subscribers and 28,000 Twitter followers. My focus has been completely on writing about startups and high-tech companies. Building up my blog in this niche audience has been a lot of fun and professionally rewarding too.
I’ve had the time to collect some observations on what works and doesn’t work, and wanted to share an interesting stat: It may not surprise you to know that the most popular 10% of my blog posts drive over 500x the traffic of my average blog post. It’s a classic Power Law distribution.
Blog titles matter
One of the most important things to any blog post is its title. It’s the first impression your writing will make on anybody on Twitter, Facebook, or any news site where your link might be shared. If you don’t impress instantly, people won’t click, and they won’t get to read your amazing content.
So what kinds of blog titles attract the most attention?
Here are the patterns that I’ve found to work really well:
1) “The tweet-sized argument”
It’s highly effective when your title argues for or against something, in a tweet-sized package. Especially when the argument uses lots of superlatives, like “best” “worst” “obsolete” or otherwise.
Take a stand! Make an argument! In real life, people usually don’t believe in the extremes- instead, they are always comfortably in the middle, in the shades of gray between two options. When you argue something, and argue it strongly, they’ll want to read it- if only to refine their own thinking.
Examples:
- If you hate your job, quit it. Today.
- The iPhone 5 is the best phone ever made
- Don’t start a startup, you’ll end up a pauper
- Mobile apps are going to make websites obsolete
2) “The sneak preview”
The other important pattern is when you can use start blog posts with titles like:
- How to do X…
- Why I think X…
- When does X happen…
- 10 ways that X…
Assuming that the topic X you’re picking is really interesting, people will check it out and find it insightful. They’ll share it if they think it’s interesting to learn how to do what it is you’re talking about. The important idea here is that the title is a promise for what you are going to elaborate upon in your post.
What not to do
What happens when you don’t use the patterns like above? Well, the most common case is that people write blog posts that are descriptive, but abstract. Something like “Google and their mobile products” or “Our product features” just sounds weak, compared to “Google makes amazing mobile products” and “5 amazing features in our new product.”
And at the same time, if every post you write is “5 ways to X” you’ll sound cheesy. So there’s a fine line there. Basically the trick is, don’t use your title to describe your content, use the title to trigger an emotional desire to read your content. Do it well, and every post will spread far and wide in your target community.
It took a few years of blogging before I was able to find my preferred topics and style. Just as important as what I like to write about is topics that over time I now try to avoid like the plague. In the occasional cases where I write something anyway, it’s because I’m feeling lazy and uncreative, and just do something that’s easy. I try not to, though.
Here are a couple of the topics I try to avoid:
Sharing links throughout the day
My blog isn’t meant to be my Twitter feed :) Most of the time, the same thing will be read by many other people, so unless I have something original to add, it’s not that important.
Trashing early startups
Startups are hard, and it doesn’t help to make it harder by being negative about how others are doing. It’s easy to make a 90% correct prediction with new products/startups: It’ll fail. It takes a lot more talent, and it’s more constructive, to talk about how to make something a success.
“10 ways that…” and other clickbait
It gets you traffic, but at the cost of your authenticity and your soul. I try not to write titles like this unless I’m feeling particularly uncreative.
Gossip about the startup community
I hear a lot of it, and it’s fun, but seriously, who cares?
Comments on anything newsy
Ideally I would be able to look at blog posts that are years old and still feel they are still relevant. Newsy posts about current events, recent M&A, or product launches, all fail this bar.
On the plus side, I have some posts about freemium, cost per acquisition, “Minimum Desirable Product,” and viral growth that are still super popular and where I’m still getting questions 3 or 4 years after I wrote them. That’s really satisfying, and is the kind of post I strive to write.
Gushing about individual companies
I try not to write about specific companies. Maybe this makes some of my posts sort of professorial :) It’s more fun for me to write about frameworks, new trends, etc. Basically anything than specific companies or products, unless it’s really notable.
Conclusion: Passion > Pageviews
The hardest thing about blogging over time, I’ve found, is that to sustain it for years and to write multiple times per week means that you should write about what you like, not what gets clicks. It’s nice if you write a piece that gets attention, but it’s hard to do that day in and day out. Then it feels like a job, like you’re doing real work.
So basically my tip is- set a quality bar for yourself on what you want to write, stay tight to your values, and make a plan to write for a long time. Ultimately having my blog has become one of the most fulfilling things I created. I would hugely recommend the experience to everyone else, but you have to be realistic about how long it takes to build an audience for one.
I recently gave a short talk to the portfolio companies of a SaaS investor, and prepped some notes around the topic of SaaS products and virality.
It’s hard enough in consumer, much less SaaS
For consumer internet entrepreneurs that are working on big markets, getting to virality is hard enough. There are plenty of sectors, like commerce or moms, where it’s almost impossible to achieve sustained viral growth, just because of the dynamics and narrow nature of the audience. When you turn your attention to SaaS products that are narrow in industry and profession, it’s even harder.
The product is what matters
The main point I make in this talk is that virality has a lot to do with product category. You can stack the odds in your favor by choosing a product that has many of the following characteristics:
- inherently social- like publishing, communication, or file-sharing
- high retention with daily usage
- applies to many job titles within an organization, so that anyone can use it
- invites travel through a new channel with a compelling pitch
- targets extroverts :)
Not every product can use virality
Of course, people don’t usually pick their product based on what they think will grow virally- so as a result, you have to analyze your own product to see what makes sense. It may be to fully embrace virality (probably not), pivot your product more towards communication/sharing, or just ignore viral altogether. For most, I think the latter option makes the most sense.
Hope you enjoy the slides! Comments welcome.
Every entrepreneur wants to believe their product is taking on a big market. Sometimes they’re kidding themselves.
If they are making something fun, they’ll say- “we’re competing against TV! The market is huge!” If they are making something utilitarian and functional, they’ll say, “everyone wants to save time- there’s millions of people who want that!” Or worse, they’ll combine two products that have big markets – Facebook and eBay, let’s say – and think “FB is huge, and eBay is huge, so a social network for auctioneers would also be huge!”
This is lazy, fuzzy thinking.
The reason why it’s useful to target big markets is that there’s pre-built demand for your product category. This makes growth and customer acquisition much, much easier. When customers understand your product category, and then your job can be to define why it wins versus the competition, rather than educating your customers on why need it in the first place. The negative is that you have a bunch of direct competition and an already established axis for how people will evaluate your product’s desirability. But that’s OK, entrepreneurs love to compete with big, slow companies right?
The “What kind of X do you use?” test
IMHO, here’s the best test of a big market- you’d ideally be able to go to 10 customers in your market segment and ask, “what kind of X do you use?” and the majority of them would be able to answer the question directly, showing a clear grasp of what X is. If you ask people, “What kind of car do you use?” they will know. Ask a sales professional “What kind of CRM do you use?” and they will also know, even if they say “we use an excel spreadsheet.”
If they say, “huh? What’s that?” then you’re in an imaginary market. Or the kinder way to say it- you’re in a “new market,” which sounds better than to say that there’s no market for your product.
An even stronger signal is when they know the label for a product category, like “car” “CRM” “browser” “phone” rather than the functional description “get you from A to B” “track your customers” etc. This is an even stronger signal that there’s a real, established market and customers know what they want to buy. If you have to explain what the category is as part of your question, then it means they still may not get it. A further improvement is then if they know the name of the product category, can tell you about the different products, and how they compare to each other. For example, if you asked me about “fast food restaurants” I could name you a whole bunch and tell you about McDonald’s versus Taco Bell versus something else. And that opens up the opportunity to also introduce a new “healthy fast food restaurant” which could be an entrant to the market.
The electronic version to do this “What kind of X do you use test” is to use Google Keywords Tool and see if a bunch of people are searching for your category. This isn’t to help generate SEO, it’s to help validate that people even know how to talk about what you’re doing. You’ll see that, for instance, a product like “blog” has 10s of millions of searches, which means millions of people understand what a blog is.
I also wrote a more detailed post a year ago about using the Google Keywords Tool for market research, for anyone interested in additional reading.
Want to tap into something people already know they need?
Remember that the first telephones were called “speaking telegraphs” and the first cars were called “horseless carriages.” No matter how important those inventions ultimately came to be, initially they had to conform to what customers expected. Only until a few years could they establish their own product category and competitive dimensions.
The other datapoint that has to be mentioned here is Apple. They helped convince me that reinventing a category is just as important as inventing a new one- while it can be a great feeling to bring something completely new to the world, Apple showed that you can be extremely innovative by taking products like laptops, MP3 players, smartphones, music software, etc., and upgrade them so much that it unlocks a whole new category for people. So for those who think that taking on an existing product category is tantamount to cloning, just try to improve an existing product as much as Apple does, and you’ll get somewhere.
The whole point of this post is: Start sizing a market based on what your target customer understands. If they don’t understand what your product is, and how it stacks up against substitute products, be honest with yourself: You’re in a new market. This means a whole different set of strategies and tactics for how to introduce your product. Start by figuring out where you are, and the rest will be a lot easier.
Recently one of my best friends, Noah Kagan, wrote a brave and detailed story around how he was hired as Facebook employee #30, then fired soon after. He didn’t collect any stock options and thus wasn’t part of the big windfall after the IPO. There are some really great lessons in there that I think that everyone should learn. Very much worth reading, and I wish more folks would share their struggle like that.
I wanted to add one little bit to to this story, of what happened after.
I met Noah almost 10 years ago at a BBQ via some college friends. From my first 5 minutes of meeting him, my first thoughts were: man, this guy is a hustler. I thought that whether it was now or later, he would go on to do something great- he was just off the charts in some very positive areas, but also frankly, a little strange in others.
It reminds me of a famous quote: “There’s a fine line between genius and insanity.”
We kept in touch for many years, and I’d call him up whenever I was down in the Bay Area, and followed his experience at Facebook. He loved that place, but felt every sense for boredom and struggle that he describes in his blog post. Noah had no doubt that Facebook would eventually become a tremendous success, but also struggled as the company grew.
I got the bad news right away. I talked to him soon after he was let go – maybe the day of, or the day after – I remember telling Noah that he had learned a very important lesson from the experience. I said, “You’re fundamentally unemployable, but that’s a good thing. Now go start a company.”
It took him a few years to get going on that, but once he started, there was no turning back.
Many entrepreneurs are a little crazy. That’s a good thing. Some of us can’t do anything else, and can’t take a normal job- and if we did try to take one, no matter how good of a situation it is, we’d blow it up. I think having an experience like the one that Noah had at Facebook teaches a lot of different things- not just who we are, but also who we’re not. It’s lucky, in my opinion, that he had such a pivotal experience so early in his career. It means that he’s free, for the rest of his life, to pursue who he really wants to be. Everyone should share that kind of experience, though obviously we’d all like it to be less expensive than what Noah went through :)
Starting a company and having a job are very different things. Committing career suicide versus startup suicide is one such example.
When you commit career suicide, it’s mostly because you do something that defies the norms. You treat a client in a way that they aren’t supposed to be treated. Or you surprise a colleague with bad news, delivered poorly. Or you can’t fit into a team during an important project. These are all examples where if you don’t conform to expected behavior, you’re screwed. Your peers judge you, and it becomes easy to be marginalized.
Startups, on the other hand, fail for the simple reason that most new businesses fail. This means that if you do everything like an average entrepreneur, make all your decisions within the boundaries of normal execution, you’ll probably end up making the decisions that bankrupt your company. That’s startup suicide right there. So in order to break out of that, instead the focus on doing a few things exceptionally well – far beyond the norms of the market – in order to succeed.
When companies are working well and can have a lot of employees, the focus is on operating the business. They just need to be doing the same thing, over and over, just better and more efficiently- the momentum is in your favor. On the other hand, when you have a new company, nothing is working at all. The momentum isn’t in your favor, and you need to do anything and everything to change your trajectory.
In one case, failure happens when you do something abnormal. In the other case, failure happens when you do everything just average. Just another example of the wicked problems you encounter as an entrepreneur.