I recently did a video interview on the topic of how your growth strategy changes from being a small startup versus becoming a larger company. It’s hard to compete when you’re launching a new product and you have to think asymmetrically for your growth efforts to work. I walk through each stage, step by step, and talk through some of the strategic dynamics to think about. (Thanks to the Reforge folks for setting this up!)
Video
You can watch the full video here, and check out the notes below.
Notes
New startups have to focus on underrated acquisition channels for early growth efforts [0:00]
- Look for channels that are too small for the big companies to worry about — this is how smaller companies can gain an asymmetric advantage
- Examples: niche communities, sub reddits, mailing lists, offline, blogs, linkedin groups, facebook groups
- The best underrated channels are all small but high-intent
Find underrated channels that directly match your product’s target market [1:45]
- Look at what are the channels that match your product the most.
- It has everything to do with finding lots of little channels with high relevance.
- Regardless of where you start, you need to quickly be able to cobble together a bunch of small channels to get going — not just one or two.
Learn with very small channels by focusing on qualitative feedback to start [2:48]
- Any small channels that allow interaction with the audience, will allow you to do testing.
- Even small groups for customer development are worth exploring
- Test for the responsiveness of your audience
Scale up to the next, bigger channels, by starting with tests to optimize your performance [3:58]
- First path: Go after the bigger channels that the bigger co’s are going after, siphon off a small amount of traffic, at minimum it’s a means of testing
- Second path: trying to find a new channel / platform, that others haven’t considered that’s unique to your product. Example: Dropbox or Slack integration if you’re doing workplace productivity.
- Those channels are “medium sized” right now but have the chance to scale up bigger as their APIs develop.
Big companies approach acquisition by building a portfolio of channels that can scale [5:32]
- Once you’re big, it’s about building a portfolio
- All the little things will hit their ceiling and won’t scale
- You’ll end up with a few established, large channels, and your strategy will be about aggregation. Grow your portfolio, not replace channels
- Big opportunity is around attacking existing channels (or new ones) in a unique way that’s tied to your product
- Product-channel fit is key (Pinterest + workplace productivity tool = dissonance)
- Examples for b2b: the calendar, the browser
- For consumer, there’s YouTube
The most exciting channels “right now” need to tie uniquely/directly to your product [9:02]
- “Right now” is the wrong way to think about it; it’s about the trajectory
- Stage 1: Map the user lifecycle:
- What are all the other tools, apps, offline experiences that your users are also coming into contact with?
- Find out what your product is most adjacent to
- Stage 2: Sizing / understanding the trajectory of all these things that are out there (at an MAU level).
- What kind of integration can you get?
- Some platforms are more conducive to virality or being used as a growth channel (instagram doesn’t give you a way to link out, so it’s less good of a channel VS youtube, which does allow cross linking and linking out)
- Channels have to match what people are trying to do with your product
You have to pick the right social channels for virality [11:30]
- Social isn’t just digital experiences; it’s also offline experiences
- So, “social channels” are any ways that your users / customers talk to each other to convey that the other person should try a product
- Direct recommendation or invite: “I’ve invited you to Facebook, you should use this.”
- Indirect recommendation or invite: “I’ve taken this cool Instagram photo, do you like it?”
- Same applies to B2B; Dropbox is an example of indirect.
- Digital is important because it’s attributable, but the broader takeaway is to create a product with a bunch of touchpoints in a user’s life; those touchpoints trigger natural recommendation or invite opportunities
How do products spread on social channels? [16:06]
- Extrinsic vs intrinsic motivation, and their accompanying rewards systems
- Extrinsic — get a direct reward for referring someone
- Intrinsic — my friends using this makes the experience better for me
- They’re not mutually exclusive, and can work well together
- Extrinsic is easier to bolt on after the fact, but intrinsic (built in to the product early on) creates deeper defensibility by creating network effects
“Going viral” doesn’t mean just building something cool [21:19]
- “I’ll just make something really cool, and people will talk about it” is not as sustainable as acquisition channels that are based on combined intrinsic and extrinsic motivations
- Example: Slack going viral
Not every platform is created equal (for virality). How do you build for the right one? [22:48]
- Anything that’s spreading from user to user is spreading on a platform that already exists.
- Platforms are built on top of each other (Facebook on top of .edu, many companies built on top of the Facebook platform) and certain ones are more suitable than others.
- Key questions to ask when evaluating platform potential:
- How easy is it for customers to communicate with one another?
- How much control do you have (via APIs or anything else) to customize the invite experience?
- Do you have the ability to add a link?
- Can you get ahold of an address book or social graph, in order to generate invites?
- You have to assess not only size and trajectory, but also how open is that platform? What are the hooks the it supplies you to build growth?