Your new product’s key milestones December 15, 2020 by Luke Szyrmer Leave a Comment December 15, 2020 by Luke Szyrmer Leave a Comment time to break out the bubbly While it would be presumptuous of me to say that all startups have exactly the same milestones, there are certain key moments in the life of every high growth tech startup. made first sale to someone you didn’t know beforehand make sales repeatedly enter high growth phase, where sales grow exponentially The first sale The first key moment in the life of a startup is the first sale, because you’ve solved all of the above problems. If you’ve successfully done that, you’ve essentially proven you have an attractive offer. You’ve proven you’re serving a niche willing to pay for your product or service. You’ve proven that your product description and positioning are effective enough to start building a business. For startups focussed on high adoption and user growth initially in order to become more valuable, this means you delay this first sale significantly (for example to advertisers). While it does work, it’s a much riskier strategy because you can’t answer the above questions. You need to think through how you can mitigate that risk initially as much as you can. For example, you can speak with potential advertisers to learn how big of a user base they want before being willing to purchase ads. Alternatively, you can try introducing a different payment scheme, such as a transaction-based cost, where you make a few pennines on each transaction so that users barely notice they’re paying you. These details are very much dependent on the type of business you want to run. If you are starting a multi-sided market, such as an exchange, you need to address the needs and concerns of each group, i.e. both buyers and sellers, which will typically be very different, in order to get that first sale. Repeated sales After you celebrate the first sale, your next major milestone would be to make sales repeatedly. At this stage you will need some kind of product or solution which you offer, at least a minimum viable product which focuses on the biggest pain point your users have. While it may be of prototype quality, you have enough to continue talking with customers about their problem in much greater depth, as they gain experience with your product. The time frame depends significantly on the size of transaction. The larger the transaction size, the more objections you need to overcome. So for example, for a low priced product like an iPhone app, a startup should be aiming to sell multiple times per day. This is pretty much an impulse buy. For a much higher priced product, such as a B2B software solution, you’d want to see a few sales per quarter. Convincing a number of people across a business, each with their own agendas and needs, to buy a $70,000 software package requires you to overcome a lot of objections. Total revenue should be financially significant, where you are able to cover your operating costs for example or quit your day job if you’re a solo founder. Hockey stick Phase 3 means that you’ve hit message-market fit within a particular niche. At that point you need to scale. Your biggest bottleneck stops being marketing, and starts to be fulfillment. You make promises in your marketing which were easy to fulfill at the first stages, but become difficult to fulfill at this stage. Often this will mean major changes are required. For example, you may need to perform a complete rewrite of your technology to be able handle the growth. While a prototype-quality product was ok to prove the business concept, you need to ensure that you keep a high standard of performance as new customers are pouring in. For example Facebook needed to rewrite a significant part of their original PHP code into highly optimized C++ code for the key components of their architecture, such as the social graph construction so that their newsfeed could keep up. << Help Yo' Friends The Secret to a Successful Extreme Product Launch November 20, 2020 by Luke Szyrmer Leave a Comment If you could only do one thing before you launch, what would it be? I know what I would do. It's simple. It takes a few hours tops, to make it worthwhile. It's inexpensive, affordable even for a threadbare entrepreneur. Photographer: krakenimages | Source: Unsplash This is what it'll give you: You easily create a product or service which actually appeals to your chosen prospects. You describe it in language which resonates with your audience. You prevent wasting time on counterproductive work (which you can't know about without actually doing this first), both in your business processes and in any software you might build. You make it much easier for people to buy what they already want (cha ching!) Your customers immediately understand your product, which means they're more likely to buy it, get excited, and promote it afterwards Your product's good reputation explodes naturally You keep your whole team aligned around the customers' needs What is it? Photographer: Mimi Thian | Source: Unsplash Talk to your prospects. Intentionally don't sell them. Just learn about how they buy. How they live. What they need. That's it. Your riskiest assumptions are probably related to your prospects and customers. Establish empathy quickly with your target prospect, figure out what's valuable, and get your innovation into the market. People like to buy, they hate being sold to. If you can engineer your whole sales and marketing process so that it's pleasant, engaging, and persuasive, you will have all of the above. You just need to ask. At the right time. In the right way. Oh yeah, you'll also have a sales process that scales rapidly. Seems like a big gain for so little work. High impact. Low effort. Which reminds me… There's a whole chapter going deep into exactly how to do this in Launch Tomorrow. What questions to ask…what order to ask them in…what to listen for…and most importantly how to find people to interview. Grab your copy, and get crackin'. << Help Yo' Friends Why early stage virality can indicate product readiness June 26, 2020 by Luke Szyrmer Leave a Comment In the early days, when I was just polishing off the manuscript of Launch Tomorrow, I gave it to a friend who also lived and breathed startups. I specifically requested that he keep it quiet and just asked for feedback. Professionally, he was a marketer but in this case I was hoping to get some honest “tough love” from him. To make sure the book would be good. After speaking with him in person, I dropped a pdf into gmail, and forwarded it on to him. Coincidentally, I also happened to have an early trial version of Streak installed on my gmail account, which is an app which measures email opens, now primarily used by salespeople. Over the next week or so, it turned out 37 people had opened that email 56 times in different locations around London and Europe. This simple indicator was enough to convince me that the manuscript is definitely at least a minimum viable product. If not a bit more. There were a lot of tweaks I wanted to make, but clearly my idea audience was enjoying and using it. Even though this viral spread was accidental, ultimately I was pleased that my friend had effectively proven to me that my product was ready. This was a special case of someone who knew me well, the fact that he forwarded it without my consent and that it was re-forwarded so many times implied that my soon-to-be released product will be able to generate word of mouth referrals when I do launch. This was particularly poignant, given that this was a B2C product. Like most impulse buys, books (on their own) tend to be low $ value products. There is little margin for error with a high customer acquisition cost, yet you need to be great at generating awareness and discoverability. So you can only use channels that have a fixed cost up front but little additional variable cost of reaching another person. Going Viral While virality seems “free” from a financial point of view, it’s expensive in terms of your time. The idea is to create enough product (content in my case) which people naturally want to share. Once you have their attention, you include some kind of call to action which then turns into a conversion , like a sale. Or at least a micro conversion, like getting an email subscriber. Your riskiest assumptions are probably related to your prospects and customers. Establish empathy quickly with your target prospect, figure out what's valuable, and get your innovation into the market. Once people hear about your idea or your product, then they decide whether to buy it or not, and also whether to share it or not. Nowadays, it paradoxically seems easier to convince people to buy an inexpensive product than it does to get them to share it (at least for me). ???? Why virality can be an engine of growth Matthew Lieberman, author of “Social: Why Our Brains Are Wired to Connect” and professor of psychology says: We always seem to be on the lookout for who else will find this helpful, amusing or interesting, and our brain data are showing evidence of that. At the first encounter with information, people are already using the brain network involved in thinking about how this can be interesting to other people. We’re wired to want to share information with other people. I think that is a profound statement about the social nature of our minds. The main reason viral growth can be a massive growth engine is the fact that once you get beyond a certain tipping point, the sharing be comes so extreme that it reaches disproportionately many people. Numerically, if you see it as a coefficient, it will be multiplied with each person (or step), and that number can quickly get disproportionately large. My high school math teacher had a good example of this compounding effect. Would you prefer to get $1 mln today, or one penny today, two pennies tomorrow, continuing to double that amount for the entire month? This is, of course a trick question, designed to put teenagers in their place. The compounding penny option ends up being a much larger amount than the initial million. This metric of 37:1 was my viral transmission ratio on this particular event. Basically anything above 1:1 will lead to geometric growth, if it sustains at that rate. At a rate of 2:1 on a daily basis, you’d be at 2147483648 within 31 days. It’s just raw arithmetic: 2^31. So if the true long term viral transmission rate settled at 2:1 that would still mean the book had a captive audience with high latent demand-and that I needed to get it out there. The good thing about a viral growth engine is that it’s costless growth. As you don’t spend any money on building initial awareness, any revenues you do make are fully yours. If you do have financial constraints initially this can be a good place to start. The main drawback of viral growth is that results tend to be highly unpredictable and difficult to manufacture deliberately. Depending on how effectively you make your content unique and engaging, people will be more or less willing to share it. More often than not, all it takes is one share from someone with a large audience, and it will give you a big spike in traffic. It’s just that it’s difficult to get those initial share, particularly if no one knows who you are. Manufacturing Engagement The hard part is writing content good enough that people want to share it with their friends. To some extent, you can pre-test this by using what Andrew Chen’s twitter technique. He writes potential headlines as tweets, and then sees if anyone interacts with it. Once the idea is proven, via a favorite or a retweet, he uses that as a basis to write a longer piece on that topic. As a result, his growth hacking essays tend be highly focussed on his target audience’s needs. As a result of forwards, he effectively “clones” his existing audience. The content people forward tends to attract other interested in the same type of content. Another approach is to repurpose a backlog management service like uservoice or a kanban tool like trello combined with audience interaction. You can create a backlog of writing ideas, and then have your existing audience vote on them. This way you are naturally spending your time writing things which is attractive for them. It’s effectively a vetting and prioritization system for content, similar to prioritizing features in agile software development. If you’d like more ideas of how to experiment with growth, take a look at Your First startup experiment my book on getting you to that first experiment. De-risk your startup idea and figure out how to grow, grow, grow with Your First Startup Experiment. Key Takeaways Virality can be an engine of growth because it rapidly raises awareness at a low per-user cost The key is that you have each person refer more than one person to your product While the best way to get and keep this effect is to build a great product that addresses a market need, you can experiment with some tools to help engineer in virality << Help Yo' Friends How to pivot your business during lockdown April 24, 2020 by Luke Szyrmer Leave a Comment Recently I’ve been revisiting the launch and pivot process in my research, in an effort to help founders and innovators change strategic direction in their business. Here is an old piece I wrote that should give you concrete metrics to track your progress. These were specifically chosen to be relevant, independently of what budget is available (and thus hopefully make it more relevant nowadays. VCs and startup investors often say they’re looking for hustle in early stage founders. But that feels vague. And honestly, on its own, it’s not particularly useful feedback. More of a sophisticated way to end a pitching session they don’t want to be hearing. Until now. There are a few leading indicators you can use to keep yourself accountable, and to make sure you actually are hustling (and you’re not falling for your own PR). The following four operating metrics say a lot about an early stage startup’s chance for success. Your riskiest assumptions are probably related to your prospects and customers. Establish empathy quickly with your target prospect, figure out what's valuable, and get your innovation into the market. 1. Number of pitches A critical leading indicator metric of early stage success is how many pitches are you making each day (even if you aren’t trying to sell)? By “pitch”, I mean any attempt at asking someone for something, even if it’s just information. For example, this could mean approaching prospects for customer discovery or customer development interviews. If you are making them, then you are learning more about your audience and iterating towards something that is likelier to work. Also, you are converting some people, which means that you can then continue to build on that as time goes on. This includes: both outbound pitches, whether for sales or for customer interviews, inbound marketing, such as free content you create which you need to put in front of your target audience. advertising (impressions) With inbound, unless if you already have an audience, usually requires some form of gatekeeper pitching or payment. You to pitch media owners, journalists, editors to get coverage. Or you create content and just pay for advertising. And then pay attention to any response you get. At some point after you’ve done this for a while, you’ll know what people want and how to reach them and roughly how to sell them. At that point do it yourself a little bit and then it makes sense to delegate it to a professional salesperson to improve your closing ratios (if you need one). That’s actually a pretty good metric, because it’s a leading indicator for all learning. And learning is the #1 goal of startup, in order to stop being a startup, and to discover a business model which works. Notice how I’m not really including the “number of failures” or “failing fast”. That’s repeated so often in tech circles it’s become hollow and meaningless. I think being able to deal with rejection is possibly more important than being able to deal with “failure”, certainly in the tech startup world. Because even in technology the most important decisions that affect your startup or are made by people (customers, prospective co-founders, prospective employees). To be fair, not every founder is a natural salesperson. But every serious founding team needs to be willing and able to face lots of rejection in order to go after their vision. In fact, the number of rejections a founder is willing to take is a good measure of how strongly they believe in their vision, product, or goal. If you have a goal you believe in, but you’re only willing to be rejected 10 times before you give up on it, you can easily end up being a genius in your own mind but giving up almost immediately once you start doing anything related to marketing. 2. Number of experiments Another related metric is how many experiments are you running each week? If this is not at least 1, you are not going to get very far. Or other startups who are will run circles around you. Or you are trying to cram too much into one test, not really telling you anything useful. This is more of a product or operational metric. Basically, the more thorough and organized you are with this, the faster you will learn what you need to know. It never ceases to amaze me, how documenting my own hypothesis and metric before running an experiment is very useful, when interpreting the result. Because it’s so easy to twist the results into what you want them to mean. Most of the major technical breakthroughs result from lots and lots of experiments. They explore an area or technology with a lot of unknowns, including “unknown unknowns”. That’s why they’re surprising for everyone outside the founding team. Here’s a breakdown of roughly the number of experiment trials required to create a certain type of invention, based on patent filings. numbers of experiments needed to achieve a breakthrough product While this looks only at technology, the same principle is true in the case of proving the business model and finding a growth engine. By focussing only on tactics, you end up using exactly the same tactics as everyone else. So if everyone is reading the same 3-4 sources for ideas and trying exactly the same tactics at the same time, the tactics tend to quickly become useless. This the law of shitty clickthroughs happening–one growth hack a time. It’s so difficult and yet so vital to differentiate, if you are using exactly the same tactics as everyone else in your industry. Growth or business level experiments, and lots of them, are the only way to really discover an effective way of growing a startup. Also, if you aren’t running any experiments, you are only delaying “learning moments”. And if you do ultimately fail for one reason or another, it’s because you’ve delayed so many “learning moments” for so long, that reality comes crashing down on you. And usually this results in the Dunning Kruger effect. You are just clueless, and being confident in what you’re doing only makes it harder to discover you are actually clueless. It’s also a different way of looking at cycle time, which is an important indicator for people like Sam Altman of YCombinator. 3. Back to basics with customer empathy Many of the pivots required by the crisis require a change of customer type. Or at minimum a focus on a particular niche that currently have a lot going on. Like hospitals. Or Supply chains. Or Agriculture and food. In that context, do you really understand your audience as well as they do themselves? Do you know their needs? Wants? What they dream about at night? Who they’re influenced by? What questions they have? What media they consume? What they typically do? What obstacles they struggle with? Do you as the founding team empathize with the customers? Do you gather and systematize data on what they say and how they behave (as an indicator of subconscious needs)? Do you have a system for doing so, like Adrian Howard’s iterative personas and/or a hero canvas? If you really have this covered, it will help you build something people want. It will help you do channel testing to discover how to reach them cost effectively. It will resolve many types of conflict among your own team, if you agree to formulate a test, and then gather data to prove which approach, option, or decision is right. Your entire business model depends on it. Most frequently, either founders aren’t aware of how important this is, or if they are, they only use this if they think it will further their own agenda (for example improving the user experience, regardless of the wider business context). 4. Goal setting and delegation Probably another really big one is lame goal setting as a founding team, which impacts your ability to ship anything, particularly at the early stages. Knowing what you want to accomplish and giving your team deadlines. This is kind of related to: succumbing to distractions (bight and shiny object syndrome) indefinitely being stuck in learning mode inability to delegate work. Drifting along indefinitely is not good. And this is often left implicit, avoiding difficult discussions, and ultimately festering and resulting in things like cofounders leaving, etc. If you really want to build a startup, at some point, you need to finish stuff as well as just learn. Which means you always need target completion dates, or at least timeboxes. In the early stages, these will tend to be very tactical and short term, because you are learning and you don’t want to commit to a “five year plan” if you don’t have any reason to do so, like revenue or traction. Even if it means have a clear goal of what you want to accomplish in the next 2 week sprint and what that matters, that will help a lot. And also having everyone on your team agree that this is your goal, and how you will track it (so that it is objectively observable). Admittedly, at first your only goal is to learn. But shifting slowly into execution mode, is inevitable as you start proving parts of your business model. Most of the internal problems that I see with early stage startup founders boils down to variations of one of these four factors. Key Takeaways The 4 key areas to achieve a successful pivot during the lockdown are: Number of pitches or contact points with new customers Number of experiments you are running Revisiting your customer segments and re-establishing empathy Setting clear goals you and your team can work towards << Help Yo' Friends How to grow your new venture 10% week after week after week December 25, 2019 by Luke Szyrmer Leave a Comment One of the really “hard things” about the startup game is getting on a growth trajectory that grows exponentially. VCs debate how fast you should be growing on a weekly basis. But one thing about growth is clear. Instead of having the occasional bump in sales or growth, high growth startups are systematic in how they pursue their results. In particular, the heavy focus in this deep dive is on channel testing. Strategyzer’s Business Model Canvas: channel testing The following is based on a discussion with Nemo Cerovac (@ncerovac), the cofounding team member responsible for the explosive growth of FishingBooker, a site that has been dubbed the AirBnB of fishing charters. Nemo Cerovac Meeting customers where they already are–at first In our first year, we spent a lot of time on the captains’ side. Finding things that worked for us. We realized that initially we could do 10% growth weekly by sending emails to captains. Targeting captains in the harbour We tried to target a couple of Captains in the same Harbor, call them up, talk with them. Initially, reactions were mixed. “Why would I sign up on the platform that is getting a commission from this? Why would I register there? You didn’t exist? I don’t know who you are.” What started happening eventually was they heard from potential customers and previous customers. We were heavily targeting consumers with ads. Your riskiest assumptions are probably related to your prospects and customers. Establish empathy quickly with your target prospect, figure out what's valuable, and get your innovation into the market. Once we got one or two captains from the Harbor, and we were killing it with Google ads, they start saying, “Oh, I got like two clients from this FishingBooker this month.” Moreover, the same Captains who were skeptical initially came back. They’re like, “Hey, you know you contacted me like three, four months ago. Let’s talk again.” It was a roller coaster. Going and meeting everyone in person helped a lot. When we went to Florida, we were going from Harbor to Harbor. Just meeting people there. Just talking with them, showing them the platform, and just meeting every notable potential user. In the end, I think it was the user drive that got us the captains. At first, it’s also no harm. You’re showing captains the approach: “Hey, this looks professional. You don’t need to do anything. If we get you some bookings, then we earn something from it.” Growing the user base There were a lot of chicken and egg problems. To be honest, Vukan’s mindset helped a lot. Vukan, the CEO, was super focussed. We were really pushing hardcore. We were figuring out each channel. For users, we figured out that the best channel for consumers at the start was paid advertising: Google ads. Finding them where they are, not where you want them to be. Basically, most people search for “fishing charters in Maldives” when they’re preparing for the trip. Or they just reserved a hotel, and now they want to plan their activities. That’s the moment of strongest intent. The easiest moment to convert. Once we figured that out, we then just focused on adding money. To convert as many as possible. We were trying to stick to this ratio where 30% of the revenue goes to paid advertising. We were pushing hard. The Golden Numbers Every Monday, we would have this white board in front of us. We listed our golden numbers. Golden numbers are the metrics that are the most important for your product–to make it or break it, at that stage. [Ed note: check out this KPI checklist to choose golden metrics for your team]. In our early days, our golden numbers were: number of captains that register on the platform number of captains that finished their profile or uploaded at least one of their boats there number of people that booked this week or this month the number of bookings started but not completed Every Monday we would look at our numbers from the previous week. We would compare them to our targets from the previous week. Our goal was 10% growth per week. Especially in the start, we had a heavy focus on testing. As fast as possible. Find what’s working, and what’s not working. Let’s say we wanted to have 10 Captains registered that week, and we hit seven. We then discussed why this happened, and tried to analyze why. Was it something that we can influence? or something that we can’t? So, sometimes it would be like, “Oh, I was sad. I was sick. Or I wasn’t focused.” If it was a problem in our control, and a channel was getting lower and lower results week on week for 4 weeks. We then decided we should try something else, since there was a clear pattern over time. These numbers and discussions forced us to think about immediate results. You want to act upon things that give immediate results first. You don’t have time to think about, “Oh, what would happen if we did this or that?” Should we go do a road show? a conference or not? A failed channel experiment After going to conferences, we realized it’s a waste of time. For us. At that time. We didn’t get anything. If you’re building the right thing, you don’t need the conference to continue building things. I’m still maybe a bit harsh on conferences. People who attend conferences usually want to chill in a half-work environment. Some people go to build up their ego. Photographer: Marília Castelli | Source: Unsplash The upside of conferences, though, is if there are potential clients or users attending. If somebody can benefit from what you’re doing is there–and it’s not just two people– then it might be worth it. Like ship captains, in our case. Or people that are interested in fishing. Then you can try to invest your time in it. But even then, be careful. Let’s say you convert 10 Captains at a conference. That’s the same amount that we get from sending cold emails to Captains and calling them on the phone in one week. During that one week, you can sit in the office and work on this for 20% of your time. Then you are free to do other stuff with the rest of your time. During a conference, you’re running around. You are trying to meet people. And you need to prepare beforehand to know who’s attending. If you have time, you introduce yourself earlier. Basically, you need to measure and compare the benefits of using each channel. Conferences do have a place. They help us to connect. They help us meet new and interesting people. So, I definitely recommend people attend conferences, as long as they have this perspective. The 10x Game Something I call the 10x game came from this idea of focusing on immediate results only. Often when you start, you start thinking about a lot of things. A lot of concerns. It’s easy to get distracted. You even start thinking of problems that are not immediate problems. Or immediate tasks that you need to complete now. For example, you are trying to think of how to optimize the process for 1000 users, but you only have five. It’s just not the best use of your time at this moment. Sure, you need to think about that in the future. But at the moment, park that idea. Put it aside. Because it sucks time from what matters now. Here’s how the 10x Game works 1. Pull out a box of multicolored post its with your team 2. Calculate what order of magitude you want to start with. This sounds complicated but actually it’s really simple. Take the number of clients you currently have. And then figure out the next power of 10 from that number: 10^1=10 10^2=100 10^3=1000 10^4=10000 Let’s say you have 33 customers. Then 100 would be your next power of 10. If you have 0, just use 10 as a baseline. 3. Assuming that is your next milestone, what marketing channels do you think will help get you to that number? So if you don’t have any customers yet, how do you want to get your first 10 customers. Take your stack of post-its, choose a color and brainstorm at least 10 different ways you can reach your target customers. 4. Then, repeat for the next power of 10 using a different color, and repeat again. 5. Finally, loop back to your first set of ideas. Priortize them. You can do this using dot-voting or any other mechanism that works for you & your team. This results in a lot of ideas, clearly prioritized in terms of what you need to do first. It give you the space to think big, but also helps you drill down into what needs to happen right now. Same channel today, different results When you have 10 Captains and you want to grow 10 more Captains next week, then maybe a conference is not the best way to go. Or a hundred Captains in the next two months. The conference was more useful for branding purposes. Just not relevant to the golden numbers at the time. Now, FishingBooker goes to a lot of conferences as a brand. You want to position and build a strong brand. You want to be in people’s minds. Once you have a budget for that, it becomes an opportunity. I saw the team a couple of months ago. They were speaking at a Google conference about their experiences. building the brand is a good use case for conferences at a later stage FishingBooker is roughly a hundred people today. It’s still one of the top Google ads spenders in Eastern Europe. Conferences were just one of the channels we tried. And as you can see, different channels are appropriate at different levels of a startup’s growth trajectory. Stepping back This is Luke again… This same insight can be applied to pretty much any channel you might consider. Everything from cold outreach, PR stunts, or any other marketing tactic which you might dream up. The numbers give them context. They are a filter to help you focus on what matters right now. On a small scale of the first 10 customers, it’s possible for the co-founders to do the majority of this work, possibly with some help. As the startup being growing, there will be different requirements to hit 100 customers. And 1,000. And so on. Key Takeaways Use Golden Numbers to drive team conversations about inputs, tasks, and alternatives needed to achieve results Focus on factors under your control and take action on trends over time Channels that might be inappropriate initially can be very appropriate later when the company is larger If you enjoyed this post, and would like to try out the 10x Game with Luke’s help, there will be an upcoming online & free 10x Game workshop you can join. Get notified when this happens! << Help Yo' Friends 1 2 3 Next Page »
The Secret to a Successful Extreme Product Launch November 20, 2020 by Luke Szyrmer Leave a Comment If you could only do one thing before you launch, what would it be? I know what I would do. It's simple. It takes a few hours tops, to make it worthwhile. It's inexpensive, affordable even for a threadbare entrepreneur. Photographer: krakenimages | Source: Unsplash This is what it'll give you: You easily create a product or service which actually appeals to your chosen prospects. You describe it in language which resonates with your audience. You prevent wasting time on counterproductive work (which you can't know about without actually doing this first), both in your business processes and in any software you might build. You make it much easier for people to buy what they already want (cha ching!) Your customers immediately understand your product, which means they're more likely to buy it, get excited, and promote it afterwards Your product's good reputation explodes naturally You keep your whole team aligned around the customers' needs What is it? Photographer: Mimi Thian | Source: Unsplash Talk to your prospects. Intentionally don't sell them. Just learn about how they buy. How they live. What they need. That's it. Your riskiest assumptions are probably related to your prospects and customers. Establish empathy quickly with your target prospect, figure out what's valuable, and get your innovation into the market. People like to buy, they hate being sold to. If you can engineer your whole sales and marketing process so that it's pleasant, engaging, and persuasive, you will have all of the above. You just need to ask. At the right time. In the right way. Oh yeah, you'll also have a sales process that scales rapidly. Seems like a big gain for so little work. High impact. Low effort. Which reminds me… There's a whole chapter going deep into exactly how to do this in Launch Tomorrow. What questions to ask…what order to ask them in…what to listen for…and most importantly how to find people to interview. Grab your copy, and get crackin'. << Help Yo' Friends
Why early stage virality can indicate product readiness June 26, 2020 by Luke Szyrmer Leave a Comment In the early days, when I was just polishing off the manuscript of Launch Tomorrow, I gave it to a friend who also lived and breathed startups. I specifically requested that he keep it quiet and just asked for feedback. Professionally, he was a marketer but in this case I was hoping to get some honest “tough love” from him. To make sure the book would be good. After speaking with him in person, I dropped a pdf into gmail, and forwarded it on to him. Coincidentally, I also happened to have an early trial version of Streak installed on my gmail account, which is an app which measures email opens, now primarily used by salespeople. Over the next week or so, it turned out 37 people had opened that email 56 times in different locations around London and Europe. This simple indicator was enough to convince me that the manuscript is definitely at least a minimum viable product. If not a bit more. There were a lot of tweaks I wanted to make, but clearly my idea audience was enjoying and using it. Even though this viral spread was accidental, ultimately I was pleased that my friend had effectively proven to me that my product was ready. This was a special case of someone who knew me well, the fact that he forwarded it without my consent and that it was re-forwarded so many times implied that my soon-to-be released product will be able to generate word of mouth referrals when I do launch. This was particularly poignant, given that this was a B2C product. Like most impulse buys, books (on their own) tend to be low $ value products. There is little margin for error with a high customer acquisition cost, yet you need to be great at generating awareness and discoverability. So you can only use channels that have a fixed cost up front but little additional variable cost of reaching another person. Going Viral While virality seems “free” from a financial point of view, it’s expensive in terms of your time. The idea is to create enough product (content in my case) which people naturally want to share. Once you have their attention, you include some kind of call to action which then turns into a conversion , like a sale. Or at least a micro conversion, like getting an email subscriber. Your riskiest assumptions are probably related to your prospects and customers. Establish empathy quickly with your target prospect, figure out what's valuable, and get your innovation into the market. Once people hear about your idea or your product, then they decide whether to buy it or not, and also whether to share it or not. Nowadays, it paradoxically seems easier to convince people to buy an inexpensive product than it does to get them to share it (at least for me). ???? Why virality can be an engine of growth Matthew Lieberman, author of “Social: Why Our Brains Are Wired to Connect” and professor of psychology says: We always seem to be on the lookout for who else will find this helpful, amusing or interesting, and our brain data are showing evidence of that. At the first encounter with information, people are already using the brain network involved in thinking about how this can be interesting to other people. We’re wired to want to share information with other people. I think that is a profound statement about the social nature of our minds. The main reason viral growth can be a massive growth engine is the fact that once you get beyond a certain tipping point, the sharing be comes so extreme that it reaches disproportionately many people. Numerically, if you see it as a coefficient, it will be multiplied with each person (or step), and that number can quickly get disproportionately large. My high school math teacher had a good example of this compounding effect. Would you prefer to get $1 mln today, or one penny today, two pennies tomorrow, continuing to double that amount for the entire month? This is, of course a trick question, designed to put teenagers in their place. The compounding penny option ends up being a much larger amount than the initial million. This metric of 37:1 was my viral transmission ratio on this particular event. Basically anything above 1:1 will lead to geometric growth, if it sustains at that rate. At a rate of 2:1 on a daily basis, you’d be at 2147483648 within 31 days. It’s just raw arithmetic: 2^31. So if the true long term viral transmission rate settled at 2:1 that would still mean the book had a captive audience with high latent demand-and that I needed to get it out there. The good thing about a viral growth engine is that it’s costless growth. As you don’t spend any money on building initial awareness, any revenues you do make are fully yours. If you do have financial constraints initially this can be a good place to start. The main drawback of viral growth is that results tend to be highly unpredictable and difficult to manufacture deliberately. Depending on how effectively you make your content unique and engaging, people will be more or less willing to share it. More often than not, all it takes is one share from someone with a large audience, and it will give you a big spike in traffic. It’s just that it’s difficult to get those initial share, particularly if no one knows who you are. Manufacturing Engagement The hard part is writing content good enough that people want to share it with their friends. To some extent, you can pre-test this by using what Andrew Chen’s twitter technique. He writes potential headlines as tweets, and then sees if anyone interacts with it. Once the idea is proven, via a favorite or a retweet, he uses that as a basis to write a longer piece on that topic. As a result, his growth hacking essays tend be highly focussed on his target audience’s needs. As a result of forwards, he effectively “clones” his existing audience. The content people forward tends to attract other interested in the same type of content. Another approach is to repurpose a backlog management service like uservoice or a kanban tool like trello combined with audience interaction. You can create a backlog of writing ideas, and then have your existing audience vote on them. This way you are naturally spending your time writing things which is attractive for them. It’s effectively a vetting and prioritization system for content, similar to prioritizing features in agile software development. If you’d like more ideas of how to experiment with growth, take a look at Your First startup experiment my book on getting you to that first experiment. De-risk your startup idea and figure out how to grow, grow, grow with Your First Startup Experiment. Key Takeaways Virality can be an engine of growth because it rapidly raises awareness at a low per-user cost The key is that you have each person refer more than one person to your product While the best way to get and keep this effect is to build a great product that addresses a market need, you can experiment with some tools to help engineer in virality << Help Yo' Friends
How to pivot your business during lockdown April 24, 2020 by Luke Szyrmer Leave a Comment Recently I’ve been revisiting the launch and pivot process in my research, in an effort to help founders and innovators change strategic direction in their business. Here is an old piece I wrote that should give you concrete metrics to track your progress. These were specifically chosen to be relevant, independently of what budget is available (and thus hopefully make it more relevant nowadays. VCs and startup investors often say they’re looking for hustle in early stage founders. But that feels vague. And honestly, on its own, it’s not particularly useful feedback. More of a sophisticated way to end a pitching session they don’t want to be hearing. Until now. There are a few leading indicators you can use to keep yourself accountable, and to make sure you actually are hustling (and you’re not falling for your own PR). The following four operating metrics say a lot about an early stage startup’s chance for success. Your riskiest assumptions are probably related to your prospects and customers. Establish empathy quickly with your target prospect, figure out what's valuable, and get your innovation into the market. 1. Number of pitches A critical leading indicator metric of early stage success is how many pitches are you making each day (even if you aren’t trying to sell)? By “pitch”, I mean any attempt at asking someone for something, even if it’s just information. For example, this could mean approaching prospects for customer discovery or customer development interviews. If you are making them, then you are learning more about your audience and iterating towards something that is likelier to work. Also, you are converting some people, which means that you can then continue to build on that as time goes on. This includes: both outbound pitches, whether for sales or for customer interviews, inbound marketing, such as free content you create which you need to put in front of your target audience. advertising (impressions) With inbound, unless if you already have an audience, usually requires some form of gatekeeper pitching or payment. You to pitch media owners, journalists, editors to get coverage. Or you create content and just pay for advertising. And then pay attention to any response you get. At some point after you’ve done this for a while, you’ll know what people want and how to reach them and roughly how to sell them. At that point do it yourself a little bit and then it makes sense to delegate it to a professional salesperson to improve your closing ratios (if you need one). That’s actually a pretty good metric, because it’s a leading indicator for all learning. And learning is the #1 goal of startup, in order to stop being a startup, and to discover a business model which works. Notice how I’m not really including the “number of failures” or “failing fast”. That’s repeated so often in tech circles it’s become hollow and meaningless. I think being able to deal with rejection is possibly more important than being able to deal with “failure”, certainly in the tech startup world. Because even in technology the most important decisions that affect your startup or are made by people (customers, prospective co-founders, prospective employees). To be fair, not every founder is a natural salesperson. But every serious founding team needs to be willing and able to face lots of rejection in order to go after their vision. In fact, the number of rejections a founder is willing to take is a good measure of how strongly they believe in their vision, product, or goal. If you have a goal you believe in, but you’re only willing to be rejected 10 times before you give up on it, you can easily end up being a genius in your own mind but giving up almost immediately once you start doing anything related to marketing. 2. Number of experiments Another related metric is how many experiments are you running each week? If this is not at least 1, you are not going to get very far. Or other startups who are will run circles around you. Or you are trying to cram too much into one test, not really telling you anything useful. This is more of a product or operational metric. Basically, the more thorough and organized you are with this, the faster you will learn what you need to know. It never ceases to amaze me, how documenting my own hypothesis and metric before running an experiment is very useful, when interpreting the result. Because it’s so easy to twist the results into what you want them to mean. Most of the major technical breakthroughs result from lots and lots of experiments. They explore an area or technology with a lot of unknowns, including “unknown unknowns”. That’s why they’re surprising for everyone outside the founding team. Here’s a breakdown of roughly the number of experiment trials required to create a certain type of invention, based on patent filings. numbers of experiments needed to achieve a breakthrough product While this looks only at technology, the same principle is true in the case of proving the business model and finding a growth engine. By focussing only on tactics, you end up using exactly the same tactics as everyone else. So if everyone is reading the same 3-4 sources for ideas and trying exactly the same tactics at the same time, the tactics tend to quickly become useless. This the law of shitty clickthroughs happening–one growth hack a time. It’s so difficult and yet so vital to differentiate, if you are using exactly the same tactics as everyone else in your industry. Growth or business level experiments, and lots of them, are the only way to really discover an effective way of growing a startup. Also, if you aren’t running any experiments, you are only delaying “learning moments”. And if you do ultimately fail for one reason or another, it’s because you’ve delayed so many “learning moments” for so long, that reality comes crashing down on you. And usually this results in the Dunning Kruger effect. You are just clueless, and being confident in what you’re doing only makes it harder to discover you are actually clueless. It’s also a different way of looking at cycle time, which is an important indicator for people like Sam Altman of YCombinator. 3. Back to basics with customer empathy Many of the pivots required by the crisis require a change of customer type. Or at minimum a focus on a particular niche that currently have a lot going on. Like hospitals. Or Supply chains. Or Agriculture and food. In that context, do you really understand your audience as well as they do themselves? Do you know their needs? Wants? What they dream about at night? Who they’re influenced by? What questions they have? What media they consume? What they typically do? What obstacles they struggle with? Do you as the founding team empathize with the customers? Do you gather and systematize data on what they say and how they behave (as an indicator of subconscious needs)? Do you have a system for doing so, like Adrian Howard’s iterative personas and/or a hero canvas? If you really have this covered, it will help you build something people want. It will help you do channel testing to discover how to reach them cost effectively. It will resolve many types of conflict among your own team, if you agree to formulate a test, and then gather data to prove which approach, option, or decision is right. Your entire business model depends on it. Most frequently, either founders aren’t aware of how important this is, or if they are, they only use this if they think it will further their own agenda (for example improving the user experience, regardless of the wider business context). 4. Goal setting and delegation Probably another really big one is lame goal setting as a founding team, which impacts your ability to ship anything, particularly at the early stages. Knowing what you want to accomplish and giving your team deadlines. This is kind of related to: succumbing to distractions (bight and shiny object syndrome) indefinitely being stuck in learning mode inability to delegate work. Drifting along indefinitely is not good. And this is often left implicit, avoiding difficult discussions, and ultimately festering and resulting in things like cofounders leaving, etc. If you really want to build a startup, at some point, you need to finish stuff as well as just learn. Which means you always need target completion dates, or at least timeboxes. In the early stages, these will tend to be very tactical and short term, because you are learning and you don’t want to commit to a “five year plan” if you don’t have any reason to do so, like revenue or traction. Even if it means have a clear goal of what you want to accomplish in the next 2 week sprint and what that matters, that will help a lot. And also having everyone on your team agree that this is your goal, and how you will track it (so that it is objectively observable). Admittedly, at first your only goal is to learn. But shifting slowly into execution mode, is inevitable as you start proving parts of your business model. Most of the internal problems that I see with early stage startup founders boils down to variations of one of these four factors. Key Takeaways The 4 key areas to achieve a successful pivot during the lockdown are: Number of pitches or contact points with new customers Number of experiments you are running Revisiting your customer segments and re-establishing empathy Setting clear goals you and your team can work towards << Help Yo' Friends
How to grow your new venture 10% week after week after week December 25, 2019 by Luke Szyrmer Leave a Comment One of the really “hard things” about the startup game is getting on a growth trajectory that grows exponentially. VCs debate how fast you should be growing on a weekly basis. But one thing about growth is clear. Instead of having the occasional bump in sales or growth, high growth startups are systematic in how they pursue their results. In particular, the heavy focus in this deep dive is on channel testing. Strategyzer’s Business Model Canvas: channel testing The following is based on a discussion with Nemo Cerovac (@ncerovac), the cofounding team member responsible for the explosive growth of FishingBooker, a site that has been dubbed the AirBnB of fishing charters. Nemo Cerovac Meeting customers where they already are–at first In our first year, we spent a lot of time on the captains’ side. Finding things that worked for us. We realized that initially we could do 10% growth weekly by sending emails to captains. Targeting captains in the harbour We tried to target a couple of Captains in the same Harbor, call them up, talk with them. Initially, reactions were mixed. “Why would I sign up on the platform that is getting a commission from this? Why would I register there? You didn’t exist? I don’t know who you are.” What started happening eventually was they heard from potential customers and previous customers. We were heavily targeting consumers with ads. Your riskiest assumptions are probably related to your prospects and customers. Establish empathy quickly with your target prospect, figure out what's valuable, and get your innovation into the market. Once we got one or two captains from the Harbor, and we were killing it with Google ads, they start saying, “Oh, I got like two clients from this FishingBooker this month.” Moreover, the same Captains who were skeptical initially came back. They’re like, “Hey, you know you contacted me like three, four months ago. Let’s talk again.” It was a roller coaster. Going and meeting everyone in person helped a lot. When we went to Florida, we were going from Harbor to Harbor. Just meeting people there. Just talking with them, showing them the platform, and just meeting every notable potential user. In the end, I think it was the user drive that got us the captains. At first, it’s also no harm. You’re showing captains the approach: “Hey, this looks professional. You don’t need to do anything. If we get you some bookings, then we earn something from it.” Growing the user base There were a lot of chicken and egg problems. To be honest, Vukan’s mindset helped a lot. Vukan, the CEO, was super focussed. We were really pushing hardcore. We were figuring out each channel. For users, we figured out that the best channel for consumers at the start was paid advertising: Google ads. Finding them where they are, not where you want them to be. Basically, most people search for “fishing charters in Maldives” when they’re preparing for the trip. Or they just reserved a hotel, and now they want to plan their activities. That’s the moment of strongest intent. The easiest moment to convert. Once we figured that out, we then just focused on adding money. To convert as many as possible. We were trying to stick to this ratio where 30% of the revenue goes to paid advertising. We were pushing hard. The Golden Numbers Every Monday, we would have this white board in front of us. We listed our golden numbers. Golden numbers are the metrics that are the most important for your product–to make it or break it, at that stage. [Ed note: check out this KPI checklist to choose golden metrics for your team]. In our early days, our golden numbers were: number of captains that register on the platform number of captains that finished their profile or uploaded at least one of their boats there number of people that booked this week or this month the number of bookings started but not completed Every Monday we would look at our numbers from the previous week. We would compare them to our targets from the previous week. Our goal was 10% growth per week. Especially in the start, we had a heavy focus on testing. As fast as possible. Find what’s working, and what’s not working. Let’s say we wanted to have 10 Captains registered that week, and we hit seven. We then discussed why this happened, and tried to analyze why. Was it something that we can influence? or something that we can’t? So, sometimes it would be like, “Oh, I was sad. I was sick. Or I wasn’t focused.” If it was a problem in our control, and a channel was getting lower and lower results week on week for 4 weeks. We then decided we should try something else, since there was a clear pattern over time. These numbers and discussions forced us to think about immediate results. You want to act upon things that give immediate results first. You don’t have time to think about, “Oh, what would happen if we did this or that?” Should we go do a road show? a conference or not? A failed channel experiment After going to conferences, we realized it’s a waste of time. For us. At that time. We didn’t get anything. If you’re building the right thing, you don’t need the conference to continue building things. I’m still maybe a bit harsh on conferences. People who attend conferences usually want to chill in a half-work environment. Some people go to build up their ego. Photographer: Marília Castelli | Source: Unsplash The upside of conferences, though, is if there are potential clients or users attending. If somebody can benefit from what you’re doing is there–and it’s not just two people– then it might be worth it. Like ship captains, in our case. Or people that are interested in fishing. Then you can try to invest your time in it. But even then, be careful. Let’s say you convert 10 Captains at a conference. That’s the same amount that we get from sending cold emails to Captains and calling them on the phone in one week. During that one week, you can sit in the office and work on this for 20% of your time. Then you are free to do other stuff with the rest of your time. During a conference, you’re running around. You are trying to meet people. And you need to prepare beforehand to know who’s attending. If you have time, you introduce yourself earlier. Basically, you need to measure and compare the benefits of using each channel. Conferences do have a place. They help us to connect. They help us meet new and interesting people. So, I definitely recommend people attend conferences, as long as they have this perspective. The 10x Game Something I call the 10x game came from this idea of focusing on immediate results only. Often when you start, you start thinking about a lot of things. A lot of concerns. It’s easy to get distracted. You even start thinking of problems that are not immediate problems. Or immediate tasks that you need to complete now. For example, you are trying to think of how to optimize the process for 1000 users, but you only have five. It’s just not the best use of your time at this moment. Sure, you need to think about that in the future. But at the moment, park that idea. Put it aside. Because it sucks time from what matters now. Here’s how the 10x Game works 1. Pull out a box of multicolored post its with your team 2. Calculate what order of magitude you want to start with. This sounds complicated but actually it’s really simple. Take the number of clients you currently have. And then figure out the next power of 10 from that number: 10^1=10 10^2=100 10^3=1000 10^4=10000 Let’s say you have 33 customers. Then 100 would be your next power of 10. If you have 0, just use 10 as a baseline. 3. Assuming that is your next milestone, what marketing channels do you think will help get you to that number? So if you don’t have any customers yet, how do you want to get your first 10 customers. Take your stack of post-its, choose a color and brainstorm at least 10 different ways you can reach your target customers. 4. Then, repeat for the next power of 10 using a different color, and repeat again. 5. Finally, loop back to your first set of ideas. Priortize them. You can do this using dot-voting or any other mechanism that works for you & your team. This results in a lot of ideas, clearly prioritized in terms of what you need to do first. It give you the space to think big, but also helps you drill down into what needs to happen right now. Same channel today, different results When you have 10 Captains and you want to grow 10 more Captains next week, then maybe a conference is not the best way to go. Or a hundred Captains in the next two months. The conference was more useful for branding purposes. Just not relevant to the golden numbers at the time. Now, FishingBooker goes to a lot of conferences as a brand. You want to position and build a strong brand. You want to be in people’s minds. Once you have a budget for that, it becomes an opportunity. I saw the team a couple of months ago. They were speaking at a Google conference about their experiences. building the brand is a good use case for conferences at a later stage FishingBooker is roughly a hundred people today. It’s still one of the top Google ads spenders in Eastern Europe. Conferences were just one of the channels we tried. And as you can see, different channels are appropriate at different levels of a startup’s growth trajectory. Stepping back This is Luke again… This same insight can be applied to pretty much any channel you might consider. Everything from cold outreach, PR stunts, or any other marketing tactic which you might dream up. The numbers give them context. They are a filter to help you focus on what matters right now. On a small scale of the first 10 customers, it’s possible for the co-founders to do the majority of this work, possibly with some help. As the startup being growing, there will be different requirements to hit 100 customers. And 1,000. And so on. Key Takeaways Use Golden Numbers to drive team conversations about inputs, tasks, and alternatives needed to achieve results Focus on factors under your control and take action on trends over time Channels that might be inappropriate initially can be very appropriate later when the company is larger If you enjoyed this post, and would like to try out the 10x Game with Luke’s help, there will be an upcoming online & free 10x Game workshop you can join. Get notified when this happens! << Help Yo' Friends
