Notes on Startup Growth
(Most insightful things I have learned from the recent Startup School lectures)
Why retention is important:
If you have 7% revenue churn in a month (you lose 7% of paying users), it doesn't seem like a lot (you still keep 93% of your revenue), but that adds up to 58% in a year. So if you're a $1m/year startup, each year you have to figure out how to make up for $580k in lost revenue, and grow on top of that.
The more you grow, the harder and more expensive it will be for marketing to gain the amount of users you have lost.
Don't keep pouring water into a leaky bucket.
Startup growth formula:
Visits * Sign ups * People who found value * Retention * People who shared product = Growth.
Use these metrics to diagnose why startup is not growing and fix it.
To prioritize - forecast outcomes. How much effort will it take, how much value it will produce? Work on one thing that has the best ratio.
An example of Airbnb optimizing an invite email:
- Use inviter's name in the subject for social proof.
- Use big headline conveying clear value (get $40 on your first trip).
- Create urgency by setting a deadline, the date by which you can accept the invite.
- CTA button says "Accept invitation" instead of just "Sign up" creating more "sense of exclusivity".
- Inviter's name, social image, information on how long he's been a user - creates even more social proof.
Growth channels to explore:
- Do people use Google to find the kind of product you're offering?
Try Content Marketing + SEO.
- Do existing users already share your product via word of mouth?
Optimize Virality and Referrals (for example offer rewards for inviting new users).
- Can you make a list of all your potential customers?
Do sales (like calling the companies in your niche).
- Do users have high LTV?
Use paid acquisition (like Facebook ads).
Conversion rate optimization.
Your product is a funnel. There are multiple steps between the first time user sees your product and the moment he hands you money. Each step causes some drop off in number of people who follow to the next step.
Optimizing each of these steps increases the number of sales.
3 key types of conversions:
- Authentication (new user signups).
- Onboarding (new user experience taking them to receiving value).
- Purchase conversion (user buying your product).
Measuring Product Market Fit
Figure out what metric represents delivering the value to your customer, and what would be the ideal frequency for that to happen.
Facebook users should visit Facebook daily, Uber users should order rides weekly/monthly, Airbnb users should book apartments annually.
Then use that metric to measure your retention(how many users hit that target metric). If retention gradually drops to zero, your product is bad, if it flattens out at 10% it's good, 50% is great.
Social Media Announcement
List of the most valuable majors:
To sum it up:
- Computer Science/Engineering and related fields.
- Engineering of every kind - electrical, industrial, chemical, aerospace, etc.
- Math and Statistics.
- Physics, Chemistry, general science.
- General business, economics, marketing.
- Insurance, accounting, finance.
- Medicine and related stuff - biology, biochemistry, genetics.
- Neuroscience, cognitive science.
- Transportation, Construction, Agriculture.
When they've been making Halo games, they spent a lot of effort designing the perfect, most engaging 10-second experience. They figured that if they can make a game that's really fun to play for 10 seconds, they can repeat this 10 seconds fragment indefinitely, making the whole game very fun. It worked.
I keep that in mind when I design a UX for my app, or think about tweaking my work/hobbies to be more fun and optimized for flow.
Nail the 10 seconds that hook your brain, then just repeat.
Business challenges based on Stripe's report:
- Access to talent constraints growth
- Security/data breaches can threaten the business
- Bringing products to market faster and increasing sales are the areas where developers make the most impact
- ‘Bad code’ costs companies $85 billion in opportunity cost annually. Developers spend about half of their time dealing with bad code, errors, debugging, refactoring, addressing “technical debt”.
I love Startups, Programming, Science Fiction, and Comedy
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