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.

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.

Focus on taking over a small market that will be big in 10 years. Build a product that a small number of people in a rapidly growing niche will really love.

It’s much easier to expand from something that a small number of people love to something that a lot of people love, than to grow something that a large number of people kinda like.

Create something so cool that it will spread through word of mouth.

Goodhart's law - "When a measure becomes a target, it ceases to be a good measure."

Once you pick a metric to evaluate human performance, increasing it becomes an incentive, and people will immediately start to game it. They'll ignore it's intended purpose and take any short-term shortcuts to maximize the number.

Founders may grow vanity metrics, raise more money, or increase number of employees whether or not this benefits the company, just because these numbers turned from metrics into goals

A local optimum is the best solution in a neighboring set of possible solutions, a global optimum is the optimal solution among all possible solutions.

You can get stuck in local optima when you're making small incremental improvements, but can't see the whole picture. At that point, you can't get better no matter how many small steps forward you take.

If you pick suboptimal career or a startup idea, you need to be willing to backtrack and explore other options.

4 types of innovation:

1. Basic research - making fundamental scientific discoveries.
(Deep Learning, Blockchain)

2. Breakthrough innovation - applying fundamental discoveries and thinking from first principles to engineer new products. (Tesla, SpaceX)

3. Disruptive innovation - finding new applications and business models.
(Uber, YCombinator)

4. Sustaining innovation - gradually improving what already exists, making it better/cheaper. Solving clear problems using preexisting skillsets.

Helpful framework for coming up with product ideas.

Identify:
- Market weakness - What are people frustrated about?
- Internal Strengths - what are you good at and passionate about?
- Adjacent Possibility - what has recently become possible thanks to new technology?

Find the overlap:
1. Is there some problem you have an aptitude for fixing?
2. How can brand new tech fix some old problem?
3. What new tech can you be good at?
4. How can new tech you're passionate about fix an old problem?

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