Designing Products for User-driven Growth
Losers betting on losers
If you listen to them, you’d be sure they are investors investing in promising startup founders. If you check the stats on how many startups fail and how many funds don’ return capital, you’d not be mistaken by calling them losers betting on losers. Most of them at least.
This article will be about winners, though. They are the players who choose their battle wisely: who study their opponents, get to know as much as possible about the playing field and only dare to play the game when they feel confident they have a real shot, a substantial edge, to thrive and prosper.
They try to visualize and predict the game, way before it’s played. They are the chess players of the startup world.
95% of startups fail and the #1 reason is that they run out of money before showing enough traction for other investors to join the party and invest more, keeping the lights on to see the dawn of another day.
Winners realize growth is the #1 priority and design and engineer their products for fast, scalable growth.
In the words of former Facebook product manager Andy Johns “Growth was about engineer systems of scale and enabling our users to grow the product for us.”
They realize user-driven growth is the holy grail of any successful startup poised to take over. They leverage their users to grow and bring in more users that will bring more users and keep the loop going.
How Snapchat and Whatsapp do it
Messagging apps like Snapchat and Whatsapp grow because their users can’t chat by themselves and need other people with the same app to exchange messages. Hence, they become the advocates, they tell others to download the app, so they can finally chat. The app spreads around fueled by people’s desire to keep in touch and communicate between each other (and sexting, you know).
How Airbnb did it
Airbnb in its early days leveraged users by allowing them to cross post their listings on both Airbnb and Craigslist. Lots of people saw them on Craigslist linking to Airbnb and found out about it that way. They also used to email Craigslist users telling them they could make more by posting their rooms and houses for rent on Airbnb as well and easily repost it on Craigslist. Users promoted Airbnb by promoting their own listings.
How Linkedin does it
Linkedin leveraged their users as well by asking them to invite all their email contacts to connect on the site, to grow their network bigger and increase everybody’s chances of success that a larger network could provide. Again, by building their own professional networks they has grown Linkedin userbase.
How Instragram does it
Instagram is another great play of growth design. Once the picture is taken and posted, the user can share it on Facebook and Twitter to show it to their friends and followers. Followers and friend see these nice pictures on their feeds, follow the links to Instagram and download the app to take such beautiful shots and show off on their social feeds.
How Dropbox does it
Dropbox offers an incentive to share the service with friends and give free space for every friend that signs up. Incentives are common: Airbnb uses them; Wealthfront uses them; Bitgold uses them by offering a quarter of a gram of real gold for both friends, the one who invites and the one who gets invited.
The higher the incentive they have and the easier it is to share it, the greater and more viral the user-driven growth will be.
Growth hacking is on everybody’s mouth, there are lists and lists of “the best curated hacks”.
To them I say: not needing growth hacks to grow is the ultimate growth hack and better. Design is the ultimate growth hack.
The growth wheels that keeps going by itself is the best.
When users are driving growth, you can focus on optimizing and focus on fine tuning the acquisition process or other things.
How to weed out losers
A good question to weed out weak founders is the following: how are you going to grow from 0 to millions of users/dollars in revenue?
You want to test their understanding of the design for growth. If they plan to build it “and then they’ll come”… Ouch.
Listen to their answer. Do they have a well-thought plan? Are they trying to think move every move in advance as if they are playing a chess game? Are they worried about other players making a move that would endanger their rise?
If investors were thorough with their analysis, they would waste less money on incompetent founders.
Don’t invest in ideas or products. Invest in distribution.
Todays’ products are yesterdays’ ideas worth a dime a dozen. Distribution is where the game’s at in 2016.
In the coming days I’m going to publish a tear down of the growth design of LeadIQ, dissecting what they are doing right and what’s crippling them heavily.