Traveling across 4 Southeast Asian countries (Indonesia, Singapore, Malaysia and Thailand) in the last month, I met early stage CEOs to talk about the way they see internationalization and growth for their startups. From incubators and company builders to stand-alone startups, every one of them puts growth in the spotlight and understands how critical it is to focus on numbers. Unfortunately, many of them ask (mainly themselves) the wrong questions when it comes to growth. To help founders avoid this trap I’ve collected the Top 5 questions that they have asked me about growth and explained what questions they need to focus on.
1. I have 400 downloads, how do I achieve more?
The question that you actually need to ask: “What assumptions am I making, and can I validate them with the current numbers?”
Everything you think about your product market fit, business model and target group at the beginning of every venture is an ASSUMPTION. I know it takes a lot of guts to agree that you might be wrong, but who said building a startup will be easy?
Assumptions come in different forms and here are some common examples:
- This app is for an independent women, 25–35 years old living in big cities (this is an assumption)
- I build a better product than my competitors because… (this is also an assumption because usually you haven’t asked users yet)
- The market is ready for a disruptive technology like mine, because… (still an assumption, until you show me how your numbers correlate with the market trend).
You are able to validate these assumptions with as little as 100 users. Break your alpha in phases (for example 2 weeks), introduce new users to the system in every phase and see how you prove or disprove your assumptions. Tweak the product on each phase, be fast to catch and adapt to the numbers you are seeing.
You will know where to get more users as soon as you clearly understand who they are and what their behaviour patterns are.
2. How should I create a dashboard for KPIs?
The correct question: What is my one and only KPI to track?
If you need a dashboard for your early stage startup it means you have more than 3 KPIs to track.
Start with one.
Boil it down. What is your sacred KPI? And be careful, you need to make sure this KPI is connected to your business. For a taxi app, it will be the number of orders, not the number of downloads. It is the same for social apps, count content that was generated, not the users.
Make sure you use the same names for events and KPIs in different tools and they are triggered by the same logic.
In the very beginning, focus on a maximum of 3 numbers and add them later, when you know by heart how the initial 3 KPIs affect your business. Your team members should know how these 3 KPI grow day by day and how their common effort affects the company wealth.
3. How do I make sure users share information about my product?
The right question to ask: How do the users that share my product describe it, and why do they feel the urge to share it in the first place?
We’ve all heard about viral loops and maps, and that in order to achieve organic growth we need to first make sure that users share information about us. The common mistake every first-time startup founder makes is to concentrate on the media, not on the message.
Ask yourself first:
How many users actually like the product so much that they have an urge (and I mean it when I say “urge”) to tell their friends, coworkers and even complete strangers about it?
Even if you have only 2 users out of a hundred who feels this urge today, listen to them and understand what specific phrase they use to describe your product. Write down one specific sentence they say/write to explain your product. You will be surprised.
The first indicator that you are in trouble is the lack of such simple phrase.
If it takes a user more than 1 sentence to tell a friend why they need to use your product, the probability that they will share is extremely low.
Next, you must look at the need behind the sharing process.
Why these users feel the need to share your product? What egoistic or practical needs come intp place?
At the end of this exercise, you will understand how to tweak your message, and you will have created “a need to share”. With this in place so more and more users will spread the word about your service. Where do they do that? Or how do they do it? They will show you.
4. How many downloads/DAU do I need to raise seed/round A etc?
The right question you need to ask yourself: “How to make your users stay and love your product, so your retention rate speaks for itself and attracts the right set of investors?”
Look at the answers to Question 1 & 3. Trust me: if you know, why significant amount of your users stick, and why and how they share your product, and you are able to replicate this process over and over again, creating value for each user, then, and only then, you are golden. Every investor that sees high retention numbers will want to invest in you, you just need to understand with whom you want to work. Some investors have a specific retention rate in mind based on the industry standards and learnings from their portfolio companies. Don’t hesitate to talk to these portfolio companies to see where you stand before talking to an investor.
To prove retention, you need time, so take it into account before bootstrapping a company.
5. What hack can I use to…
Right question: “What should my growth process look like?”
Repeat after me:
“Growth is a process, not a hack; growth is a process, not a hack”
After repeating this statement 20 times out loud to your whole team, sit down and describe your growth process to your team. Who is in charge of what KPI (I usually recommend that for every KPI you are tracking you find an owner), how are you going to track the numbers, how you will validate assumptions, and how you plan to prioritise growth areas, as well as design and build features etc.
Tweak not only the product, but the process itself to achieve better results.
Create structure, including room for creativity, and “hacks” will suddenly fall into place. But only when you know what, with whom and how you plan to achieve your goals.
Please let me know what other questions you consider relevant when talking about early stage growth, and feel free to connect with me on twitter to discuss them @olgasteidl
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