James Currier on Unlocking the Secrets of Growth
On Friday I attended the Weapons of Mass Distribution conference hosted by 500 Startups in San Francisco. Over the next few days I’ll be posting my notes from a number of the talks, starting with this one.
Sporting a Star Wars t-shirt and opening with a picture of Yoda, James Currier said that to unlock the secrets of growth, you must unlearn many of the lessons you have learned. He shared eight things he’s unlearned though his experience of working with dozens of startups, most recently through his NFX Guild accelerator.
1. Paid growth
According to James, the first lesson to unlearn is to default to paid user acquisition. In fact, they discourage NFX Guild companies from pursuing paid growth, believing that it’s a drug that can warp a company’s organization and culture. Furthermore, many blockbuster exits — like Facebook and LinkedIn — built value almost entirely organically.
That said, it’s getting harder and harder to drive growth through organic channels, while paid channel opportunities are increasing. In particular, James pointed to the accuracy at which you’re able to target your audience on Facebook’s Ad platform, and suggested that the growth in their user base and by turn their growing ad inventory means that clicks are still affordable, unlike more saturated alternatives such as Google AdWords.
So, when might paid advertising be a good choice? James gave three cases: when you have high customer lifetime value, when you have a lot of competition, and when you just can’t manage to grow any other way.
2. Language is the foundation
When building a new product or company, most people start by identifying the problem, come up with a product to solve that problem, and then stick some language on it to market it. This is backwards and something that we must unlearn.
Instead, start by first researching the language people use to describe what it is they want. Once you’ve identified that vocabulary, then come up with a product to match it. Language is what actually drives the product, which in turn is what drives growth.
James gave several anecdotes of this in practice. Switching from “Store your photos” to “Share you photos” drove massive growth for a photo product. Most memorably, a gaming company used two Facebook ad campaigns to see which of ten places and which of ten creatures generated the most clicks. The result: “Dragons of Atlantis,” which they developed a game around and exceeded $120 million in revenue during the first year.
3. Make it about them, not about you
Companies think they need to convince users why their product is so great. But don’t fool yourself: nobody actually cares about your company or product. This is something we must unlearn. Instead, realize that a customer cares about just one thing: himself or herself. Stop trying to tell people what your product *does*, and start telling them how it will make their life better.
4. Network effects
Many companies don’t think about network effects (i.e. when another user makes the service more valuable for every other user), and this is a mistake. In a recent blog post, James said:
“If I have a choice, I’d rather start a business where I know if it works, it will be defensible… that I can really protect it from competition. For a long time.”
Not to be confused with virality, network effects don’t necessarily make you grow. But they’re what make users stay. So while it might not drive top line revenue or signups, it will drive retained growth and enable you to build a definsible product.
Your speed bar is set too low. Way too low.
The number one advantage of startups is their speed. James said that every month, your team has to be going through 20–100 experiments to win. Go faster!
6. Grow your business, not just your user base.
7. Choose your target customer for faster growth
Companies sometimes make the mistake of selling to the wrong customer. Who are you trying to sell to now? Are you sure it’s the right type of person or organization? James gave an example of a SaaS company who was trying to sell to HR managers, only to later realize that sales reps were actually a much more reception audience. Close rates skyrocketed once they started selling to the right person. Sometimes a secret to unlocking faster growth is to zero in on the right target customer.
8. Change the name of the company
Lastly, companies may want to consider changing their name to better communicate where they add true value. In particular, James suggested that companies who have figured out how to incorporate a strong network effect may want to incorporate this into their name (he mention an NFX company that renamed to “The Hotel Network”, for example). This can help the team rally around that network effect.
The slides from the talk haven’t been posted publicly yet. But if they are, I’ll be sure to link to them here. In the meantime, you can follow James on Twitter.