How to Start a Startup — W02

Product. Customers. Growth

Here are a few takeaways from Stanford/Y Combinator CS183b — How to Start a Startup — Week 2 lectures.

Lecture 3 Counterintuitive Parts of Startups, and How to Have Ideas PG Founder, Y Combinator

No one can put it more eloquently than PG so refer to his essay Before the startup for Lecture 3 summary.

Lecture 4 Building Product, Talking to Users, and Growing Adora Cheung, Founder, Homejoy

Product

Become an expert

• Immerse yourself in the industry that you are getting into so that people trust you when you are building this product.
• Sweat the details. Understand the little details and inner workings of the industry so that you may exploit the inefficiencies and build a better product.
• Know your competitors to the level of obsessive detail.

Start with storyboarding ideal user experience

When starting out have a one-liner that describes the functional benefits of what you do.

Before you even create a product or code you should storyboard the user experience of how you are going to solve their problem.

• How did the customer find out about you?
• When they come to your site what does that text say?
• What are you communicating to them when they sign up for the project?
• When they purchase the service, what are they actually getting from your service or product?
• After they finish using the product or service do they leave a review or do they leave comments?

Customers

Your initial few users are your inner circle — family, friends and co-workers or online communities like HN, Reddit or mailing lists or blogosphere influencers then comes cold calling and emails and press.

• Make it easy for users to contact you have a phone number with voicemail setup.
• Your best feedback will be from your users, go talk to them. Meet your users for drinks and have a conversation about your product.
• Users respond to surveys only if they love you or hate you for the in-between group go meet them.
• Track customer retention. Over time you are looking at monthly retention. In the absence of data to calculate retention, good leading indicators are reviews and ratings. Calculate net promoter score by asking them for a rating from 0 to 10 and how likely they are to recommend you to a friend.
• Build fast and optimize for the current stage of your growth not future. Automating your processes is important as you scale but first do the task manually before automating since automating too fast may cause you to slow down and iterate.
• Listen to feedback but when a user requests a feature don’t build it right away get to the bottom of why they are asking you to build the feature.
• Focus on one distribution channel at a time execute on it for a week and continue if it’s successful else move on.
• If you find a channel that is working keep iterating and optimizing since channels keep changing all the time.
• Revisit failed channels. Find that little thing that no one else is doing and do that to the extreme.

Growth

• Sticky growth is trying to get your existing users to come back and buy stuff. Measure it over time by looking at the CLV and retention cohort analysis.
• To achieve viral growth where users want to tell their friends and family set up customer touch points — referral links where users can refer other people to you, when they sign up or after they use the product.
• You can also use program mechanics like $10 for $10 where you invite your friends to try the product and they get $10 and you get $10.
• Paid growth is when you have money to spend to get users, e.g. SEM, Display ads, Facebook Ads, Groupon, B2B sales, Direct mailers etc. For paid growth to be good your Customer’s Lifetime Value(CLV) should exceed your Customer Acquisition Costs (CAC).
• Have a growth plan when you start out. If you are fully executing on your product, and if you go 3 or 4 weeks in a row of zero growth or negative growth, then it’s time to consider a pivot.

*Photo by: William A. Clark