TWiST LAUNCH Incubator series #1— Jared Fliesler, Matrix VC & growth guru (Square, Google), leads master class on product growth

Jared Fliesler, ex-growth at Slide, Square

Ever wondered what happens at the Launch Incubator? Who are the world class speakers Jason Calacanis brings in? What do they teach to the lucky founders of those 6–8 companies that make it past the selections?

Well, you are in for a double treat.

First, the ThisWeekInStartups show has started to release some masterclasses from their private recordings.

Second, I’ve started writing notes about them so you don’t have to listen or watch the show if you can’t (you should, though, it’s awesome).

On today’s first episode of the series (Youtube, Itunes link), Jared Fliesler (growth at Slide, Square, now a venture capitalist at Matrix Partners) explains how he goes about product growth, sharing several examples from his work and experience at Square and some tactics he’s learnt along the way.

His conclusion: you don’t have to reinvent the wheel or start from scratch. Keep your eyes open, take other people’s ideas and see how you can apply them to your own product or business.

Don’t forget to subscribe to the ThisWeekInStartups podcast on Itunes and never miss any other episode from these guys deep in the game.

The 3 pillars of growth

1. you need to build an amazing product

2. you need to be able to explain how amazing it is

3. You need to market it

• Noah’s ark mentality (“If you grow it, they’ll come”) doesn’t work
• If you build it, you’ll explain it well enough to be understood and you’ll market it, then they’ll come
• You’ve got to nail these 3 parts to grow effectively: there so many great products that nobody knows that rest in products graveyards (alongsidethe crappy ones)

The core product loop

• At the foundation, you need a core product loop: the core set of steps that all your users go through to use your product
• You need to have it down before even thinking about growth
• Example of core loop at Square: customer hands his credit card to the merchant, they slide their card.
• Then the merchant asks the customer to sign with his finger on the Square reader, the customer engages with that merchant and ultimately a receipt is printed or sent to the customer via email or text message
• At the end there is a decision point: they can either do nothing or decide to sign up to Square because they themselves have a small business and want to receive payments through Square or tell a friend that may need Square to sign up or go through another transaction

How to improve your core loop

• Have the smallest number of steps: you want it to be as simple (and quick) as possible
• You want to figure how to optimize it: at each stage is there an opportunity to do something that’s better for your customer or your product or the network you are trying to build
• You want to differentiate it from competitors’ loops: you graph out the crappy UX that the customer has to go through today: what’s the core loop that’s existing as the status quo from your competitors?
• Before Square, payments with credit cards were crappy experiences
• If you were to walk at Blue Bottle before they started using Square you would:
• wait in line a lot and once at the counter, they would ask you what you want, your money, you would hand them your money
• if you paid with a credit card, they would look at your total, type it in the terminal, type the last 4 digits of his card to confirm it
• then the terminal would print a receipt, the register would print another receipt, you would have to sign the copy from the terminal and give it to them
• then they would take both copies of the receipts, staple them together and gave them to you
• At this point, you’d have these 2 receipts in your hand, no bins to toss them and your groceries to pick up
• You don’t feel anything positive about this experience, at best you forget it
• You could ask customers the name of the company processing their payments and nobody would know it

How Square changed the purchasing experience

• Square wanted for customers to know who they are: they were willing to put their brand on the line to create an experience their customers would love
• They only use white readers: to stand out, they want their readers to be seen
• They thought about building a case for the reader but decided not to, the reader must be well-visible and recognizable
• The signing process involves you touching the product, it’s a closest experience
• The receipts over time have become longer and more dense of information: number of items bought, map of where they were, their signature
• They looked at the status quo and thought how to make all these steps better, more interesting, fun, exciting
• They support coffee shops even if they can’t make money off 1 dollar coffees purchased with Amex: it provides them exposure
• dentists, accounts, people with small businessess, they all drink coffee and when they see it, they may realize they need something like that
• Growth isn’t about some wizardry growth hackers do: their hardware’s helped them to grow, the design and the product team have helped them grow, their marketing team’s helped them grow
• Growth is a many teams work

How to hire for growth

• Find people that are cross-functional and have these 3 different attributes

1. Hire someone who’s quantitative: at the end of the day, growth is a number’s game, it’s about tracking a number of different elements, not just about quantity of the users but also the quality

• A mistake lots of people make is focusing on the number of users, downloads, the first event in their user flow
• Sometime is enough (for an ecommerce, the first event of users flows are sales and they could get away with no paying attention to their lifetime value and how to foster repeated purchases over time)
• For your product it’s not an optional, you must care about lifetime value, track events and measure who’s spending how much

2. They also must be creative: they should be able to think of alternative ways to reach goals, by changing the whole model not just optimizing the existing model

3. And they must be collaborative: growth comes from different teams

• you have to build a great product, you have to market it effectively and be able to message it so people understand the value of it and that requires working with different sorts of people in the organization
• Best growth people tend to have a background in product management

How to structure your growth team

• You can go with either a centralized “growth team” or with a decentralized one with “growth people” with a “growth mindset” embedded to the different teams (product team, marketing team, design team)
• At Square they started with a centralized growth team (engineers, designers) and they could go in and modify any area of the product that could help them grow
• over time though they blew up the team and integrate them into their other groups
• Over time companies wing up somewhere in the middle with a hybrid of the 2

Centralized team

Pros:

• You tend to get high quality work product because you have all these people with the same skillset together, same background, shared tool set, their data pushed to the same repository, some more senior than others but there is a clear career track and everyone is excited to jump onboard, they come together as a team, all doing the same thing, sharing knowledge, pushing each to do a better job
• you can do huge projects because you can flex and scale and have enough people for it

Cons:

• they are a centralized them and away from the product, away from other teams, away from day-to-day meetings, they are often seen as a consulting organization on the side other teams go to only when they think they need help
• They don’t feel like they are a part of the teams they should empower
• Jared prefers a decentralized/hybrid model: a person is “deployed” in a specific team but often meets with other growth people and they all share their information with each other
• You want them to have be a community of like-minded individuals, with a clear career path

What a growth person do

• The work you do as a growth person is “to capture value and build community”
• Value comes from users in 4 different ways: 1. they can pay you money 2. they can create content for you 3. they can give you their eyeballs 4. they can give you other users
• Every company, every product boils down to this 4 way of capturing value
• It can be direct value or deferred value (content is generally deferred value)
• Example: Youtube gets a lot of value from customers by them creating and uploading content. That content is then seen by another user and some of that content is paid for by users
• Another random example: Chevron users drive up and pay money and get a product. If Chevron had a loyalty program they could use it to bring other users
• Community is a really big element in growth
• In these deferred business models where you are not collecting money directly or immediately you are trying to get these other users to come back in and at some point you want to convert this o money
• 2 things that convert to money tend to be content or eyeballs
• You either paying to get some product, service, content or you are giving viewership to some and somebody else is paying for that viewership and attention
• Example: Thumbtack has 2 type of people coming to their system
• on the supply side, service providers that provide the content (“I’m a plumber and I give you access to my plumbing services”)
• on the demand side, consumers looking for a plumber (without “content”, plumbers the would have no reason to go to the site)
• When we get users in we want them to get us one of these 4 things
• We have users that can give us value in different ways, users that never pay a dime and still be incredibly valuable, users that pay lots of money, users that can get us other customers they are all equally valuable

Marketing

• paid marketing is not a bad thing, it doesn’t mean you’ve failed or you are desperate
• Some entrepreneurs want to rely 100% on organic growth but what if they spent the money they made to grow even more?
• You should reinvest the money you make into the system, for more users
• Having control on your user base is a good thing (with organic growth you are not in control)
• When he joined Square, most of his growth was organic and that’s great — but 100 variables goes into it, even if people always say they know where it comes from
• Who knows what elements break organic growth and then you are back to square one
• He didn’t want to cannibalize it, just put some layers on top of it
• In the early days you should testing channels (paid and not) and see if they move the needle with 2 weeks tests
• If it works well, great, keep it, if not put it on the shelf
• In the early days you have to focus on the stuff that really drives growth, not 1% growth user acquisition channels for the long tail
• You can worry about the small channels later but at the beginning you need to focus on the 2–3 channels that really move the needle (it could be referral marketing, Facebook Ads, paid marketing etc)
• In the long term you’ll realize it’s a sediment chart: more channels, more layers, bigger numbers
• The more channels you are dealing with, the more mind share and resources they require
• Focus on what moves the needle, the rest, leave it for later

How do you find these channels

• You should look what your competition is doing, learn from them. Ask: what is anyone doing?
• What channels are they using? How can I do the things they are doing? Could those things work for me?
• Start thinking about what channels may work only for you
• Example: Square took inspiration from Intuit
• Intuit can (and do) easily sell software on their websites, but they started to sell physical usbs with their softwares in big, visible box at Office Depot where small business owners or employees would buy all they need for running their businesses
• They went where their customers are
• Square wanted to do the same thing, they wanted to put their credit card readers in retails stores
• They got it into Apple stores and started to sell it as an accessory (1/10 people in the US run a small business, the other 9/10 people surely know somebody with a small business)
• They sold like gangbuster, they were the first CC reader sold in the Apple Store
• Then they went to BestBuy, OfficeMax, Staples, OfficeDepot, Walgreens, HomeDepot
• They are now in 45000+ retails store
• After they went into retail, every competitor copied them
• They redesigned their package to stand out among other accessories and learning from others selling headphones

New Ideas vs Same ideas

• He’s now a venture capitalist: he gets pitched everyday and he believes there are no ideas, “they are this for that”, “this thing with a slightly different twist”, very few few ideas are new, if any
• He gets almost all his ideas by looking around, by taking something over here and applying with something else over here in a way nobody has done it
• You can learn from brands big and small

Bose

• Bose had their own business cards in the headphones cases, so if you are somewhere and somebody asks if those headphones are good, you can hand them a Bose card
• Bose used to be sold to Airlines and could be plugged only into the plug on airplanes, at a a cost or with discounts, to be used by the first-class flyers
• They get on the place first, sit down and put headphones
• When everybody else walks into the plane, they see them wearing Bose headphones and naturally think they must be good
• They created an airline only model and the consumer model
• They used the airline as a creative marketing channel to say “people having the best experience wear the best headphones”

Zappos

• Zappos’s created the model that everybody is copying today based on speed and service

Alcoholics Anonymous

• It’s the single most effective long-lasting community building organization, they bring people together in a distributed way
• They give out books at community centers, they get to create a fairly unified normalized system that gets people in and have an incredible referral program
• People go to these meeting, bring others, they get people as mentors
• Result: incredible retention rate and engagement, people come in weekly
• You can learn from everybody

Myspace

• Tom was your friend on Myspace and everybody else copied the same psychology: nobody wants to go into an empty room
• You join myspace and you have at least one friend, Tom
• Facebook did it better: in their onboarding flow they say “find your friends” and you bring them in (using address book importers)
• Again, once they did everyone else copied it and now everybody does it
• You can use these tactics to make users feel the way they want to feel, that’s our goal with our products, satisfy a need a want a demand a desire (what’s the desire they want?)

Alice

• Sometimes you’ve got to look at the box that your product is shipped with and differentiate it
• Shipping boxes used to be unbranded, then Amazon’s started printing their brand on
• USPS has made theirs white and recognizable
• Alice put bright colors on it to make it eye-catching and let other people wonder what was inside
• Such differentiation creates conversations
• even if it’s hard to measure when somebody goes to Alice.com after seeing the box, it’s worth the change

Dyson

• Sometimes you have to rething the product entirely
• Dyson was the first to sell a fan with no blades — now when you see a blade-less fan, it’s a Dyson, they are the only doing it

Surprise and delight

• Surprising and delighting your user make them talk about products even if’s hard to do and takes work and creativity
• The best products start surprise and delight users, they best products start conversations after they are utilized

The gift of Square

• During Christmas holidays they did “the gift of Square”: they put silver foil print on their boxes, same reader inside, they wrapped them in snowflake gift wrap and turned them into gifts to give to somebody that may have a small business
• They sold over 25k units (while at the time all Square readers were free)

Lyft

- He once got a Lyft with Ruth, doing a spoof of Cash Cab, the program where you could win money playing a quiz game in a taxi. She had a light system in the car, trivial pursuit questions, chocolate coins. He remembered that experience and told other people about it

Fun theory

• Some people believes that turning something boring, like taking the stairs, into being funnier to do can change people behaviors
• So they made piano stairs: when you walk on each different step it makes a different note, like a piano
• They got 66% more people to take the stairs and 20+ million views on Youtube

Rainbow crosswalks

When they painted rainbow crossroads in San Francisco it made the news, people would take picture, some people probably smiled when they saw it and their mood improved. These are small things but they can have a great impact

Virgin

• Virgin made a fun safety instruction video, then other companies copied them.
• They weren’t the first though, south west was the first to take the fun approachin having their hostesses giving safety instructions in funny ways
• But Virgin was smarter and made a video, messaged it and marketed it
• First they animated, then remade it with popular tv celebrities and launched it like it was a blockbuster with teasers on tv and online
• Now when you see it on the plane it puts you in a better mood, you’ll remember the experience on a Virgin airplane as less painful

Conclusion

You shouldn’t start from scratch, take ideas from others and apply them to your product and your business

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