Gustaf Alströmer - Growth for Startups
Summary
TLDRIn this insightful talk, Gustav from Airbnb's growth team shares his expertise on scaling startups. He emphasizes the importance of achieving product-market fit and strong retention before focusing on growth. Gustav outlines key growth channels and tactics, highlighting the significance of conversion rate optimization and leveraging platforms like Google and social media for discovery. He also stresses the value of data-driven decision making through A/B testing to steer clear of biases and make informed choices for sustainable growth. This talk is a must for founders looking to scale their startups effectively.
Takeaways
- 🚀 **Do Things That Don't Scale**: In the early stages, founders must do things that may not feel natural or scalable to get the startup off the ground.
- 🔍 **Product Market Fit First**: Focus on achieving product market fit and good retention before concentrating on growth, as growth efforts without these are futile.
- 📈 **Measure Retention for Growth**: Use unbiased data and focus on retention as a key indicator of whether you have a product that people truly want and will continue to use.
- 🛠️ **Iterate Based on User Feedback**: Engage directly with customers to identify pain points and iterate on the product to improve the user experience and satisfaction.
- 🤝 **Leverage Word of Mouth**: Utilize referral programs that incentivize users to bring in new users, which can be a powerful way to grow through word of mouth.
- 💰 **Understand Your Costs**: Be clear on the customer acquisition cost (CAC) and ensure that the lifetime value (LTV) of a customer is higher than the cost to acquire them.
- 🌐 **Optimize for Growth Channels**: Once you have product market fit, focus on growth channels like SEO, paid marketing, and viral loops to scale your user base.
- 🔗 **SEO is Competitive**: Recognize that SEO has become highly competitive, with large companies dominating keyword rankings, so focus on being as good as the best.
- 📊 **Use A/B Testing for Decision Making**: Implement A/B testing to make informed decisions about product changes and to avoid relying on gut feelings or biases.
- 🌟 **Cultivate a Culture of Experimentation**: Develop a company culture that values experimentation and data-driven decision making to guide growth strategies effectively.
- 📝 **Track the Right Metrics**: Focus on tracking metrics that represent the value of your company and avoid vanity metrics like registered users or visitors that don't indicate product-market fit.
Q & A
What are the three main topics Gustav covers in his talk on growth for startups?
-Gustav covers product market fit and retention, growth channels and tactics, and decision-making processes when scaling a team.
Why is focusing on growth before achieving product market fit and good retention not advised?
-Focusing on growth before product market fit and good retention is not advised because it's inefficient; you need a solid foundation and a product that people want before trying to scale up.
What is Gustav's background, and how did he learn about growth strategies?
-Gustav worked on the growth team at Airbnb for almost five years, growing the team from two to over 100 people, and he learned most of the growth strategies there.
What is the importance of 'doing things that don't scale' in the early days of a startup?
-In the early days, founders need to do things that don't scale to understand their customers and product deeply. This hands-on approach helps in learning and iterating on the product effectively, which is crucial before scaling.
Why is it a mistake to assume that launching a product will automatically lead to success?
-It's a mistake because the world is busy, and people are not waiting for your product launch. Success requires deliberate efforts to reach out and convince people to try and adopt your product.
How did Airbnb's founders initially improve their product during the early days?
-Airbnb's founders acted as hired photographers for their hosts, improving listing photos and talking to hosts to understand their challenges and how they used the product, which helped them iterate and improve the service.
What is the significance of retention in measuring product market fit?
-Retention is significant because it shows whether users are repeatedly using your product over time. High retention indicates that users find value in your product, which is a strong sign of product market fit.
Why are vanity metrics like registered users or visitors not good indicators of product market fit?
-Vanity metrics like registered users or visitors do not indicate whether users are actively engaged with the product or if they are deriving value from it, which is essential for assessing product market fit.
What are some examples of growth channels that Gustav mentions in his talk?
-Examples of growth channels include Google (for SEO or SEM), social media platforms like Facebook and Instagram for advertising, referrals, virality, and sales for B2B products.
How can startups effectively optimize their conversion rates?
-Startups can optimize conversion rates by improving internationalization, authentication flows, onboarding processes, and purchase conversion experiences, ensuring each step of the user journey is smooth and compelling.
What is the primary advice Gustav gives regarding paid growth or online marketing for startups?
-Gustav advises startups not to engage in paid growth or online marketing unless they have a revenue stream and a clear understanding of their customer acquisition cost (CAC) and the lifetime value (LTV) of a customer.
What is the role of A/B testing in decision-making for growing startups?
-A/B testing is crucial for making data-driven decisions at scale. It helps determine the impact of changes like new designs or features by comparing them against a control group, providing clear insights into what works best for the users.
Why is it important for startups to build a culture of experimentation and data-driven decision making?
-A culture of experimentation and data-driven decision making ensures that the loudest voice in the room doesn't dictate the direction of the company. Instead, it relies on empirical evidence to guide the growth and development of the product and the business.
Outlines
🚀 Introduction to Growth for Startups
Gustav introduces the topic of growth for startups, emphasizing the importance of addressing growth strategies only after launching. He mentions that the talk will be particularly relevant to those who have already launched their products. The speaker outlines three main topics for discussion: product-market fit and retention, growth channels and tactics, and decision-making within a team. Gustav shares his background, highlighting his experience at Airbnb where he worked on the growth team, growing it from two to over a hundred people. He stresses the importance of recognizing that most startups do not have product-market fit and that founders often deceive themselves into thinking otherwise. The paragraph concludes with a recommendation to read Paul Graham's article on 'doing things that don't scale,' which is relevant to the early stages of a startup.
🔍 The Importance of Product-Market Fit and Retention
Gustav discusses the significance of product-market fit and retention in the context of growth. He explains that working on growth without achieving product-market fit and good retention is not advisable. The speaker shares his insights on how Airbnb's founders personally visited hosts to understand their challenges and improve the product. This hands-on approach led to fixing bugs and enhancing the user experience, which contributed to Airbnb's success. Gustav emphasizes that founders play a crucial role in making startups take off by doing things that may not feel right or scalable but are necessary for growth. He also touches on the importance of reaching beyond friends and friends of friends to gain unbiased feedback on the product.
📊 Measuring Product-Market Fit with Data
In this section, Gustav explains how to measure product-market fit using unbiased data. He argues against relying on net promoter scores or surveys, which can be biased or misleading. Instead, he suggests focusing on retention rates as a key indicator of whether users genuinely want the product. Gustav provides examples of different companies and how they define their metrics for measuring value and usage frequency. He illustrates the concept of plotting retention over time to determine if a product has achieved product-market fit, showing that a flat retention line indicates a stable and satisfied user base. He also warns against using poor metrics like registered users, visitors, conversion rates, or free product giveaways as indicators of product-market fit.
🛠 Growth Channels and Conversion Rate Optimization
Gustav shifts the discussion to growth channels and tactics, applicable once product-market fit is established. He differentiates between product growth (led by engineers, designers, and product managers) and growth channels (platforms where people discover products). The speaker lists examples of growth channels, such as Google, Facebook, and Instagram, and explains their importance in product discovery. He then delves into conversion rate optimization, detailing the importance of every step in the product experience as a funnel that can be measured and improved. Gustav outlines specific areas to focus on, such as internationalization, authentication, onboarding, and purchase conversion, to enhance the user journey and increase the number of successful conversions.
🌐 Exploring Growth Channels for Scalable Growth
The speaker continues the discussion on growth channels, emphasizing the importance of understanding which channels are relevant for a product to grow at scale. Gustav explains that most successful companies rely on one or two key channels rather than spreading efforts across multiple avenues. He provides examples of companies like TripAdvisor and Pinterest that have grown significantly through SEO. The speaker also discusses the importance of virality and referrals, particularly for products that naturally inspire word-of-mouth. Additionally, he touches on the effectiveness of sales for targeting specific customer lists and the increasing significance of paid advertising for companies with high lifetime value products. Gustav advises startups to focus on the most effective channel for their specific product and to avoid spreading resources too thin.
💰 Navigating Paid Growth and SEO
Gustav addresses the complexities of paid growth and search engine optimization (SEO). He warns against investing in online marketing without a revenue model, as it can lead to unsustainable spending. The speaker stresses the importance of understanding customer acquisition cost (CAC) and ensuring that the lifetime value of a customer exceeds this cost. He also discusses the competitive nature of SEO and the challenges faced by smaller companies in ranking alongside well-established giants. Gustav provides insights into on-page and off-page SEO strategies, emphasizing the need for a clear value proposition and authoritative inbound links. He concludes by advising startups to focus on mastering one or two growth channels rather than attempting to excel in all areas.
📈 The Power of A/B Testing for Decision Making
In the final section, Gustav introduces the concept of A/B testing as a critical tool for making informed decisions at scale. He explains that relying on instincts or opinions can lead to incorrect conclusions, whereas A/B testing provides a data-driven approach to determine the effectiveness of changes. The speaker shares examples from Airbnb's experience, where they tested different designs and features to measure their impact on user engagement and conversions. Gustav emphasizes that A/B testing helps to eliminate bias and provides a clear understanding of what works and what doesn't. He advises startups to embrace experimentation and data-driven decision making as they grow, as it will become increasingly important for scaling effectively.
📝 Summary of Growth Strategies for Startups
Gustav concludes the talk by summarizing the key points for startups to consider when thinking about growth. He reiterates the importance of doing things that don't scale in the early stages, as traditional growth strategies may not be applicable yet. The speaker stresses the need to measure retention to assess product-market fit accurately. Finally, he encourages the development of a culture of experimentation and data-driven decision making, which will become invaluable as the startup grows. Gustav reminds the audience that while some of the topics discussed may not be immediately relevant, they will become crucial at certain stages of growth.
Mindmap
Keywords
💡Product Market Fit
💡Retention
💡Growth Channels
💡Unscalable Tactics
💡Customer Acquisition Cost (CAC)
💡Viral Loop
💡A/B Testing
💡Net Promoter Score (NPS)
💡SEO (Search Engine Optimization)
💡YC (Y Combinator)
Highlights
Gustav is giving a talk on growth for startups, focusing on product market fit, growth channels, and decision-making as the company scales.
Emphasizes the importance of achieving product market fit and good retention before focusing on growth.
Shares personal experience from Airbnb's growth team, scaling the team from two to over 100 people.
Discusses the common misconception that launching a product will naturally lead to success and customer acquisition.
Recommends reading Paul Graham's article 'Doing Things That Don't Scale' for insights on early-stage startup growth.
Highlights the need for founders to perform tasks that don't scale in the early days to understand and improve the product.
Airbnb's founders personally improved listings by visiting hosts and taking photos, demonstrating hands-on early growth strategies.
Stresses the significance of founders in making startups take off through unconventional and necessary actions.
Introduces the concept of measuring product market fit through unbiased data and retention rates.
Argues against using net promoter score and surveys as accurate measures of product market fit.
Advises using clear metrics like repeat usage to determine if a product has product market fit.
Provides examples of how different companies, such as Lyft and GitHub, measure their product market fit through retention.
Warns against using vanity metrics like registered users or visitors as indicators of product market fit.
Outlines the two main ways to grow at scale: product growth and growth channels, including tactics like conversion rate optimization.
Details the importance of conversion rate optimization, including internationalization, authentication, onboarding, and purchase conversion.
Explains the role of growth channels like Google, Facebook, and Instagram in product discovery and acquisition.
Discusses the power of referrals and virality in growth, as well as the importance of understanding customer acquisition cost in paid marketing.
Advises startups to focus on one or two key growth channels rather than spreading efforts too thin.
Talks about the importance of SEO and the competitive landscape for startups looking to rank in search results.
Introduces A/B testing as a crucial tool for decision-making at scale and the value of data-driven decisions.
Encourages building a culture of experimentation and data reliance for effective decision-making as the company grows.
Transcripts
my name is gustav i i'm gonna give a
talk on
growth for startups um this is gonna be
for
um some of you guys not super relevant
right now because you might not not
launched
and thinking too much about growth when
you're having launch isn't that relevant
but for those of you that have launched
this is hopefully going to be good
talking
so i'm going to cover three different
things today first i'm going to talk
about
product market fit and retention uh the
reason that that relates to growth so
much
is because working on growth before you
have product market fit
and good retention is not a good idea
the second thing i'm going to talk about
is growth channels and tactics these
things definitely apply
after you have launched and often after
you have
a good product market fit you've found
something that people really want and
then you want to scale it up to the
the larger world and lastly i want to
talk about how you make decisions
when you have several people on your
team you want to start redoing things
and you're not really sure exactly
if you're making the right decisions or
not and this is also things that apply
when you're a little bit bigger
so my background uh i learned most of
these things i'm going to talk about at
airbnb
i worked on the growth team for uh
almost five years from where
two people until over 100 people
on that team this is the team back in
2015
most of the lessons i'll talk to today
are things i learned there
most of you are going to be somewhere on
this line
most startups don't have price market
fit founders tell themselves that
they do and they try to convince
themselves that this is working
but the truth is for most companies is
not working so
that means you're going to be somewhere
on this line
people also have this idea that if i
launch my
product it will work somehow it's going
to work if i just tell the world
that i am my i built my is not
now there
now unfortunately that's not the case
the world is a really busy place
and there isn't really lots of people
waiting for you to launch your product
they're not standing there and they're
not going to try it the moment you
launch it
that is unfortunately not the truth and
for many people
who have never thought of these
questions before of how do i reach the
world
this actually comes as a surprise people
have been used to working in big
companies
where this is not a problem people be
used to going to
school or other areas where this is just
not a problem in this case when you
launch a
startup it's all down to you and these
are it is going to be a problem in the
very very early days
there's a great article that i recommend
for you guys to read on this this is
called
doing things that don't scale about paul
graham he wrote that
six years ago it is about the early days
of the airbnb
story and the thing that's really
important about this
is as a founder you need to keep two
different skill sets in mind
as your company grow in the beginning of
your company you're going to do a lot of
things that don't
feel right at the when they don't feel
natural to you because it's not the kind
of thing that you learned in your
previous jobs or in school
it's just like the most kind of um
physical or real things that you have to
do that you aren't going to be relevant
later on
but later on as your company grows
bigger you're going to be doing a lot of
things that
are things that relate directly to
software and other things to scale your
company so these are two things two
skill sets so you have to keep in mind
at the same time
nyc we have this thing where where we
tell companies that
you just launched uh you got to do
things that don't scale
and we got lots of these mbas that go
went to school and said
well this idea does not scale standing
outside of this store or sitting in this
in this elevator to sell people
something that certainly doesn't scale
correct that does not scale but that is
where everyone needs to start
and if you went to school and you
learned they should only work on things
that really scale
you're gonna have to unlearn that skill
because when you start your company
the most important thing is going to do
things that don't scale so if you get
comfortable with that idea
this is the early days of airbnb so this
is sometimes in 2009
they were just a few people the article
i mentioned earlier doing things that
don't scale
tells the story of the first year or two
of airbnb
when the founders came to yc they had
spent
almost a year trying to get mb off the
ground
it didn't really work this was the first
version of the airbnb website
airbed and breakfast.com in fact the
website itself
didn't really speak to what the what the
what the company does
it was started as a website to offer
air mattresses to people that visited
design conferences
and they had to navigate the way to find
the place to
where mb is today whenever we joined yc
the first question they got from paul
graham
was who are your users and at a time the
site looks something like this
you click on a listing and you had three
different
pieces of information you had a photo of
the of the host
you have one photo in this case of the
building from the outside
and then you have one map of where that
place was
now at the time the only comparison to
uh what a site like this would look like
would be craigslist
so craigslist wasn't a lot better than
this so at least they met that
criteria but it wasn't something that
would make airbnb take off
they didn't really have in the product
will make everybody take off
the things that were missing is is this
a good listing
how does this listing actually look like
can i trust the host
lots of things that were missing in that
early product and how do you learn that
the way they learned that is they went
and talked to the host
on their first week in yc paul graham
told
the founders of amb you guys go meet
your host where are your hosts
most of our hosts are in new york we
don't have that many but most of them
are in new york it's the flu to new york
undercover not on the cover they claim
to be um
hired photographers for airbnb and
breakfast
so when i met with all the hosts they
said want to come by your home and take
photos
they didn't say that they were the
founders because that made the company
sound much smaller
they came and met with a host and while
one of the founders were taking the
photos of the listings
to make this look a lot better the other
founders sat down with the host and
asked them questions about
how what what are the challenges you're
having with the product
like what are the things that are not
working can you show me how you use the
product
and by doing that they got for the first
time to meet the people that were the
customers
which they really haven't done before
and they got to see how they use the
products
that's doing things that don't scale and
that is nothing that scales
you can't go and fly to meet every
single one of your customers but when
you start doing that
you will learn things that you can't
learn sitting in front of a computer
so they learned that this payouts things
didn't work or this
there was a big ui bug on this page or
didn't work on an internet explorer well
all these things that you can't learn
sitting in your in front of a computer
they went back to san francisco um
back to y combinator and um they sent an
email today the morning after and
said here are all the photos we took of
your house they're now up on
urban breakfast.com and by the way we
fixed half of the bugs
that you emailed us about or we fixed
the bug that you told us about yesterday
um that made the host love them and
those hosts became
the reason their b eventually took off
like
doing doing things that don't scale
fixing the product making the product
work for the early host we which became
the backbones of the early days of a b
so the lesson here is that founders are
the ones who make starters take off
the founders you guys are the ones that
make the stars take off
you're going to have to do
unconventional things
you're going to have to do things that
don't feel right certainly going to do
things that you didn't learn in
in business school and just going to do
the things that are needed
and this is basically what the yc batch
is about
when someone joins yc we're going to be
like you're going to launch
because that's the most important thing
you do right now but once you've
launched is like how do i get users like
you got to figure out how to do it and
it's different for every company for
many other companies that means sales
for other companies that means doing
things that don't scale typically people
start with their friends
and then friends of friends and then
hopefully you get one step further
the people that are now not your friends
and friends and they're going to give
you true
opinion about your company those are the
people you're going to have to reach
early on
it doesn't really start with like i
launched my website and i put up
google ads or i launched my website and
somehow it's being discovered
that's not how companies get started
that's how they end up much later but
that's not how they get started
there's only one way to grow when you're
really small and that is doing things
that don't scale
all right next topic i'm going to talk
about product market fit
this is a terminology that probably most
of you have heard of
this is a thing that's been hard to
measure
or hard for people to say do i have
project market fit or not
a lot of people like to tell themselves
that they do have product market fit um
it's this thing that we throw around as
a way to say
my product is great so now i have price
market fit
i would argue that there are some ways
you can measure product market fit and
there are many ways that you can't
so let's talk about the one thing that i
think is the best way to do that
i think that the best way to figure out
a product market fit
is to use data unbiased data
to understand if you basically have made
something people want
the two ways that i do that when i start
that the first way is i try to figure
out
what is the metric the data point
that represents the value of your
company that's the first thing i do
the second thing i do is try to figure
out how often should i really be doing
that
a great example might be startup school
the metric here is like
are people showing up to the video talks
at startup school
how often is that it's every week all
right that's pretty easy
but most companies can be defined this
way
let's give some example so airbnb
what is the the metric that represents
the value
well it's the bookings and the stays
it's not the searches
search is not that it's going to be the
bookings in the state when i travel and
b
i've experienced the value so now i know
what it is about
how often do people do this well travel
is actually
mostly an annual thing you don't really
travel every month most people don't do
that
so when we were measuring retention um
at air b we're looking at annual let's
look at instagram
what's the expected use case of
it's basically just coming back to
instagram most people are not expected
to post photos every day
it's just gonna be coming back to
instagram and viewing photos that's what
most people do
and that's fine that's actually what
they want they want some people to post
for sometimes
but most of the time just coming back is
good enough how often
probably every day let's think of a b2b
company gusto
so for gus though the most valuable
thing that they do for their customers
is their own payroll and they pay out
money to employees they're they're
the employees of customers gusto's
customers so
um how often do you run payroll well it
depends probably every bi-weekly
or monthly and by measuring these two
things
how many people am i running payroll and
are they continually running payroll
with me
that's probably the best way to figure
out if people enjoy using gusto if
they're going to switch to some other
payroll provider
and finally lyft you might want to think
it's rides here
the rides is the best metric here it's
actually writers
like the people that are taking the
rides are the ones that matter because
um it's the individuals that we want to
measure here
and we not necessarily want to measure
the the action that they take
and that's it probably weekly or monthly
so now we have these two metrics we have
a bunch of examples of those companies
let's put in my graph one piece on the
graph is going to be the metric
and the other one is going to be the
time window so every single
uh time window we can put some
percentage of those people on the graph
so let's give an example on week zero
in the case of lyft you had 100
drivers so what i'm what do i mean by
that i basically mean that
um if i had a hund like let's say 10
riders this week
the road would lift they would be
calculated on the week zero
now how many of their riders that i had
last week
are now traveling with lyft this week
that is your week not one number
and the week two number and the week
three number now why is this important
because we're trying to measure repeat
usage repeat usage is the
best most unbiased way to figure out if
someone is liking your product
it's more true than what they tell you
they might tell you things
but what they do is going to be the most
important thing so
most companies can be defined this way
even if you have a b2b contract company
that do annual contracts
measuring say what do people do with my
product could be a really good way
on like this this regular basis so even
if i pay for gusto
on an annual basis which they don't do
measuring the activity are you using
gusto
on a regular basis let's say bi-weekly
and monthly
is is the way to figure out if people
actually using the product so most of
the ideas even your bdb or consumers
could be plotted on this line now why is
this important
well if you're ever going to raise money
this is a graph that investors are going
to ask for
like how much retention do you have like
are people actually repetitively using
your product
those are things they're really curious
about because they know there are other
metrics that you might have that don't
matter
this is a sign of a bad product
basically every single week
after i started using this product fewer
and fewer and fewer people continue to
come back and use the product
so this graph can be plotted and
basically show that this wasn't a good
product
this however is a good product every
week it eventually flattens out
and the people that stop from the
product stop stop using the product
and eventually here at week 8 9 10
we have a flat line of people that
continues to use product every single
week
that means that they are retained i they
you have product market fit for those
users for this product
so i'm not gonna ask you these questions
but here are two examples of two
companies that
i would argue have product market fit
the first one here has thirty percent
after two months and
twenty one percent after twenty months
this is pretty good so you kept
a fifty users 21 months later or twenty
months later
store dash door dash have a monthly
retention of 20
two years later a year and a half later
uh here's another company
more like a b2b company um so 80
retention after one month and then
30 after 60 months it's really good this
is a really good product
very sticky people like this product and
they don't stop using it it's a github
so retention is the best way to measure
product market fit
let's talk about specific things you
might wanna
uh that some people think uh is a better
way i'll argue that they're not
so here's some worse ways to make sure
product market fits
net progress score why is it not good
well you can just google the best
products and best companies in the world
they all have bad net promoter score
like the iphone apple all of them have
bad enough for more scores like it
doesn't necessarily correlate with good
products
correlates with perceptions of companies
surveys
problem with surveys is they are going
to be biased so if you ask your users
you're going to have some level of bias
there are good ways to use service to
improve your products but it's not going
to be the best way to figure out this
metric
there is one cool question you can ask
user which is
how would you feel if you can no longer
use this product
sometimes this works it can give you an
idea but i wouldn't do it instead of of
attention i was to always try to find a
way to measure retention
all right so what are some bad metrics
for prime market fit these are not the
kind of things you want to throw around
it's like
evidence for your practice working
registered users
really bad does not say anything about
repeat usage or if they liked you or not
visitors also bad does not say anything
about whether your product is going to
be valuable conversion rate
we have this conversion rate of visitors
to something else
well that doesn't really say much
because you don't know what people
you're converting
you don't know who they are so this does
not say much about
market fit either and finally something
that should be a paid product
you're giving away for free is not a
good sign of product market fit
like you want to figure out if people
are willing to pay for it because price
if someone says i love this if it's free
but if it costs money i'm not going to
use it
that's pretty bad like then they're not
going to work out for you
so you want to make sure that the people
that are doing something like this on
this graph
if it's expected that you pay for a
product they should be paying for the
all right next section let's talk about
growth channels and tactics
this section really applies if you have
product market fit
if you if most of the people that come
to your product
go down the drain right away and they
never come back this section doesn't
matter like why would you work on trying
to get more people to a product
that if no one is using your product
anyway
if most people are just churning and
like they try it once and then they're
going to come back
like don't work out the stuff wait with
this stuff until you have
some people that care about your product
you can try to use some of these
channels to reach those people
specifically there's really two ways
that you can grow at scale
so when i looked at that team they saw
the photo of the airbnb
team they worked on two things they
either worked on what i call
product growth or conversion rate
optimization
what this means is you have typically
engineers designers
data scientists product managers working
on improving
specific parts of your product to get
more people through that funnel
it's a good example i'm going to give
you some example in a second but that's
basically what i
defined as the first section most of
those people in that photo
were in this category they were
engineers designers product managers and
their scientists
the second group is what i call growth
channels growth channels is basically
platforms in the world that people tend
to discover products on
let me give you some specific examples
google huge
platform for new products to be
discovered anything that you want to use
that is a rare behavior in your life
google that's what you do insurance so i
forgot insurance
google when i find a doctor google
everything you do rarely is going to be
which means lots of products are being
discovered on google
and growth channels like google is an
extremely important one for many
companies
another one might be facebook instagram
advertising on facebook and instagram is
critical to companies growth these days
what i mean by growth channels that
means basically other platforms about
your website
or your app so let's talk about
conversion rate
optimization what does it mean every
single step
of your product experience is a funnel
that like the retention curve can be
measured you can have a metric and i
think i think
ilya talked about this since earlier
shop school school talk when you build
funnels
if you put a metric on every single page
in your product you will know what
percent of people
that make it from the first page let's
say the homepage
to the booking page in the case of
airbnb we call the home page p1
the search results page p2 and then the
booking page
and the listing page p3 and then the
booking page was p4
four pages that was the entire website
now what's the funnel
what percent of people make it from p1
to p4 what percent
not that many one percent two percent
most people don't make it that far your
job is to figure out
how many people make it that far why are
they dropping off
what can i do to increase that number
that's basically multiple teams or
multiple people at startups that work on
those things
every single step in that funnel is
going to have some kind of drop up for
some reason
they might be that the content on the
page is not suited for them latin airbnb
all the content speaks to millennials i
have a family
it's not not good content i land on some
other website and the content doesn't
speak to me because i'm not the
the right customer that's one example of
a drop-off
you can fix with content content
changing the content another one might
be
i'll land on the website it doesn't work
because internet explorer is not
optimized for that it's not optimized
for that
you're going to drop off so you've got
to fix that too there's lots of
different reasons
people want to drop off here are some
specific things that people tend to work
on when they work on
conversion rate optimization
internationalization if your website or
your product is
international translating it the product
is really
a good idea uh we saw that airbnb i've
seen that at facebook
i've seen that many other companies
where translation is is is really really
important
authentication most products have some
flow where you're signing up
now that flow probably your products too
have some kind of authentication flow
that flow is very um critical
and the users are kind of vulnerable in
that case because they don't really
have time for too much friction so if
it's not working perfect
they might just go to the next website
uh so make sure the authentication flow
works really well
look at the best websites in the world
look at pinterest look at airbnb
look at some of those sites they have
teams optimizing these these these flows
the authentication flow copy what they
do they probably figure it out they
spend a lot of time optimizing
onboarding this is a huge effort
specifically for products that need a
lot of involvement from the users
to be able to um become active users
so a lot of questions you might want to
ask early on on a new product
the more you can onboard users by asking
them questions that make the experience
better
the more active and the more retained
they will be so onboarding the lots of
things you can do
and finally purchase conversion when
you're about to purchase
a lot of things around urgency and
scarcity
and just user flow and ui all of these
things
matters and that's another great example
of version of optimization
so let's talk about growth channels so
again
don't get here until you have some good
sense of that this is something people
want
first one um like i said earlier if this
is a rare behavior
most new ideas are rare behaviors either
because they don't exist yet
or because they're not something you do
every day we tend to go to google
to learn about rare things that we don't
do very often
so that's why if that is the kind of
product that you have
being on google is going to be really
important it can be either on google
through paid marketing
through sem or through seo i'll talk
about in a second
second does your product
already the people already share your
product through word of mouth
so some products are viral in this
nature because they sound really
exciting to talk about
left and uber and airbnb are examples of
those
um if that's the case you want to make
sure you focus on virality
and referrals what does that mean is
you're building into your product a flow
that friends can tell other friends
about the product referrals is a way
that you can do that
by giving some kind of financial
incentive does the proc get better
if you have more users well this is true
for marketplaces but it's
specifically true for anything that's
social so if you think of a linkedin or
an airbnb
so linkedin or facebook then having more
people on the product is going to make
it better
so it's going to be really important for
you to get more people and those people
on your site is going to be the ones
doing it
so you want to figure out a good viral
loop so when you sign up to linkedin the
first thing they ask you is to
invite more people that's because your
experience get better and there are more
people on linkedin
now many products do work this way and
this can be perfected
and the ones who really succeed in the
world of of um
of the social products are the ones that
really nailed this down to figure out
how it is really well
the many people that make social apps
underestimate how important it's going
to be
to get to get your friends on that
product
if you can make a list of all your
customers
even if that list is a hundred thousand
or five hundred thousand
if as long as it's not mainstream enough
they'll be in the tens of millions
you're probably gonna do sales you'll
make that list
and you start counting on those people
why make it any more complicated why go
out and reach the world
for people if there are only a few
people that you really want to reach
so most companies in yc these days i ask
them this question
can you make a list of your customers
yeah right make that list
start listing them out who are the
people decision makers in those
companies you're trying to sell to
these people make the list email
addresses phone numbers try to figure
out how to reach them
but start by making the list don't make
it complicated by going out
in a in a world where most people aren't
going to be relevant for for your
product
and finally this is a channel that
nowadays
is bigger than it ever has been and more
important than it ever has been
which is if you look at how the entire
world of startups has changed in the
last 10 years
more and more of them are turning more
money um and and
therefore getting what's called a higher
high ltv high lifetime value
by getting a higher lifetime value
you're enabling the ability to buy
paid advertising if you don't have
people paying for your product where
you're making money from your product
you should not be spending time on on
online marketing
now the truth is that most companies
these days are charting for the products
they are making money from the product
and therefore they spend money on online
marketing
if that's true for you this can be an
extremely powerful channel
the biggest mistakes founders make is to
start working online marketing
when they don't have people paying for
the product here's an insight you
probably didn't think of
most really big companies didn't use all
of those channels
they use one or two channels think of a
tripadvisor how is supervisor big
seo you guys type in something on google
you land on tripadvisor
and that's how you found this website
most companies have
um have a setup where there's gonna be
one or two channels that really matters
if you think of pinterest seo is the ra
the real way how printers is going
you type something on google they
already access the pinterest board for
that you'll land on that pinterest board
that's how they acquire new users all
right i'm going to
give some specific uh tactical advice on
some of these channels
the first one i talk about is referrals
and virality so referrals
is word of mouth if word of mouth is a
strong drive
of a product then referrals is going to
be
one way that you can amplify that word
of mouth how do i define referrals
financial incentive to tell your friends
about the product
that's my definition this is the airbnb
referral product
you give someone forty dollars to sign
up to airbnb
and when they do i get twenty dollars
pretty simple concept
uh we have that on the on the website
and on the mobile app
now that's actually more complicated
than you might think this entire product
funnel
where there's multiple steps in that
funnel i'm not going to go into detail
here but if you think of a referral
product it's not just as simple as
throwing that
offer out that's probably what you want
in the very beginning but once you have
a referral part you want to start
measuring each of these steps
like what is that referral offer and
people go to that page
how many people send invites how many of
those invites are being clicked on
how many of those people sign up from
those invites how many of those people
that sign up end up booking
each one of those steps is a step in
this funnel let's talk about one
specific step
the referrals email invite so we would
spend a lot of time optimizing this this
step
because there were lots of people
getting the referrals email invited at
airbnb
so what are the things you can optimize
on the referral invite email
first who's the sender of the email if
it's just airbnb
i probably never never heard of air b
with the first time i get this email
if it's gustav they send the email and i
send it to my friends they have heard of
me
that's the reason to open the email so
people open the email clear value
what is this email about many emails you
start with text
don't start with text just have the
clear value prop at the top
why should i care about this email in
this case it's extremely simple
gustav sent you 40 for your first trip
that sounds good
what is that about i'm gonna read about
it um when do i have to care about this
by this date in the next month so i
can't just leave this email and never
open it again i have to do it right now
what do i have to do here well i could
sign up which is a
undefined thing that you can do sometime
in the future or
i can do what we did here was accept my
invitation this sounds more exclusive
it sounds like something that is just
for me it doesn't sound like something i
can do anytime
in the future and finally here's some
social proof
from uh this email this is me i live in
san francisco we can reveal that
i actually been a member of mmb since
2009 and we can reveal that as well
let's talk about paid growth each of
these sections referrals pay growth seo
could be a presentation on its own so
it's impossible for me to go into
deep details on this but if you're
determined that you have product market
fit
you want to grow one of these channels
and this is the channel you wanna you
wanna go deep on
you're gonna have to go really deep on
it because being really good at one of
these channels require a lot of work
so there's lots and lots of stuff online
about how to get really good at one of
these channels
it doesn't really make sense to get good
at all of them because most of you won't
really need all of them
the number one lesson in paid growth ie
online marketing
is to not do it if you unless you have
revenue
this is the most common mistake that
founders make is that someone start
buying ads
for products and they'll never be able
to pay them back don't do that
the next thing you want to figure out is
what's called cac customer acquisition
cost
how much does it cost to acquire a new
paying
or a new valuable customer someone's
giving you value value back
um many of the advertising tools like
google and facebook
have a very clear system for how they
calculate this and once you start
running ads they'll start telling you
what the cost is going to be
next is going to be that your revenue or
protected revenue from this user
is going to have to be higher than the
cac higher than the cost
very simple otherwise you can't do this
so
how do you know this is the common
question you get early on in paid
marketing
well it seems like in eight months it
will be higher but not in the first
month
well you can't take all your money and
spend on something that you have no
clear certainty of is going to happen in
the future so you're gonna have to
either wait
eight months or you're gonna look for
early indicators
that your hypothesis about the value is
going to be stronger
the best thing startup can do is don't
wait eight months just have a much
lower like a much lower target on what
your cac is going to be
maybe one month two months three months
first first transaction
something like that that's a much better
way to do it the main channels for
online marketing these days is going to
be google
facebook instagram that's pretty much it
let's talk about search engine
optimization
this has changed a lot in the last
couple of years it's very competitive
and what changed is there used to be
millions of websites
each would rank for tens of millions of
keywords
now what i've changed is that the really
big companies starting
getting really good at ranking for all
those keywords
so a pinterest or a tripadvisor might
rank for every single travel keyword you
can imagine
that's hard for small companies what
that means that if you are going to rely
on search engine optimization to grow
um you're going to have to be as good as
a pinterest or
or supervisor eventually not right away
but eventually
uh it's so competitive to win in this
grant like large world of seo
when you get started you can think of
this way seo is is a zero-sum game
basically you're competing against
others so what you do in seo is going to
be
matter and what do you compare to others
the second thing is that the the
keywords that people search for are
changing right
constantly so if you're building
something new let's say asmr i think was
in
a thing that came up recently lots of
companies able to rank for that because
it's a new keyword there weren't
websites built 10 years ago they rank
for that because the thing didn't really
exist
all right let's talk about seo how it
works on the technology side
this is their b search results page this
is what you and me see when we go to the
mb
this is what google see google just sees
text
so to be good at seo you need to
understand what text am i showing to
so google can understand what the
website is about people can't understand
what your site is about
it's not going to rank it what are the
two main levers for seo
the first one is going to be things i do
on my page
so for example what's the title of the
page can google read the
the page does the page throw errors what
specific
page in my keyword am i trying to rank
my page for
well start with the keywords do some
research and see what are people
searching for how many people are
searching for asmr
in in in the united states per month
maybe i want to try rank for that
keyword we'll build a website just
trying to rank for that keyword start in
that that
start with google don't start with your
own content you don't know exactly what
people are searching for
you're going to start doing some
research the second thing is the thing
you can't
do that much about which is called
off-page optimization or
domain authority or or something like
that
which basically means how valuable does
google perceive your website to be
in the grand scheme of all websites and
the more inbound links you get from
press
the more links you get from all kinds of
people
that are also authorized like have high
authority the more valuable your website
will be in the in the eyes of google
which means it will rank you higher on
some of the keywords you're trying to
rank for
because it will compare you to other
websites and see if they seem
more or less authoritative i'm going to
details here but that's basically how
google work if you're curious about this
you can google
pay track and go to the wikipedia
article on page link basically will
explain sort of like
high level how google works final
section i'm going to go through this one
a little faster most of you guys don't
have to focus on a b testing
at all it won't matter for a long time
it is a great decision
making tool later on here's the
the situation the startups tend to get
into i want to launch a new
um home page i want to launch a new
design i did and the numbers went down
what happened it's a really hard problem
to
launch something new and sort of like
just look at that the metric over time
don't do that there's a better way first
before you get into that stage you want
to figure out
is a b testing something i want to do
the best way to do that is to
go to google and type in a b testing
calculator think of the metrics that
you're trying to change here so like
visitors to some conversion metric put
them into that first link you see on
and that'll tell you whether it's going
to be worth doing most of you it won't
be worth doing for quite a while
so here's the example i'm trying to give
you on the website so i want to ship a
new
experiment our new design on the
homepage
so let's ship it the metric went up or
the magic went down
either way like i don't know if the
website actually cost it or not
the only way for me to know if this new
design actually changed the metric
is if i had an alternative alternative
side of history
because two side to two different um
parallel universes at the same time
one with the new design and one with the
older sign if i had that i can tell
exactly what happened
that's the definition of a testing you
basically have two different
parallel universes of the thing you
shipped the same time
you measured the metrics that matter to
you the reason this is so powerful
helps you make decisions at scale what
ends up happening if founders when they
get five or ten people in the company
and they launch a new design and they're
arguing about
what caused the thing to go up or go
down the only way to really know is to
run an a test to figure out
uh what does the metric say about what
it went up or down
this is hard to internalize because most
people
think of themselves as as good product
good product thinkers so we're talking
about one thing called experiment review
this is airbnb how many here think that
you guys have good product instincts
they usually hand now you guys are
founders you have you should have good
products these things
all right let's see let's say go there
um all right so i'm gonna give you two
examples
so at airbnb we launched uh a new
sharing sheet for the
mobile app and um this was the old
version which was the
the native share sheet that you've seen
on ios uh you click on share and then
you see a bunch of sharing options
and then we just tried this new sheet
that showed more options uh we call this
the experiment but it
didn't really look native so the
question was which one was better
well we didn't really know so we
launched an a b test we launched both of
them at same time for different users
the goal here was to measure the number
of shares so
all right how many here think that the
control
was better how many people think that
this experiment was better and people
thought there was no difference
this is quite common this is about forty
percent better for us
so thank god a bit of an experiment
because if this was the decision making
group then we wouldn't have made the
right decision
next one should we have a sign up wall
or not in the app
now these are not necessarily learnings
you can apply to your companies right
away
but it was an important decision for us
to determine so should we have people
just open air b app and go straight into
the app or should we
have an experiment where you can click
out and x out the sign up wall
or should we have a sign up wall that is
a wall that you can't climb over you
have to sign up otherwise you can use
the mb app
which one is better how many here think
that the control
no sign up wall is better raise your
hand how many
people thought that the experiment where
you can x out and then sign up was
better
and people thought that just like this
wall you can't climb over it was better
that's a few amount of people all right
so this is a lot better
um we got 2.6 more bookings from ios
by making people sign up through a
signup wall in the app
why is that well we knew something about
them so we can send we can show them
more personalized stuff
and when they were about to book we
already had them signed up so they don't
have to
at the time of booking go through the
motions of signing up
you want to learn why why cost this the
whole point is basically when you get
big enough
when you're starting to grow and you
have these decisions about should i
launch this thing or not
um this is a really good way to do it
practice decisions are really hard
so using data to to to make them is a
good way
most of you won't have to worry about
this for a while so don't worry about it
here's the summary of my talk today most
of you
need to do things that don't scale you
are not at the place where you can think
about
um real growth things that growth teams
do so you have to unlearn the things
you've learned at your big companies or
in mba programs and just do things they
don't scale
secondly you want to measure your
attention to understand
if you have product market fit there are
other ways too but that's the best way
in my opinion
and third you want to build a cult
culture experimentation
you want to use data and not have the
loudest voice in your room
decide what the best decision is but you
want to use data and experimentation to
decide
what is the best decision probably
doesn't matter right now but it will
matter some point
thank you
you
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