What Start-Ups Need to Know About Protecting Intellectual Property Around the World
Jeffrey Shieh· August 22nd, 2012 8 Comments 8 CommentsIntellectual Property (IP) is vitally important to start-ups. The Start-Up Genome Project, which aims to map, model and analyze what makes start-ups tick, identified IP as a top source of competitive advantage for start-ups. But start-ups face significant challenges in acquiring, maintaining and enforcing their intellectual property.
Guest author Jeffrey Shieh is a Senior Patent Attorney at inovia, a foreign filing technology platform provider. He is responsible for counseling the company and its clients in all facets of the international patent process. Prior to joining inovia, Shieh was a patent attorney at the law firms of Cooper & Dunham LLP and Amster, Rothstein & Ebenstein LLP.
We hear a lot in the news about patent wars among the tech giants – Nokia vs. Google, Apple’s lawsuits in China, and Facebook vs. Yahoo! International patent protection is clearly a key component to defensive and offensive competitive strategies within large, global organizations. But what about smaller technology players and early stage start-ups that don’t have the resources to hire full-time, international law firms? For cash-strapped start-ups, the cost to file international patents to protect their innovations is often too complex and too costly. This leaves them exposed to competition in other markets and may have a serious impact on their ability to scale long-term.
What can start-ups do to protect their innovations and IP on the world stage during the four lifecycle stages identified by the Start-Up Genome Project: Discovery, validation, efficiency and scale?
It massively affected my life. I once slept through the finals of a doubles tennis tournament. My 4 alarm clocks and the repeated calls from my partner didn't wake me up. I remember once, in college, having an important meeting scheduled for 8am. I had to stay up all night to ensure that I would be there. Because I was so nocturnal, I couldn't take any morning classes. In 4 years of college, I took 1 class before noon. I probably missed 75% of the class sessions and barely passed. There were all sorts of fascinating classes that I would have loved to take but couldn't because they weren't afternoon classes.
Most people return small favors, acknowledge medium ones and repay greater ones - with ingratitude.
--Benjamin FranklinFeeling gratitude and not expressing it is like wrapping a present and not giving it.
--William Arthur WardFeeling grateful or appreciative of someone or something in your life actually attracts more of the things that you appreciate and value into your life.
--Christiane NorthrupIf the only prayer you ever say in your entire life is "thank you," it will be enough.
--Meister Eckhart
4 Common Investment Mistakes With First-Time Profits
7 Proven Templates for Writing Value Propositions That Work
10 Things Entrepreneurs Don’t Learn in College
Michelle Wetzler wrote this post on May 03, 2013
Keen IO is bringing cutting-edge data analytics technology to companies around the world. In doing so, we’ve talked to hundreds of companies about their analytics projects and pain points. Data analytics can sound daunting—even to data scientists—and one of the most common problems that we hear from companies seeking to gather and analyze data is: where do I begin?
The following 4 best practices will help any business as they get their data analytics framework off the ground:
1. Start Small - Analytics is not a project, it’s a practice. If you’re making a requirements matrix of everything you could possibly track in your business and then amassing a team to build out the infrastructure for it, you’re probably doing it wrong. Start by picking a few key drivers or pain points in your business and thinking how you can measure your success there.
2. Riskiest Areas First – Teams tend to focus on what they know best. For example, product companies will focus on analyzing & optimizing the look and feel of every user experience (green button or aqua-marine button??). But if they have no idea how to market their product to attract users, their business will fail. They should be testing their ability to attract & convert new users. What are the areas of your business that worry you most and what can you do to test your assumptions there? The book “Lean Analytics” goes into this concept in depth.
3. Be Agile – Analytics agility is a key skill for modern companies. Some people are scarred from year-long, staggeringly expensive BI implementations gone wrong. Don’t spend months agonizing over what tools to use to answer all of your questions. Try one tool to answer a specific question and if it fails, try another one. Tools will change over time as your priorities shift and new technologies emerge. Think of analytics tools as the means to answering whatever business questions are relevant at the time.
4. Elevator Pitch – When a customer has a hundred ideas of what to track I ask them to give me the elevator pitch for their business. I make a note of the 5-10 verbs and 5-10 nouns that they use. You’ll be well ahead of the curve if you’re collecting rich data on those things. You can always drill in deeper once that data starts generating more questions.
Analytics isn’t just for data scientists; it’s a way of thinking about what things in your business can be measured and tested. Start small, fail fast, and build your practice as you go. You’ll get better at it over time and pretty soon, you’ll be collecting and leveraging incredibly interesting and useful data.
Michelle Wetzler wrote this post on May 03, 2013
Chapter 1 Defining SalesTo define sales, we first need to ask a simple question. Who needs to know how to sell?
The answer may suprise you... everyone. Yes, everyone. Regardless of what you do, be it owning a small business or cranking away as an aspiring artist, you need to know how to sell. As a small business owner, it's your job to get customers in the door. As an artist, it's your job to move your artwork. We are selling every day, we just don't realize it. Which means that we are deciding to be poor salespeople, in most cases.
If you're thinking to yourself,
"I'm not a salesperson by trade, so this doesn't apply."
You're horribly mistaken. Selling is all around us, from the billboards we drive by on the way to work to the idea that you just ran by your boss during the latest conference call. It's all sales. It's your decision on whether you want to make yourself more persuasive and more impactful, and this guide is a great place to start. The ability to sell is an enabler, allowing you to grow your business and your dreams.
What Is Sales?
When thinking about sales, a common misconception of the trade exists: The best sales professionals are those that "convince" most people to buy from them. The typical thought process of a failed sales process goes something like this:
"How do I convince the prospective customer that my product or service provides value to them or their business?"
This isn't how the most successful sales professionals think, however. Their intention is not to convince but to uncover the reasons why their prospects would benefit from their solution.
The key to a good salesperson is research. This commitment is what separates those that are coveted and compensated by the most lucrative industries, from the has-nots. Anyone can convince someone to try something one time, but growing a book of business that is filled with consistent and trusting customers takes a professional. A professional that loves their industry and views what their role as uncovering problems for their customers.
Knowing enough about your prospective customers' pain points, so that you can articulate them with precision, will put you leaps and bounds ahead of your competitors. Sales is being prepared to capitalize on that opportunity, through diligent research and preparation.
Researching and Data Gathering
We now know that research and data gathering about prospective customers is key, but where do you find it? For the technology world, few datasources are better than Crunchbase for pulling raw statistics on the company. Linkedin also offers a very comprehensive search for both people and companies that may prove to be helpful for your diligence.
The important piece of research is understanding the questions that matter to your prospective customers, and tailoring those answers to fit their needs. There's no such thing as a canned response in the world of effective sales.
Next Chapter
So your interview is going along great, you’re swiftly navigating their questions with gusto and aplomb, then they ask you, “Okay, do you have any questions for us?” For the first time in the interview, you don’t know what to say. How many questions should you ask? Are certain questions offensive? Is this a trick question about asking questions?!
Hint: If the interviewer does not give you time to ask questions, especially if they sidestep around your attempts to ask questions, skip this company and move on to the next one. They’re probably hiding something, like their sweatshop headquarters, lack of decent coffee, or their ancient PowerPC developer workstations. The interview should be as much about whether the company is a good fit for you as them figuring out if you’re a good fit for the company.
If you’re interviewing with an engineer/software developer, feel free to ask them an opinionated question, like if they prefer Vim or Emacs, Nginx or Apache, or Supervisor or Upstart. You shouldn’t start an argument with them of course, but ask questions that give you a sense for how they think and what their preferences are.
Here are some specific questions I like to ask when interviewing for technical positions. I don’t encourage you to just read through this list in an interview, tailor these questions to the company and your personal interests.
1. What is a typical day at your company like?
This is a great question that gives you an idea of what your workday could be like. Ask questions about daily checkins, meetings, typical hours, whether employees eat meals together or not, Agile/Scrum, and management style.
2. What are the sizes of various teams?
I encourage you to ask this question about teams you’re specifically interested in. Their response should give you a picture of how any people you’ll be working alongside and how the team communicates with management. Additionally this question might give you insight into which team you’d like to work with.
3. Do developers use Mac, Linux, or Windows workstations? Why?
Chances are most employees are going to be using the same machines for development. If you strongly prefer a certain operating system, mention this upfront. They may be able to accommodate you or they’ll at least explain their reasons for the company’s preference.
4. What does your company use for source code management? Is submitted code reviewed first?
In this modern age, especially at a startup, you’re probably going to get an answer involving a distributed version control system (DVCS) like Git or Mercurial, with code backed up to GitHub or Bitbucket. Ask about code reviews before pushing to production, if open-sourcing service components is encouraged, how code quality is maintained (PEP8 for Python, JSLint for JavaScript), how testing is done, and if a continuous integration service like Jenkins is used.
5. Does your company have a mentorship or onboarding program for new employees?
Inquire about what new hires do in their first two weeks to get acquainted with the company and its codebase. If you’re applying for an internship at a mid-size or large company, ask if there are any activities or outings for interns. Assuming you take the internship, many of these interns could be your future coworkers so you’ll want to get to know them and figure out what kind of personalities are attracted to the company.
6. How does your company assess the performance of employees and how often is this done?
Some companies are known for strangling employees with management constantly evaluating them. This question will give you a sense for how management keeps tabs on employees and what incentives (or bonuses) they offer for outstanding work. Having your performance reviewed isn’t necessarily a bad thing, this information can be instrumental in pointing out which of your strengths are being recognized and areas that you have room to grow in. A little constructive criticism can be very helpful.
7. Does your company encourage developing internal tools to automate tasks and increase productivity?
Some companies are against their employees spending time in the office on other projects, however related to the company they may be. If you spot an opportunity to increase the productivity of yourself and other developers you should be encouraged to work on a solution. They key is to get approval first and demonstrate the potential benefits of your project.
8. What are some of the biggest challenges I will face?
Ask the interviewer about challenges that other employees face at the position you’re interviewing for. Show that you don’t shy away from problems and are interested in coming up with innovative solutions. This question can also serve as an opportunity for you to discuss how you would specifically address some of these challenges.
9. What is the culture of your company like?
This is a very important question because every company can have a different culture on some level. Ultimately this often ends up being the biggest determining factor in whether or not the employee feels like the company is a good fit for them. Ask if employees go out to lunch together or hang out after work, what kind of values the company was founded upon, what the general atmosphere in the office is, how approachable upper management is, and how many ping-pong tables are in the rec room.
10. Do you have any reservations about my skill set or are there any strengths I will need to develop while working to be a contributer to your company?
I like to save this for my last question. It gives you a chance to find out what the interviewer really thinks about your fit for the position in the company. One time I asked this question in an interview and the interviewer said he was concerned that I didn’t have any Java experience. Now I am by no means a big Java fan, but I’ve got plenty of experience with it. I pointed out to him that it was on my resume and in addition to working with Android, all of my university coursework has been in Java. If I had not asked this question it’s likely that the interviewer would have just skipped over me, all due to a simple misunderstanding.
I encourage you to ask questions like these so that you get a much better sense of the company than you’ll be able to gleam from a job post. Additionally, many of these questions demonstrate to the interviewer that you’re really interested in the company and want to make sure they’re a good fit for you. They’ll want to qualify themselves and their company to you to prove that they’re good enough to have you as an employee. Never be afraid to ask questions!
As a sales manager one of the first things I had to learn to do, especially during the financial crisis back in 2008 /2009 was learn to never take my sales teams commitments at face value. This was tough, because as a manager you want to have a relationship with your staff that allows you to trust them and take their word as gospel. There is nothing worse than being let down by a member of your sales team in business. Nothing. They are responsible for making sure that you are getting a paycheck and can pay all the bills that month. That is why they SHOULD be well compensated for their efforts.
In general around 80% of sales people I have met, are pretty average, because they really don’t understand the science around sales and the difference between that and account management. There is a HUGE difference. When you are starting up a business, before you have accounts to manage, this is when you truly see what sales and business development is all about. Coming from sitting as the head of a sales team and being bought back down to the trenches again as a startup myself, I am starting to get back into the hardcore sweaty game that is sales, which is somewhat humbling and bloody hard work. You see startups don’t have their case studies and reputations yet, they don’t have people to re-contract agreements in the early days for easy revenue.
At the very beginning of a business the sales process is a science. And talking to many startups and even small businesses as I do daily, I am beginning to see that people don’t understand the science, they talk shit and LOVE having a chat about their vanity metrics.
The science is easy, and there are really only a few things you need to understand. [1] Prospecting [2] Building a Pipeline [3] Objection Handling and [4] Closing.
Prospecting
This is actually communicating with a client or customer, it might be a phone call, a face to face or skype meeting. For an online business this would be the person on your store looking around, clicking on products, looking at options etc. Prospecting is about identifying your opportunities through REAL conversation with a potential customer and client, it is about getting them to say to you they are interested, that you should send them over a proposal or that they will add an item to the shopping cart whilst they continue to browse around.
Building a Pipeline
Even seasoned sales people don’t REALLY understand how to manage their pipeline and what it actually means. Only once you reach the stage of a customer committing to a proposal should you then go ahead and place it in your pipeline. In an online environment, this means that someone has added a product to the shopping cart.
I am going to go a little deeper with this one though, as not knowing how to properly identify the value of a pipeline is where I see startups and businesses fall flat on their face.
Whenever something is added to your pipeline you should rank that proposal according to the probability that the deal is going to close, if you are speaking to the actual decision maker, and things are looking good – then the probability is going to be higher for a close than if you are just at the stage of talking to an influencer within the company. To make it easier to understand what I mean by this, let’s have a look at the some of the pipeline that I have built for the business this week.
This week I made 120 phone calls [actual sales conversations] that resulted in 8 face to face appointments that resulted in 14 proposals being sent to people as some were smaller value deals that didn’t require a face to face meeting. In that mix of proposals I sent 9 to decision makers and 5 to department heads that will need to gain approval. The total value of opportunities there for my business are around $101,500 across the year if they all come through. Statistically though – they won’t. Next to each proposal I rank where they are sitting in terms of how many times I have spoken to the person, their feedback, the budgets we have spoken about etc. From there I can clearly see that right now at this very moment for the work I have done this week, that I have:
9 x $500 sales sitting at a probability of 10% to close
1 x $10,000 sale sitting at a probability of 10% to close
2 x $30,000 sales sitting at a probability of 10% to close
1 x $500 sale sitting at a probability of 75% to close
1 x $500 sale sitting at a probability of 60% to close
1 x $26,000 sale sitting at a probability of 60% to close
Meaning that my sales pipeline is actually $23, 725 worth of opportunity at the moment, due to the different stages that the sales are at. Of course today in follow up calls I may be able to move 8 sales into a 60% probability and thus the pipeline increases. You need to take into account, objections, renegotiations whenever you are building a pipeline, and far too often we mistake “opportunities” being worked on for “pipeline” which inflates what you WILL actually be able to close and becomes a vanity metric, not a true measure of what is actually going on in the business.
Objection Handling
This stage of sales is where you start to move things up or down your pipeline, handling objections and maintaining buy in, means the probability of a sale increases, and the opposite for not handling the objection well. This is the stage where you must trial close in every conversation, objection handling can often be the most expensive part of a sale because people will keep their hopes up and not distinguish properly between a time waster that hates saying no and someone that it is genuinely vetting you to make sure you can deliver what they want. If you are prance around with them, they will prance around with you, be straight, ask them if they actually want your product, and if it is in their budget to purchase it. If the answer is no, take them out of the pipeline.
Closing
Still now, I occasionally have trouble with closing, mainly when I am talking about asking people for a commitment that means a lot of money over a year, some people say that people fear being successful and fear making money – I personally think it is less about that and more about being addicted to the fluff, not wanting to leave that stage of the sale where you have a great relationship and things look positive, we fear that “if” we are rejected for one reason or another the whole exercise is ruined. But if we don’t ask for it, we don’t get it – and if you have completed your due diligence during the sales process, you should have vetted the “no” in the objection stage and only be asking a guaranteed ”yes” to sign on the dotted line. This whole process is exactly the same online, it just is way more transactional and uses technology to have the conversation, your buy now button is the closer.
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One thing that’s not taught in school is technical recruiting. You develop skills to become a better programmer, get trained on how to perform well in interviews, but it’s always assumed that it will either take years before you’re in a position to interview a potential hire, or that the company you’re currently working for will teach you their secrets.
As a result, I’ve put together a list of my recommend “must-reads” below that covers topics of recruiting, hiring and interviewing from various thought leaders in the industry. Reading all of these won’t turn you into an all-star technical recruiter overnight, but they will help you understand the fundamentals, key things to stay away from and best practices from people who have been doing it (and doing it well) for years.
If you’re a technical recruiter, Joel Spolsky is a must-known name. He often writes on everything in recruiting/interviewing technical talent, and here are the top 5 posts by him:
Jeff Atwood, Joel’s co-founder to Stack Overflow, has also written on this topic:
And lastly, a few articles/blog posts that are very popular and highly recommended:
Aside from this, the best thing you can do to hone your skills is to go out, and start recruiting. It’s one thing to read the best interview tips, but it’s a whole different world putting them to use in interview after interview after interview.
Good luck! Feel free to send me an email at konrad@kiratalent.com if you have any questions!
Kira Talent has changed the way organizations hire by infusing video into the recruitment process. Interested in a free demo? Send Geoff an email at geoff@kiratalent.com.
Konrad Listwan-Ciesielski is a Co-founder and CTO of Kira Talent.
We all like to build software which is reliable, but every once in a while it seems like a good idea to demo something still in it's unreliable infancy. Google Chrome has a little known feature which can help.Record modes let you record every request Chrome makes. Playback mode serves requests out of that recorded cache just as if they were being loaded on the spot. It doesn't record where you click or what you open, just every request as it moves over the wire.
These instructions are tuned for OS X, but can be adapted to any operating system.
1. Start by closing Chrome (after copying down these instructions!)
2. Open a Terminal (Cmd+Space then type "Terminal")
3. Type open -a "Google Chrome" --args --record-mode and hit enter.
4. Run through your demo, and close Chrome, returning to the terminal.
5. Type open -a "Google Chrome" --args --playback-mode and hit enter.
6. Everything will be served out of the recorded cache, even if your servers have exploded, a bug has been deployed, or the conference wifi has dropped out.
Thanks to commenter Michael Kenniston we have these commands for Ubuntu (and most other Linux):
google-chrome --record-mode
google-chrome --playback-mode
As with the OS X instructions, remember to close Chrome before beginning and between steps.
Commenter Kristian J. has provided these instructions for Windows:
Press Win+R to open the run dialog, enter chrome --record-mode for record mode and chrome --playback-mode for playback.
The Business of Software Conference sounds like a phenomenal event. I haven't attended it, but I did recently run across one of the sessions from their 2012 conference, a talk by Gail Goodman, the CEO of Constant Contact:For those who don't know, Constant Contact is a publicly traded online marketing company with over 500,000 customers who rely on it for things like email marketing. While many people probably think of it as a recent success, it was actually founded in 1995, and went public in 2007, which means its nearing its 20th anniversary.
Gail's talk is fantastic, and well worth watching/reading in full detail. But in my limited space, what I'd like to do is to focus on the one number that explains the company's success: 45
The average Constant Contact customer stays with the company for 45 months. At their $39/month price point, this means that a customer generates about $1,800 in lifetime revenue, allowing Constant Contact to make money at a CPA (cost-per-acquisition) of $450.
This is the key to success in the SMB market. Small businesses don't pay a lot of money; $39/month is probably on the high end. And small businesses are hard to market to. Constant Contact found that even after they dominated the organic search results for email marketing, they didn't get enough signups simply because small businesses weren't bothering to even search for email marketing.
Goodman credits the company's success to--get this--in person seminars through Chambers of Commerce across the country.
This kind of high-touch marketing is expensive, hence the $450 CPA. So the math could only possible work if Constant Contact could hang on to those customers long enough to make a profit.
If you're a SaaS startup targeting the SMB market, you'd better either have an awesome freemium offering, or you'd better have a average customer lifetime of around 45 months.
Preventing Unsubscribes in Forwarded Emails
Guest blogger Jonathan Kim discusses the concept of the Silent Unsubscribe and how you can prevent your most engaged subscribers from disappearing from your list.You have an amazing newsletter and fanatic subscriber base, but did you know it’s at risk? ESPs do a good job of making unsubscribing from emails super easy, often with one-click. But what if that link falls into the wrong hands? Someone could accidentally end your relationship with a passionate reader, a concept we call a silent unsubscribe.
The Litmus team discovered these silent unsubscribers when they noticed a long-time fan removed himself from the Litmus newsletter after sharing an email with 85 of his coworkers. That’s right: this die-hard subscriber opened Litmus’ email, shared it with 85 people, then unsubscribed — never to receive Litmus emails ever again. That just didn’t add up. After some digging, it turns out that one of the people who received the forwarded email thought it was spam and clicked the unsubscribe link. Accidentally losing a super-engaged subscriber — someone that would share an email with 85 other people — well, it’s an email marketer’s worst nightmare.
FINDING A SOLUTION
In November, I wrote about a technique to change the contents of a forwarded email, an idea I got after analyzing Litmus’ Email Analytics tracking code. At the time, we were using it as a way to bring in more subscribers at HubSpot, but it can also be used to prevent silent unsubscribes. In fact, it should probably be used to do both! Here’s an example:
The unsubscribe link is visible in the original email. After the email is forwarded, the unsubscribe link is hidden and a new “subscribe” call-to-action appears
HOW TO GET STARTED
This technique should be standard practice for every email marketer. It decreases the silent unsubscribe rate, has decent client support and degrades gracefully for clients like Gmail. To use it, use the following <style> block in your next email, and add the class original-only to anything you want to hide from silent unsubscribers.
Basic Method: Hiding the link in forwarded emails
<style type="text/css"> blockquote .original-only, .WordSection1 .original-only { display: none !important; } </style> <p class="original-only"> No longer wish to receive this email? <a href="">Unsubscribe.</a> </p>
Advanced Method: Hiding the link + introducing a sign-up button<style type="text/css"> blockquote .original-only, .WordSection1 .original-only { display: none !important; }blockquote .forwarded-only, .WordSection1 .forwarded-only { display: block !important; } </style><p class="original-only"> No longer wish to receive this email? <a href="">Unsubscribe.</a> </p><p style="display: none"> Want to get this email? <a href="">Subscribe today.</a> </p>ARE YOUR EMAILS (AND SUBSCRIBERS) AT RISK?
From some light research, it looks like all the major Email Service Providers support one-click unsubscribe links, but it’s often not the only option they support. Unless you’ve been sending out email from your own custom server, odds are you’ve already been affected by silent unsubscibes.
EMAIL CLIENT SUPPORT
Unfortunately, this technique doesn’t fully work in Gmail since display: none isn’t supported, and inlining display: none !important can’t be overriden later. If a majority of your email base uses Gmail, consider using only the basic method above. While this won’t hide the unsubscribe link in Gmail, it will still work in other clients.
OTHER SOLUTIONS
The aforementioned solutions are some of the simplest techniques and are for emails that contain one-click unsubscribe links. If you want to take this even further, here are a couple of other suggestions:
- Require confirmation instead of one-click unsubscribe
- Try making the email address that will be unsubscribed VERY clear on subsequent pages after the link is clicked
About the Author: Jonathan Kim’s 9-5 is making customers happy as a frontend engineer. He geeks out about email, software and business on his blog. Impatient about improvement.
Editor’s note: While we definitely advocate the use of innovative techniques in email marketing, we also encourage you to use common sense and your best judgement when implementing HTML that can hide an unsubscribe link. Making sure you’re familiar with your country’s email marketing, spam and privacy laws is a good place to start!
I want my actions to be more data-driven. I want to make Dave McClure, Steve Blank, and Eric Ries proud. Easier said than done.
Analytics is still a pain in the ass.
How can I tell if people are using my product, Draft? (Draft is the tool I'm working on to help people become better writers.)
I could look at user retention. Once people start using Draft, do they come back to use it again?
There's some great software to help study how users return to your product. They use a method called cohort analysis, which breaks up users into groups of people who “activate” or sign-up at the same time and then you track their progress as a group. Do users that signup in January after one month use your app more than those users who signed up in December after their first month? They do? Awesome, those features and things you did in February might be onto something.
To use these analytics tools, I have to integrate my application with them. I have to figure out how to send even more data to them.
But I don't want to integrate something else right now. I already have data. It's coming out of my ears. A database full of it. Log files upon log files. Can't some of the data I already have power this user retention analysis? Do I really have to start all over again collecting new data?
I don't want to work harder for more data right now. I want the data to work harder for me.
I got irritated, so I built a simple way to study your Rails app's user retention using a cohort analysis with the data you already have in your database. It's called CohortMe.
https://github.com/n8/cohort_me
To get a cohort analysis, just use this in your Rails app:
CohortMe.analyze(activation_class: Document)That's it.
Above is an example of studying user retention for Draft. Users are “activated” once they create their first Document. Then they “return” if they create another Document.
CohortMe.analyze will spit out a ruby Hash:
{Mon, 21 Jan 2013=>{:count=>[15, 1, 1, 0], :data=>[#<Document user_id: 5, created_at: "2013-01-22 18:09:15">,During the week starting on 21 Jan 2013, I had 15 people signup. One week later, I only had 1 user still creating Documents. Yuck. That's a terrible retention rate. I better explore why they aren't coming back. Note: it's just bogus test data.
Here's some partial view code you can use to show your cohort analysis in a nice table:
Pretty easy. If you have any trouble let me know on Twitter or email.
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CohortMe Details
Options you can pass to CohortMe.analyze:
- :period - Default is “weeks”. Can also be “months” or “days”.
- :activation_class - The Rails model class that CohortMe will query to find activated users. For example: User. CohortMe will look for a created_at timestamp in this table.
- :activation_user_id - Default is “user_id”. Most Rails models are owned by a User through a “user_id”. If it's something else like “owner_id”, you can override that here.
- :activation_conditions - If you need anything fancy to find activated users. For example, if your acivation_class is Document (meaning find activated Users who have created their first Document) you could pass in: :activation_conditions => [“(content IS NOT NULL && content != '')], which means: Find activated Users who have create their first Document that has non-empty content.
- :activity_class - Default is the same class used as the activation_class. However, is there a different Class representing an Event the user creates in your database when they revisit your application? Do you expect users to create a new Message each week? Or a new Friend?
- :activity_user_id - Defaults to "user_id”.
Examples
First, figure out who your activated users are. Are they simply Users in your database? Could be. But I prefer treating an active user as someone who has signed up AND done a key feature.
For example, if you created a group messaging app, it's probably a User when they created their first Group.
Next, figure out what a user does to be classified as “returning”. This needs to be another record in your database. Is it a Message they made this week? A Share? A new Document?
For my group messaging tool, my cohort analysis might look like this:
@cohorts = CohortMe.analyze(period: "months", activation_class: Group, activity_class: Message)CohortMe will look at Groups to find activated users: people who created their first Group. Next, CohortMe will look to the Message model to find out when those users have returned to my app to create that Message activity.
This assumes a Group belongs to a user through an attribute called “user_id”. But if the attribute is “owner_id” on a Group, that's fine, you can do:
@cohorts = CohortMe.analyze(period: "months", activation_class: Group, activation_user_id: 'owner_id', activity_class: Message)Here's an example from Draft. It's slightly more complicated because I have guest users, and documents that can be blank from people kicking the tires. I don't want to count those. My cohort analysis looks like this:
non_guests = User.where("encrypted_password IS NOT NULL AND encrypted_password != ''").all @period = "weeks" activation_conditions = ["(content IS NOT NULL && content != '') and user_id IN (?)", non_guests] @cohorts = CohortMe.analyze(period: @period, activation_class: Document, activation_conditions: activation_conditions)Data Returned
The data returned looks like this:
{cohort date1 => { :count=>[integer, smaller integer, smaller integer], :data=>[user event record, user event record] }Installation
- Add gem 'cohort_me' to your Gemfile.
- Run bundle install.
- Restart your server
- Get your cohorts in a controller action. For example:
class Users def performance @cohorts = CohortMe.analyze(period: "weeks", activation_class: Document) render action: 'performance' end end
- Do something with @cohorts in a view. Here's code you can use for your view. It displays a basic cohort analysis table you can play with.
- If you look closely at that table image, you'll notice that the numbers are links. I've tweaked the table in my own app to be able to show me who exactly are those users returning to Draft. You can do the same:
<%= link_to "#{((row[1][:count][i].to_f/start.to_f) * 100.00).round(0)}%", show_users_retention_path(cohort: row[0], period: i) %>And I have a Controller action that looks like this:
class RetentionController < ApplicationController def show_users @cohorts = CohortMe.analyze(activation_class: Document) @documents = @cohorts[Date.parse(params[:cohort])][:data].select{|d| d.periods_out.to_i == params[:period].to_i} user_ids = @documents.collect{|d| d.user_id } @users = User.where("id IN (?)", user_ids) end endFeedback
Source code available on Github. Feedback and pull requests are greatly appreciated.
225 Kudos
February 16th, 2013This December, our Time Tracking app Freckle will turn five. I’ve learned a lot about running a SaaS over these years, from making the right business decisions to choosing the technology to go with them.
The single most important thing you have to do as a business is make money. You need to pay your bills and put food on the table. At the same time you don’t want to compromise what you’ve set out for, in our case building the best time tracking tool there is and making it fun and awesome.
It follows that you need to have the most time available to actually talk to customers, refine the product and add awesome features—without losing the focus on what you’ve set out for.
In other words, you want to minimize time spend on things that other people probably know more about, including obvious things like taxes and accounting, but also keeping a SaaS up and running.
Here’s some tools we happily pay money for to keep some of the work of our backs:
- Travis Pro for continuous integration. We used to run our own CI server, no more. One more thing we don’t have to keep running
- NewRelic, which monitors not only the performance of our code and servers, but also external web services. This enables us to watch for performance issues with new releases as well as pro-actively act before something starts to slow down Freckle.
- Postmark sends our transactional email. No need for us to run our own mail server plus we know we can rely on deliverability. A must if your app sends mail.
- Honeybadger for error monitoring & tracking
- DocRaptor, a hosted version of PrinceXML, for converting HTML to PDFs. We literally implemented PDF downloads for invoices in one hour of coding with it (that includes writing tests and all).
- logentries.com keeps a tab on our logfiles, and provides instant search in case we encounter an issue. Much faster to quickly locate logs as you can view logs of the same time period across servers combined into one view.
- Dome9 provides a SaaS firewall solution so we don’t have to mess with iptables or other weird things manually. They have an iPhone app to on-demand open up ports we need to administrate our servers.
- Webmon and Pingdom allows us to monitor world-wide service availability and response time, as well as see if our DNS resolves globally. Pingdom also provides our status website without further configuration necessary (it took 5 minutes to set up).
- Dead Man’s Snitch emails you when periodical tasks (cronjobs) aren’t running.
- PagerDuty collects alerts from various services and gives us a central place from where to distribute alerts by text message and emails. This saves time by not having to configure all monitoring services separately.
- Tinfoil and Trustwave do security scans of our infrastructure, and tell us when it’s time to install security updates.
- KISSmetrics for metrics and event tracking and Customer.io for sending out on-boarding emails, as well as emails about features.
If there’s someone that can do it for you (probably better than you can) for a price that makes sense, then you’d be stupid to build it yourself (and by the way, this list is not exhaustive, there’s even more services we use).
There’s a thriving ecosystem of apps and services that help you running your SaaS—make good use of it!
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Navigating the ad network bullshit
Follow @PapayaMobileWRITTEN by Justin Mauldin
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If you're like us chances are you've been contacted by numerous ad networks promising you money, chart boosting, and world domination. The problem is that every one of these networks are competing in a really crowded space so they tend to bend truth to make themselves stand out.
For example Google AdMob claims to have 20 billion impressions per month but somehow super small ad networks like Fiksu Inc. and Adfonic are doing over 100 billion impressions? Companies like Jumptap are working with 1000+ developers while others like Mobpartner are stating they have over 130,000 developers in their network?
Then when you start looking at other metrics (Pay-Per-Install, Cost Per Click (CPC), eCPM, etc) it gets even more confusing. One very sneaky trick that some companies are doing is defining "cost-per-download"differently than cost-per-install.Essentially, they are claiming that if the user clicks the advertisement and is taken to google play, that is considered a "download". This is just another way for Ad Networks to get more money for what is essentially a CPC model. Make sure you do your diligence when asking ad networks how they measure an impressions, click, and install.
On top of that there are companies who are paying developers /bloggers a commission to promote their network in highly effective SEO articles (revmobreviews.com). It becomes even harder to know who is telling the truth and who is a paid affiliate.
So how do you know who to work with and who to write off? You could just try all the networks but assuming you don't have that kind of time or money start by checking their Alexa Rank. Chances are if a company has been around for awhile they probably have a fair share of traffic going in/out of their site.
Put their customer service to the test. Are they responsive to emails within 24 hours? Do they have exaggerated claims on their website? Make sure to grill them about the details and if it sounds fishy just move on. You want to make sure whether you are advertising, publishing, or exchanging that you are working with quality partners. When evaluating different networks make sure to look past their marketing. Create a checklist. Here are 10 sample questions:
- What do their back-end analytics look like?
- What is the average eCPM for publishers?
- How much revenue does each ad network keep as their "cut"?
- How many non-incentivized installs can they drive to your app per day?
- How do they measure? Install, Click, Impression, Action, etc.
- Can you target users beyond the basics? (geo, language, device, OS)
- Can you manage the account yourself?
- Do they support server-to-server?
- Are all kinds apps welcome to publish/advertise or just certain categories?
- What ad formats do they support?
Below are my top five companies to work with based on experience (in no particular order):
- Tapjoy- Clearly the leader in incentivized downloads. Tapjoy has a robust backend system and a great team of account managers to answer your questions.http://www.tapjoy.com
- AppFlood- The only network where publishers keep 100% of their advertising revenue, advertisers get non-incentivized users on cost-per-install model, and exchangers get free users 1-1.http://www.appflood.com
- Tapit!- Recently acquired by Phunware, Inc., Tapit! has real time bidding, a large selection of ad-formats, and incredible reporting/analytics.http://www.tapit.com
- InMobi- InMobi recently rolled out a new audience targeting platform that is head and shoulders above the competition. For example, you can target users who are spending less than their previous average amounts of time in your app with custom ads. This is where mobile advertising is headed.http://www.inmobi.com
- Flurry- Without question Flurry has an enormous amount of data and analytics that can be used to segment your audience with a variety of ad formats.http://www.flurry.com
I have a need to organize the world. Four years in as an angel investor and one as a VC, I realize the world of startups and venture investing is pretty noisy and ambiguous… very hard to organize! But there has to be an order, a pattern. How else can one make a successful career of venture investing (money) or entrepreneurship (time and heart) in startups? Without some structure, it is gambling.
Below is my framework for thinking about digital startup BUSINESS MODELS. This is based on the 500+ startups I’ve seen over the last few years. The framework is still evolving, because my data set is evolving too, and I am young and learning.
I think about businesses model as a vertical line connecting the customer to profit.
The BUSINESS STRATEGY is where and how the entrepreneur chooses to play on each of these dimensions. The spectrums of how and where to play are captured in the full framework below. There are many different ways to create and MONETIZE a valuable service for customers, depending on type of customer.
Implicit in this figure is that a vertical line represents a set of strategic choices on each key dimension that constitutes a potentially (you’ll see why I say “potentially”) winning business model.
Let’s get tactical. Below are highlighted two particular cases, SAP and Dropbox. SAP sells to enterprises – one of the few cases where cost benefits are an appealing value proposition. An SAP sale is a long, tedious and expensive enterprise sale into a market comprised of the top 10,000 businesses in the world, but the relatively small number of addressable customers and long sales cycle are justified by a very high ticket price.
Dropbox is on the other end of the framework. Does Dropbox save consumers and small businesses cost or drive revenue? Yes, maybe, but mostly Dropbox just makes life less annoying… eg, it has lots of “utility”. Dropbox was distributed “virally” (remember when it spread in ’08 and ’09?). Number of endpoints in the addressable market is HUGE, offset by a monetization level through SaaS subscription that is very low. Both of these companies are incredibly successful because their strategic choices have created a strong business model.
So now you see how the framework works.
MAKE SURE YOUR STARTUP FITS THE FRAMEWORK
I meet many startups whose approaches are off - sideways Ms, sideways Vs, forward slashes, back slashes, etc. For example, a backslash (\) doesn’t work because ticket price is too low to support a long sales cycle and small number of addressable endpoints. It doesn’t mean the business can’t be successful, just that tweaks are needed. When I meet with a startup, I check it against this framework in my head. If the line is not vertical, or close to vertical, my feedback centers on the deviations.
WHAT ELSE WE CAN LEARN FROM THE FRAMEWORK
Cost is a tough value proposition: Take a look at the value proposition dimension. You will notice that cost (eg, cost savings) doesn’t extend to the right beyond medium sized businesses. So all you startups selling into the cost side of SMB, professional and consumers’ P&L, good luck. It is a tough road. Not impossible, but tough. It is very difficult to get SMB or professionals’ attention by saying, “hey, you know that line item that is 10% of your cost structure? I can save you 10% on it.” Snore. That is 10% of 10%, or 1% to the bottom line. They would much rather spend the same time learning and investing in a way to raise revenue 5%!
A business can move right to left, but not the other way: Dropbox is a great example. They entered the professional and consumer markets and are slowly working their way left, with increasing monetization. Brilliant. I see this “dropbox” strategy a lot, and I like it. The older generation of VCs calls it the Webex strategy. But how many companies have you seen move left to right? What enterprise software companies have started delivering and monetizing great consumer apps??? Side note: one such folly is Autodesk’s free consumer app to turn digital pictures into 3D models. Don’t get me wrong, I REALLY want to 3D print my head, but not sure what that does for Autodesk’s core business.
You will notice this framework doesn’t fit two-sided networks: I suppose you could stick a mirror at the bottom and reflect it to achieve a two sided framework. The point is that two-sided networks are HARD. I have seen a ton of “first we’re going to be wildly successful in B2C, collect a bunch of consumer data via an app and then sell it to businesses B2B.” Scary. Just being wildly successful in B2C is hard enough without having to pin monetization on being wildly successful in B2B. Quick callout to Justin Massa at HPVP portco Food Genius. You realized within a few months that B2C2B2B was a bad idea. Please spread the word.
By the way, don’t confuse Dropbox or Facebook for two sided networks. They are networks, but primarily one-sided. Members of the same side create value for each other. Those fit this framework.
NECESSITY AND SUFFICIENCY
Making strategic choices to fall close to vertical within this framework is necessary for success, but it is not sufficient. A successful startup also needs a killer value proposition and incredible management. And don’t forget the competition.
Guy is Managing Director at Hyde Park Venture Partners. Follow guy at @guyhturner
The era of User Generated Discontent began about a decade ago, when a critical mass of people started using social apps on the web often enough that they felt a bit proprietary over the user interface and design of those services. Inevitably, that led to mass revolts and widespread complaints any time a company changed even the most minor parts of its user experience.
From Facebook's introduction of News Feed and Timeline to Twitter's launch of New Twitter and New New Twitter to countless angry responses to any given logo change, the spirit of "Why Wasn't I Consulted?" runs deep on the Internet, and perhaps in no realm is it expressed more passionately than in user interface design. How come we keep screwing it up? Is it possible to change a UI without inciting a riot?
It would appear so. We just have to follow some principles based on learning from the last 10,000 times that a mob of users got upset.
Saving Face
Yesterday I talked about how all dashboards should be feeds, using the example of our work with ThinkUp. I sort of glossed over it by saying "we threw out the old UI when we built version 2.0", but the reality is we totally redesigned an app that had been designed by a community, and nobody got upset. So it's possible to do this! But how? By obeying a few principles:
- Communicate in advance with the community about what your goals are. You've got reasons for making a change in your app or site, but they should be grounded in meaningful goals that meet user needs. "We want to increase engagement" is not a goal, or at least not one that you should try to get a community to care about. But "we want to make sure new users aren't overwhelmed with options" is something people can actually respond to intelligently. If the community can understand your rationale, then they can help you achieve it, or at least begrudgingly concede that it's one of your priorities. And the time to do this is before you actually put the new version out. If you're concerned about revealing secrets to competitors or to the market, then just speak in broad terms without revealing exactly how you're going to change the app to meet those needs.
- Enforce communications discipline amongst your team members when communicating the change. Everyone who knows a change is coming should get together and discuss how they'll talk about the redesign, and should work together to come up with consistent ways to describe both the goals and what's up for discussion in terms of future adjustments. Be hyper-responsive and very present as soon as the change is announced or released, to respond to complaints or questions wherever they happen. And if someone on your own team is worried about a design change, or disagrees with its implementation, you can bet that many of your users will feel the same way.
- Describe the audiences you're trying to serve by making changes. One of the most common tensions with a community is when you make a change to address one part of your audience, making the other people you serve feel left out. If you optimize your mobile UI, desktop users get mad, or if you shift an element on the page so that international languages get a better experience, your primary language users might be frustrated. And no matter who you're serving, some people will say "Why did you fix that instead of fixing this other thing I care about more?" So articulating who a change is meant to serve helps to focus the conversation about a change in a useful way. We did this in a very literal way, simply writing a blog post called Who is ThinkUp for? to start to define our target audiences.
- Give people structured ways to provide feedback and comments. Okay, so your users are asking "Why wasn't I consulted?" about this new change — now what? There should be clear, consistent ways for them to get heard, whether that's through social media or email or a comment form or any other mechanism. So many companies, especially big companies, screw up on this part by hoping that refusing to provide a forum for user complaints or feedback will somehow stop a backlash from coming.
- Define a process and timeline for iterating based on feedback. Many of the issues that your community complains about or brings to your attention are going to be legitimate! They'll be raised in the spirit of a productive conversation, and you have an obligation to respond to those points with plans that are as concrete as possible in addressing them. So, be ready before you announce your changes with a team that will estimate the effort involved, and roll out those updates as efficiently as possible.
- Set a measured, rational tone with your community. This is something you need to be doing well in advance, but if you set the expectation that changes will be responded to and both your team and your users are going to communicate about them respectfully and calmly, people will follow the prevailing culture of the conversation. On ThinkUp, we've had a mailing list for almost four years where there's never been a flame war. That's almost unheard-of in open source, and in addition to making things less stressful when we make a change, it helps us attract good, diverse talent to our community.
- Accept that some people will never be happy. This is the sort of zen aspect of community management with changes, the one you have to confront by reciting the serenity prayer. Some people are determined to be unhappy, usually for reasons having to do with their personal lives or other challenges, and they simply want to use your app as the platform through which they demonstrate it. As long as you can contain their tantrums and direct them away from those giving productive feedback, they're not that hard to deal with.
- It helps if people don't care that much about your app. This is more of a worst-practice than a best-practice, but we began to explain our reasoning behind a radical change in our user experience by talking about what sucked in older versions of ThinkUp. As painful or humbling as that exercise may have been, the criticisms that were leveled resonated as being accurate with our community, and gave us permission to pursue a more aggressive redesign. So one takeaway if your community gets upset is that you should thank them, because it indicates passion about what you're doing.
Humility Above All
This is far from a comprehensive list, but these are some of the basics that you'll have to accommodate if you want to not make your users mad. If you have a super-small community, you might be able to skip some of these steps. But overall it let us go from an app that looked like this:
To one that looks like this:
Without anybody getting upset. It's not inevitable that every change on the web has to involve drama; By carefully anticipating people's responses and thoughtfully engaging with your community, you can actually come out of even a dramatic UI redesign with people happier than they were before.
Related Reading
Many of these ideas of community management are far from new; Lots of people liked a similar piece that I wrote a few years ago called If your website's full of assholes, it's your fault.
If you're a developer or designer, you might want to follow along and make sure we put these principles into action by joining ThinkUp on GitHub.
A friend of mine recently came back from a trip to Australia, where he simply marveled at the predominant “can-do” attitude that existed throughout the country. His enthusiasm was shocking to me only in that as I reflected on the last year, I realized how many people I had encountered who were obsessed with what could not be done in today’s world.
It seems that globalism, technology, and political gridlock have convinced many Americans that the change brought on by each is making it impossible to do anything. This obsession with explaining why things can’t happen seems so antithetical to everything that America and our entrepreneurial spirit are founded on that I, for one, am sick of it. So I suggest we all take on a resolution to dream a little bigger this year.
I know how challenging the world is today. It is a very complex and dynamic place where there seem to be more problems than answers. But therein lies the hope. I, too, have fallen victim to obsessing about the complexities making things more difficult to navigate, but it’s always good to take a step back and remember that no dream is achieved if it’s not first spoken of in the light of day. So a few suggestions for anyone who’s also tired of hearing about what can’t be done:
1. Pick one thing you want to accomplish this year and tell everyone you work with or are close to what it is. It’s amazing how motivated you will be to get it done once you’ve said it out loud. For example, I recently created and filled the role of president for the agency. To ensure that she would be successful, and I wouldn’t lapse into doing things that for 20 years have been my entrepreneurial duty, I had a companywide meeting where I outlined her new leadership responsibilities. After such a public declaration, there is no backsliding for me now--and so far it’s been a home run for all.
2. Any time you or someone you are with identifies a problem, do not end the conversation without proposing some fragment of a solution. This is harder to do than you realize. I was recently in a meeting where we were all happily complaining about how utterly impossible the marketing problem we were wrestling was to solve. So I suggested that if we came up with a hypothesis by happy hour, drinks were on me. Lo and behold, we came up with three. Shocking.
3. Spend more time celebrating and acknowledging accomplishments, big and small, that both you and the people around you achieve. This reminder of a can-do spirit can be infectious and highly motivating. At every VIA holiday party we give out the VIA Way awards, which are granite stones engraved with the VIA logo (long story, but it has a meaning). You would think that getting a rock wouldn’t be very exciting, but I promise you, people value these awards like they had just received an Oscar. When the winners are announced they get a sincere, explosive standing ovation from the entire agency because their recognition is the embodiment of what we struggle every day to deliver--dreams. Everyone wants more of that feeling, so it drives us throughout the year.
These three simple steps of saying it, solving it, and celebrating it can be the best fertilizer to make things grow. Yes, the world is a complicated place, for sure. But people who are willing to dream a little bigger will wake up with smiles on their faces.
The VIA Agency, founded in 1993, uses cross-functional teams to solve complex marketing challenges and help clients find new growth. VIA is one of the top 100 agencies in the U.S. and counts numerous Fortune 500 companies as clients. VIA was recognized in 2011 as Ad Age's Small Agency of the Year.
[Image: Flickr user Dan Jordan]
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The Heritage-O'Neill, Abhimanyu Sanyal, Julian Salazar Lopez, Stacy Slaughter, Usha Karunakaran, Laura Smrekar, Narchie Medina Batol, Paulette Weir, Nic Thompson and Luz Elena Richaud like this
Barbara Spike Very well said. I'd like that kind of boss; even better, I'd like to be that kind of boss. Thanks for writing it. 12h
Gwendoline Paulsen Food for thought 3d
Harry Singer Spot on! These are 10 things bosses should tell their employees to open the lines of communication and bridge the mangement divide. 3d
Ben Hopper Excellent article. I saw a few other comments of people being sent this article by their bosses. I know if that happened to me it would turn my day around! 3d
Ilan Dor 11. The level of performance you are attempting to operate at is just not gonna work here. 4d
Shep Hyken Love the list. And, I think that the boss should tell the employees much, if not all that is on this list. Would make the boss more human and foster some open and honest communication. 4d
Paul Darlington CEng MIET FIRSE excellent article, sums it up nicely.. 4d
Ankur Gahlawat real for virtual 4d
Shabu Babu good article ! 4d
Marty Martinez Awesome Article! 5d
Melanie Coleman Excellent article. Thanks for sharing this! 5d
Colin Bunge This is why building relationships with your team is so critical... 5d
Stephanie Deiter, SPHR Great article. 5d
Maria Marcucci Accurate and well written. 5d
Deborah Draper, PHR Great article!! Thanks for sharing! 5d
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As 2013 is now just days away we’re into the critical planning period for most marketers.
While time will undoubtedly be spent drilling down into a multi-faceted digital strategy plan, necessity should dictate that at the very heart of it lies great content.
Industry websites like this one have been filled to the brim with posts preaching the content sermon during the latter part of 2012 and the New Year offers businesses a chance to realign budgets and plans to take full advantage of the shift.
For big businesses that may mean employing a chief content officer and launching a major new agency push to realign their available resource and skill sets, but for smaller firms this just a pipe dream.
But a smaller business can execute a successful and effective content strategy. There is still a huge amount you can do as a small business with a great idea creation process and time. Irrespective of what niche you occupy.
Here a few ideas to help you formulate a quality content led digital marketing plan.
How to Come up With Ideas
Great content strategies stand or fall by the quality of the ideas that come together to make them.
And the best bit is that ideas are free!
You don’t need huge budgets to brainstorm ideas. Yes, larger numbers of people can help with idea creation but in reality too many cooks do spoil the broth.
The optimal number for any one brainstorm is 10. Any more people in a room and communication and sharing breaks up into smaller sub-groups, which makes capturing output that more difficult and ineffective.
Creating the perfect environment is easy and cost effective. While meeting rooms work, rooms with light and things going on make for a more stimulating conversation. Pubs are great for this if you can secure a side room, alcove, or similar.
Other brainstorming tips include:
- Appoint an "idea recorder" to note each and every relevant idea.
- Clearly define the problem you wish to solve at the beginning.
- Develop ideas communally. Don’t always write down the initial idea as often the group will throw it around and create a better final output.
- Break every 90 mins and force people outside or to grab a drink. It allows the brain to reset.
Want to know even more? Read up on techniques such as reverse brainstorming, starbursting, brainwriting, or read this piece on how to keep them coming even when the ideas dry up.
How to Get Organized
Ideas are nothing without structure, however. The times we have seen great ideas die through a simple lack of structure, or a team full of great creative not living up to expectations because of their adversity to planning then we’d be rich.
This post goes into a little more depth around how you can then translate that list into an editorial plan that then covers every major distribution channel. The central document in all of this is the editorial planner. The one I have used and perfected over the past 12 years looks like this:
How to Get Your Content Noticed?
This post isn't really about planning or idea creation, however, but rather sharing real tactical tips on how you can make your small budget content plan fly.
Below is a list of cost effective tips that every business can action to maximize the ROI of any content investment made.
1. If Your Audience is Local
Create content of relevance for your community and seed to hyper local bloggers and print news outlets. Local paper reporters are hungry for any kind of good news story and often have trouble finding them! Help them by placing it in their laps. Google has also been offering local businesses a chance to register their business for some time, so do this as a bare minimum.
2. If You Have a Promotional Budget
It can work really well to assign budget to paid search, across Google and Facebook. Even Twitter at a push. By creating super targeted ads to download pages you can collect lots of data and reach many more people than without it. This works really well for podcasts, whitepapers etc. that can sit behind a sign up form.
3. If You Want More Return Visits
Interact. Allocate time to becoming a valuable part of the community by sharing knowledge via your blog, in forums, and in guest posts.
Add into your time the set up of Google news alerts around your brand and mentions of snippets of your latest content. By spotting them you can build relationships with those sharing your content. This creates brand allegiance and trust and in turn effects return visits.
You can then affect this further on page by offering loyalty or gamification schemes for repeat purchases, review writing, etc. There are now lots of great plug ins for key CMS platforms that help with this, including sweettooth for Magento or Punchtab, which can work across the board.
Customers who feel appreciated are going to give the love right back in the form of loyalty.
4. If You Want to Prove How Great You Are
Give your products away for free. It’s the best possible way of driving awareness and trialing as you de-risk the situation. People also like ‘free’ and it can be used to create new audience via competition outreach.
5. If You Want to Get Rid of Stock
Sales work but with every man and his dog doing it you need a way of turning it into a content event. Some try the "share to grab a bargain" option to incentivize social sharing, others get even more inventive.
There are sites like this one devoted to weird sale items. By adding in an unusual item, or creating a strange reason for the sale that make the "January Sale" norm look totally dull. Craigslist is full of oddities and you can use this to your advantage. Make sure your sale includes weird items to attract attention and links.
6. If You Want to Get Really Creative (Desperate!)
If you’re really creative (desperate!) there is no end to what you can do. This guy is selling the rights to his last name during 2013. You can bid to legally own his surname for the entire year!
7. If You Have Willing Friends
Check out guys like iwearyourshirt.com for a fun, creative, and relatively cheap way to get your company seen. These guys promote companies by wearing their T-shirts and doing crazy stuff for them via social media. You can do this too!
8. If You Like Face to Face
Organize a meet-up for either local people or niche enthusiasts via a site like meetup.com. It may not seem like a great way of creating or marketing content initially but the reality is those attending will write and tweet about the experience.
9. If You’re an Expert
A great way to engender trust is to share that knowledge. Publishing whitepapers, eBooks and regular quality article creation will help build that association. You can do this "off page" too by getting involved in Q&A aggregators like Yahoo Answers, LinkedIn Groups and Quora.
10. If You Feel Like Giving
Donating to charity can create great positive PR. You can wrap the giving element into some kind of competition also where the winner can decide who the beneficiary is. You can also work with the charities themselves to leverage audience reach.
11. If You Have a 404 Page
Make your 404 page memorable. It costs very little to get really creative with your ‘this page is broken’ message – like these here.
12. If You Like Surprises
Why not randomly upgrade people. Everyone loves an unqualified and unexpected extra and Zappos have made it a key marketing trick. It’s also relatively inexpensive to do.
13. If You Like Saying Thank You
Why not create or improve the existing thank you page on your site that a customer receives shortly after buying.
Even better why not partner with a strategically relevant business to reciprocally exchange space on each other’s thank you page? This works incredibly well if your products or services have real synergies. So, think car dealers and warranty businesses for example.
14. If You Like Debate
Make sure you content plan has a regular opinion piece as opinions sell papers. Opinion is something we aren't yet that great at online and it’s a real opportunity in your niche as people will come back to it and interact with it for its controversy.
15. If You Like Using Emotions
Fear, love, and the other emotions are key triggers to brand affinity and purchase. Ensure you have content mapped to this as part of your plan based on the emotions most important to your particular niche. Just be careful if you use humor, as you need to clearly understand your audience to get it right.
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Today I want to respond to the #1 concern I hear from early stage startups: how to get people to find out about your product without having to pay for it.
In this post, I’ll cover some of the best growth hacks that I’ve discovered for the acquisition stage of the lean marketing funnel. Here’s how I like to think about it. You can either do the work of acquiring new potential users (HARD), or you can let others do the work for you (EASIER).
What do I mean?
Put simply, go to where your potential users are. There are literally thousands of services out there that have already done the work of building up a audience, whether it’s a highly trafficked website or a big email list. What you want to do is piggyback off of those traffic sources.
Here are a few which have recently grown in relevance if your audience is startups or early adopters: Quora, Slideshare, Wikipedia, Hacker News, Meetup, Craigslist, Skillshare, email newsletters like StartupDigest and events. These are all channels where a large amount of high-quality potential users for your product are every single day.
You can’t just post a link to your startup’s site on each service and expect people to come, that’s lazy. But you can do basically the same thing so long as you cater to the content that people go to each service for. For example, in my spare time I teach classes on How to Teach Yourself to Code on Skillshare and Udemy. I accidentally discovered that SlideShare could tap into a huge audience that could drive students to my class when I posted my class slides which didn’t take too long to be viewed by over 95,000 people.
After putting these up, I started getting getting multiple emails a day about the slides, people begging to learn more.
Slideshare
Put together a short presentation (20 – 40 slides) with educational content that potential users of your product would be interested in.
If your product helps people out with their finances, make a deck on tips for managing your finances. If your product is a marketplace where college students can swap goods, make a deck on how to save money and get free stuff in college. If it’s a tool to help people cut down on email clutter, write a guide for cutting down on email clutter!
Then put a link to your website on some slide near the beginning and also on the last slide. Don’t make it too salesly. We recently had BrandYourself talk at our NYC GrowHack Meetup on how they got 60k users in 60 hours.
The slides have been viewed over 15,000 times and drove several thousand visitors to their site. I’ve had similar success with slides on growth hacking I recently put online. If you’re unsure of whether you can build slides that people will find worth sharing, check out my slides on How to Build Great Presentations.
Quora
Every founder of every company should be on Quora answering questions related to their company’s product ALL THE TIME. Okay that’s probably overkill. But, there’s no better way to get your expertise known and get yourself in front of people who never would have heard about you and your company otherwise.
The point is to to focus on providing content that’s useful for your audience. Link to your product, but be as objective as possible. Here’s a great example:
But what if no one’s asking questions about your product? Post your own questions and then answer them yourself. Also don’t forget similar services like Yahoo Answers.
Wikipedia
One dirty secret companies like TechCrunch use all the time is every time they write an article about a person or a company, they update the Wikipedia page with a new fact and link to the article.
This may seem small, but depending on how trafficked a Wikipedia article is, this can drive a significant amount of users to your site.
Just make sure you read the Wikipedia guidelines first so that your changes don’t automatically get deleted for being too promotional or anything like that.
You probably can’t create a Wikipedia article for your startup (it’s not “notable” enough in wikipedia’s eyes) but you may be able to create one for your product category or something similar that may not have been covered yet. (I plan on writing one for Growth Hacking soon, and you can be sure I’ll be linking to this post).
Hacker News
If you’re focused on a startup crowd, Hacker News can bring some incredible traffic, and has done a great job promoting some of my content from other places like Slideshare (although it’s tough to know what will take off and what won’t).
Write a blog post about something technical, where techies will learn something cool or new. Sometimes you may need a small bump to make it out of that “new” section. DON’T send your friends links to the item directly asking for an up vote. Hacker News recognizes this as manipulative behavior and doesn’t count the vote.
Instead, send your friends to the “new” section and tell them what the name of the item is to search for. Make sure they do this quickly. If you can get a handful of up votes in a short amount of the (5 or so) you can get catapulted to the front page and get potentially thousands of visitors.
If you do want to just show off your product and you think it’s cool enough, do a Show HN. Depending on what you’re showing, people may see this as spammy and not up vote, but it may work.
Meetup
Meetup.com is one of those services that will do the job of driving traffic to your meetup if you create one. Find a topic your users would be interested in, and bring them great content. If your biggest potential userbase is people on Etsy, then start the NY Etsy Meetup and bring in people who’ve launched successful products on that platform.
This is also an excellent place to do in person for customer development. You’re able to hear first-hand the language your audience uses to describe the problem and get a sense of how they really feel about your product.
This can also work as a way to base yourself in reality. If you’re not able to create content that attracts your customers, you might want to rethink your product.
Craigslist
If people looking for products like yours ever go on Craigslist, you’ll be able to get in front of them for free by putting up a post. This involves a bit of 1-on-1 back and forth.
Skillshare
One huge opportunity a lot of founders miss out on is teaching classes around their topic of expertise. This gets your company in front of a room of 20-40 people who are interested in learning more about your product (and they’ll pay for it too)!
Every few weeks, I teach classes on coding, growth hacking and presentation design. Again, this is great customer development. It’s a way to make a bit of money, and get to know people in the class who are willing to pay money to solve that particular problem.
All the cool kids are doing it.
Email Newsletters
In the startup scene, this can another great way to get people to come to your classes and meetup. Big newsletters in NYC include StartupDigest and Gary’s Guide, but you can also reach out to meetup organizers who want to give bring in good content to their meetups.
Others have already been built to upwards of 10s of thousands of people. Each one has a way to submit events so figure out how to do that. For StartupDigest submit your event here, for GarysGuide submit your event here.
Events
Founders should have a list of all the big relevant events to their potential customers and be there. Don’t confuse this with being at tech events. If your product is a tool to help authors self-publish online, go to the events that THOSE people will be at. Publishing conferences. Etc.
Each industry has a number of big name sites that collect the events for people in that industry to go to. For example, http://www.mediabistro.com/events/ for advertising.
Bonus tip: Update your email signature
Update your email signature. You send what, at least 30 emails a day? What’s in your email signature right now?
Hotmail was able to grow virally just by adding “PS. Get your free email at Hotmail” to the signature of each person. If you’re trying to get people to use your product, put a simple “sign up for x at y” in your signature on every email. Its not too pushy, and over the course of a few weeks you can get potentially hundreds of free users.
How do you get your users?
This is by no means a comprehensive list, but it includes some of the basic tactics I’ve recently seen. If you’ve used any others successfully that I didn’t include on the list, please post them in the comments below. I’d love to hear about it!
Share and Enjoy
Jessica Alter | December 3rd, 2012
We often get asked what cofounders should look for or ask each other. We combined our knowledge with insight from our community to create a master list of questions to ask potential cofounders, or rather to make sure you cover (going to down the list one-by-one might be awkward). We’ve broken them down into four categories – Personalities and Incentives, Personal Priorities, Working Styles and Culture, Roles and Responsibilities - that really reflect the areas we find are key to matching up.
Personalities and Incentives - you have to spend a lot of time together, just having complementary skill-sets isn’t going to cut it. You really need to have chemistry and be aligned on why you’re building a company.
1. Why do you want to start a company (in general and in particular, right now)?
2. What motivates you (e.g. a technical challenge, an overall problem, helping the world, etc.)
3. What do you do with your free time? (e.g. how do you unwind? How do you deal with stress and big challenges?
4. What do you think I’d be most surprised to find out about you?
5. What are our respective personal goals for the startup (e.g. a sustainable business that is spinning off cash and running it forever or high growth and some type of liquidity event)?
6. Will this be the primary activity for each of us?
- What is the expected time commitment (now, in 6 months, 2 years, etc.)?
- Are we allowed to take on anything outside of the company?
7. Would we sell this for $5mm? $100mm? Are we waiting for the billion dollar exit?
8. Is there a part of our plan that we are unwilling to change (e.g. he product being built, the market being addressed or some other aspect of the company)? Pro-tip: the only guarantee is that things will change, so if someone isn’t open to that there is a problem.
Personal Priorities - risk tolerance varies by individual, so make sure you know where the other stands and that you’re both comfortable with it.
1. What are our personal cash needs in the short term?
2. Are we both going unpaid and when would this change?
- If you’re not able to go full-time now, under what circumstances would you be able to start working on something full-time?
3. Do we want to raise outside money?
- If so, how much – now, in 6 months, 2 years, over the life of the company?
4. Where do we want the business to be located?
5. Get a sense of personal commitments that the person has so as to better manage your time and their time (i.e. are you married? With/without kids?)
6. Have you ever failed at anything?
- If so, how did you handle it and what did you learn? If not >> big red flag!
7. Talk about times you both did something you had never done before – how did it get handled and what was the outcome (could be technical or non-technical (e.g. I ran the internationalization of a site; I scaled a site to 5M users)?
8. The Spouse Test- given how much time you’re going to spend with a cofounder, if you have a spouse or significant other you should have them meet the potential cofounder. Not only do they know you better than almost anyone and can give you a second opinion, but also they should know the person you’re going to spend a lot of time with (h/t to Bobber Interactive for this one).
Working Styles and Culture – this is so important and often overlooked. Think hard about the type of company you want to build culture-wise and make sure you’re aligned on how to build it.
1. If you had to come up with 3 words to describe the culture you want to create, what would they be (e.g. open, hard-working, eccentric)? Pro-tip: if you’re really serious and far along go visit few office spaces together to get a sense of what each of you likes work environments wise and why.
2. What values do we want to instill in our employees?
3. If you could pick 2 things to change and two things to bring with you from your previous companies, what would they be and why?
4. How much equity are we allocating for future employees?
5. Who do we think the first 5 hires will be?
6. Describe your working style to me in a few words?
7. What are some of the products you love and why? Pro tip: this will help you get a sense for they appreciate and even aspire to – design, product, tech, biz strategy, etc.
8. How do you deal with conflict? Compromise? TIP (not even a pro one): the only real way to know this is to do a side-project or start working together. Fights are healthy, how you get through them is the question.
9. Ask for references or just back channel them! Don’t be afraid to do this, it’s important! We reference everyone in the FD network (yes, it’s true) and we still tell members to reference their potential cofounders before tying the knot.
Roles and Responsibilities – it’s great to have complementary skill sets, but there is such an immense amount of work to do at the beginning that you should make sure you agree on who is really going to own certain areas and which areas can/will be shared in the first 12-18 months.
1. What areas do you see yourself definitely wanting to be point-person on for the first 12-18 months?
- What about me?
- What are the areas you know you’re not particularly good at?
2. What do you think I am best at?
- What do you think I need support for?
- How will you help me succeed?
3. How will decisions get made?
- Can you outvote me?
- Can either of us fire the other?
- If one of us gets fired, what do we leave with?
4. Why do you think we’ll be good together?
5. Some of the legal stuff…
- Have you ever been fired, gone to jail, or done anything that would materially impact your time with the company?
- Do you sit on any boards of companies and do you have any conflict of interest with our project?
- Is there a ‘no compete’ clause that is active at this time?
- Will any of us be investing cash in the company? If so, how is this treated? (e.g. debt? convertible debt? Does it buy a different class of shares?)
6. Have you worked and/or managed diverse teams and if so, how?
7. How do you think we should give feedback to each other (and the team)?
8. Who is going to be CEO (and why)? Are we both comfortable with this?
9. What’s the equity split and why? Are we both comfortable with the reasoning behind this decision?
Again, we don’t recommend just going down this list in one sitting like an interview. Have several conversations, a lot of these topics should come up naturally. You’ll also note, we don’t have questions like “what language do you code in?” or “tell me about a deal you put together?” These questions are fine, but try to refrain from making them the focus – it will feel like a job interview. This is someone you want to be your partner, not your employee. And as exhaustive as this list might be, in order to really understand how you work with someone you have to… actually work with them. Once you’ve agreed you’re aligned on a lot of the categories above, start a side-project, go to a hackathon (or 2). It’s really the only way to tell. This list is definitely a work in progress so feel free to tweet to us - what did we leave out or which question do you wish you had asked?
When visitors come to our office, one of the first things they notice is how quiet it is. Naturally, one of the first questions they ask is "how do you keep it so quiet?" My answer is "library rules." Everyone knows how to behave in a library. You keep quiet or whisper.
If entrepreneurship is, as Harvard professor Howard Stevenson calls it, “the pursuit of opportunity without regard to resources currently controlled,” then business builders have a lot in common with journalists. And whereas entrepreneurs can learn much from the journalism trade itself, some of today’s top business leaders are actually participating in journalism, with enterprise-worthy results.
The way they do it is through guest writing, and the point of attack is the Opinion section or other places where publications print expert commentary. Whether it’s the governor of New York guest writing a persuasive essay on climate change in a daily newspaper or this guest column you’re reading right now in Fast Company, most magazines, newspapers, and blogs allot space for industry experts to share their points of view.
But most publications won’t take just anyone. And they won’t print thinly veiled marketing messages with no takeaway. Here are four tips for getting printed and breaking through the full-to-bursting inboxes at your top-choice publications:
Establish Credibility
Editors are busy people who are constantly badgered by pitches that are far off the mark, and they are the gateway to publication through which you must pass. So don’t waste their time. Convince them to give you a shot through at least two of the following three:These will make a wary editor’s leap of faith a little easier to make.
- Show you’ve got a track record of writing for legitimate places (the editor will infer you’re a good writer, and probably easy to edit). Your pitch email itself is another opportunity to show your writing ability, so let a little personality in. If your email bores them, why would they want to subject their readers to a longer version of it?
- Write a concise story pitch that shows you can write well in few words. (I recommend keeping your story idea pitch to 300 characters or less.)
- Tout relevant credentials or expertise in the subject matter (CEO of a relevant company, Albert Einstein’s apprentice).
Have Something To Contribute To A Larger Conversation
To get the gig--and the audience respect that comes with it--“you have to truly be a valuable source of information,” says Michael Lazerow, CEO of Buddy Media and frequent guest writer for Advertising Age and Fast Company.A former journalist, Lazerow understands that his industry--social enterprise software--is full of people hungry for information and fearful of being left behind. His guest posts about Facebook, advertising, and social marketing help his audience make sense of the industry, while establishing Lazerow (and his company) as a thought leader.
“Think about who you are trying to reach, and then think about the top questions those people would ask about the topic you're writing about,” Lazerow says. “Try as best as you can to answer those questions.”
For the social media newspaper The Daily Dot, guest writing is a way to simply get on people’s radar.
“We wanted to find opportunities to tell our story to audiences we weren't already reaching,” says founder Nicholas White. White’s stories at places like PBS discuss the future of newspapers, using The Daily Dot’s experiences as conversation starters. To be successful, says White, “it has to be a real contribution to a conversation, not just an ad for your site.” Telling compelling stories about your personal experiences or citing case studies from your own company in some instances can help illustrate points about your industry or area of expertise and give you material that no one else has.
Use Journalistic Rigor
As the prestige of a publication increases, so does the credibility and rigor necessary to be published. For example, in a recent Op-Ed I wrote about America’s freelance economy for The Washington Post, I researched and interviewed economists, business professors, advocacy groups, and man-on-the-street freelancers, and pored over dozens of government reports in order to back up my point, that the growing number of freelancers in the U.S. is helping the economy and needs infrastructure.Thorough research, reporting, and proper attribution of sources prevents writers from being dismissed as self-promotional gasbags. And with all information publishing--whether objective news or content marketing--be ethical. Never betray your readers with misleading material.
Take A Stance, If You Have One--And You Should
Guest writing, says White, often best succeeds when it’s opinionated. “It can't be like, no, duh,” he says.In many cases, that’s exactly the reason publishers will print expert commentary; you’re bringing something to the discussion that a traditional news story can’t. Your business should stand for something anyway. Why not leverage your unique point of view?
Focus On What You Can Contribute, Not Self-Promotion
“Too many founders think about guest posting in terms of, ‘How can I translate my sales deck into a guest post?’” Lazerow says. “If you're just going to use a guest post to plug your widget, it's useless and people will see through it.”Guest writing ought not to be thought of as marketing. The likelihood of directly tracking ROI (e.g. someone clicks on your byline in a guest post, then immediately buys something on your site) is very low, and not the best use of guest writing opportunities. For young companies with small footprints, or established organizations wishing to align with certain topics, guest writing raises awareness, builds brand equity, and cements the idea that a company cares about an industry, topic, or cause.
“Being a good source--through speaking with journalists and writing guest columns for publications--is one of the best ways to create value,” Lazerow says.
And in the long run, it can drive business. As White puts it, guest writing is like giving out samples in a grocery store. “You get a taste and hopefully you decide to buy a bottle.”
For more tips on how to get your story published (maybe even in Fast Company), subscribe to the Fast Company newsletter.
--Shane Snow is a New York City-based technology writer, infographicker, and cofounder of Contently.com, a new media company that empowers journalists and brand publishers.
[Image: Flickr user Lucho Molina]
What Start-Ups Need to Know About Protecting Intellectual Property Around the World
Jeffrey Shieh· August 22nd, 2012 8 Comments 8 CommentsIntellectual Property (IP) is vitally important to start-ups. The Start-Up Genome Project, which aims to map, model and analyze what makes start-ups tick, identified IP as a top source of competitive advantage for start-ups. But start-ups face significant challenges in acquiring, maintaining and enforcing their intellectual property.
Guest author Jeffrey Shieh is a Senior Patent Attorney at inovia, a foreign filing technology platform provider. He is responsible for counseling the company and its clients in all facets of the international patent process. Prior to joining inovia, Shieh was a patent attorney at the law firms of Cooper & Dunham LLP and Amster, Rothstein & Ebenstein LLP.
We hear a lot in the news about patent wars among the tech giants – Nokia vs. Google, Apple’s lawsuits in China, and Facebook vs. Yahoo! International patent protection is clearly a key component to defensive and offensive competitive strategies within large, global organizations. But what about smaller technology players and early stage start-ups that don’t have the resources to hire full-time, international law firms? For cash-strapped start-ups, the cost to file international patents to protect their innovations is often too complex and too costly. This leaves them exposed to competition in other markets and may have a serious impact on their ability to scale long-term.
What can start-ups do to protect their innovations and IP on the world stage during the four lifecycle stages identified by the Start-Up Genome Project: Discovery, validation, efficiency and scale?
It massively affected my life. I once slept through the finals of a doubles tennis tournament. My 4 alarm clocks and the repeated calls from my partner didn't wake me up. I remember once, in college, having an important meeting scheduled for 8am. I had to stay up all night to ensure that I would be there. Because I was so nocturnal, I couldn't take any morning classes. In 4 years of college, I took 1 class before noon. I probably missed 75% of the class sessions and barely passed. There were all sorts of fascinating classes that I would have loved to take but couldn't because they weren't afternoon classes.
Most people return small favors, acknowledge medium ones and repay greater ones - with ingratitude.
--Benjamin FranklinFeeling gratitude and not expressing it is like wrapping a present and not giving it.
--William Arthur WardFeeling grateful or appreciative of someone or something in your life actually attracts more of the things that you appreciate and value into your life.
--Christiane NorthrupIf the only prayer you ever say in your entire life is "thank you," it will be enough.
--Meister Eckhart
4 Common Investment Mistakes With First-Time Profits
10 Things Entrepreneurs Don’t Learn in College
I was stressing.
We had seen 40% of our customers cancel, and it was eating me up inside.
Each of those (former) customers had:
- decided they had the problem SocialWOD solves (workout tracking for every gym member at your gym, just by snapping and emailing a photo of your results whiteboard)
- decided they needed to solve that problem
- done research on solutions that might solve their problem
- decided that SocialWOD was compelling enough to try
- decided to take out their credit card to pay SocialWOD
- used and promoted SocialWOD to their members
After investing that much mental and emotional energy, they then they decided to cancel.
Argh.
We were trying to understand what the key differences were between our customers that cancelled, and our customers that didn’t.
We hop on the phone every week or two to call up customers, so qualitative data was no problem.
But we wanted to see what we could learn from our data.
Enter the Cohort Analysis
A cohort analysis helps you see how behavior varies across different cohorts of customers.
In this case, we were interested in the behavior of the cohort of customers who HAD cancelled, vs the behavior of those that hadn’t. What differences were there in each cohort’s usage of our product, and could we steer more gyms to do things like those gyms that had stayed on as customers?
I had read high-level stuff about cohort analyses, but it was this 90 minute cohort analysis class in NY with genius marketer Cassie Lancellotti-Young that really opened my eyes to how to run a proper one.
What Tools to use
Cassie recommended using Excel, and provided a template to use as the basis for a cohort analysis.
She mentioned tools like Kissmetrics and Mixpanel, but they were harder to use, less flexible, and required more overhead than Excel.
Given that likely all of the useful data you’ll want to analyze lives in your application’s database, her suggestion made a ton of sense to me.
How to start
We started by asking questions.
In this case, we were trying to answer this question:
“What are the major differences between customers than cancel, and customers that don’t?”
Pull some data
The next step was to write a ginormous SQL query pulling out all the data that could possibly help us answer this question.
Here’s some of the relevant data we pulled:
- The month a customer joined in
- The amount a customer paid per month
- Free trial length
- The number of a gym’s members that claimed their SocialWOD profiles
- # days after paying before canceling their service
- whether a gym uses SocialWOD to post their workouts to their gym’s Facebook page (where the gym’s members hang out)
All in all, there were 51 different fields of data that we pulled.
Analyze the raw data
I ran pivot tables comparing the difference between gyms that cancelled and gyms that didn’t.
I learned that customers who cancelled:
- had about half as many of their members claim a SocialWOD profile (so they could engage with our product)
- used the “post our workout results to my gym’s Facebook page” feature about half as much as gyms who remained customers
- paid about 23% more than gyms who stayed
- cancelled their subscription after 61 days on average
Square the quantitative with the qualitative
We have a spreadsheet that details cancellation reasons for every customer, and I’d estimate we’ve talked to at least half of the customers who quit.
The two most common reasons we kept hearing about why gyms quit were:
- our athletes aren’t using it
- it’s too expensive. SocialWOD is a nice-to-have (we’re working on that
). A member CRM is essentially a must-have for a gym over a certain size. The price for a member CRM is lower that it should be imho, and it sets a strong price anchor in the mind of a customer (i.e. “I *need* a CRM and it costs $X. I don’t *need* SocialWOD, but it costs $1.5X.”)
Given that the quantitative data suggested high member usage and lower price were big drivers of customer retention, the qualitative and quantitative data told a pretty strong story about what to do to cut down on cancellations.
Acting on the results
Here’s what we decided to do about each learning:
1. A cancelled customer had about half as many of their members claim a SocialWOD profile (so they could engage with our product).
Previously, our customers would tell their members to sign up for SocialWOD by posting an announcement about SocialWOD on their gym’s Facebook page, writing on their gym’s blog (read by most members), talking about SocialWOD at the gym, etc.We figured there’s nothing easier to act on than an email describing benefits and a call-to-action. So we improved our onboarding to help a gym owner export a CSV of their members’ email addresses to send to us.
Once they do, we email each member a description of how SocialWOD benefits them, along with a link to click to sign up.
2. A cancelled customer used the “post our workout results to my gym’s Facebook page” feature about half as much as gyms who remained customers.
We improved our onboarding so that customers who haven’t set up posting to Facebook receive an email detailing the benefits, providing a video, and a strong CTA to do so.3. A cancelled customer paid about 23% more than gyms who stayed
We built some technology than makes processing photos cheaper for larger gyms, and passed those savings on to both our existing and new customers. Those changes enabled us to drop prices by 15-60%, depending on price plan.4. A customer cancelled their subscription after 61 days on average
We haven’t acted on this yet, but I can imagine sending gyms that meet some “likely to cancel” criteria an offer around day 45 of their membership to lock in for a year at a heavy discount.The Outcome
Since implementing changes 1-3 two months ago, we’ve seen our cancellation rate drop from 40% to 5% – an 87.5% decrease. We’re going to run another cohort analysis in a couple months to isolate the impact of each change as it’s still too early to know the long-term impact of these changes, but in the short-term both Ryan and I are stoked about stopping the hemorrhaging.
—
Interested in learning how a cohort analysis can help your business grow? Get in touch – I work with select clients to help identify growth and retention opportunities, and build features to realize those opportunities.
Here is an essay version of my class notes from Class 9 of CS183: Startup. Errors and omissions are my own. Credit for good stuff is Peter’s entirely.
Class 9 Notes Essay—If You Build It, Will They Come?
I. Definitions
Distribution is something of a catchall term. It essentially refers to how you get a product out to consumers. More generally, it can refer to how you spread the message about your company. Compared to other components that people generally recognize are important, distribution gets the short shift. People understand that team, structure, and culture are important. Much energy is spent thinking about how to improve these pieces. Even things that are less widely understood—such as the idea that avoiding competition is usually better than competing—are discoverable and are often implemented in practice.
But for whatever reason, people do not get distribution. They tend to overlook it. It is the single topic whose importance people understand least. Even if you have an incredibly fantastic product, you still have to get it out to people. The engineering bias blinds people to this simple fact. The conventional thinking is that great products sell themselves; if you have great product, it will inevitably reach consumers. But nothing is further from the truth.
There are two closely related questions that are worth drilling down on. First is the simple question: how does one actually distribute a product? Second is the meta-level question: why is distribution so poorly understood? When you unpack these, you’ll find that the first question is underestimated or overlooked for the same reason that people fail to understand distribution itself.
The first thing to do is to dispel the belief that the best product always wins. There is a rich history of instances where the best product did not, in fact, win. Nikola Tesla invented the alternating current electrical supply system. It was, for a variety of reasons, technologically better than the direct current system that Thomas Edison developed. Tesla was the better scientist. But Edison was the better businessman, and he went on to start GE. Interestingly, Tesla later developed the idea of radio transmission. But Marconi took it from him and then won the Nobel Prize. Inspiration isn’t all that counts. The best product may not win.
II. The Mathematics of Distribution
Before getting more abstract, it’s important to get a quantitative handle on distribution. The straightforward math uses the following metrics:
- Customer lifetime value, or CLV
- Average revenue per user (per month), or ARPU
- Retention rate (monthly, decay function), or r
- Average customer lifetime, which is 1 / (1-r)
- Cost per customer acquisition, or CPA
CLV equals the product of ARPU, gross margin, and average customer lifetime.
The basic question is: is CLV greater or less than CPA? In a frictionless world, you build a great business if CLV > 0. In a world with some friction and uncertainty, you build a great business if CLV > CPA.
Imagine that your company sells second-tier cell phone plans. Each customer is worth $40/month. Your average customer lifetime is 24 months. A customer’s lifetime revenue is thus $960. If you have a 40% gross margin, the customer’s lifetime value is $384. You’re in good shape if it costs less than $384 to acquire that customer.
One helpful way to think about distribution is to realize that different kinds of customers have very different acquisition costs. You build and scale your operation based on what kinds of things you’re selling.
On one extreme, you have very thin, inexpensive products, such as cheap steak knives. You target individual consumers. Your sales are a couple of dollars each. Your approach to distribution is some combination of advertising and viral marketing—hoping that the knives “catch on.”
Things are fundamentally different if you’re selling a larger package of goods or services that costs, say, $10,000. You’re probably targeting small businesses. You try to market your product accordingly.
At the other extreme, you’re selling to big businesses or governments. Maybe your sales are $1m or $50m each. As the unit value of each sale goes up, there is necessarily a shift towards more people-intensive processes. Your approach to these kinds of sales must be to utilize salespeople and business development people, who are basically just fancy salespeople who do three martini lunches and work on complex deals.
III. The Strangeness of Distribution
A. Fact versus Sales Pitch
People say it all the time: this product is so good that it sells itself. This is almost never true. These people are lying, either to themselves, to others, or both. But why do they lie? The straightforward answer is that they are trying to convince other people that their product is, in fact, good. They do not want to say “our product is so bad that it takes the best salespeople in the world to convince people to buy it.” So one should always evaluate such claims carefully. Is it an empirical fact that product x sells itself? Or is that a sales pitch?
The truth is that selling things—whether we’re talking about advertising, mass marketing, cookie-cutter sales, or complex sales—is not a purely rational enterprise. It is not just about perfect information sharing, where you simply provide prospective customers with all the relevant information that they then use to make dispassionate, rational decisions. There is much stranger stuff at work here.
Consider advertising for a moment. About 610,000 people work in the U.S. ad industry. It’s a $95bn market. Advertising matters because it works. There are competing products on the market. You have preferences about many of them. Those preferences are probably shaped by advertising. If you deny this it’s because you already know the “right” answer: your preferences are authentic, and ads don’t work on you. Advertising only works on other people. But exactly how that’s true for everybody in the world is a strange question indeed. And there’s a self-referential problem too, since the ad industry has had to—and did—convince the people who buy ads that advertising actually works.
If you buy Levis jeans, your apartment blows up. Or is it the other way around?
Comparisons to price or how fast computers work? No. Something strange is going on.
The U.S. sales industry is even bigger than advertising. Some 3.2 million people are in sales. It’s a $450bn industry. And people can get paid pretty well. A software engineer at Oracle with 4-6 years experiences gets a $105k salary and an $8k bonus. But a sales manager with 4-6 years experiences gets $112k and a $103k bonus. The situation is very much the same at Google, which claims to be extremely engineering driven; at a $96k base, $86k in commissions, and a $40k bonus, Google salespeople earn quite a bit more than their engineering counterparts. This doesn’t mean everyone should go into sales. But people who are good at it do quite well.
Self-referential version of sales question.
B. Salesman as Actor
The big question about sales is whether all salesmen are really just actors of one sort or another. We are culturally biased to think of salespeople as classically untrustworthy, and unreliable. The used car dealer is the archetypical example. Marc Andreessen has noted that most engineers underestimate the sales side of things because they are very truth-oriented people. In engineering, something either works or it doesn’t. The surface appearance is irrelevant. So engineers tend to view attempts to change surface appearance of things—that is, sales—as fundamentally dishonest.
What is tricky about sales is that, while we know that it exists all around us, it’s not always obvious who the real salesperson is. Tom Sawyer convinced all the kids on the block to whitewash the fence for him. None of those neighborhood kids recognized the sale. The game hasn’t changed. And that’s why that story rings true today.
Look at the images above. Which of these people is a salesman? President Eisenhower? He doesn’t look like a salesman. The car dealer in the middle does look like a salesman. So what about the guy on the right?
The guy on the right is Bill Gross, who founded IdeaLab, which was more or less the Y-Combinator of the late 1990s. IdeaLabs’ venture arm invested in PayPal. In late 2001, it hosted a fancy investor lunch in southern California. During the lunch, Gross turned to Peter Thiel and said something like:
“I must congratulate you on doing a fantastic job building PayPal. My 14-year-old son is a very apathetic high school student and very much dislikes writing homework assignments. But he just wrote a beautiful e-mail to his friends about how PayPal was growing quickly, why they should sign up for it, and how they could take advantage of the referral structure that you put in place.”On some level, this was a literary masterpiece. If nothing else, it was impressive for the many nested levels of conversation that were woven in. Other people were talking to other people about PayPal, possibly at infinite levels on down. The son was talking to other people about those people. Bill Gross was talking to his son. Then Gross was talking to Peter Thiel. And at the most opaque and important level, Gross was talking to the other investors at the table, tacitly playing up how smart he was for having invested in PayPal. The message is that sales is hidden. Advertising is hidden. It works best that way.
There’s always the question of how far one should push this. People push it pretty far. Pretty much anyone involved in any distribution role, be it sales, marketing, or advertising, should have job titles that have nothing to do with those things. The weak version of this is that sales people are account executives. A somewhat stronger version is that people trying to raise money are not I-bankers, but rather are in corporate development. Having a job title that’s different from what you actually do is an important move in the game. It goes to the question of how we don’t want to admit that we’re being sold to. There’s something about the process that’s not strictly rational.
To think through how to come to an organizing principle for a company’s distribution, consider a 2 x 2 matrix. One axis is product: it either sells itself, or it needs selling. The other axis is team: you either have no sales effort, or a strong one.
Consider the quadrants:
- Product sells itself, no sales effort. Does not exist.
- Product needs selling, no sales effort. You have no revenue.
- Product needs selling, strong sales piece. This is a sales-driven company.
- Product sells itself, strong sales piece. This is ideal.
C. Engineering versus Sales
Engineering is transparent. It’s hard. You could say it’s transparent in its hardness. It is fairly easy evaluate how good someone is. Are they a good coder? An ubercoder? Things are different with sales. Sales isn’t very transparent at all. We are tempted to lump all salespeople in with vacuum cleaner salesmen, but really there is a whole set of gradations. There are amateurs, mediocrities, experts, masters, and even grandmasters. There is a wide range that exists, but can be hard to pin down.
A good analogy to the engineer vs. sales dynamic is experts vs. politicians. If you work at a big company, you have two choices. You can become expert in something, like, say, international tax accounting. It’s specialized and really hard. It’s also transparent in that it’s clear whether you’re actually an expert or not.
The other choice is to be a politician. These people get ahead by being nice to others and getting everyone to like them. Both expert and politician can be successful trajectories. But what tends to happen is that people choose to become politicians rather than experts because it seems easier. Politicians seem like average people, so average people simply assume that they can do the same thing.
So too in engineering vs. sales. Top salespeople get paid extremely well. But average salespeople don’t, really. And there are lots of below average salesmen. The failed salesman has even become something of a literary motif in American fiction. One can’t help but wonder about the prehistory to all these books. It may not have been all that different from what we see today. People probably thought sales was easy and undifferentiated. So they tried it and learned their error the hard way. The really good politicians are much better than you think. Great salespeople are much better than you think. But it’s always deeply hidden. In a sense, probably every President of the United States was first and foremost a salesman in disguise.
IV. Methods of distribution
To succeed, every business has to have a powerful, effective way to distribute its product. Great distribution can give you a terminal monopoly, even if your product is undifferentiated. The converse is that product differentiation itself doesn’t get you anywhere. Nikola Tesla went nowhere because he didn’t nail distribution. But understanding the critical importance of distribution is only half the battle; a company’s ideal distribution effort depends on many specific things that are unique to its business. Just like every great tech company has a good, unique product, they’ve all found unique and extremely effective distribution angles too.
A. Complex Sales
One example is SpaceX, which is the rocket company started by Elon Musk from PayPal. The SpaceX team has been working on their rocketry systems in Southern California for about 8 years now. Their basic vision is to be the first to send a manned mission to Mars. They went about doing this in a phenomenal way. Time constrains make it impossible to relate all of Elon’s many great sales victories. But if you don’t believe that sales grandmasters exist, you haven’t met Elon. He managed to get $500m in government grants for building rockets, which is SpaceX, and also for building electric cars, which is done by his other company, Tesla.
That was an even bigger deal than it may initially seem. SpaceX has been busy knocking out dramatically inferior rocket technologies for the past 10 years, but it’s been a very tricky, complicated process. The company has about 2,000 people. But the U.S. Space Industry has close to 500,000 people, all distributed about evenly over the 50 states. It’s hard to overstate the extent of the massive congressional lobbying that goes to keeping the other space companies—almost the entire industry—alive. Things are designed to be expensive, and SpaceX’s mission is to cut launch costs by 90%. To get where it is now—and to get to Mars later—SpaceX basically took on the entire U.S. House of Representatives and Senate. And so far, it seems to be winning. It’s going to launch a rocket next week. If all doesn’t go well, you’ll certainly here about it. But when things go well, you can predict the general response: move along, nothing to see here, these aren’t the rockets we’re looking for.
Palantir also has a unique distribution setup. They do government sales and sales to large financial institutions. Deals tend to range from $1m to $100m. But they don’t have any salespeople—that is, they don’t employ “salespeople.” Instead they have “forward deployed engineers” and a globetrotting CEO who spends 25 or 26 days each month traveling to build relationships and sell the product firsthand. Some argue that the traveling CEO-salesman model isn’t scalable. It’s a fair point, but the counterpoint is that, at that level, people really only want to talk to the CEO. You certainly can’t just hire army of salespeople, because that sounds bad. So you have forward deployed engineers double up in a sales capacity. Just don’t call them salespeople.
Knewton is a Founders Fund portfolio company that develops adaptive learning technology. Its distribution challenge was to figure out a way to sell to big educational institutions. There seemed to be no direct way to knock out existing players in the industry. You would have to take the disruptive sales route where you just try to come in and outsell the existing companies. But much easier is to find a non-disruptive model. So Newton teamed up with Pearson, the big textbook company. Without that partnership, Knewton figured it would just be fighting the competition in the same way at every school it approached, and ultimately it’d just lose.
B. Somewhat Smaller Sales
As we move from big, complex sales to sales, the basic difference is that the sales process involves a ticket cost of $10k-100k per deal. Things are more cookie cutter. You have to figure out how to build a scalable process and build out a sales team to get a large number of people to buy the product. David Sacks was a product guy at PayPal and went on to found Yammer. At PayPal, he was vehemently anti-sales and anti-BD. His classic lines were: “Networking is not working!” and “People doing networking are not working!” But at Yammer, Sacks found that he had to embrace sales and build out a scalable distribution system. Things are different, he says, because now the sales people report to him. Because of its focus on distribution, Yammer was able to hire away one of the top people from SalesForce to run its sales team.
ZocDoc is a doctor referral service. It’s kind of a classic internet business; they are trying to get doctors’ offices to sign up for the service at a cost of $250/month. Growth is intensively sales-driven, and ZocDoc does market-by-market launches. There is even a whole internal team of recruiters who do nothing else but try to recruit new salespeople. Toward the lower end of things—and $250 per month per customer is getting there—things get more transactional and marginal.
C. The Missing Middle
There is a fairly serious structural market problem that’s worth addressing. On the right side of the distribution spectrum you have larger ticket items where you can have an actual person driving the sale. This is Palantir and SpaceX. On the extreme left-hand side of the spectrum you have mass marketing, advertising, and the like. There is quite possibly a large zone in the middle in which there’s actually no good distribution channel to reach customers. This is true for most small businesses. You can’t really advertise. It wouldn’t make sense for ZocDoc to take out a TV commercial; since there’s no channel that only doctors watch, they’d be overpaying. On the other hand, they can’t exactly hire a sales team that can go knock on every doctor’s door. And most doctors aren’t that technologically advanced, so internet marketing isn’t a perfect solution. If you can’t solve the distribution problem, your product doesn’t get sold—even if it’s a really great product.
The opposite side of this is that if you do figure out distribution—if you can get small businesses to buy your product—you may have a terminal monopoly business. Where distribution is a hard nut to crack, getting it right may be most of what you need. The classic example is Intuit. Small businesses needed accounting and tax software. Intuit managed to get it to them. Because it nailed distribution, it’s probably impossible for anyone to displace Intuit today. Microsoft understood the great value of Intuit’s distribution success when it tried to acquire Intuit. The Department of Justice struck down the deal, but the point is that the distribution piece largely explains Intuit’s durability and value.
D. Marketing
Further to the left on the distribution spectrum is marketing. The key question here is how can one advertise in a differentiated way. Marketing and advertising are very creative industries. But they’re also quite competitive. In order to really succeed, you have to be doing something that others haven’t done? To gain a significant advantage, your marketing strategy must be very hard to replicate.
Advertising used to be a much more iconic and valued industry. In the 1950s and ‘60s it was iconic and cutting edge. Think Mad Men. Or think Cary Grant, who, in the classic movie North by Northwest, played the classic advertising executive who is cool enough to be mistaken for a spy. Advertising and espionage were debonair enterprises, roughly equal in glamorousness.
But it didn’t last. As the advertising industry developed in 70s and 80s, more people figured out ways to do it. Things became much more competitive. The market grew, but the entrants grew faster. Advertising no longer made as much money as they had been before. And ever since there has been a relentless, competitive push to figure out what works and then dial up the levers.
Advertising is tricky in the same way that sales is. The main problem is that, historically at least, you never quite know if your ads are working. John Wanamaker, who is billed as the father of advertising, had a line about this: “Half the money I spend on advertising is wasted: the trouble is I don’t know which half.” You may think your ad campaign is good. But is it? Or are the people who made your ad campaign just telling you that it’s good? Distinguishing between fact and sales pitch is hard.
In most ways, Priceline.com represents certain depressing decline of our society. It points to a very general failure. But one specific thing Priceline does well is its powerfully differentiated marketing, which makes it very hard to replicate or compete against. PayPal once staged a PR event where James Doohan—Scotty from Star Trek—would beam money using a palm pilot. It turned out to be a total flop. It turns out that Captain Kirk—that is, William Shatner—is in a league of his own.
Advertising’s historical opaqueness is probably the core of why Google is so valuable; Google was the first company that enabled people to figure out whether advertising actually worked. You can look at all sort of metrics—CPM, CTR, CPC, RPC—and do straightforward calculations to determine your ROI. This knowledge is important because people are willing to pay a lot for advertising if it actually works. But in the pre-internet magazine age before Google, ad people never really had a clue about how they were doing.
Zynga has excelled at building on top of Google’s ad work. Everyone knows that Zynga experienced great viral growth as its games caught on. Less known is that they spent a lot of money on targeted advertising. That allowed them to monetize users much more aggressively than people thought possible. And then Zynga used that revenue to buy more targeted ads. Other gaming companies tried to do just viral growth—build games that had some social element at their core. But Zynga went beyond that distribution strategy and got a leg up by driving rapid growth with aggressive marketing.
The standard bias on the internet is that advertising does not work. But that’s an interesting double standard. There are an awful lot of websites whose businesses model is ad sales. And then they turn around and say that they don’t actually believe ads are good way of getting customers. The Zynga experience shows that creatively rethinking the standard narrative can be quite lucrative. There is a lot of room for creativity in distribution strategy.
E. Viral Marketing
Viral marketing is, of course, the classic distribution channel that people tend to think of as characteristic of Internet businesses. There are certainly ways to get it to work. But it’s easy to underestimate how hard it is to do that. William Shatner and James Doohan seemed similar. In fact they were a world apart. Salesmen may seem similar. But some get Cadillac’s, while others get steak knives. Still others get fired and end up as characters in novels.
[Section on viral marketing math excluded. You can learn about this stuff elsewhere, e.g. here. The gist is twofold: first, viral cycle time is important. Shorter is better. Second, there is a metric called viral coefficient, and you need it to be > 1 to have viral growth.]
PayPal’s initial user base was 24 people. Each of those people worked at PayPal. They all knew that getting to viral growth was critical. Building in cash incentives for people to join and refer others did the trick. They hit viral growth of 7% daily—the user base essentially doubled every 10 days. If you can achieve that kind of growth and keep it up for 4-5 months, you have a user base of hundreds of thousands of people.
Certain segments grow fasters than others. The goal is to identify the most important segment first, so that anybody who enters the market after you has a hard time catching up. Consider Hotmail, for instance. It achieved viral growth by putting sign-up advertising at the bottom of each e-mail in their system. . Once they did that successfully, it was really hard to copy with the same success. Even if other providers did it and had similar growth curves, they were a whole segment behind. If you’re the first mover who is able to get a product to grow virally, no one else can catch up. Depending on how the exponential math shakes out in a particular case, the mover can often be the last mover as well.
PayPal is a classic example. The first high-growth segment was power buyers and power sellers on eBay. These people bought and sold a ton of stuff. The high velocity of money going through the system was linked to the virality of customer growth. By the time people understood how and why PayPal took off on eBay, it was too late for them to catch up. The eBay segment was locked in. And the virality in every other market segment—e.g. sending money to family overseas—was much lower. Money simply didn’t move as fast in those segments. Capturing segment one and making your would-be competitors scramble to think about second and third-best segments is key.
Dropbox is another good example of a very successful company that depended on viral growth. Pinterest may be as well. It’s sort of hard to tell at this point. Is Pinterest actually good? Or is it a fad? Will it become a ghost town that no one uses? It’s not entirely clear. But it has certainly enjoyed exponential growth.
Marketing people can’t do viral marketing. You don’t just build a product and then choose viral marketing. There is no viral marketing add-on. Anyone who advocates viral marketing in this way is wrong and lazy. People romanticize it because, if you do it right, you don’t have to spend money on ads or salespeople. But viral marketing requires that the product’s core use case must be inherently viral. Dropbox, for example, let’s people share files. Implicit is that there’s someone—a potential new user—to share with. Spotify does this with its social music angle. As people use the product, they encourage other people to use it as well. But it’s not just a “tell your friends” button that you can add-on post-product.
F. The Power Law Strikes Again
We have seen how startup outcomes and VC performance follow a power law. Some turn out to be a lot better than others. People tend to underestimate how extreme the differences are because our generally egalitarian society is always telling us that people are essentially the same.
We’ve also heard Roelof Botha explain that LinkedIn was the exception that proves the rule that companies do not have multiple revenue streams of equal magnitude. The same is true for distribution, and exceptions are rare. Just as it’s a mistake to think that you’ll have multiple equal revenue streams, you probably won’t have a bunch of equally good distribution strategies. Engineers frequently fall victim to this because they do not understand distribution. Since they don’t know what works, and haven’t thought about it, they try some sales, BD, advertising, and viral marketing—everything but the kitchen sink.
That is a really bad idea. It is very likely that one channel is optimal. Most businesses actually get zero distribution channels to work. Poor distribution—not product—is the number one cause of failure. If you can get even a single distribution channel to work, you have great business. If you try for several but don’t nail one, you’re finished. So it’s worth thinking really hard about finding the single best distribution channel. If you are an enterprise software company with a sales team, your key strategic question is: who are the people who are most likely to buy the product? That will help you close in on a good channel. What you want to avoid is not thinking hard about which customers are going to buy it and just sending your sales team out to talk to everybody.
Distribution isn’t just about getting your product to users. It’s also about selling your company to employees and investors. The familiar anti-distribution theory is: the product is so good it sells itself. That, again, is simply wrong. But it’s also important to avoid the employee version: this company is so good, people will be clamoring to join it. The investor version—this investment is so great, they’ll be banging down our door to invest—is equally dangerous. When these things seem to happen, it’s worth remembering that they almost never happen in a vacuum. There is something else going on that may not be apparent on the surface.
G. PR and Media
PR and Media add yet another layer to the distribution problem. How the message of your company gets distributed is worth thinking hard about. PR and media are very linked to this. It is a sketchy and very problematic world. But it’s also very important because we live in a society where people don’t usually have a rational idea of what they want.
Consider an example from the VC world. It’s almost never the case that a company finds just one interested investor. There are always zero or several. But if the world were economically rational, this wouldn’t be true at all. In a perfectly rational world, you’d see single investor deals all the time. Shares would be priced at the marginal price where you get a single highest bidder—your most bullish prospective investor. If you get more than one person interested in investing, you’ve done it wrong and have underpriced yourself. But investors obviously aren’t rational and can’t all think for themselves. So you get either zero investors or many.
It’s easy and intuitive for smart people to be suspicious of the media. For many years, Palantir had a very anti-media bias. But even if media exposure wasn’t critical for customers or business partners, it turned out to be very important for investors and employees. Prospective employees Google the companies they’re looking at. What they find or don’t matters, even if it’s just at the level of people’s parents saying “Palantir? Never heard of it. You should go work at Microsoft.” And you can’t just plug yourself on your own website; PR is the art of getting trusted, objective third parties to give you press.
H. On Uncertainty
It’s fairly difficult to overestimate how uncertain people are and how much they don’t know what they actually want. Of course, people usually insist that they are certain. People trick themselves into believing that they do know what they want. At the obvious level, “Everyone wants what everyone wants” is just a meaningless tautology. But on another level, it describes the dynamic process in which people who have poorly formed demand functions just copy what they believe everyone else wants. That’s how the fashion world works, for instance.
V. Distribution is Inescapable
Engineers underestimate the problem of distribution. Since they wish it didn’t exist, sometimes they ignore it entirely. There’s a plot line from The Hitchhiker’s Guide to the Galaxy in which some imminent catastrophe required everybody to evacuate the planet. Three ships were to be sent into space. All the brilliant thinkers and leaders would take the A ship. All the salespeople, consultants, and executives would take the B ship. All the workers would take the C ship. The B ship gets launched first, and all the B passengers think that’s great because they’re self-important. What they don’t realize, of course, is that the imminent destruction story was just a trick. The A and C people just thought the B people were useless and shipped them off. And, as the story goes, the B ship landed on Earth.
So maybe distribution shouldn’t matter in an idealized, fictional world. But it matters in this one. It can’t be ignored. The questions you must ask are: how big is the distribution problem? And can this business solve it?
We live in a society that’s big on authenticity. People insist that they make up their own minds. Ads don’t work on them. Everything they want, they want authentically. But when you drill down on all these people who claim to be authentic, you get a very weird sense that it’s all undifferentiated. Fashionable people all wear the same clothes.
Understanding this is key. You must appreciate that people can only show tip of the iceberg. Distribution works best when it’s hidden. Question is how big the iceberg is, and how you can leverage it. Every tech company has salespeople. If it doesn’t, there is no company. This is true even if it’s just you and a computer. Look around you. If you don’t see any salespeople, you are the salesperson.
Corporate development is important for the same reasons that distribution is important. Startups tend to focus—quite reasonably—on the initial scramble of getting their first angel or seed round. But once it scales beyond that—once a company is worth, say, $30m or more—you should have a full-time person whose job it is to do nothing but travel around the world and find prospective investors for your business. Engineers, by default, won’t do this. It’s probably true that if your company is good, investors will continue show up and you’ll have decent up rounds. But how much money are you leaving on the table?
Say your company could reasonably be valued at $300m. Valuation is as much art as it is science. At that range it can fluctuate by a ratio of 2:1. If you raise $50m at $300m, you give away 16% of the company. But if you raise that $50m at $500m, you give away 10%. A 6% delta is huge. So why not hire the best person you can and give them 1% of the company to make sure you capture that value?
A similar thing exists with employee hiring. It’s trickier to know what to do there. But traditional recruiters do not take the distribution problem seriously enough. They assume that people are always rational, and that by giving them information, people will make good decisions. That’s not true at all. And since the best people tend to make the best companies, the founders or one or two key senior people at any multimillion-dollar company should probably spend between 25% and 33% of their time identifying and attracting talent.