slides from my talk @ KAUST in Saudi Arabia (Nov 2013). Note: these slides are old, ugly, out-of-date, and probably will get you jailed or killed... so please don't pay attention to them.
8. DO Marketing!
(It’s Not Evil)
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Marketing is Both Qualitative + Quantitative
Qualitative: Create Emotion, Drive Action
Quantitative: Measure Results of Action
Design (UX) & Distribution (MKTG) Matter
Volume (#), Cost ($), Conversion (%)
9. Changes in Tech Startups
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LESS Capital required to build product, get to market
– Dramatically reduced $$$ on servers, software, bandwidth
– Crowdfunding, KickStarter, Angel List, Funders Club, etc
– Cheap access to online platforms for 100M+ consumers, smallbiz, etc
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MORE Customers via ONLINE platforms (100M+ users)
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Search (Google)
Social (Facebook, Twitter)
Mobile (Apple, Android)
Local (Yelp, Groupon, FourSquare)
Media (YouTube, Pinterest, Instagram, Tumblr)
Comm (Email, IM/Chat, Voice, SMS, etc)
LOTS of little bets: Accelerators, Angels, Angel List, Small Exits
– Y Combinator, TechStars, 500 Startups
– Funding + Co-working + Mentoring -> Design, Data, Distribution
– “Fast, Cheap Fail”, network effects, quantitative + iterative investments
10. Lean Startup:
Simpler, Faster, Cheaper, Smarter
1. Startup Costs = Lower.
2. # Users, Bandwidth = Bigger.
3. Transaction $$$ = Better.
Building Product => Cheaper, Faster, Better
Getting Customers => Easier, More Measurable
Iterative Product & Marketing Decisions
based on Measured User Behavior
11. Industry Changes
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Startup Efficiency, Reduced Capital Costs
Growing Market, Growing Platforms
VC Industry Upheavals (2000, 2008)
Super Angel -> Micro VC: Seed Funds (ex: First Round)
Incubators & Accelerators (ex: Y Combinator)
Big VC (ex: A16Z) & Platforms (ex: Angel List)
more info see: http://PreMoney.co
12. Before & After 2 Dot-Com Crashes
Daft Punk Startup: Simpler, Faster, Cheaper, Smarter
Before 2000
•Sun Servers
•Oracle DB
•Exodus Hosting
•12-24mo dev cycle
•6-18mo sales cycle
•<100M people online
•$1-2M seed round
•$3-5M Series A
•Sand Hill Road crawl
•Big, Fat, Dinosaur Startup
After 2008
•AWS, Google, PayPal, FB, TW
•Cloud + Open Source SW
•Lean Startup / Startup Wknd
•3-90d dev cycle
•SaaS / online sales
•>3B people online
•<$100K incub + <$1M seed
•$1-3M Series A
•Angel List global visibility
•Lean, Little, Cockroach Startup
13. Series A Crunch: Good or Bad?
Series A rqmts: $1M revenue, 1M active users,
10M downloads, 100% YoY growth
•Lots of Incubation / Seed startups will “fail”
•BUT: Fail Budget = $50-$500K, not $5M+
•Many “failed” startups = ramen-profitable, small acquisition,
or MBA alternative (<$100K)
•Series A/B VCs have lots to choose from
•Overall, founders / market getting smarter
•More focus on customers, problems, revenue
•Many die, some survive (1-5x), a few thrive (20x+).
14. Silicon Valley 2.0:
Lots of Little Bets
aka “MoneyBall for Startups”
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VC Evolution: Physician, Scale Thyself (Aug 2012)
MoneyBall for Startups, 500 Startups Investment Thesis (Jul 2010)
15. 500 Strategy: “Lots of Little Bets”*
1) Make lots of little
bets pre-traction,
early-stage startups
2) after 6-12 months, identify
top 20% performers and
double-down higher $$$
3) conservative model assumes
-5-10% large exits @20X ($50-100M+)
-10-20% small exits @5X ($5-50M)
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*See Peter Sims book: “Little Bets”
17. Just Gimme the GOOD Metrics.
Users, Pages, Clicks, Emails, $$$...?
Q: Which of these is best? How do you know?
• 1,000,000 one-time, unregistered unique visitors
the
good
stuff.
• 500,000 visitors who view 2+ pages / stay 10+ sec
• 200,000 visitors who clicked on a link or button
• 20,000 registered users w/ email address
• 2,000 passionate fans who refer 5+ users / mo.
• 1,000 monthly subscribers @ $5/mo
18. The Lean Startup
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Talk to Customers; Discover Problems
Progress ≠ Features (Less = More)
Fast, Frequent Iteration (+ Feedback Loop)
Measure Conversion; Compare 2+ Options
Focus on Product/Market Fit
Keep it Simple & Actionable
21. AARRR!: Startup Metrics Model
SEM
SEM
Social
Social
Networks
Networks
SEO
SEO
Blogs
Blogs
Apps &&
Apps
Widgets
Widgets
PR
PR
Campaigns,
Campaigns,
Contests
Contests
Affiliates
Affiliates
Email
Email
Domains
Domains
ACQUISITION
ACQUISITION
Biz
Biz
Dev
Dev
Direct,
Direct,
Tel, TV
Tel, TV
Emails & Alerts
Emails & Alerts
Blogs, RSS,
Blogs, RSS,
News Feeds
News Feeds
R
n
ntio
et e
Biz Dev
Biz Dev
$$
$$$
nue $
enue
Reve
Rev
System Events &
System Events &
Time-based Features
Time-based Features
Ads, Lead Gen,
Ads, Lead Gen,
Subscriptions,
Subscriptions,
ECommerce
ECommerce
Website.com
22. Startup Metrics for Pirates
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Acquisition: users come to site from various channels
Activation: users enjoy 1st visit: "happy” experience
Retention: users come back, visit site multiple times
Referral: users like product enough to refer others
Revenue: users conduct some monetization behavior
AARRR!!
AARRR
(note: If you’re in a hurry, Google
“Startup Metrics” & watch 5m video)
23. One Step at a Time.
1. Make a Good Product: Activation & Retention
2. Market the Product: Acquisition & Referral
3. Make Money: Revenue & Profitability
26. Role: Founder / CEO
Q: Which Customers? Problems? Metrics?
A: Focus on Critical Few Actionable Metrics
(
27. Optimize 4 Happiness
(both User + Business)
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$$$
Define States of User + Business Value
Prioritize (Estimate) Relative Value of Each State
Move Users: Lower Value -> Higher Value
Optimize for User Happiness + Business $$$
Achieve High Cust Value + Low ACQ$ @ Scale
28. What is Minimum Viable Product ?
MVP = F(Customer, Problem, Time or $$$)
• Focus on CUSTOMER
– Qualitative Discovery, Quantitative Validation
• Get to know habits, problems, desires (FUN MATTERS)
– what causes pain? what causes pleasure?
• Ship the simplest, fastest solution that solves the problem.
• Define 1-5 TESTABLE Conversion Metrics of Value
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Attention/Usage (session time, clicks)
Customer Profle Data (email, connect, profile)
Revenue (direct or indirect)
Retention (visits over time, cohort behavior)
Referral (users evangelize to other users)
29. Example Conversion Metrics
(note: *not* actuals… your mileage may vary)
Stage
Conversion Status
Conv.
%
Est. Value
(*not* cost)
Acquisition
Visitors -> Site/Widget/Landing Page
(2+ pages, 10+ sec, 1+ clicks = don’t abandon)
60%
$.05
Activation
“Happy” 1st Visit; Usage/Signup
(clicks/time/pages, email/profile reg, feature usage)
15%
$.25
Retention
Users Come Back; Multiple Visits
(1-3x visits/mo; email/feed open rate / CTR)
5%
$1
Referral
Users Refer Others
(cust sat >=8; viral K factor > 1; )
1%
$5
Revenue
Users Pay / Generate $$$
(first txn, break-even, target profitability)
2%
$50
31. Role: Product / Eng / Design
Q: What Features to Build? Why? When are you “Done”?
A: Easy-to-Find, Fun/Useful, Unique Features that
Increase Conversion (stop iterating when increase decelerates)
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Wireframes = Conversion Steps
Measure, A/B Test, Iterate FAST (daily/weekly)
Optimize for Conversion Improvement
– 80% on existing feature optimization
– 20% on new feature development
32. What is Product/Market Fit ?
PMF = F(Customer, Solution, Alternatives*)
• Product / Market Fit occurs when:
– Customers like your stuff better than other options
– Not static, Not optimal – just Local Max F(customers, solution, time)
– make sure you’re moving in optimal direction 2 local max
• Q: what competitive solutions are available?
– … that your customers know about?
– how are you diff/same?
– in ways that people care about? (will pay for)
35. Discover Meaning
Keywords, Images, Call-to-Action
Top 10 - 100 words
• Your Brand / Products
• Customer Needs / Benefits
• Competitor’s Brand / Products
• Semantic Equivalents
• Misspellings
Call-to-Action
• Words
• Images
• Context
• Button/Link
• Emotion
Relevant images
• People
• Products
• Problems
• Solutions
Result
• Positive?
• Negative?
• Neutral (= Death)
• A/B test & Iterate
36. How To Tell if Design/UX is Good?
AUX = F(Customer, Design/UX, Metrics)
• If Users Use Your Product Then It’s GOOD.
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Define Metrics, Measurability for Design / UX
Focus on Psychology of User
Relative to Competitive Alternatives (that your customers know about)
Keep Testing 4 Awesomeness
• RAMP Mktg & $$$ AFTER it’s clear your MVP is:
– Functional = useful for >1 customers
– Differentiated = better than other stuff availabile
– Awesome (see above)
45. Startup 2.0:
“Lean Investor” Model
Method: Invest in startups using incremental
investment, iterative development. Start with
lots of small experiments, filter out failure, and
expand investment upon success.
• Incubator: $0-100K (“Product Viability”)
• Seed: $100K-$2M (“Expand Distribution”)
• Venture: $1M-$10M (“Maximize Revenue”)
50. Links & Resources
Additional References:
• Influence: The Psychology of Persuasion Robert Cialdini (book)
• The Mating Mind Geoffrey Miller (book)
• Putting the Fun in Functional Amy Jo Kim (etech 2006 preso)
• Futuristic Play Andrew Chen (blog)
• Don’t Make Me Think Steve Krug (book)
• Designing for the Social Web Joshua Porter (book, website)
• Startup Lessons Learned Eric Ries (blog)
• Customer Development Methodology Steve Blank (presentation, blog)
• Startup-Marketing.com Sean Ellis (blog)
• Understanding Comics Scott McCloud (book)