How to Start a Startup is a multi-part series on the intricacies of creating, sustaining and dominating the startup sphere derived from Y Combinator’s Lecture Series
Welcome to Startup 101. In Part 6 of our series, we discussed about the nature of competition. In this part, we will again talk about growing efficiently.
Well, you must be wondering why we are spending so much time on growth, every-single-lesson. Well, one can’t stress enough on the importance of it. Growth is the hardest thing to achieve in a venture and the most important. Without growth the stagnant venture dies and with growth, the sky’s the limit for the venture. Therefore, today we will dedicate a whole lesson towards growth.
So, what’s the most important factor in obtaining growth? A great product. And when you get a great product, you get customers. But getting these customers isn’t enough, retention of those customers is equally important, if not more. Therefore it is important to create a product that people inherently want. The people who’d actually want your product will keep using it and your engagement and retention numbers will be great. Give your customers a product they cannot refuse.
Decide Your North Star
Setting a goal is the first step in creating the invisible to the visible. Great companies don’t look at the money they are bringing in as a growth meter. What great companies do is keep their own North Star – AirBnb measures their growth in terms of nights booked on their service, WhatsApp measures theirs by the number of sent messages on their system in a day, Amazon and EBay measure their growth by their Gross Merchandising Volume each day. Every company, when it thinks about growth, needs a different North Star. Any of these metrics will indirectly co-relate to growth, but it is better to focus on these metrics.
Focus on the Marginal User
The users who love your product already won’t be lost by you. Focus on those users who sometimes use your product so that they always do. Building an incredible product definitely improves the usability of your current users or the ones that use your product the most, but when it comes to driving growth, people who are already using your product are the ones you have to worry about.
This is the step on the graph where you move from searching for product-market fit to growth. You’ve built something that a sustainable core of users love. Check. Now expand the features and usability to capture fringe users and convert them to core users.
Using Virality Efficiently
Quick growth spurts can come from virality. But if one does not strategise about how to create their viral campaign or boost on SEOs, it is a waste. So, there are three things to keep in mind while creating such campaigns. First comes payload – which is essentially how many people can one hit with one blast or boose. Then comes conversion rate of those people as customers or users and thirdly comes frequency of these users returning. Make this your mantra.
Whren you are ready to handle X number of customers with your product, make sure your backend is equally strong, because otherwise you are just accelerating towards the dirt pit. Otherwise your great marketing will burn through early adopters and their money and even turn them off due to poor backend. Don’t expect them to give you a second chance.
Move fast and don’t be afraid of breaking stuff. If you are running more experiments than the next guy, if you are hungry than the person ahead of you and if you are willing to spend sleepless nights to get just one extra user onto your product, and do it over and over and over again, you are bound to grow faster. Most entrepreneurs who win simply do so because they continuously want more!
These tips and tricks help budding entrepreneurs understand what they’re getting into. In part 8, we will discuss how to create products that will make users fall in love with you.