Startups must prioritize product market fit before focusing on growth. Founders should do things that don't scale in the early stages, like Airbnb did in 2009 by providing a personalized experience. The case study on Airbnb highlights the importance of founders taking unconventional actions and learning from customers. Product-market fit can be measured through unbiased data analysis and is demonstrated when users are willing to pay for the product. Growth channels and tactics are crucial for scaling, but only after achieving product-market fit. Conversion rate optimization involves analyzing and optimizing each step of the user journey. The nature of the product should be considered when exploring growth channels. Referrals and virality are important channels for growth, and paid growth should only be pursued after achieving product-market fit and revenue. SEO is a competitive field, and A/B testing is a powerful decision-making tool for startups. Startups should prioritize non-scalable tasks, measure attention for product-market fit, and foster a data-driven culture of experimentation.
Introduction
Startups must prioritize product market fit before focusing on growth, as most founders deceive themselves about having achieved it. Gustaf Alströmer, a former member of Airbnb's growth team, highlights three key areas for startup growth: product market fit and retention, growth channels and tactics, and decision-making with a team.
Do things that don't scale
The most profound aspect of the topic "Do things that don't scale" is that in the early stages of a startup, founders must prioritize unconventional methods to reach their target audience, even if it goes against traditional business practices.
Key points:
- Startups should prioritize getting their product or service in front of potential customers, even if it doesn't seem scalable.
- Airbnb in 2009 is an example of a startup that focused on providing a personalized experience to their users, despite it not being scalable.
- While scaling is important later on, founders must initially focus on doing whatever it takes to reach their target audience.
Case study: Airbnb
The most profound aspect of the case study on Airbnb is the importance of founders in making startups successful.
Key points:
- In the early stages, Airbnb struggled to gain traction and lacked important features.
- The founders personally visited hosts, took photos, and gathered feedback to improve the platform.
- Founders need to do unconventional things and take actions that may not align with traditional business practices.
- Learning from customers and addressing their concerns is crucial for success.
- The video emphasizes the importance of doing things that don't scale when a startup is small.
Product-market fit
Product-market fit is the assessment of whether a product is meeting the needs of its target market. It can be measured through unbiased data analysis, focusing on key metrics that represent the value of the company. The frequency of measuring these metrics is important, as it varies depending on the nature of the product. Startups can determine product-market fit by analyzing metrics such as user engagement and retention over time. This information is crucial for attracting investors and ensuring long-term success. Metrics like net promoter score and surveys are not reliable indicators of product-market fit, while metrics like registered users and conversion rates do not accurately represent it. True product-market fit is demonstrated when users are willing to pay for the product.
Growth channels and tactics
Growth channels and tactics for startups are crucial for scaling, but only after achieving product-market fit. There are two main ways to grow: product growth and growth channels. Product growth involves improving specific parts of the product to increase user engagement and retention. Growth channels refer to platforms like Google, Facebook, and Instagram, where products can be discovered and advertised.
Conversion rate optimization
Conversion rate optimization is the process of improving the percentage of users who complete a desired action on a website or product.
Key points:
- Analyzing and optimizing each step of the user journey to address drop-off points
- Areas of focus include content suitability, browser compatibility, internationalization, and authentication flow
- Startups can learn from successful platforms like Pinterest and Airbnb
- Effective onboarding increases user activity and retention
- Asking users questions during onboarding enhances their experience
- Optimizing the purchase conversion process through factors like urgency, scarcity, user flow, and UI impacts conversion rates.
Growth channels to explore
The most profound aspect of the text is the importance of considering the nature of the product when exploring growth channels for startups.
- If the product is a rare behavior or something people don't do often, being on Google through paid marketing or SEO is important.
- If the product is viral in nature or can be shared through word of mouth, focusing on virality and referrals is crucial.
- If the product gets better with more users, particularly for social or marketplace products, creating a viral loop and getting friends on the product is essential.
- For products with a smaller target audience, focusing on sales to a specific customer list can be effective.
- Creating a list of customers and decision makers is important for effective outreach.
- Generating revenue from the product before investing in online marketing is significant.
- Successful companies often focus on one or two key channels, such as SEO, to acquire new users.
Referrals & virality
Referrals and virality are important channels for growth in startups.
Key points:
- Referrals involve providing a financial incentive for users to tell their friends about a product.
- Optimizing the referral process involves multiple steps, including the referral offer, sending invites, and getting people to sign up and book.
- The referral invite email is a specific step that requires optimization, considering factors such as the sender, value proposition, urgency, and call to action.
The video emphasizes the importance of personalized and timely referrals, as well as the use of social proof to encourage sharing.
Paid growth
Paid growth in startups involves utilizing channels such as referrals, paid ads, and SEO to acquire new customers. However, it is crucial to have product-market fit and revenue before investing in paid growth.
Key points:
- Startups should determine the customer acquisition cost (CAC) and ensure that the revenue from acquired customers exceeds the CAC.
- Setting lower targets for CAC and looking for early indicators of value can help avoid waiting for months to assess the success of paid marketing.
- The main channels for online marketing currently include Google, Facebook, and Instagram.
Search Engine Optimizaion (SEO)
SEO (Search Engine Optimization) is a highly competitive field where big companies dominate rankings, making it challenging for smaller businesses. To succeed in SEO, you need to be as good as these big companies. The key points to optimize your website for SEO are understanding what Google sees, ensuring it understands your website, and leveraging on-page and off-page optimization.
- SEO is a zero-sum game where you compete against others.
- Keywords people search for are constantly changing.
- On-page optimization includes page title and keyword research.
- Off-page optimization involves building domain authority through inbound links from high authority sources.
A/B Testing
A/B testing is a powerful decision-making tool for startups.
Key points:
- Determine if A/B testing is necessary before launching a new design or feature
- Use an A/B testing calculator to assess potential impact on metrics
- Run parallel experiments with different versions of a product or design to measure impact on metrics
- Helps founders make data-driven decisions and avoid subjective arguments
- Compare different versions of a feature or design simultaneously and measure results
- Examples include comparing a new sharing sheet for a mobile app and the impact of a sign-up wall on bookings
- A/B testing helps make informed decisions and optimize growth for startups.
Conclusion
In conclusion:
- Startups should prioritize non-scalable tasks, measure attention for product-market fit, and foster a data-driven culture of experimentation.
- These steps are essential for achieving growth and making informed decisions.