Before You Grow
blog.ycombinator.com
blog.ycombinator.com
If you fail to attain at least some group of rabid fans right after launch, then you have to ask users and find out what changes you could make that would turn them into rabid fans - if anything. If you don't get some sense of agreement among users from the responses, odds are that you should move onto another project. Products that the masses love are very rare. Creating them is hard, and because it involves a tremendous amount of subjectivity and pure luck, it will likely take far more than one try. But you can only fail at it if you stop trying or let yourself get bogged down with attempting to make something work that users simply don't and will never care about.
Of course, product/market fit is not a sufficient condition for success. You also need the market to be big enough.
There's this weird balance between the lean "get it out as soon as you can, fail fast" and "make sure it's a good product before you ship".
The poster child for not doing this in my mind is Adora Cheung. I remember watching her "growth at all costs" lecture from Startup School shortly after Homejoy shut down and thinking well, there you have it folks. Seems they suffered from exactly the leaky bucket problem Sam talks about here.
Two caveats: 1) I'm sure there are many other examples of leaky bucket companies, Homejoy just came to mind first 2) I still think Adora is brilliant and am really excited about her new cities project.
I am in an environment that has a particularly high density of genuinely enthusiastic, but naive, people; I am inclined to think that it is a mindset that's also predominant in other circles, besides University campuses.
Indeed, there seem to be quantities of people who are looking for silver-bullet secret sauces that will let them reach Steve Jobs status. Perhaps that's precisely because of the various personality cults that our industry subscribes to. I can't know for sure. And while I am sure there are some good anecdotes showing the contrary, it seems that, all in all, this is overall hurtful both to innovation and to the ones that try to accelerate it.
If you are going to be captain of a ship, you better not embrace any gust of wind that comes your way. Otherwise, you are more drifting away than going anywhere. And like Paris, you would rather be tossed by the waves than sink.
You should absolutely release your product to customers to gather feedback as early as possible, just don't fuel growth by spending before you're sure you've got the product 100% right and people love it.
Imagine you sell a simple widget available in three sizes and two colours. A very simple product. Yet 10% of sales result in returns. If it takes you three days to respond to returns requests and then another hour processing a return weeks after the customer requested it then you are also going to have some damage done to your company brand on social media and customers that will not buy from you again.
It is not actually the widget that is the product, it is the whole sales process for that widget via the website that is the product. The customer service aspects of it need to be done really well before you grow. In the above example you can build out the forms for managing returns so that there is minimal effort needed, a scan and a mouse click in the warehouse, all communication with the customer handled totally automatically and procedures in place for the parts of the process that do need a human.
It can take weeks of work to get all of the customer service elements working properly, many of those aspects might seem to fail cost benefit analysis at the start, why spend ages making neat forms so your customer can return your product when you are really concerned with selling the product? Yet, if growth happens, this will be important. It could take an hour to process a returned widget when you take into account what happens in the warehouse, the office and in accounts. Or this task could be done in a leisurely five minutes if organised. The former is bad for the brand, the latter much better. You could get ten returned widgets a day, taking all day to do. This would deny you the time to build out those customer service forms needed for the five minute process to happen. You would need to hire an order manager person or a programmer to put the back end systems in place or else you are going to be stuck processing returns for unhappy customers, late, all day, every day. Maybe if you work hard they will not rate your widgets so badly.
So it is a classic step in time saves nine. But the product isn't just the widget, it is the distribution and customer service. Customers won't be able to love your product if they cannot get it or if you cannot sort their problems out with it.
Now managers with sales targets to hit could start advertising the widget before all of the customer service parts are in place. They may view too many returns as a nice problem to have and just think they can hire some interns if help is needed with that. Growth is gone for, widgets sell well but with the ten fold increase in sales is a ten fold increase in returns. Before long a whole returns department is established. This gains its own inertia and involves so many people that it becomes practically impossible to implement a simple form change to speed up customer returns.
The widget itself can be quite boring, it doesn't have to set the world on fire. The product is bigger than that, it is the brand, customer service and other things. This is what customers must love, and part of building a product they love is the dull customer service stuff. If you don't get those bits finished before you grow then you are just growing the amount of work for yourself.
airbnb's 1000 days are mentioned in the article. it is not like they were just coding in their living room during that time. they had a product out, and they were flying to NY to talk to every possible host, improving the listings, and so on -- learning what made the product awesome. it was probably tempting at the time to work on getting more hosts on the platform, or to optimize the number of bookings, and other growth stuff. that's what Sam is cautioning against.
Iphone app companies do this one neat trick for this. They release in foreign markets (Canada, Australia, etc) and make sure their users love their apps before releasing in the US.
Yes, late product release in the US even if the product was developed in the US is an old technique.
(build -> deploy -> feedback -> build -> deploy -> feedback ..) until you reach love, when you can start focussing on growth.
The lean philosophy is to make sure your (build -> deploy -> feedback) loop is tight.
Also I was under the impression YCombinator focuses on helping companies grow and organizes a demo day 3 months later to help them raise money from VCs. The pg article even mentions growth targets during YC. If this is true then companies accepted to YC should already have a product people love and be ready to hack growth over the next 3 months. This clearly is not the case (eg Airbnb joined YC after about a year not 1000 days).
If YC is not only about growth but also about helping companies at much earlier stage still working on the product people love stage, that would seem to be a challenge. What do YC speakers talk about? Growth or Product? It's like putting kids learning Algebra in the same class as those ready for Calculus, not easy at all. Maybe there should be two types of YC sessions then? One for early startups still working on product, another YC for startups working on growth...
Every founder I have ever met wants their product to be loved, but unfortunately they need time and money to figure this out. Other issues: it's hard to know when to walk away pre-product and pitching VCs without growth doesn't seem to work. So founders raise money by showing early "growth" without PML (product/market love), then they go back to work on the product and when PML doesn't materialize in the first couple months they start to get nervous and switch resources back to growth hacking their mediocre product so they can be ready to raise money again and have another chance.
Obviously this is all very complicated, full of exceptions to rules. In reality product and growth have to be going on at once - but the timelines and resources and challenges to do product and growth at the same time should be part of the advice.
"fix the plane while it's flying".
This is typically advice for startups that have found product-market-fit (i.e. have a product people love) but there are a million other things broken. In that case the advice is often to fix these things "while flying", i.e. while simultaneously growing sales and the company in general.
"organizes a demo day 3 months later to help them raise money from VCs"
I understand the purpose is primarily to help companies raise seed/angel rounds, not big "institutional" rounds. And just generally make connections for later.
"The pg article even mentions growth targets during YC."
Clearly this is not applicable to all companies. E.g. what's the "growth target" for a company like Rigetti who build a quantum computer?
"One for early startups still working on product, another YC for startups working on growth"
One of the primary (if not the most important) benefits of YC is the network. You get that regardless of whether you're in product or growth stage.
"pitching VCs without growth doesn't seem to work"
Depends on what you're pitching for. Seed and Series-A are two entirely different games.
"So founders raise money by showing early "growth" without PML (product/market love), then they go back to work..."
Good investors aren't fooled by that and will ask the right questions to quickly uncover any fake metrics. Besides that a seed round is typically raised on team, talent, idea and early traction, not growth.
Are you actually in a position to offer advice? What you say seems outdated - seeds grew to multi-million figures such that "seed is the new series A" was a thing back in 2013 - firms now offer "pre-seed" funding and "second-seeds" seem increasingly common.
The assumption today seems to be that if you have no connections, you must self-fund / bootstrap / FFF your way to traction to even attract angel interest and for you, seed is for growth. However, if you have prior exits and connections then you play a different game and can probably raise a MM seed without even an idea of what your new business might be.
Are you in a position to question that I am?
I've raised a seed round for my company 3 years ago and we are now going for Series A. I feel experienced enough to share some of my thoughts. Feel free to ignore it if you disagree.
What would have been fascinating, practical and not have raised my doubts would be if you compared the metrics and institutions you used to raise your seed compared to what you are using for your Series A.
Anyway, best of luck. Three years seems like a long time to live on a seed.
and confirmed here https://news.ycombinator.com/item?id=12490241
This is a point that I am always curious/skeptical about because growth will always become marginally harder. So ads, marketing and PR are always going to be necessary at some point.
Using his examples, facebook is creating airplanes to deliver facebook to people they can't reach otherwise - talk about high acquisition cost. AirBnB has a ton of TV [2] and Print ads.
Further, companies like abcmouse [3], dealdash [4] all blanket the airwaves with their ads and seem to be doing well.
So maybe some companies/products lend more to traditional ad spend than others, or maybe the idea that viral is the only way to grow and sustain is wrong.
[1] https://www.facebook.com/notes/mark-zuckerberg/the-technolog...
[2] https://www.ispot.tv/brands/oLp/airbnb
The article is suggesting that you get your conversion & retention rates up into something reasonable before you blast out ad spending. You've got a lot more leverage here than on almost any other driver of your business's economics. It makes no sense to lose money on CAC - LTV and make it up in volume.
I have extensive experience applying the NPS to the hospitality industry, and I can tell you that it's not a marketing gimmick as I have read in some other comments. That's why I decided to roll my own service :-)
The difficult design aspects seem to be when to ask and choosing what other supporting information to gather about who they are, where they came from and how they used your product/service - you can't just hook in an API.
It's a vanity metric, just like asking "would you pay $10 for this?" instead of getting someone to actually pay $10. https://en.wikipedia.org/wiki/Net_Promoter#Criticism_of_NPS
It's useful for us.
That said, the NPS methodology is much more than the overall score. The real value is in the individual scores, verbatim feedback and its proven ability to tie those results into both growth and churn. All combined (and when done correctly)it can help drive funding, determine PMF, guide your product roadmap, forecast revenue and drive measurable growth (just to name a few benefits).
Breaking it down to just a score is looking at NPS far to simplistically.
Yes, you can ask any customer any question and get a response, but does that question/response elicit the same intelligent and predictive value of the NPS questions? Will randomly surveying your customers generate the same response rate as an NPS survey?
NPS is a proven methodology with predictive intelligence and high response rate, what you're suggesting is not. The choice is yours though.
That's a blank statement that tries to be authoritative and sounds nice, but where's the proof?
A lot of SaaS businesses have proved this for their customer base and found it's worth driving by. If it's not true for you, that's fine.
For instance, Apple has a very high NPS. A lot of Apple customers recommend Apple products to all their friends. Why might they do that? On reason might be that Apple products are high quality and their users have a good experience from using them. Another explanation is that there's a network effect and that Mac users want to be able to share programs and files and be able to get help when their computer breaks from their other Apple-owning friends.
A manufacturer of Windows laptops might see that their NPS score is lower than Apple and take that as a sign that their customers are more unhappy with their products than Apple's (which very well might be true), but it could also be the case that, in general, Windows laptop owners don't particularly care what brand their friends all buy because Windows laptops are more-or-less interchangeable. Company executives might conclude that adding more proprietary features to their products and creating a walled-garden ecosystem like Apple's is a good idea, when it probably isn't.
CSAT has been far more illuminating. NPS often indicates success, while CSAT would actually show issues happening on the ground. It feels like NPS is idealistic and in the clouds, while CSAT is grounded and shows real feedback.
Plus, clients just don't like NPS either.
1. https://www.nucleics.com/why-do-only-5-of-the-93-dna-sequenc...
In other words, if they want something, and want it badly, instead of monetizing it with $$, monetize it with a case study.
Personal favor also. You go the extra mile for one user/infleluencer/decision maker in a customer company. Then ask to return the favor: "could you spend 15 minutes talking to this prospect of mine, it would help me a lot".
They can say no, find an excuse. But it will hurt them because they know you helped them unreasonably in the past, it was valuable to them, and you may be less willing to do so in the future.
Some will say yes. You just need one or two.
One of the more amusing things is different divisions of the conglomerate that owns my main competitor are among of my largest customers. I am always amazed how little internal communication there is within large companies.
On the contrary, we found the European and Australian customers to be completely different; competing companies in the same local markets seem to be quite chummy and will share such information freely.
Obviously not to be generalized. We have North American evangelists too.
Edit: to explain my thinking - the idea here is it may actually be that if you're getting paid alongside them that you don't need to grow to other customers. You can get all the revenue you need from getting this one customer to dominate their market.
Edit. I should add that I have offered a discount in return for being able to publicise their use. Unfortunately, everyone has declined the offer.
Seems really nice. I figured it might be useful for folks trying to run an NPS survey after reading Sam's recommendation.
On the positive side, I have had pleasure of using some well-designed interfaces, and the giving of positive feedback probably reinforced in my mind that I liked the site. I.e., it made me cognizant of the good design.
I try to let my own CSS (particularly fonts) on Safari trump the sites I read a lot, such as Hacker News. Safari's reader view is good too.
i think i'd be smarter to cite maybe smaller companies that exited in the million/100,000 dollar range. seems more accurate.
i understand that ycom wants the people they're funding to focus on ideas that generate billions as that's ultimately advantageous for ycom, but, realistically, most of these companies will putter out or exit in the low millions, which is still cool as hell too!
doesn't seem to make much sense for anyone to constantly cite huge outliers like googs or fb or salesforce etc. when there's plenty of dope ass smaller ycom companies that probably did exactly what sam is talking about: build high quality, fun, exciting, engaging products.
As a side note: the new UI for blog.ycombinator is really ...uncomfortable. 3 columns? 4 if you count the social share buttons jutting out on the left. Designed on a > 21" monitor :(
The list of tags doesn't need it's own column... each with it's own row. Just make it a tag cloud above or below the blog list, and give a little breathing room to the actual article.
>> Airbnb slogged for 1000 days before discovering how to make their product loved.
>> It’s unclear exactly when Airbnb implemented what’s become their most famous growth hack, ...
Craigslist had one thing that Airbnb did not - a massive user base.
https://growthhackers.com/growth-studies/airbnbI've experienced that many users are unwilling to engage in conversation, they test it and if they don't like it they leave and won't communicate why.
Suppose one creates a new Whatsapp-like product, how would one, in practice, go about gathering feedback?
Step two would be to interpret nothingness as (negative) feedback that your product wasn't interesting enough for them to bother commenting on. Which probably means you're not solving a deep enough problem.
This problem is really hard for whatsapp-like products, since people already have their problems solved pretty well in that domain and so they are less likely to find a new product particularly interesting. If I were advising a startup who were making a whatsapp-like product then I would tell them to find a narrower niche where they could solve a deeper problem.
Making current users even more happy is one way to go, they are more likely to provide feedback but it skews the perspective since we don't get any feedback on what the unhappy users were unhappy with.
Now, suppose it is a Whatsapp-style product, there must be a way to gather feedback even for them?
Would be interesting to correlate the emails with how engaged the user was after signup.
Personally as a user the only time I would try to engage the creators is if the product was very close to my use case but certain aspects didn't work the way I would need. This being for B2B where a potential customer is going to be more engaged, B2C the reply rate to those emails is likely always going to be tiny.
Dirty secret that startup methodologies usually doesn't tell you: it's mostly trial and error. You observe people, you form a hypothesis about what they want, you put something in front of them, and you see if they want it. If they don't, change something. It's not unusual to require dozens to hundreds of iterations before you converge on something folks like.
This is also why founders that are building for themselves have such an advantage: then you do get some signal about exactly what you might need to change, and why you would want it. You've got to know (and accept) yourself pretty well to be able to listen to it, though.
Iteration, it feels like a company could use the run rate iterating and never figure it out?
The lesson to take from this is to get your iteration velocity up and your burn rate down. If you can, you also want to be extracting as much information as possible from the failures, so it's not entirely random, but even if you're brilliant and 100% paying attention there will still be a lot of them.
Early on, it's nothing more than an educated guess. Part of the problem here is that if you're actually creating something new, rather than a refinement of an existing product, you're in uncharted territory. Think of Henry Ford's comment about the customers wanting faster horses. That's not what they want. That's just the limits of their imaginations and experience. Great founders should be creating something the customers desperately want and need but couldn't even imagine or articulate. Henry Ford's customers just wanted to get from one place to another, faster than they could at the time, more reliably, and affordably. They wanted faster horses. He gave them mass-production cars that were affordable and easy to maintain.
I'd argue it is. Building something people love is all about growth. If they love it, they'll talk about and champion it. In fact measuring generic word of mouth growth is a decent way of figuring out if people love the product (my working hypothesis is that engagement is great but if they go beyond that...we're golden).
I'd say ignore all kinds of growth except word of mouth growth. I don't care about user acquisition schemes...as soon as the word of mouth growth flattens the alarm bells must go off and all other measures are probably just life extending measures.
I'd also say ignore "growth hacking" especially of the "I'll trick people to like my product" variety. Genuine product improvement is the best growth hacking there is.
Build a small focused product to generate some revenue, then hopefully that will give you time and financial freedom to build more complex products down the road.
Usually if people put money down and there is an entire industry around it, the collective mindset of that industry is close to optimal. They might be wrong on a couple of important issues. They also might be very wrong, but they're still close to optimal by definition because nobody's doing it better.
TL;DR: calling entire world-class industries clueless implies naiveté.
In the same way you or I wouldn't accept a PR that doesn't align with the larger vision of a framework or library we've written, VCs don't want to fund a company if the leaders of the company aren't empathetic with the VCs goals. It's about aligning interests. The goal is really to align technology and people - create something technically amazing, with huge potential, and align yourself and your vision with those who have the capital to fund you.
You don't have to do the dance if you don't want to, but I'd be hesitant to be overly dismissive of it.
Before you think this is a mere joke, consider that normal people don't even know what computer logging is, much less want to become a user of a logging service. The addressable eyeballs are few, and it's a market chock full of free products already. Plus the most serious consumers always end up with a bespoke proprietary solution.
While it's easy to find sensational stories to the contrary, bear in mind that sensationalism is a cheap path to sales, meaning not every narrator is reliable. Indeed, if you start raising money yourself you'll quickly discover how unreliable many "sources" can be.
Plus in evaluating an industry you would need to see it in context. So returns for investors VS similar asset classes. Or in this case how VC funding compares to other funding methods for founders under relevant circumstances - and looking at relevant metrics (pace of growth, sanity etc).
And they're usually wrong.
From Efficient Market Hypothesis: Is The Stock Market Efficient? | Investopedia http://www.investopedia.com/articles/basics/04/022004.asp#ix... "Conclusion It's safe to say the market is not going to achieve perfect efficiency anytime soon. For greater efficiency to occur, the following criteria must be met: (1) universal access to high-speed and advanced systems of pricing analysis, (2) a universally accepted analysis system of pricing stocks, (3) an absolute absence of human emotion in investment decision-making, (4) the willingness of all investors to accept that their returns or losses will be exactly identical to all other market participants. It is hard to imagine even one of these criteria of market efficiency ever being met."
Markets are interesting, though, in that the more people believe they are efficient, the more inefficiencies creep in, and the more people believe they are inefficient, the more they become efficient. When everyone assumes everyone else has found all the opportunities, nobody bothers to look, and so there are lots of undiscovered opportunities to cash in on. When everyone assumes they can get rich finding opportunities, they bid up prices to very close to their "true" value, and the profit opportunities disappear. It's a self-correcting system.
The question of how widely believed the EMH is itself suffers from selection bias. People who believe markets are efficient don't enter the financial industry, they give their money to Vanguard to manage. That means that everyone in the financial industry, by definition, believes that they can make better-than-average returns, otherwise they wouldn't be in the industry. And then by returns, most of them are wrong, but that also doesn't matter because the few who are right are the ones who survive to play the next round.
Edit: Foiled by my delay settings! Damn.
But your objective may not be go big or go broke - and you may well end up personally happier for being more balanced in your life. That's perfectly fine in my opinion, and very underrated here on HN.
Plus the freedom is worth thousands alone in my opinion, if I have the choice I'll never go back to startups. It seems like startups are the default these days, and so many of them would probably be just fine as regular small-medium businesses. I have to cram the idea in people's heads haha, you can make money in software and not be a slave working 14hr days.
(Also if one can get funding, it lets one get paid an actual salary more quickly.)
IMO having a small team constraint is powerful too, you really have to optimize things otherwise you're screwed. Basically the opposite of a startup, where you'd toss money at the problem while you try and attract more people, making the product increasingly brittle.
A business that you own and which makes you any money on 3 hours a day may be even more rare than a unicorn. In most cases you'll be spending those 3 hours per day on administrative stuff alone.
It's not easy, but there are dozens or hundreds in many large cities.
And if it makes money in 3 hours, chances are it makes more in 30 hours.
https://qbix.com/blog/index.php/2016/11/properly-valuing-con...
I think this is a situation where be a just ruler and exercise judgment in paying employees in proportion to their contribution, makes a lot more sense than trying to codify an agreement.
IMO there is to much focus on becoming high growth vs simply creating revenue. Of course creating high growth companies is great thing to do - But so is creating a company that solves a small niche problem and creates sustainable revenue.
When a single user gets no utility from your product if there aren't enough already using it, what does one do? You kind of have to spend some money marketing to get the initial word out. This is something I've been struggling with. We've been doing a lot of writing content and there's some word of mouth happening. We spend small amounts on FB too. But we're seeing a lot of users drop off with the reason "there just aren't enough other people using this".
For your dating app example, you could add a non-geographically bounded ranking feature, similar to "hot or not."
Basically, creating any sense of accomplishment within the platform will make it more difficult for people to abandon, giving you time to reach a scale where the core product value can be realized.
Here are some links to get started:
http://avc.com/2012/12/single-user-utility-in-a-social-syste...
http://andrewchen.co/social-products-win-with-utility-not-in...
http://platformed.info/seeding-platform-standalone-square-op...
There are also countless examples of successful two-sided marketplaces who started out by "nurturing" (aka faking) one side of the market until they reached their critical mass.
There's all kinds of strategies, like starting hyper local (Facebook started just on Harvard's campus) or other startups have used waiting lists before launching to get a minimum threshold of users before opening the experience.
Be careful of "there just aren't enough other people using this" as it directly relates to Sama's advice. Again it depends on the type of product you are building, but when there's a product users love or see they will love even more if there were more users, they don't drop it so easily rather they go out and recruit more users.
What could you change to get these users to love the product so much they instead help it grow and recruit other users instead of just dropping it? I don't mean give them $20 (though you can) I mean how could you make the product so great they want to tell others to use it too?
2) Bootstrap - grow from a small X that generates value for individuals/small-groups and slowly mutate into a Y that delivers value primarily from the network as your user-base grows.
3) High cost blanket advertising or PR - get an inrush of like minded people at the same time. I can't actually think of a success story that achieved this, plenty of failures though.
4) Better than 3) is to use capital to buy users and user activity such that the value stays in the network e.g. paypal giving away free $$ to every sign-up that they then paid to a paypal merchant.
I'm working on a product that is seeing great growth (free atm), and what appears to me to be good customer engagement.
When I break things, users email and let us know, time on site is good, etc. etc. At what point do you go, yup, this is something people love.
Of course, I'm still making product improvements and figuring out what people will pay for.
Any examples of this?
But we did not follow Sam's path. 1/ we made resellers and developers happy (being open source played an important role early on) 2/ we grew 3/ we made end users very happy 4/ we grew much faster
The reason we took this part is that it takes a lot of time to both build the enterprise features, and make it great. We built the scope first and made it great after, which is not an usual path.
Disclaimer: I am the founder.
How do you grow your reseller network?
I would presume that reseller's interests don't always align directly with end-user interests?
Salesforce is another example. Again, it seems dated now, but when it first hit the scene, it was seismic.
It's actually pretty straightforward to make a loveable product for the enterprise, if only because the pain can be so great. The problem is wading through the sales process.
The shift has been that employees and individual teams now have a lot of say in what tools they use -- sometimes without the higher-ups knowing about it until it's seen a good amount of adoption amongst internal teams. SaaS with instant access and 0 deploy times makes this possible.
Another shift is that employees will now carry their championed products with them from one company to another. In an area like Silicon Valley where job hopping is common, the social/word-of-mouth effects on enterprise software is significant.
Slack has already been mentioned and is a prime example of both.
With our own "enterprise" product, we're seeing the same -- adoption from teams and employees that eventually can become something more. But, this can only happen if you're resonating with some group of users that love your product.
But, I have a better advice: Do not spend money and time promoting something that sucks or it is not useful.
examples are airbnb and dropbox
In the old days if you didn't have a product that "sold itself" (i.e. loved) then you'd just make it cheaper than the competition.
These days software products are by and large free (your users pay in time), so there is no obvious competitive strategy on similar products. If you don't have evangelical user base that loves your product and spreads it or at least a well defined niche use case, you've literally got nothing.
There is no room for "Facebook but cheaper". Heck there isn't even room for "Facebook but marginally better" anymore.
They just happen to be national companies (russia, china, some european).
If anything. The thought that they have no competitors/alternatives is just a display that SV totally ignore the local non-english competitors (no matter how engrained they are in their market) and generally disregards anything that is under 1 billion unique users.
Tesla has far under a billion users and SV loves it.
Many b2b startups have a few hundred to thousand users.
If you want to sell Ads and be free, you need billions. If you have an actual product you charge money for, you need far less.
I have a lot of great software ideas (great in that I wish they existed and want to use them), but no clue which could actually be monetized effectively. Billions of users seems like a tall order, and not a sensible thing to pursue.
Much easier to sell 100 copies of something than get 100 million people to use your software.
One of the difficulties of SV is that several people have made the "Facebook for Brazil" or the "X for Y region" but over long term iteration, the regionalized product gets overtaken by a supra-regional product's momentum.
Perhaps the most successful of the social networks that competed against Facebook on even terms was Orkut, and it's gone now.
Markets with strong network effects, like social networks, tend to be winner takes all. You'll never upset the market leader by making a marginally better product. If it's not 10 times better AND can't be copied by the leader you've got no chance really.
If Facebook is replaced it will be by people shifting to a different paradigm, not to an incrementally modified version of the same thing.
It's a competitive advantage to charge users. Because when user == customer, your incentives are aligned. People know that.
In the beginning it seems like the best way to measure if people are telling their friends is by not measuring at all. Just talk to users. You'll find out if people are about to tell their friends or how new users found you (an existing user sent them your way).
I'm always weary of surveys since they can be a dangerous mix of qualitative and quantitative. NPS seems solid since there's no denying a number. Sometimes I see NPS surveys that only ask for the rating (1-10) and don't ask a follow-up question ("Why did you choose 5?"). This is such a missed opportunity since the "why?" text can contain feedback gold. There's also no substitute for following up after the NPS survey to do more in-depth qualitative feedback gathering through user interviews.
I'm curious to hear more about what Sam thinks about measuring DAU/WAU/etc in the beginning.
Pre-edit:
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I liked your comment but you won't believe how I felt about one part:
>Iphone app companies do this one neat trick for this.
I'm sorry, I just found it very distracting... like you use clickbait title interspersed in your writing. I tried to replicate the effect for you at the top of this comment. There's nothing wrong with what you said, it's just kind of like the format of clickbait titles, you know? Thank
EDIT: got voted to -1 but I'm keeping this - it's genuine feedback for someone. the phrasing "do this one neat trick for this" doesn't come from normal writing or conversation and I find it distracting in an otherwise nice and informative comment.
so it's product development. the point isn't about marketing at all. (Except in a broad sense.) it's a product development trick, like a closed beta. I don't think you would call a closed beta "marketing" exactly.
at least, this is what I read the comment as.
(Sorry, could not resist)