Lecture 6: How to Start a Startup

This needs to be better understood/accepted by startups, but it's a bitter pill to swallow for many entrepreneurs.

I wrote a book on growth hacking and now often get requests (sometimes casual, sometimes formal) on how a startup can "growth hack" or accelerate their growth. Then when I ask about the basics like target market, retention metrics, customer feedback etc - I get a bunch of blank stares.

It's no good driving more traffic or "virality" when people aren't interested in your startup in the first place. I'd say in 9 out of 10 cases, there's still a ton of PM fit work to be done by startups who think they are in the "growth hacking" stage.

The problem is, I'd say most first-time entrepreneurs just think the only obstacle they need to overcome is getting more people seeing their website, or downloading their app. It's hard to accept that your startup is not ready for growth because it's not providing any clear value yet.

Obvious as it seems, I never got a good answer like that from "experts" about how to define PM fit.

There were those guys talking about lean startup, measure everything and stuff; but when come to this crutial question they were all "well, you will know when you have PM fit" or an arbitrary question with an arbitrary answer "ask your clients how disappointed they would be if your startup would shut down now; if 60% answer very disappointed, you have PM fit".

So, similar key takeaway for me: "It is easy to be wrong about having Porduct/Market fit. Make sure your retention flat lines at the appropriate level."

backlog (can be applied to sales & implementation pipelines)

Its very different as you mention. "Growth" in the sense that its talked about here only really applies to products with many feedback cycles where iteration is possible (not hardware). For products with longer sales cycles its generally based on more traditional sales metrics, measuring where people are in your sales funnel and conversion between sales funnel steps.

I've been a manager working for telco companies so I know a bit about it. Usually the backlog is a good metric but it works from when you have already sold the product. Usually to assess what happens before the sales team is asked to assess the probability of closing the deal and discount the deal size by that probability. An increase of the scope (and of the total value) or of the probability to close the deal represents your metric. It is not very scientific but could be made pretty accurate. E.g: you know the price of your product and how much you are willing to give a discount in order to close the deal. Also, even if negotiation, especially with big companies, could be unpredictable, it is usually done in steps and each steps closer means an higher chance of success. A possible sequence of steps is: - RFI received. - RFI answered. - Q&A and first meeting - Follows Up - RFP received - RFP answered - First round of Q&A/meetings - Short Listed - Second round of Q&A/meetings - Product demo - Final negotiation (usually price and conditions) This is the process for RFI, there's a different one (and a little bit more complex) for "cold calls" that probably is more applicable to startups. Obviously some steps are optional and the names could changes but this is how it works. Just a final note, though. If you are a startup in B2B avoid, at the beginning at least, big corporation as client if you can. They have a huge negotiation power, they will drive down your price like crazy and being your biggest client they will use their force to ask you a lot of extra work than the one negotiated. You will end up loosing a lot of money on the deal and also you will have little ability to follows other deals. Yes, they are useful to qualify for other clients and if you lock them in they could be quite profitable, but unless you have deep pocket they will crash your company.

What you are describing is enterprise sales. I co-founded one of those. Early traction is easy to spot:

- at first, you can barely get first meetings with any potential customers. You track how many companies even agreed to meet with you once.

- a few months in, you get your hopes up (incorrectly - usually). A few companies you met are talking about doing an evaluation of your product.

- another few months go by, just one of all your contacts moved to do an evaluation, but then they postponed their purchasing decision to the next fiscal year.

- still no revenue, but now you have a funnel: x prospects in first meeting, y prospects in second meeting, z prospects in eval, 0 prospects have bought. Keep tracking those numbers and the trend will be clear.

Great talk, but I agree that like a lot of startup advice out there, it is for companies that have a product-market fit.

I've been thinking why the startup community has so few talks about product design. We have a lot of advice about tech stacks, growth hacking, rising funding, building a team, even some about customer research, but surprisingly little about design.

Yet, product design is one of the key activities to achieve product market fit: you can understand the problem, but if your product isn't easy enough to use, PM fit is hard to achieve.

For example, you can find a deep analysis of a different SaaS models, but it is surprisingly rare that someone does a deep analysis of e.g. Facebook's UI and writes a blog post about it.

I think it's a very important distinction to make, especially early on, to make sure that founders focus on power users and completely ignore casuals. It's tempting to try to get interest from marginal users, because there is many more of them than potential power users, but it's going to do you no good if power users don't see value in what you build.

I find HackerNews pretty good at highlighting the best content in non-flamewar articles. What I mean is that if the article isn't anything to do with the big tech companies we will get good discussions and people will up/downvote rationally. Whenever Apple/Google/Facebook etc. are mentioned the fanbois come out.

FWIW Facebook tore through my college in a couple weeks way before they had any type of inviting mechanisms. So PM fit was definitely there and virality was all word of mouth.

it's internet.org not palantir

It's called a High Rising Terminal. http://en.wikipedia.org/wiki/High_rising_terminal