Lecture 4 - Building Product, Talking to Users, and Growing (Adora Cheung)
- Speaker introduces the topic of going from zero to many users.
- Speaker shares personal experiences and mistakes made during their entrepreneurial journey.
- Advice is given as directional guidance, acknowledging that every business and individual is different.
- To successfully start a startup, it's important to have a significant amount of dedicated time.
- Compressed time is more effective than sporadic work sessions.
- The ability to focus and immerse oneself in the idea is crucial.
- The novice approach involves keeping the idea a secret, building the product in isolation, and aiming for a grand launch.
- This approach often results in a lack of user feedback, leading to low user retention.
- Buying users may provide a temporary boost, but it's not sustainable and eventually leads to failure.
- The speaker shares a personal experience of following this approach during their time in YC.
- Clearly define the problem your product solves in a single sentence before building it.
- Ensure the problem resonates with you personally and is something you are passionate about.
- Verify that the problem affects others beyond yourself by talking to people.
- Immerse yourself in the industry you plan to disrupt by becoming a part of it, even if it seems counterintuitive.
- Gain detailed knowledge by experiencing the industry firsthand, as this can reveal inefficiencies and opportunities for improvement.
- Obsessively research the industry and competitors by reading articles, quarterly financials, and attending earnings calls to become an expert in the field.
- Identify customer segments to target your product effectively.
- Before creating a product, focus on a specific customer base to optimize for their needs.
- Storyboard the ideal user experience, including how customers find out about the product, sign up, use it, and leave feedback.
- Visualize the perfect user experience and put it down on paper before coding.
- Build a minimal viable product (MVP) with the smallest feature set that solves the problem.
- Talk to potential users and research existing solutions to understand their immediate needs.
- Develop a simple product positioning statement that describes the functional benefit of the product in one sentence.
- Initially, focus on communicating the practical benefits rather than emotional benefits.
- To get the first few users, target people who are close to you.
first few users (00:14:06)
- Start with people you know: co-founder, family, friends, and co-workers.
- Look for user feedback in online communities like Hacker News (for developer tools) and local community mailing lists (for consumer products).
- Homejoy's initial challenge: not many people in their network were using the service.
- Homejoy's tactic: set up a booth at a street fair and handed out free bottles of water on a hot day.
- People were more likely to approach them for the free water and ended up booking cleaning services.
- Another startup approached people at the post office who were trying to ship products and offered their shipping service.
- Go to places where your target audience is likely to be, even if your conversion rate is low initially.
customer feedback (00:17:45)
- Customer feedback is essential for product improvement, and multiple channels should be provided for users to contact you, including phone, email, and surveys.
- Actively seek out user feedback by meeting them in person and engaging in casual conversations.
- Track customer retention and collect reviews, ratings, and NPS (net promoter score) to monitor product performance over time.
- Be aware of the "honesty curve" where people closest to you may be less critical in their feedback compared to strangers, and getting paid feedback from users provides more valuable insights compared to feedback from friends or family.
- Optimize for the next stage of growth rather than building features for a million users when you only have ten.
- Manual processes can help you understand what to build before automating everything, and temporary brokenness is better than permanent paralysis; don't worry about perfecting edge cases at the early stages.
- Beware of the Frankenstein approach of building every feature users suggest; prioritize and consider the overall product vision.
- Before building a feature, understand the underlying problem users are trying to solve, as users' suggestions may not be the best solution, but they often indicate deeper issues that need to be addressed.
- Prioritize solving these underlying problems before adding new features, and avoid piling on features that hide the real issues.
- Some people continue building their product indefinitely without ever shipping it.
s is for stealth, and stupid (00:28:16)
- Stealth in perfecting the product endlessly is not advisable.
- Imitation is cheaper than innovation in terms of time, money, and capital.
- Assume that someone will fast-follow and execute aggressively if you have a good idea.
- Don't hold back user feedback by delaying the launch due to paranoia.
- Founders often go through this, and it's not necessary unless building something that requires tens of millions of dollars to start up.
ready for a lot users? (00:29:33)
- When you're ready for a lot of users, focus on one growth channel and execute on it for an entire week.
- If it works, continue executing until it caps out.
- If it doesn't work, move on.
- Always iterate on channels that work.
- Don't give up on channels that fail initially; revisit them later when your situation changes.
- Creativity is key to successful growth.
- Performance marketing and growth require technical skills but also creativity to find unique and effective strategies.
- Three types of growth: sticky, viral, and paid.
- Sticky growth: existing users come back and pay more or use more.
- Viral growth: people talk about a product they like, leading to new users.
- Paid growth: using money to buy growth.
- Central theme: sustainability, ensuring money and time invested have a good return on investment.
- Key to sticky growth: delivering a good user experience.
- Good experience leads to continued usage, potentially addictive usage.
- Measuring sticky growth:
- CLV (Customer Lifetime Value): net revenue a customer brings over a certain period (e.g., 12 months).
- Cohort analysis: tracking user retention over time by segment (e.g., month, female vs. male).
- A good retention curve shows a flattening out over time, indicating reduced user attrition.
- A bad retention curve shows a sharp drop-off after the first use.
- To achieve viral growth, deliver a good experience that makes users want to share it with others.
- Implement a referral program with effective mechanics, such as offering incentives for referrals.
- Place customer touchpoints, where users can refer others, at strategic moments when they are highly engaged and satisfied with the product.
- Optimize the conversion flow for referred users to ensure a smooth sign-up process.
- Examples of paid growth include:
- Search engine optimization (SEO)
- Pay-per-click (PPC) advertising
- Social media advertising
- Influencer marketing
paid growth - examples (00:41:40)
- Paid growth involves spending money to acquire users.
- The customer lifetime value (CLV) should be greater than the customer acquisition cost (CAC) for a successful paid growth strategy.
- CLV and CAC should be analyzed for different customer segments to optimize ad targeting.
- Payback time is crucial to avoid unsustainable growth. A safe payback period is three months, while risk-loving businesses may opt for 12 months. Beyond 12 months is considered unsafe.
Save this summary
Browse more from