Two schools of thought on how to gain early traction for consumer-focused startupsPosted: November 3, 2008 | Author: yeeguy | Filed under: business strategy, product management, startups | Tags: early stage, startups, user acquisition, user adoption, viral loop |4 Comments
I’m a co-founder of a startup and I’ve noticed that our advisors are beginning to form “teams” around two opposing schools of thought for gaining early user adoption. These two philosophies are mostly mutually exclusive so I think entrepreneurs need to make a choice about which camp they fall into… Which are you?
I won’t call out individual advisors/directors to preserve any “secret-sauce” that these folks may be building around their own businesses, but suffice it to say that some folks much smarter than me are championing these philosophies.
Philosophy #1: I’ll call this the “Loop Experimentalist” or “New School” approach. This approach focuses on building and experimenting with a number of viral loops (email, web, scrapers, mobile, etc.) in a completely quantitatively-driven manner. First step is to build a viral loop (e.g., register for your site, add friends from Gmail importer, site sends invitation emails to selected friends, friends receive email and clickthru to register at your site). 2nd step is to try throwing users into the loop(s) with minimal generically-good-sounding instructions (“Add friends to your GoodPalsNetwork!”). No product necessary, a broken flow at the end of the loop is OK (“Thanks! More features coming soon!”). Find a loop that has K > 1.0 and then see what kind of users are going through it. Build a product around those users.
Philosophy #2: Let’s call this the “Use-case Driven” or “Classic” approach. This approach centers on gathering qualitative data through consumer focus groups, interviews, ethnographies, and BD/pre-sales discussions. Use qualitative data to understand customer pain points and find a vertical use-case or problem that you can define your product around. Build a product that delights some users. Goto market with the same consumers/partners that you talked with initially. Get linear adoption within that target set first, then figure out how to grow exponentially from there.
Do these models jive with your observations of the startup-o-sphere? Lemme know!
I think it’s more general than that.
It’s a bottom up, empirical approach versus a top down, design-driven approach.
On the design-driven side you have companies like Apple, IDEO, Jump, etc. They identify needs and use some design process to work out a solution. They use tools from the social sciences, e.g., psychology, anthropology, etc. Rapid iteration is possible, but harder. There is a strong focus on brand.
On the empirical side you have all the PayPal people (as I’m sure you know) and all the viral folk (if they’re doing it right). The focus here is about small test cases, quantitative feedback, and rapid iteration. There is also a strong focus on distribution.
This applies across any industry, really. Think: Whole Foods v. Wal-Mart. Think: Apple v. Dell.
Many times the type of business dictates the approach. Consumer internet and media companies are more amenable to the latter. Or at any rate it’s less risky to take that approach. Iterating over a small time-scale is easier if you’re taking the data-driven approach, which is what consumer internet rewards.
Those thoughts might be a little jumbled, but that’s how I see it.
I don’t think that it has to be an either/or choice. I think it you can do both options without them interfering w/one another.
“Build a product that delights some users.” And then build the product around them? There’s probably a middle ground between #1 and #2.
When you can get a product to go “viral” though, that’s a powerful way to get early adopters.
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