The other week at Coloft in Los Angeles, Noah Kagan gave a motivational and entertaining talk on startup growth, hiring, ghetto validation, and much more. Noah is known as the Founder & Chief Sumo at AppSumo, former Director of Marketing at Mint, and a very early Facebook employee.
Along with the pizza & beer, here's most of what I took from Noah's talk:
Startup & Business Growth
Pick one metric and go after that. Yes, PICK ONE METRIC! He first heard this from David Skok as he posed the question, "What's stopping your business from growing 10x?"
For Appsumo, the metric is email addresses. Everything else (revenue from purchases, sharing deals, visibility & brand awareness) is rooted in that single metric. With focusing on email addresses to grow his company 10x, they demanded email addresses on the homepage to enter the site. Did everybody like that? No, but they had a goal to hit and deal people wanted to see so they went full steam ahead.
For Facebook, the core metric was customers. By focusing on that, they had two big spikes during his time there: 1) opening the site up to everybody (not just college students) and 2) rolling out international/multi-language versions. For Mint, he didn't reference a metric they went after, but mentioned two aspects that brought them great success: 1) winning TechCrunch 40 and 2) have an "awesome fucking product" people wanted.
[Side note: Something Noah learned from Mark Zuckerberg was the people that use your products are customers, NOT users. After all, they are people, not druggies...for the most part. Think of them (when dealing with them, trying to acquire them, etc.) as people.]
Hiring at Startups
Whether hiring at a startup or any other business, he believes there are 3 types of people: -1, 0 & 1. A person that is a -1 detracts from your business. Fire them right away. The 0 just keeps your business in its current state; doesn't help it grow, but doesn't hurt it. Fire them. The 1 improves your business, and thinks of ways to grow or expand or creative ventures. Obviously, keep them. Think about their traits and how they fit with your team, then hire more of them.
Ghetto Validation
With your startup (or any business), what are you trying to solve? Answer that in one sentence. Don't be afraid (and it's strongly encouraged) to use "Ghetto Validation." Call, email, talk to people on the street. Figure out if people need/want what you're trying to solve AND if they will pay for it (this is similar to "Getting out of the building" in the lean startup world as is preached by Steve Blank, and more recently Patrick Vlaskovits in that post).
For instance, with his friend thinking of eBay dinners for single guys, he went on Craigslist to find a caterer to do homemade dinners that could deliver for $10 around San Francisco. Then, he emailed 20 single tech guys in the area (his target demographic) and asked if they'd use the service, and if so, send him $20 right away. Granted, they were friends, but 11/20 responded. Right there, he proved his startup had, at least, small scale validation. Remember, ask for money to see if people will pull the trigger on your product, instead of just saying they will because it's free or fictitious money.
Website & Personal Working Optimization
Whenever doing any type of optimization, start with the top of the funnel. With website optimization, analyze the page that gets the most traffic and move down the chain from there. This might sound like a no brainer, but I see this often get overlooked, including by yours truly. Similarly, if you're going to optimize your personal working efficiency, why don't you start with getting a faster computer & internet hookup, then work on your typing & reading speed?
How to Write Copy
I'll keep this short: the main component of copy is to create a Value Add to the Customer. As can be seen in AppSumo copy (and Groupon among others), it helps to be funny, witty, etc., but make sure your text is aimed at providing value to your customers and not just talking about your product. A resource he mentioned were Gary Halpert's Boron Letters.
3 Phases of Marketing
- Experimental - Trying things. Get creative. With AppSumo, they created bundles and had those products email the bundles to their entire free userbase. Worked awesome as they obtained techie users already familiar with SaaS products while spending time (sweat) versus money. Now that they have a large userbase, they don't offer bundles any more. From the paid side, they used Facebook Ads (test images!).
- Effectiveness - What works most effective? Ads worked well for them and are scalable.
- *Expletive* & Pillage - Run with what works! Figure out your who (customer): pin point your best customer (are they old, Canadian ladies in Florida that like books and bingo?). Then, find where the hell they are and take them all! With paid, when LTV > CAC go pedal to the metal.
One Metric? What about Cohorts?
Cohorts can be extremely helpful, but according to Noah, often "screw cohorts." Look at Revenue/Customer and track that. You can gain valuable data from cohorts and should look at metrics in relation to time, but figure out what actions you can take from that. If you can't, keep things simple. Don't focus on too many metrics.
Custom Features
Don't build custom shit until you need to. Come up with an experiment and manually test its success. For instance, email people yourself instead of creating an automated process before Day 1. The AppSumo 404 Page is a Google Form to sign up with them (emails, emails, emails!). Try integrating with certain products and if a ton of people love that feature and want it and use it a ton, build it and charge for it, but don't waste time/money when you don't need do. Create the front-end as if you can do what you promise and see if people demand it (make sure you can fulfill it manually), then create the back-end. At AppSumo, he claims they fail with 84% of the things they try. When you fail, think about why and what you're going to do about it.
Mixed Bag & Having Fun
There were many "random" tidbits I didn't want to leave out, such as if you want to work with somebody, provide them (valuable) creative shit. Obvious, but people don't think about it.
In regards to any marketing or other efforts being black/gray hat, just ask yourself, "Would you be embarrassed if what you did was published in the Wall Street Journal?" Test the limits, but ask yourself that.
Don't be average. Ever. With some things, say fuck ROI. For instance, with AppSumo, they made an AppSumo Golden Ticket. Their designer spent an hour creating a Golden Ticket and they'd just manually select random customers and email them it. He hopes the customers use it. He hopes they reply with a Thank You, but don't waste too much time tracking that. Be memorable to your customers.
Throw Easter Eggs in there. Have fun (always have fun!). With Facebook, they'd throw fake facts scrolling on the bottom and lots of other things. Try something that makes you laugh.
Future of AppSumo
It was very interesting to hear Noah talk about the future of AppSumo, especially as he consciously mentioned multiple times that he wants AppSumo to be more like Amazon, not Groupon. He is not building a daily deals site; he is learning about software distribution. People continue to come back to the site because AppSumo consistently features great products to purchase, free webcasts, etc. and his customers view it as the place to buy quality business apps online, just like people went to Amazon to find books and get great deals.
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I understand some of the topics were a bit disjointed, but so is Noah. Thanks for making it this far. Hopefully we can get Noah down to Orange County to present at an OC Tech Startup event or Startup Weekend: Orange County in the near future (who could turn down a free trip to Orange County?).
Please, what are your tips on startups, marketing, validation, etc.? What do you agree OR disagree with from Noah's talk?
Thanks to Rusty Sheriff, Dirk Calloway, and NASA Goddard for the images.