In today's tweet thread, I want to tell you a bit about my journey and why I'm such a stickler for customer acquisition. That seems to be the only drum that I'm beating, but it is SO SO SO important.
Read on >>
Read on >>
1) In late 2008, I quit my cushy job at Google to start a company. At the time, I think I was more enamored w/ the idea of starting a business rather than having a specific problem to solve.
But we all remember that time - it was a TOUGH time. No one would fund me.
But we all remember that time - it was a TOUGH time. No one would fund me.
2) And for those who did get funding, I remember valuations in kickass businesses in Silicon Valley being around $2m post-money. Seems laughable now. But ppl felt so grateful to get those offers.
3) But anyway, a big reason I couldn't get funding had nothing to do w/ the market AND/OR me. A big reason was that I had a TERRIBLE IDEA.
I tweeted about good/bad ideas the other day here:
I tweeted about good/bad ideas the other day here:
https://twitter.com/dunkhippo33/status/1364668553564065794?s=20
4) The startup we were building was a co-browsing tool - a browser extension that would let ppl browse the internet together.
You could use it for co-shopping. Or setting up travel. Or whatever.
You could use it for co-shopping. Or setting up travel. Or whatever.
5) It was a neat little widget, but it was NOT a business.
Sure, it's an annoyance to share links back and forth w/ your friends sometimes, but it's NBD in the grand scheme of life. Certainly not something ppl would pay for or use on a regular basis.
Sure, it's an annoyance to share links back and forth w/ your friends sometimes, but it's NBD in the grand scheme of life. Certainly not something ppl would pay for or use on a regular basis.
6) This is a problem from a unit economics perspective. It would certain cost us a LOT to get customers at scale - esp to install a browser extension -- so much friction there.
But where would the revenue come from?
But where would the revenue come from?
7) And if ppl wouldn't pay for it, then we'd have to go w/ ads / affiliate - something of that nature. You make SO LITTLE money on ads / affiliate that you would need repeat users like crazy.
But how often do you need to co-browse w/ ppl? Not often.
But how often do you need to co-browse w/ ppl? Not often.
8) @hnshah told me to launch it ASAP & see what ppl do. We spent a LOT of time perfecting it :(.
It turned out friends who beta tested *forgot* to use it, because the use case was so specific. That's a bad sign! It didn't matter how janky it was if ppl *forgot* to use it!
It turned out friends who beta tested *forgot* to use it, because the use case was so specific. That's a bad sign! It didn't matter how janky it was if ppl *forgot* to use it!
9) Another friend @SephSkerritt gave it to me straight -- that it was a horrible idea & that I should find a diff biz idea & laid out all the reasons I wrote above. He knew a LOT more about business than I did & was SPOT ON.
I was too naive to understand then.
I was too naive to understand then.
10) As a side note, @SephSkerritt is one of the BEST entrepreneurs (& should be way more famous than he is!).
He has taken near zero outside funding & does tens of millions in revenue on his co. The best entrepreneurs often don't seek VC $; they can make tight margins work.
He has taken near zero outside funding & does tens of millions in revenue on his co. The best entrepreneurs often don't seek VC $; they can make tight margins work.
11) Anyway, I'm grateful to the handful of friends who gave me very direct thoughts on the co-browsing tool. Thank you to all of you!
I wasn't ready at the time to internalize the advice, but after falling on my face w/ that, I got the msg loud and clear.
I wasn't ready at the time to internalize the advice, but after falling on my face w/ that, I got the msg loud and clear.
12) My entrepreneurship journey has certainly been comprised of a lot of lessons -- incl hiring & managing, but I think the lessons that stick out the most in my mind are around just how HARD customer acquisition is.
13) And the truth is if you have a business that has strong product/market fit, you don't need to be a customer acquisition genius. I think a lot of ppl think "Oh, if I have a really good marketer or salesperson, this will work well!"
But, almost all the time, that's not so.
But, almost all the time, that's not so.
14) In fact, the best marketers & salespeople know that. As a successful friend of mine who does sales once told me, "I seek out companies that have strong growth & I try to work with them. I want to work at companies where the product doesn't require much sales."
15) So ppl matter way less than you think and product/market fit wins on a lot of dimensions. The best sales and marketing ppl may be smart and skilled, but they actively seek companies where the product sells without much effort.
16) So if I were starting a product-company today, my strategy would be to: 1) Be thesis driven about an impt problem, but 2) be agnostic to the approach. Try to look for acquisition channels & ideas that aren't crowded where you can rise above the noise.
17) 3) Optimize for use cases with high repeat use. 4) And optimize for good buffer between potential LTV and guesstimates around CAC. 5) Don't force an idea to work w/ stringent CAC requirements. If that's the case, it's going to be an uphill battle.
18) Lastly, most VCs look at teams first.
But my startup past is why I look at ideas / unit economics above all else as a first step, because if that works out, then many teams can run with it.
In addition, it's also easier to attract top notch teammates w/ product/market fit.
But my startup past is why I look at ideas / unit economics above all else as a first step, because if that works out, then many teams can run with it.
In addition, it's also easier to attract top notch teammates w/ product/market fit.
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