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Posted on October 23, 2014 @ 10:48:00 AM by Paul Meagher
I've been recommending that anyone involved in a startup, especially a software-based startup, should be watching the lectures for the online course, How to Start a Startup, now being offerred by Y-Combinator to students at Standford. I recently had a chance to watch the 4th lecture by Adora Cheung, founder of Homejoy, who discusses ideas and strategies for early startup growth.
What I liked about this video was that she counters the myth that successful startups always add users quickly right out of the gate. Oftentimes early growth has much less ambitious goals and perhaps rightly so because if you are expecting to add large numbers of users every week then a) you might be very disappointed or disillusioned with your early progress, and b) you might be using the wrong marketing techniques to get started.
Adora talks about her goals for starting up as doubling her users every week starting with 1 user in week 1, two users in week 2, 4 users in week 3 and so on. When your growth goals are this modest early on, they seem doable and can be accomplished using low-cost localized techniques to encourage users to join. It gives you a chance to learn what works and what doesn't in your messaging and gives you a chance to personally interact with your users to better understand their motivations and desires and how they are using your product or service.
Some startups hold off on engaging in these modest attempts to gain users because they assume that a startup campaign requires a large infusion of money to get the marketing engine started. That can be a mistake when you are seeking funding because it helps to have at
least a few users on board with some trickling in on a regular basis when you ask for funding for marketing/advertising. At least you have 1) established that your product or service has a real market, 2) learned something about what promotional messaging is best to use, and 3) whether your feature set is viable so that injecting money into marketing/advertising is more likely to be a worthwhile endeavor.
There are other lessons to be learned from Adora's lecture. My main take home, however, was to have modest expectations for early growth. It does not require a large marketing budget initially to get your product or service in the hands of users. Once you get to the stage where you need to start spending money to add larger numbers of users to achieve your growth targets you will have hopefully learned many useful things about how customers think about and use your product or service and this knowledge should help to ensure that advertising dollars are well spent. If your product is sufficiently good, you may not have to spend too much on advertising if you are getting positive word of mouth. I didn't get the sense that Adora was spending too much on advertising but I could be wrong.
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