Don't grow (yet)07 Jan 2015
I could summarize this post with the following sentence:
If your focus as an early-stage founder is on growth, you're doing it wrong.
Some time ago I was listening to Paul Graham's class on How to Start a Startup when a funny comment caught my attention:
Whenever you hear somebody talk about Growth Hacks, just mentally translate it in your mind to "bullshit".
I know it caused some buzz on the internet. But I instantly knew what he was talking about.
It's not that growth isn't important. Or having a twitter account with +50K followers is useless. The idea is that when you're starting a startup your focus should be on building something people want. (ie. "Making your users happy"). Anything else you might be doing is a waste of time and resources.
Different stages of a startup
As Dave McClure summarizes on his Startup Metrics for Pirates there are several things a startup founder can focus on. Acquisition -> Activation -> Retention -> Revenue -> Referral. Startup founders usually start focusing on the first two steps (Acquisition and Activation), when they're by far the two less important. Why would you want to drive great amounts of traffic to a poorly finished product? Why would you waste an entire week tuning your landing page to give you 0.05% better conversion rate; when you might have a shit of a product. Nevertheless we constantly see founders focusing on trivial things like growing their twitter followers list, optimizing landing pages, etc.
The two most important phases on that model are Retention and Revenue. "Do my customers keep coming?" (Retention metric) directly relates to "They like my product.". "Are they paying for it?" (Revenue metric) relates to "They value my product enough." If your retention is flawed you can put 100M customers at the start of the funnel that all of them are going to flush out like in a leaky bucket.
Now, here are the bad news (or good, depending on how you want to see it): the only way to have a good retention rate is having a great product. You can apply all the super-cool growth hacking techniques you want, but at the end of the day, a good product is the one that will preserve your customers (and their money).
You don't need that many users
Unlike what seems to be a general agreement I don't think you need a huge amount of users when you're starting (regardless of the type of business, trust me). Just a small subset (10, 20 maybe) can get you off the ground and let you start testing all your hypothesis. Getting a small amount of users to get you started is easy. You just need to get out of your office and get some people to use your product. If you can't get 10/20/100 users it's not a problem of "growth hacking techniques". You must have a shitty product, that's all. Or maybe you aren't even tackling a real problem.
Plus, the first users you're going to have will be really important. You need to get to know them in deep. You'll be expending time with them, asking questions and getting valuable feedback. That's why a small and controlled subset of people will be greatly valuable: you'll know how to interact with them, what are their interests and what are their problems. As PG says:
What you need to succeed in a startup is not expertise in startups. (...) What you need to know to succeed in a startup is expertise in your own users.
Don't social-network me young kid
Now you might be thinking: "My type of business really needs a huge amount of users to be viable". I don't believe that, I think that's just an excuse. You can always zoom in your product enough to make it viable with a small subset of users. Think about Facebook. Mark wanted to create a Social Network and we all know about Metcalfe's law. But what he did was he zoomed in enough to focus on Harvard University, his own college. And he got a small subset of users he really knew: they shared his same culture, interests, age range, communication habits, etc. Once he validated his hypothesis and tuned the product he zoomed out a little bit more. Then he moved to some other Universities and re-iterated. He kept zooming out and perfecting his product with a bigger subset of users every time. The rest is history.
Focus on creating a great product. Focus on getting to know your first users. If you're spending too much time trying to "get" users (more than 5% of your time) you're doing it wrong. You're "forcing" your product. Focus, focus, focus..