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Lecture 6: How to Start a Startup

startupclass.samaltman.com

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Re: Lecture 6: How to Start a Startup

#41

Post by diminish »

Right after minute 32:00 Alex Schultz says "Facebook was viral via word of mouth because of the awesome product". Is this really true? I think "Use your email login and password and invite your contacts" namely contact import was the viral technique. The payload and frequency was high and the CR was ok.

I remember Facebook growth days somewhat well. People logged in with their emails and passwords were asked to provide their email provider passwords (to be fair, somewhat deceivingly) to invite everyone in their addressbook to come to Facebook. And I remember quite well some people didn't event notice the difference between whether they were asked for a Facebook password or their email provider password, and didn't really understand what was asked by inviting their friends.

Re: Lecture 6: How to Start a Startup

#42

Post by alain94040 »

oretoz wrote: post #37

I still haven't got my head around the 'growth' thing is how is it applicable to software/hardware startups that are NOT developing products for mass market. For example, if someone in telecom industry creates a product that can only be sold to operators. The time it takes to convert an engagement can be upwards of 6 months. In such cases, what would be a good growth metric with which to measure your progress? Now, w…

What you are describing is enterprise sales. I co-founded one of those. Early traction is easy to spot:

- at first, you can barely get first meetings with any potential customers. You track how many companies even agreed to meet with you once.

- a few months in, you get your hopes up (incorrectly - usually). A few companies you met are talking about doing an evaluation of your product.

- another few months go by, just one of all your contacts moved to do an evaluation, but then they postponed their purchasing decision to the next fiscal year.

- still no revenue, but now you have a funnel: x prospects in first meeting, y prospects in second meeting, z prospects in eval, 0 prospects have bought. Keep tracking those numbers and the trend will be clear.

Re: Lecture 6: How to Start a Startup

#43

Post by oretoz »

LukaAl wrote: post #40
oretoz wrote: post #37

I still haven't got my head around the 'growth' thing is how is it applicable to software/hardware startups that are NOT developing products for mass market. For example, if someone in telecom industry creates a product that can only be sold to operators. The time it takes to convert an engagement can be upwards of 6 months. In such cases, what would be a good growth metric with which to measure your progress? Now, w…

I've been a manager working for telco companies so I know a bit about it. Usually the backlog is a good metric but it works from when you have already sold the product. Usually to assess what happens before the sales team is asked to assess the probability of closing the deal and discount the deal size by that probability. An increase of the scope (and of the total value) or of the probability to close the deal repre…

Thanks for the detailed answer. I suppose tracking stages of sales pipeline is a good metric as you and several others have mentioned. Much better than being completely in dark.

Also by 'backlog', I assume you meant product backlog (e.g. features remaining) or something in the sales funnel?

While tracking the sales funnel is great to use as an indicator of progress, it is not great as a decision-making heuristic internally (e.g. for product features) as pg mentions in his essay 'Startup=Growth'. I suppose product backlog is a good metric for such cases.

Tldr; use sales funnel to track business side and feature backlog internally.

Because of the faster feedback cycles, the web/mobile app world can use the same metric to track internal and external progress.

Re: Lecture 6: How to Start a Startup

#44

Post by sobriquet »

diminish wrote: post #41

Right after minute 32:00 Alex Schultz says "Facebook was viral via word of mouth because of the awesome product". Is this really true? I think "Use your email login and password and invite your contacts" namely contact import was the viral technique. The payload and frequency was high and the CR was ok. I remember Facebook growth days somewhat well. People logged in with their emails and passwords were asked to provi…

FWIW Facebook tore through my college in a couple weeks way before they had any type of inviting mechanisms. So PM fit was definitely there and virality was all word of mouth.

Re: Lecture 6: How to Start a Startup

#45

Post by LukaAl »

oretoz wrote: post #43
LukaAl wrote: post #40

Earlier quoted context omitted.

I've been a manager working for telco companies so I know a bit about it. Usually the backlog is a good metric but it works from when you have already sold the product. Usually to assess what happens before the sales team is asked to assess the probability of closing the deal and discount the deal size by that probability. An increase of the scope (and of the total value) or of the probability to close the deal repre…

Thanks for the detailed answer. I suppose tracking stages of sales pipeline is a good metric as you and several others have mentioned. Much better than being completely in dark. Also by 'backlog', I assume you meant product backlog (e.g. features remaining) or something in the sales funnel? While tracking the sales funnel is great to use as an indicator of progress, it is not great as a decision-making heuristic inte…

What do you mean by backlog depends a lot on what you are selling: - If it is software, usually you sells it in stage or you have to deliver customization/integration at a later stage: - If it is SaaS is like before but you have also the following months of license (they usually ask for a minimum guaranteed lifetime for the SaaS); - If it is hardware for internal use usually it is installed in stage, so you could have your sales spread over few months/years. - If it is something they resell, you will have the projection of sales. _ If it is a service, you have the service not yet delivered as backlog. Obviously they can cancel when they want, but it is still your backlog until you deliver it or it is cancelled.

Re: Lecture 6: How to Start a Startup

#46

Post by diminish »

sobriquet wrote: post #44
diminish wrote: post #41

Right after minute 32:00 Alex Schultz says "Facebook was viral via word of mouth because of the awesome product". Is this really true? I think "Use your email login and password and invite your contacts" namely contact import was the viral technique. The payload and frequency was high and the CR was ok. I remember Facebook growth days somewhat well. People logged in with their emails and passwords were asked to provi…

FWIW Facebook tore through my college in a couple weeks way before they had any type of inviting mechanisms. So PM fit was definitely there and virality was all word of mouth.

Yes but right after school expansion, it was not only WOM.

Re: Lecture 6: How to Start a Startup

#47

Post by alexorig »

soneca wrote: post #32
npalli wrote: post #13

Enjoyed the talk. Key takeaway for me was the need for explicit sequencing of product market fit and growth hacking (i.e, don’t bother with growth hacking if you don’t have PM fit). I suppose it is obvious intuitively, but demonstrating PM fit via retention metrics (“make sure your retention flat lines at the appropriate level”) was an interesting take. It can be easy to create work and activity doing growth hacking…

Obvious as it seems, I never got a good answer like that from "experts" about how to define PM fit. There were those guys talking about lean startup, measure everything and stuff; but when come to this crutial question they were all "well, you will know when you have PM fit" or an arbitrary question with an arbitrary answer "ask your clients how disappointed they would be if your startup would shut down now; if 60% a…

thank you very much - really appreciate the kind words!

Re: Lecture 6: How to Start a Startup

#48

Post by alexorig »

diminish wrote: post #46
sobriquet wrote: post #44

Earlier quoted context omitted.

FWIW Facebook tore through my college in a couple weeks way before they had any type of inviting mechanisms. So PM fit was definitely there and virality was all word of mouth.

Yes but right after school expansion, it was not only WOM.

you guys are totally right (in the growth tactics I definitely tell you lots of the non-organic stuff). That being said the idea here is "how to start a startup" and so I was trying to focus on what got Facebook the first 50million users not the next 1.3Billion and how we think about growth for products at Facebook and how I think about it when advising companies. It's always cool to see the different comment threads (one saying I'm too optimized for big company growth, one saying I'm talking about too early, I am hoping that means I pitched it about right :) )

Re: Lecture 6: How to Start a Startup

#49

Post by alexorig »

dirtyaura wrote: post #26
drinkzima wrote: post #24

This is a great talk, but I can't help but think this is tailored to bigger companies than YC-application stage start-ups. Alex spends lots of time talking about the distinction between power users and marginal users, which is incredibly valuable advice for the AirBnBs, Dropboxes, Facebooks, etc but a different problem set than the 'normal' start-up. For emerging product-market fit companies, your power users are you…

Great talk, but I agree that like a lot of startup advice out there, it is for companies that have a product-market fit. I've been thinking why the startup community has so few talks about product design. We have a lot of advice about tech stacks, growth hacking, rising funding, building a team, even some about customer research, but surprisingly little about design. Yet, product design is one of the key activities t…

you are spot on. I was directly focused on the point in Sam's list (idea, product, team, execution) where you decide when to really focus on the execution phase of scaling and then what to do when you hit it. I think it's easy to over-focus on product design though, big companies are really bad at this, they produce polished products with great user flows and so on but miss the big win. Products like craigslist/eBay/Google weren't really great designed products to start with, they just solved a real need. As such I think Peter T's talk is really good on getting to product market fit.
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