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How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

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Re: How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

#81

Post by briandear »

crikli wrote: post #21

So...to me this article illustrates the dramatic differences in objective and mentality between bootstrappers and VCs. This VC looks at this idea, figures out that in order to own the market and make $fuckton, they'd have to spend > $fuckton. Decides to bail. As a bootstrapper of businesses, I look at this case study and go "well yeah of course it'll take $fuckton because you're haven't focused on a narrow enough nic…

Using that case study, getting $21k in revenue for $80k in expense makes zero sense ever. That doesn’t even count the actual startup cost to build the platform or even get the “talent” to deliver the lessons — which is an expense not to be ignored. So the real $80k is probably much higher because for a marketplace to exist, you have to attract buyers and sellers. And a 30% commission means that music teachers would have to sell at 30% more than they would for their own off-marketplace customers. And, unlike app sales, 1-1 music lessons don’t scale, so that 30% is a real hit because they can’t really make it up in volume: 1 hour can only yield, 1 hour of lesson for one person. I know this problem well: I founded a therapy marketplace that has been surviving for 10 years now, but it took 8 years to actually become profitable and still, just barely.

Re: How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

#82

Post by arminiusreturns »

anstosa wrote: post #23
crikli wrote: post #21

So...to me this article illustrates the dramatic differences in objective and mentality between bootstrappers and VCs. This VC looks at this idea, figures out that in order to own the market and make $fuckton, they'd have to spend > $fuckton. Decides to bail. As a bootstrapper of businesses, I look at this case study and go "well yeah of course it'll take $fuckton because you're haven't focused on a narrow enough nic…

Ansel from PSL here. Absolutely. Because we're venture-backed and are spinning out venture-backed companies, we are limited to billion dollar ideas. It's not uncommon for us to kill great ideas that could "only" make tens of millions of dollars. We're hoping through blog posts like this and other means to be able to share more of them because we want those companies to exist, we're just not set up to create them!

Does this apply to the vast majority of VC's? So if I want to do a yc pitch it needs to be able to have unicorn level potential? Who would you target as investors for tens of millions ideas if so? I'm guessing a larger focus on angels and IB's after a more proven, traditional profit model is shown (often a much different model than VC-startup profit model).

Re: How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

#83

Post by treebornfrog »

arnaudsm wrote: post #9

It's crazy how markets saturate quickly online. You really need a large marketing budget and/or network effect to triumph nowadays, product quality is not differentiating enough. I am scared for the future, this will inevitably lead in harder-to-break monopolies. I worked for an entire year on a next-gen comparison engine (picked.cc if you want to check it out), and even with exciting user feedback and crazy conversi…

Neat idea, I created something similar years ago but didn't know how to market it.

What's your strategy to get users?

Re: How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

#84

Post by chrisfrantz »

I love this, I follow a similar method. One thing that immediately stood out is the Instagram ad creative is poor. The copy is overly technical and there’s no call to action. The image is a basic stock photo.

Spending 5 minutes in Biteable [1] or a similar service would kick out much better ad creative that would likely have yielded substantially better results.

Another point of contention is around the revenue model. Sure you could pay 4x to drive initial growth, but if you keep those customers longer than a month, the LTV could outpace the CAC.

Finally, all those efforts work together. Spend $20K on google ads and referrals will go up, you can test conversion funnels since you have traffic, back links will appear that will help your organic SEO in the long term, audiences for retargeting on Facebook will fill up, etc.

However, the conclusion of the author is one I agree with in the long term. Tech will solve for this. Hololens and Quest are close, the next generation will probably solve it across multiple platforms.

[1] I work for Biteable.

Re: How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

#85

Post by nautilus12 »

awb wrote: post #48
anstosa wrote: post #23

Earlier quoted context omitted.

Ansel from PSL here. Absolutely. Because we're venture-backed and are spinning out venture-backed companies, we are limited to billion dollar ideas. It's not uncommon for us to kill great ideas that could "only" make tens of millions of dollars. We're hoping through blog posts like this and other means to be able to share more of them because we want those companies to exist, we're just not set up to create them!

> we are limited to billion dollar ideas How did matchmaking for music lessons get into the discussion as a billion dollar idea? Referrals for tutoring in any subject (math, reading, music, etc.) would be a bigger market, but even then it might not be a $1B company.

> How did matchmaking for music lessons get into the discussion as a billion dollar idea?

This is a near perfect example of how "big business" can kill the spirit of entrepreneurship.

The idea (or VC cocaine induced fever dream) that every idea should be a billion dollar idea is exactly whats wrong with the current tech climate.

Re: How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

#87

Post by snowwrestler »

anstosa wrote: post #23
crikli wrote: post #21

So...to me this article illustrates the dramatic differences in objective and mentality between bootstrappers and VCs. This VC looks at this idea, figures out that in order to own the market and make $fuckton, they'd have to spend > $fuckton. Decides to bail. As a bootstrapper of businesses, I look at this case study and go "well yeah of course it'll take $fuckton because you're haven't focused on a narrow enough nic…

Ansel from PSL here. Absolutely. Because we're venture-backed and are spinning out venture-backed companies, we are limited to billion dollar ideas. It's not uncommon for us to kill great ideas that could "only" make tens of millions of dollars. We're hoping through blog posts like this and other means to be able to share more of them because we want those companies to exist, we're just not set up to create them!

Have you found many billion-dollar ideas by following this ad-testing methodology?

Re: How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

#88

Post by briandear »

IAmGraydon wrote: post #63
lowdose wrote: post #3

So these guys have to read up on some articles about multisided marketplaces which what they were testing. Starting a matching platform between consumers and teachers is not a feasible plan because this is a longer term relationship and a platform is easily cut out. A platform like uber works because nobody has a regular cab driver. Supply and demand matching is also terrible for dog walking platforms. Don't spend ti…

Not only that, I’m amazed that VCs call the awful ads they tested “marketing”. What they created is simple, uncompetitive, uncreative advertising, and that kind of thing doesn’t stand a chance in today’s world. Of course it performed terribly. Marketing today takes just as much creativity as the product you’re selling. Actually, I would argue it takes more in many cases. It’s like building a race car and putting low…

If the ads were higher quality, the click through would improve but conversions wouldn’t. So it would drive up the acquisition costs even more — further making the point that this was a loser idea.

Re: How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

#89

Post by briandear »

nunez wrote: post #47
lowdose wrote: post #3

So these guys have to read up on some articles about multisided marketplaces which what they were testing. Starting a matching platform between consumers and teachers is not a feasible plan because this is a longer term relationship and a platform is easily cut out. A platform like uber works because nobody has a regular cab driver. Supply and demand matching is also terrible for dog walking platforms. Don't spend ti…

How do you explain Angie’s List then?

I don’t have a regular “Sheetrock repair guy.”

Re: How to Kill a Startup Idea with Google Keyword Planner and AdWords: A Case Study

#90

Post by briandear »

chrisfrantz wrote: post #84

I love this, I follow a similar method. One thing that immediately stood out is the Instagram ad creative is poor. The copy is overly technical and there’s no call to action. The image is a basic stock photo. Spending 5 minutes in Biteable [1] or a similar service would kick out much better ad creative that would likely have yielded substantially better results. Another point of contention is around the revenue model…

> that would likely have yielded substantially better results

No. It would yield higher click through, but not necessarily a higher conversion rate. It would actually yield a lower conversion rate because a lot of creative ads get curiosity clicks rather than people dying for the product on offer.

Let’s just pretend though in fantasy land that double the clicks meant double the conversion— the business would still be operating at a huge loss.

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