Lecture 3: Talking to Users

Summary of Sam Altman's Class on: http://startupclass.samaltman.com/courses/lec04/

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Email: luke@ghacklabs.comTwitter: @GHackLabsWebsite: www.ghacklabs.com

What You Shouldn't Do• The novice approach is thinking, "I

have this really great idea, I don't want to tell anyone about it.

• I'm going to build, build, build and then going to maybe tell one or two people and then I'm going to launch it on TechCrunch or somewhere like that, and then I'm going to get lots of users."

• What really happens is because you didn't get a lot of feedback, maybe you get a lot of people to your site, but no one sticks around because you didn't get that initial user feedback.

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What You Should DoImmerse yourself in the industry. What this means:

• One: become a cog in that industry for a little bit. Take 1-2 months working in that industry, see how it works. The advantage, you will be able to see and exploit inefficiencies.

• Two: Identify customer segments. Choose a small market within a big market. Don't start with everyone first.

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You Have to Be an ExpertYou should be so obsessed that you want to know what everybody in that

space is doing. Google searching competitors, click on every single link from 0 to 1000. You should be come an expert in your industry. Their should be no

doubt when you are building this that you are the expert = customer trust. 4

Use Surveys to Validate Your Idea

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Here's a great link that explains it: http://www.forentrepreneurs.com/surveys/

User Surveys - Sean Ellis,

The 40% Rule.Objective metrics, using qualitative data:

How would you feel if you could no longer use this product?

1. Very disappointed 2. Somewhat disappointed 3. Not disappointed 4. N/A

If 40% of the people surveyed said they will feel Very Disappointed, you have a winner.

Here's the link to the full article: http://www.startup-marketing.com/using-survey-io/

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How do you get users

• The first users should be obviously people you are connected with.

• You and your cofounder should be using it, your mom and dad should be using it, and you're friends and coworkers should be using it.

• Beyond this, you want to get more user feedback.

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Getting More Users: HomeJoy Case Study

• Went to a street fair, tried to chase people down to get them to do a booking = fail.

• It was a hot and humid day. People were gravitating towards the food & drinks area. An idea.

• They decided to hand out free bottles of iced water. People kept coming for water.

• People felt obliged to book a cleaning. The result, the majority of the people, kept using their service after = a big win.

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The 3 Types of Growth• Sticky Growth: Is trying to get your users to come back and pay you

more, or use your more.

• Viral Growth: Is when people are talking about you. So you use a product, you really like it and you tell ten other friends, and they like it.

• Paid Growth: You can use money to buy growth, As an example, Google Adwords.

Extra Reading Viral Coefficient: http://andrewchen.co/viral-coefficient-what-it-does-and-does-not-measure/

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Now you have users. What's next?

The first thing you should do is make sure there is a way for people to contact you. Ideally you should have a phone with voicemail.

Next, what you should be doing is going out to your users and talking to them. Get away from your desk, and just do it.

This is where it is going to teach you what features you need to completely change, get rid of, or what features you need to build.

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The Honesty CurveSome people will just lie to you. These are degrees of separation from you, and this is their level of honesty.

• Your mom will be honest and proud.

• Friends will be pretty honest too.

• Random people, they don't know who you are.

• Honesty differs between free and paid products for all people.

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The Frankenstein

ApproachBeware. Great you talked to all of these users and they gave you a

bunch of new features. Don't build straight away. Figure out what is the

actual problem behind their suggestion. This means, more

testing.

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Sustainable Growth Don't be a leaky bucket. The money you put in has to

have a good return of investment.

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CTV/ LTV• CLV, some people call it TLV, is

a customers lifetime value. It is basically the net revenue that a customer brings in the door over a period of time

• A 12 month CLV is how much net revenue a customer pays you over 12 months.

• At period zero, you are at 100%.

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Customer Segments• Cohort is another name for customer segments.

• For example, you might look at female versus male cohorts in Atlanta, Georgia versus people in California cohorts. The most common, is monthly.

• So in March 2012, 100% of the people are using your product. Now one month later 50% of the people might come back. Expect some initial drop off.

• Over time, what you want is your curve to flatten out. These become your CORE customers. These are the ones that will stay with you over time.

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Program Mechanics = Referral Programs

The most common is $10 for $10. You get $10 if you invite your friends, and they use it and they get $10. Extra Reading Upsell

Strategy: https://www.groovehq.com/support/upsells 16

Have a Realistic Growth Plan

What this means is an optimistic but realistic way to grow the business?

It might look like something like this, in week one you just want one user, in week two you want maybe two users and so forth. And you keep doubling up.

It is when you grow it to 100 users a week, that's when you need growth strategies to start working.

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A Pivot

If you have 100 users per week and your product has not grown in 4 weeks, it might be time to consider a pivot.

Extra Reading on Product Market Fit: http://www.startup-marketing.com/the-startup-pyramid/

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