- “Traction is basically quantitative evidence of customer demand. So if you’re in enterprise software, initial traction may be two or three early customers who are paying a bit; if you’re in consumer software the bar might be as high as hundreds of thousands of users. … It’s the Supreme Court definition of porn. You’ll know it when you see it.” - traction is growth. The pursuit of traction is what defines a startup. - Most founders only consider using traction channels they’re already familiar with or think they should be using because of their type of product or company. This means that far too many startups focus on the same channels (search engine marketing, public relations) and ignore other promising ways to get traction. - It’s hard to predict the channel that will work best. You can make educated guesses, but until you start running tests, it’s difficult to tell which channel is the best one for you right now. - You probably won’t have a bunch of equally good distribution strategies. Engineers frequently fall victim to this because they do not understand distribution. Since they don’t know what works, and haven’t thought about it, they try some sales, BD, advertising, and viral marketing—everything but the kitchen sink. That is a really bad idea. It is very likely that one channel is optimal. Most businesses actually get zero distribution channels to work. Poor distribution—not product—is the number one cause of failure. If you can get even a single distribution channel to work, you have great business. If you try for several but don’t nail one, you’re finished. So it’s worth thinking really hard about finding the single best distribution channel.” - Almost every failed startup has a product. What failed startups don’t have are enough customers. Marc Andreessen, founder of Netscape and VC firm Andreessen-Horowitz, sums up this common problem: “The number one reason that we pass on entrepreneurs we’d otherwise like to back is their focusing on product to the exclusion of everything else. Many entrepreneurs who build great products simply don’t have a good distribution strategy. Even worse is when they insist that they don’t need one, or call their no distribution strategy a ‘viral marketing strategy.’” - traction and product development are of equal importance and should each get about half of your attention. This is what we call the 50% rule: spend 50% of your time on product and 50% on traction. This split is hard to do because the pull to spend all of your attention on product is strong, and splitting your time will certainly slow down product development. - To reiterate, the biggest mistake startups make when trying to get traction is failing to pursue traction in parallel with product development. Many entrepreneurs think that if you build a killer product, your customers will beat a path to your door. We call this line of thinking The Product Trap: the fallacy that the best use of your time is always improving your product. In other words, “if you build it, they will come” is wrong. - “One of the most common types of advice we give at Y Combinator is to do things that don’t scale. A lot of would-be founders believe that startups either take off or don’t. You build something, make it available, and if you’ve made a better mousetrap, people beat a path to your door as promised. Or they don’t, in which case the market must not exist. Actually startups take off because the founders make them take off… The most common unscalable thing founders have to do at the start is to recruit users manually. Nearly all startups have to. You can’t wait for users to come to you. You have to go out and get them.” - the way you get traction will change. After your growth curve flattens, what worked before usually will not get you to the next level. On the flip side, traction channels that seemed like long shots before might be worth reconsidering during your next iteration of Bullseye. - The better your prospective investors understand what you’re doing, the less traction they will need to see before they invest because they are more likely to extrapolate your little traction and believe it could grow into something big. On the other hand, those investors that have little real-world experience within your industry may find it hard to extrapolate and may demand more traction initially before they invest. - We strongly believe that many startups give up way too early. A lot of startup success hinges on choosing a great market at the right time. Consider DuckDuckGo, the search engine startup that Gabriel founded. Other search startups gave up after two years: Gabriel has been at it for more than six. - “Over time, all marketing strategies result in shitty click-through rates.” (Click-through rate refers to the response rate of a marketing campaign.) What this means is that over time, all marketing channels become saturated. As more companies discover an effective strategy, it becomes crowded and expensive or ignored by consumers, thus becoming much less effective. When banner ads first debuted, they were receiving click-through rates of over 75%! Once they became commonplace, click-through rates plummeted. - Constantly running small traction tests will allow you to stay ahead of competitors pursuing the same channels. As Andrew puts it: “The … solution to solving the Law of Shitty Click-Throughs, even momentarily, is to discover the next untapped marketing strategy… If you can make these strategy work with a strong product behind it, then great. Chances are, you’ll enjoy a few months if not a few years of strong marketing performance before they too slowly succumb.” - the simple act of preparing to meet with your mentor(s) on a regular basis is a forcing function that compels you to think more critically. - Out of sight, out of mind. Startups generally don’t think of things like speaking engagements because they are usually out of their field of vision. Some founders refuse to seriously consider channels they view negatively, like sales or affiliate marketing. Just because you hate talking on the phone doesn’t mean your customers do. Bias against schlep – things that seem annoying and time consuming. Channels like business development and trade shows often fall in this category. - “I’ll bet you a lot of your competition will refuse to even try these channels. And if that’s true, that’s even more reason to go try those channels! It can almost be a competitive advantage (at least a temporary one) if you can acquire customers in channels that others cannot, or refuse to try. That’s more interesting than duking it out with AdWords competitors in positions 1–3.” - A viral loop in its most basic form is a three-step process: A user is exposed to your product. That user tells a set of potential users about your product. These potential users are exposed to your product and become users themselves. - Inherent virality occurs when you can only get value from a product by inviting other users. For example, if your friends don’t have Skype, the application is worthless. Apps like Snapchat and WhatsApp also fall into this category. This type of virality comes with the advantage of “network effects,” where the value of the network increases as more people get on it. - Other products grow by encouraging collaboration. In this case, the product is still valuable on its own but becomes more so as you invite others. Google Docs is useful alone, but it is far more valuable when used collaboratively. - Another common case is to embed virality into communications from the product. Hotmail put a “Get a free email account with Hotmail. Sign up now.” as a default signature and Apple similarly appends “sent from my iPhone.” As a result, every message sent spreads the word about the product. - Products can also incentivize their users to move through their viral loops and tell others about the product. Dropbox gives you more space if you get friends to sign up. AirBnB, Uber, PayPal and Gilt give you account credits for referring the product to friends. - Companies like reddit and YouTube have grown virally by using embedded buttons and widgets. - Another type of viral loop leverages social networks to attract new users to a product. In this case, a user’s activities are broadcast to their social connections; often more than once. - Shortening your viral cycle time drastically increases the rate at which you go viral, and is one of the first things you should focus on improving if using this channel. To shorten it, create urgency or incentivize users to move through your viral loops. Additionally, make every step in your funnel as simple as possible to increase the number of users that complete it. - Conversion pages work best when they use the same messaging as the invitations that preceded them. For example, if in the invitation you say so-and-so referred you to this product, you can put the exact same message on the conversion page. It really helps in both cases (invitations and conversions) to think about the psychology of the new user. - “Products that aren’t inherently viral trying to add a bunch of viral features Bad products that aren’t adding value trying to go viral Not doing enough A/B tests to really find improvements (assume 1–3 out of every 10 will yield positive results) Not understanding how users are currently communicating/sharing, and bolting on “best practice” strategies (Just add Facebook “like” buttons!) Not getting coaching/guidance from people who’ve already done it Thinking about virality as a tactic rather than a deep part of a product strategy” - For them, the direct approach is rarely the best approach. Instead, you approach obliquely. So, you find the blogs that TechCrunch reads and gets stories ideas from. Chances are it will be easier to get that blog’s attention. You pitch there, which leads The New York Times to email you or do a story about you based on the information they’ve seen on the news radar.” - Matthew’s team at [Archives.com](http://archives.com/) started with roughly 100,000 keywords. As they refined their SEM campaigns, they cut out many unprofitable terms and ran optimized, profitable campaigns with the 50,000 or so keywords that actually converted well. - “I think it’s a huge competitive advantage because, even though it can feel like tinkering or incrementalism at the time, what you’re really talking about is a major business improvement. Let’s say keywords cost 15 cents, and you’re running a website and for every click you’re able to generate 13 cents. Well if you scale that, that’s a losing business. If you improve … and you get that 13 cents to 16 cents, now all of a sudden you have something that’s more sustainable. And if you go from 16 to 20 cents, you’re looking at 25% profit margins in terms of sales minus marketing. - You can use search engine ads to test product positioning and messaging (even before you fully build it!). - Large display advertising campaigns are often used for branding and awareness, much like offline ads. Yet display advertising can also elicit a direct response, such as signing up for an email newsletter or buying a product. On the other hand, social ads are best when approached indirectly, where you build an audience, engage with that audience over time, and eventually convert them into customers. - Mike tests ads in groups of 5 and looks for places where conversions are below 10%. If that’s the case, there’s likely a mismatch between the ads and the sales page, so he either heavily tweaks or stops running them altogether. - To get started in display advertising, first understand the types of ads that work in your industry. Tools like MixRank and Adbeat show you the ads your competitors are running and where they place them. Alexa and Quantcast can help you determine who visits the sites that feature your competitors’ ads. Then you can determine whether a site’s audience is the right fit for you. - “If you have a piece of content that has high organic reach, when you put paid advertising behind that piece of content the magic happens. As more and more people see it, more and more people engage with it – because it’s a better piece of content… Paid is fundamentally only as good as the content you put behind it. And content is only as good as how many people actually see it. Content only goes anywhere if people care about it… With social, it’s word of mouth on crack. You should only employ social advertising dollars when you’ve understood that a fire is starting around your message and you want to put more oil on it. Getting that spark started is based on what you’re trying to say: startups do the opposite of this all the time where they waste tens of thousands of dollars trying to push a message that nobody cares about. With social platforms, the burden of success is on the advertiser as opposed to the platform.” - This tactic also works well with content distribution networks like Outbrain and Sharethrough. Each of these ad networks promotes your content on popular partner sites like Forbes, Thought Catalog, Vice, Gothamist and hundreds more. These native ad platforms make your content look like any other piece of (native) content on the target site. Since these sites have large audiences, using a native ad platform to target them can drive lots of engagement in just a short period of time. - “When you buy a Facebook ad, you’re buying more than just a targeted fan; you’re buying the opportunity to access that fan’s social graph. With the proper incentives, fans will share and recommend your brand to their connections.” - With over 25 million “stumblers,” StumbleUpon has a large potential userbase looking for new and engaging content. A recent case study showed that StumbleUpon was the #2 referrer of social media traffic, just behind Facebook. An interesting feature about this site is that ads don’t surround the content on StumbleUpon – they are the content. When people hit the “Stumble” button, they will be directed to a paid piece of content that looks just like any other site on the network. The downside to traffic from StumbleUpon is that its users are difficult to engage – most users are likely to click off your page as quickly as they came to it. This means you have to make sure to engage these users right away. Blog posts, infographics and video content can do well on the site. - “The problem with Uber is that there’s not a lot of search demand for it. I mean nobody searches for ‘alternatives to taxi cabs that I can hire via my phone.’ It’s just not a thing. And this is a problem with a lot of startups that are essentially entering a niche where nothing had existed previously… There’s just not search volume. What works is finding the topics and the people that will be customers and building content to attract them, rather than just finding the keywords that work in Google.” - Email marketing is one of the best channels to surprise and delight your customers. Brennan Dunn of Planscope (a project planning tool for freelancers) sends a weekly email to his customers telling them how much they made that week. Who wouldn’t want to get an email like that? Any sort of communication telling your customers how well they’re doing is likely to go over well. Patrick McKenzie calls this the “you are so awesome” email. - “I think of free tools as content (albeit, interactive content). At HubSpot, we really believe in marketing channels that have high leverage (i.e. write it or build it once – and get value forever). As such, we take a very geeky and analytical approach to marketing. We think of each piece of content (blog article, app, video, whatever) as a marketing asset. This asset creates a return – often indefinitely. - A simple roadmap to executing this technical strategy includes: Providing something of true value for free, with no strings attached. Making that offering extremely relevant to your core business. Demonstrating that value as quickly as possible.” - For business development to work, you must have a clear understanding of your company objectives. What metrics do you need to hit in order to maximize your chances of success? How can partnerships help you get there? Good BD deals align with your company and product strategy and are focused on critical product and distribution milestones. These deals should help you hit your key metrics, whether growth, revenue, or product-related. - Whether you are starting out or scaling to millions of users, business development can move the needle in any product phase. Kayak is a perfect example of this. As we mentioned, they got their first users through a key partnership with AOL. Later, they partnered with hotel chains, rental agencies, and other groups to extend their reach to new groups of customers. - “For startups that don’t have a lot of money, where you can’t just open a PPC (pay-per-click) account and start throwing darts, affiliate marketing seems to me to be a logical place to start. There’s really no guarantee on that if you spend 10k on Google AdWords you’ll make more than that. If you were to compare affiliate marketing and PPC, the advertiser assumes the risk in PPC. If you set up poorly written and poorly thought out campaigns on AdWords, you’re going to have to pay for the click whether or not your ads suck, or whether or not they’re converting well. With affiliate marketing, you get to define what the transaction or the conversion is, and you also have tools available to mitigate low quality. For instance, if someone refers an ecommerce transaction to you but the credit card is declined, the affiliate commission is zero. - “Every year there’s a new platform, new device, new something, and as somebody who’s starting a company you should consider if there’s something really cool you can do on an upcoming platform. Now obviously you can’t plan if a platform is going to be successful, but you can make some reasonable guesses based on past experiences with a company. - “Some of the most successful startups grew by making bets on emerging platforms that were not yet saturated and where barriers to discovery were low - Twitter launched nine months before SXSW in 2007 and was seeing decent amounts of traction, on the order of several thousand users. Because many of their early users were headed to SXSW, Twitter saw the conference as an opportunity to accelerate their adoption. As Evan Williams, Twitter’s co-founder said: “We did two things to take advantage of the emerging critical mass: We created a Twitter visualizer and negotiated with the festival to put flat panel screens in the hallways… We paid $11K for this and set up the TVs ourselves. (This was about the only money Twitter’s _ever_* spent on marketing.) We created an event-specific feature where you could text ‘join sxsw’ to 40404. Then you would show up on the screens. And, if you weren’t already a Twitter user, you’d automatically be following a half-dozen or so “ambassadors,” who were Twitter users also at SXSW. We advertised this on the screens in the hallways.” - As Rob said: “I think the overarching thing for marketing is startups need to try more things, and fail faster and more quickly… Trying all of this stuff and seeing what works is paramount. The tried and true approaches like Facebook and AdWords are so crowded now. People need to think about doing things that don’t scale. Early on when you’re trying to get those first 1,000 customers, you have to do things that don’t scale. You have to take more risks. - “To become a speaker you have to speak once. If you speak and you’re good, people in the audience will ask you to speak at other events. That’s just how it happens. I’ve never marketed myself as a speaker; it’s not in my bio or anything. What happens is, you speak at a conference, people see it or talk about it, and you get invited to other ones.” - People want to feel like they’re part of something bigger than themselves: that’s why you need to have a mission if you want to build an awesome community. A powerful mission gives your community a shared sense of purpose and motivates them to contribute. - From our interviews we discovered that it’s critical to foster connections among your community (through forums, events, user groups, etc.). By encouraging your users to connect around your startup, they feel more cohesive as a community and can come up with ideas that you may not think of yourself. - There are some businesses that lend themselves to doing this very well. Companies whose core function is the connecting of people are best set up to take advantage of community. Whether that’s a trade show thing, an investment thing, whatever: when a company’s underlying value is in bringing people together, and where people matter in the system, that’s where this community stuff can really take off.”