In this package, Gabriel share’s his views on an area critical to startups: traction.
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Most startups don't fail at building a product. They fail at acquiring customers. The biggest mistakes I see over and over again when startups try to get traction are as follows (in order of importance). They don't pursue traction in parallel with product development. The benefits of parallel customer acquisition cannot be understated.
If you ask an angel investor what they look for in a company, they'll usually rattle off a list of things that describe the ideal angel investment: huge market, great team, superior product, sustainable competitive advantage, etc. Trouble is, even if your startup has those things (and most don't), you still have to convince each investor.
Many entrepreneurs think they are building an empire or sparking a powder keg, when they are really trying to start a movement. I think beginning with the wrong expectation will greatly increase your chances of failure. You need to be prepared for the movement lifestyle.
When you're just starting out, a lot of things can move the needle. That's why I think the right approach to getting initial traction is to intelligently try a bunch of traction verticals, see what looks promising, and focus there. When I first launched DuckDuckGo, I showed up at a local Philly startup event and pitched it.
There was a great post last week by Blake Jennelle that said you should pivot if your startup feels that you are constantly fighting an uphill battle. The premise is that if you have a really good idea+execution you'll get product/market fit, and "gravity" will do the rest.
I watched Moneyball last night and saw a lot of parallels to startup land, but tying them all together was the notion of competing effectively by changing the game. In the (true) story the Oakland A's competed against big money teams by leveraging undervalued players to achieve real world gains (focusing on runs instead of wins, though which of course correlate with wins).
In my first startup, I generally had analysis paralysis. I moved slowly, and hardly ever reacted to things in real time. I strictly adhered to what I thought was critical path. I didn't realize that by doing so I was probably passing by countless micro opportunities that could help my startup get traction.
The second major thing I've learned from interviewing people on getting traction is that initial traction can happen in a lot of different ways, often unpredictably. (The first thing was that entrepreneurs usually have movement ideas even though they often think they have powder keg or empire ideas.)
Another often overlooked viral loop concept is cycle time. That's the average time it takes to complete one loop, e.g. the cycle from sending out an invite to the person who was invited sending out an invite. In other words, Viral cycle time is the wavelength of viral loops.
When you're serious about engineering a viral loop, you meticulously measure each loop component, and the overall k-factor. A factor greater than one means you are in exponential growth territory. However, you can see exponential growth with an average k-factor less than one. I've seen it happen several times now, e.g.
DuckDuckGo was named one of TIME's 50 Best Websites of 2011. I thought other startups might want to know how this awesome inclusion came to be. I'm sure each story is slightly different, but here is one data point for you.
The other day I gave a presentation with Steve Welch on the use of social media in politics. Steve was was walking through (live) the process of creating a Facebook ad. He started targeting the ad by location and interest, and the number of potential people he was reaching began decreasing on screen (Facebook tells you dynamically).