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5 questions you really need to ask about startup growth
Mobile startup expert Olga Steidi gives an insightful list of the right questions to ask and the ways to implement growth in your startup
Travelling across four Southeast Asian countries (Indonesia, Singapore, Malaysia and Thailand) in the last month, I met early-stage CEOs to talk about the way they see internationalisation and growth for their startups. From incubators and company builders to stand-alone startups, every one of them puts growth in the spotlight and understands how critical it is to focus on numbers.
Unfortunately, many of them ask (mainly themselves) the wrong questions when it comes to growth. To help founders avoid this trap, I’ve collected these top five questions they have asked me about growth and explained what questions they need to focus on.
1. I have 400 downloads, how to get more?
Right question: “What are the assumptions I am validating and can I validate them with the current numbers?”
Everything you think about your product-market fit, business model and target group at the beginning of every venture is an assumption. I know it takes a lot of guts to agree that you might be wrong, but who said building a startup was easy.
Assumptions come in different forms and here are some of them:
– this app is for independent women, 25–45 years old living in big cities (this is an assumption)
– I build a better product than my competitors because… (this is also an assumption because usually you haven’t asked users yet
– The market is ready for a disruptive technology like mine, because… (still an assumption, till you show me how your numbers bit the market trend).
To validate these assumptions usually even 100 users is enough. Break your alpha in phases (for example two weeks), introduce new users to the system in every phase and see how you prove or destroy your assumptions. Tweak the product on each phase, be fast to catch and adapt to the numbers you are seeing.
You will know where to get more users as soon as you clearly understand who they are and what are their behaviour patterns.
2. How to create a dashboard for KPIs?
Right question: What is my one and only KPI to track?
If you need a dashboard for your early-stage startup, it means you have more than three KPIs to track.
Start with one.
Boil it down. What is your sacred KPI? And be careful, you need to make sure this KPI is connected to your business. For a taxi app, it will be the number of orders, not the number of downloads. Same work for social apps, count content that was generated, not the users.
Make sure use you use the same names for events and KPIs in different tools and they are triggered by the same logic.
In the very beginning, focus on maximum three numbers and add them later when you know by heart how the initial three KPIs affect your business. Your team members should know how these three KPI grow day by day and how their common effort affects the company wealth.
3. How to make users share information about my product?
Right question: How do users that share my product describe it and why do they feel the urge to share?
We’ve all heard about viral loops and maps and that for organic growth we need to make sure that users share the information. The common mistake every first-time startup founder makes is concentrating on the media, not on the message.
Ask yourself first: How many users actually like the product so much that they have an urge (and I mean it when I say ‘urge’) to tell about it to their friends, coworkers and strangers?
Even if you have only two out of a 100, listen to them and understand what specific phrase they use to describe your product. Write down one specific sentence they say/write to explain your product. You will be surprised.
The first indicator that you are in trouble is the lack of such a simple phrase.
If it takes a user more than one sentence to tell a friend why they need to use your product — the probability that they will share is extremely low.
Then look at the need behind the sharing process.
Why do these users feel the need to share your product? What egoistic or practical needs come in place?
At the end of this exercise, you will understand how to tweak the message and create a need to share so more and more users spread the word about your service. Where do they do that? They will tell you.
4. How many downloads/DAU do I need to raise seed/round A etc?
Right question: “How to make your users stay and love your product, so your retention rate speaks for itself and attracts the right set of investors?”
Look at questions one and three and the answers. Trust me: if you know, why significant amount of your users stick, and why and how they share your product and can replicate this process over and over again and create value for your users, you are golden.
Every investor that sees high retention numbers will want to invest in you, you just need to understand with whom you want to work. Some investors have a specific retention rate in mind based on industry standards and learnings from portfolio companies. Don’t hesitate to talk to these portfolio companies to see where you stand before talking to an investor.
To prove retention you need time, so take it into account before bootstrapping a company.
5. What hack to use
Right question: “How should my growth process look like?”
Repeat after me: “Growth is a process, not a hack; growth is a process, not a hack.”
After repeating this statement 20 times out loud to your whole team, sit down and describe your growth process to your team. Who is in charge of what KPI (I usually recommend that for every KPI you are tracking, you find an owner), how do you track the numbers, how do you validate assumptions, how do you prioritise growth areas, design and build features, etc.
Tweak not only the product, but the process itself to achieve better results.
Structure creates room for creativity and ‘hacks’ will fall in place when you know what, with whom and how you want to achieve growth.
This article by Olga Steidi originally appeared on e27, a Burn Media publishing partner.