STARTUP 

READING LIST – JUNE 2012

Marketing, customer 
acquisition and sales 
Early stage marketing, marketing strategy, 
driving user engagement, consumer psychology, 
viral growth, pricing, sales, PR, blogging, content 
marketing, copywriting, search engine 
optimisation and marketing, email marketing, 
optimisation and landing pages 
 

   

 A reading pack of helpful startup articles compiled by @stevepell for personal study only. All copyright vests 
with the original authors. If you find this pack helpful you’ll be able to find any subsequent versions at 
http://sustainorcreate.com/category/startup‐reading‐list/   
Contents 
Early stage marketing ............................................................................................................................................. 5 
Focus and market segmentation – David Skok ................................................................................................... 5 
Understanding market – Chris Dixon .................................................................................................................. 6 
What customers to serve – Mark Suster ............................................................................................................. 6 
Getting started with marketing – Brant Cooper ............................................................................................... 11 
Getting started with marketing – Dharmesh Shah ........................................................................................... 13 
Marketing for early stage tech startups  – Mark Suster ................................................................................... 16 
An online marketing recipe ‐ KISSmetrics ......................................................................................................... 20 
Naming your startup– Chris Dixon .................................................................................................................... 31 
Underhyping your startup – Chris Dixon ........................................................................................................... 32 
Both sides of the marketing equation – Chris Dixon ......................................................................................... 32 
Platform distribution risks – Chris Dixon ........................................................................................................... 33 
MVP to landing page – Ash Maurya ................................................................................................................. 34 
Avoid the launch – Eric Ries .............................................................................................................................. 40 
Fred Wilson on marketing – Fred Wilson .......................................................................................................... 43 
The role of marketing – Rand Fishkin ............................................................................................................... 46 
The 5 Minute Guide To Cheap Startup Advertising – Rob Walling ................................................................... 51 
Marketing strategy ............................................................................................................................................... 57 
Pick Your Early Beta Customers Very Carefully– Ben Yoskovitz ........................................................................ 57 
How to get your first 1,000 users – Vinicius Vacanti ........................................................................................ 58 
1000 true fans – Kevin Kelly .............................................................................................................................. 60 
10 obvious strategies to ruthlessly acquire users ‐ Andrew Chen ..................................................................... 65 
10X Your Business – Elad Gil ............................................................................................................................. 67 
How to bring a product to market – Nivi / Sean Ellis ........................................................................................ 69 
Marketing science Q&A with Sean Ellis – Nivi / Sean Ellis ................................................................................ 95 
Pace of marketing change – Sean Ellis ............................................................................................................. 97 
Startup marketing (Sean Ellis) – Nivi ................................................................................................................ 98 
The 10x product launch – Ash Maurya ........................................................................................................... 101 
Marketing is hard – Rand Fishkin ................................................................................................................... 106 
Inbound marketing – David Skok .................................................................................................................... 107 
Marketing to match the channel – Steve Blank .............................................................................................. 110 
AARRR by business model – Brant Cooper ...................................................................................................... 113 
Content targeting is no match for persuasion architecture ‐ Mariel Bacci ..................................................... 115 
Persuasion architecture in action – Mariel Bacci ............................................................................................ 117 

1 
 
 Founders Make the Best Startup Marketing Leaders – Sean Ellis ................................................................... 119 
Growth hacking – Sean Ellis ............................................................................................................................ 121 
Customer feedback ‐ Andrew Chen ................................................................................................................. 122 
Lessons from the casino industry ‐ Andrew Chen ........................................................................................... 125 
Driving user engagement ................................................................................................................................... 127 
Product distribution (Gaining user traction) – Peter Thiel (Blake Masters) .................................................... 135 
Getting traction – Gabriel Weinberg .............................................................................................................. 181 
Optimising the conversion funnel – David Skok .............................................................................................. 151 
Big picture customer development – Sean Ellis .............................................................................................. 119 
Engaging new users – Chris Dixon .................................................................................................................. 183 
Demand harvesting – Sean Ellis ...................................................................................................................... 184 
How cost of customer acquisition kills startups – David Skok ........................................................................ 135 
Value of a user ‐ Andrew Chen ........................................................................................................................ 135 
Social network marketing – Andrew Chen ...................................................................................................... 131 
Facebook click to action – Brian Solis ............................................................................................................. 127 
Cost of customer acquisition – David Skok ..................................................................................................... 135 
Measuring user engagement ‐ Andrew Chen ................................................................................................. 185 
Paying to acquire users – Sean Ellis ................................................................................................................ 170 
Cost per acquisition ‐ Andrew Chen ................................................................................................................ 151 
Building networks – Chris Dixon ..................................................................................................................... 185 
The cardinal sin of community management – Eric Ries ................................................................................ 189 
Consumer psychology ......................................................................................................................................... 193 
The psychology of fear (and conflict) – Peter Thiel (Blake Masters) ............................................................... 193 
People always stay the same ‐ Andrew Chen ................................................................................................. 206 
25 reasons users STOP using your product – Andrew Chen ............................................................................ 210 
10 things about people – Cindy Alvarez .......................................................................................................... 213 
Why fear is a marketers best friend – KISSmetrics ......................................................................................... 213 
What jobs are users hiring your product to perform – Chris Dixon ................................................................ 216 
Viral growth ........................................................................................................................................................ 218 
Viral branding versus viral action ‐ Andrew Chen ........................................................................................... 218 
Viral loops ‐ Andrew Chen ............................................................................................................................... 220 
Engagement loops – beyond viral – Eric Ries .................................................................................................. 223 
Viral marketing is not a marketing strategy ‐ Andrew Chen .......................................................................... 227 
Ways to achieve viral growth – Vinicius Vacanti ............................................................................................ 229 
Viral marketing – David Skok .......................................................................................................................... 232 

2 
 
 Making content go viral – Mark Suster .......................................................................................................... 237 
Facebook viral marketing ‐ Andrew Chen ....................................................................................................... 240 
Pricing ................................................................................................................................................................. 246 
Pricing for startups – Rob Fitzpatrick .............................................................................................................. 246 
Determining optimal price – Sean Ellis ........................................................................................................... 247 
Great Guidance on Pricing – Sean Ellis ........................................................................................................... 249 
Is Your Pricing a Dot or a Triangle? – Cindy Alvarez ....................................................................................... 250 
Should You Charge More For Your Product? – Brad Feld ................................................................................ 253 
It’s easy to underprice your product – Nivi ..................................................................................................... 254 
Price: Why Lower Isn't Always Better – Fred Wilson ...................................................................................... 257 
PR ........................................................................................................................................................................ 259 
Pitching a tech blogger – Mark Hendrickson .................................................................................................. 284 
Building relations with journalists – Mark Suster ........................................................................................... 286 
Noone cares about your startup – Matt Brezina ............................................................................................ 289 
PR and crisis management – Mark Suster ...................................................................................................... 292 
Hiring PR agencies – Brant Cooper ................................................................................................................. 296 
PR for startups ‐ Erica Swallow ....................................................................................................................... 299 
Spin and PR – Mark Suster .............................................................................................................................. 305 
How to pitch tech journalists – Ciara Byrne .................................................................................................... 307 
How to pitch to the press – Nick Saint ............................................................................................................ 309 
Creating a good blogger pitch – STEPHANIE SCHWAB ................................................................................... 311 
Blogging .............................................................................................................................................................. 314 
Starting a blog ‐ Andrew Chen ........................................................................................................................ 314 
No time to blog? – Charlie O’Donnell ............................................................................................................. 318 
How to start blogging – Mark Suster .............................................................................................................. 319 
Becoming a better blogger – Neil Patel .......................................................................................................... 323 
Blogging for business – Rob Fitzpatrick .......................................................................................................... 335 
Becoming a conversion machine – Glen Allsopp ............................................................................................. 337 
Just start blogging – Jason Cohen ................................................................................................................... 350 
The Ultimate Guide to Guest Blogging – Kristi Hines ...................................................................................... 353 
Content marketing .............................................................................................................................................. 361 
Content marketing – Toby Murdock ............................................................................................................... 361 
Content for both sides – Douglas Melchior ..................................................................................................... 371 
Content creation – John Pring ......................................................................................................................... 373 
Copywriting ......................................................................................................................................................... 388 

3 
 
 Long copy vs short copy – Jeff Sexton ............................................................................................................. 388 
For conversions or thought leadership – Steph Hay ....................................................................................... 390 
How to be interesting – Jonathan Morrow ..................................................................................................... 392 
Persuasive writing techniques – Brian Clark ................................................................................................... 395 
Sales .................................................................................................................................................................... 259 
Sales and scope creep – Michael Woloszynowicz ........................................................................................... 259 
Enterprise customers don’t change – Ben Horowitz ....................................................................................... 261 
Scaling sales (ABC) – Mark Suster ................................................................................................................... 264 
Scaling sales (objection handling) – Mark Suster ........................................................................................... 267 
Understanding salespeople – Mark Suster ..................................................................................................... 269 
Building a sales team – Dharmesh Shah ......................................................................................................... 272 
Hiring sales – Furqan Nazeeri ......................................................................................................................... 274 
Hiring sales people – Mark Suster .................................................................................................................. 275 
Selling to enterprise – Chris Dixon .................................................................................................................. 278 
Create a burning platform – Mark Suster ....................................................................................................... 279 
The one day sales cycle – David Skok .............................................................................................................. 281 
Search engine optimisation and marketing ........................................................................................................ 398 
Adwords is not enough for success on the consumer web ‐  Andrew Chen .................................................... 398 
Some thoughts on SEO – Chris Dixon .............................................................................................................. 400 
SEO is no longer a viable marketing alternative – Chris Dixon ....................................................................... 401 
Strategic SEO for Startups – Patrick McKenzie ............................................................................................... 403 
Email marketing .................................................................................................................................................. 412 
It’s the CEO’s job to email the first 1000 signups – Rob Fitzpatrick ................................................................ 412 
Email marketing – KISSmetrics ....................................................................................................................... 414 
Optimisation and landing pages ......................................................................................................................... 422 
Why your site will fail – Andrew Chen ............................................................................................................ 422 
AB test big changes (not just small) – Josh Porter .......................................................................................... 423 
AB vs qualitative testing – Laura Klein ............................................................................................................ 426 
Website optimisation – Conversion Rate Experts ........................................................................................... 431 
The Anatomy of a Perfect Landing Page – FormStack .................................................................................... 449 
Landing pages that convert – Chance Barnett ................................................................................................ 451 
 

   

4 
 
 Early stage marketing 
Early stage marketing 

Focus and market segmentation – David Skok 
http://www.forentrepreneurs.com/sales‐marketing‐machine/focus‐market‐segmentation/ 

Focus & Market Segmentation 

Focus: Segment your Market, and pick the Low Hanging Fruit

At the start of your marketing process, you will be dealing with the issue of who to target – people that
you suspect represent potential buyers. A big mistake that I see with startups is that they don’t take
the trouble to segment their target market, and identify the low hanging fruit. Much has been written
about the importance of Focus, and I am yet another strong believer in this. Particularly in the early
days of a startup, when you have very few resources, and when everything you do has to pay off.

If you are not convinced of this, I strongly recommend reading Crossing the Chasm, by Geoffrey
Moore, which remains to this day one of the most important books for startups. Inevitably there will be
some sub-segment of your market that is most likely to buy from you. It may be a particular vertical, or
it could be picking a particular size of customer, or some other characteristic such as experience with
IP networking. Look for buyers that are feeling extreme pain (where their hair is on fire), and who also
have money, a sense of urgency, and a good fit with the features of your current version of your
product.

This will also allow you to develop very specific focused marketing messages that will likely appeal far
more strongly than broad general messaging. It will also make it easier to decide what product
features to build next, as you will be driven to complete those needed to fully satisfy that one
segment. A common mistake is a product that meets 80% of many different segments, because
management didn’t have the discipline to focus. 80% is enough to get them interested, but not
enough to get them over the bar to purchase.

The reason that management teams don’t focus is because focus is hard. Focus means saying no to
highly attractive opportunities that may be knocking on your door. As an example, when I first started
working with one of my portfolio companies, they had been approached by one of the top global
banks that loved their software and wanted to put it into 2,500 branches. The customer was
consuming tons of the company resources, with sales and product people flying everywhere. The
problem was the bank needed on-site global support, and there was no way that a tiny startup was in
a position to provide that. However because the opportunity was so big, no one was willing to say no
to it. It took some outside help to make them realize they couldn’t win the deal, and that they were far
better off focusing on the SMB market where their products and ability to service them were ideally
suited.

Don’t fall into that trap: you will win by having a product that is over the bar for one sub-segment, and
well targeted focused messaging that resonates clearly with that segment.

This market segmentation will drive the first part of your funnel: figuring out who to target.

5 
 
 Understanding your market – Chris Dixon 
http://cdixon.org/2009/10/11/understanding‐your‐market/ 

October 11, 2009

Understanding your market

Some startups become huge sensations without requiring any active marketing – YouTube, Skype,
and Twitter come to mind. However, the vast majority of successful startups gained adoption through
marketing: PR, SEO, partnerships, paid marketing, and so on. My strong suggestion would be to
hope for the former but plan for the latter.

Marketing is a huge topic. Here I just want to make the point that, for starters, you need to figure out
two things: 1) how information and influence flows in your market, and 2) when and where people
use and/or purchase your product.

I’ll use my last startup, SiteAdvisor, as an example. SiteAdvisor (now called McAfee SiteAdvisor) is
a consumer security product. Most consumers don’t learn about security products on their
own. Instead, they rely on their “family/friend sysadmin” (smartest computer person they
know). These family sysadmins read technical websites and magazines. In order to reach this
audience, we performed studies on data we had collected, which led to lots of coverage, which
raised our profile and bolstered our credibility.

Now to when and where people buy security products. Most people only think about security when 1)
they buy a new computer, 2) they first get internet access, or 3) they get a virus or other security
problem. The last case is actually pretty rare, so most companies focus on 1 and 2. How do you
reach people at those moments? Through “channels” – in particular PC makers (“OEMs”) and
internet providers (“ISPs”). (For public market people: focusing on these two channels was McAfee’s
big insight in the 2000′s and how they made a comeback versus Symantec who dominates retail).

Most people don’t talk to their friends about security products so it’s very hard to do mass word-of-
mouth marketing. (Exceptions would be the beginning of the spyware epidemic around 2001-2 when
AdAware got super popular via word of mouth). So you have to understand and pitch to these
channels.

These observations are specific to consumer security, but every startup should have a similar theory
of how to market their product.

What customers to serve – Mark Suster 
http://www.bothsidesofthetable.com/2009/09/16/most‐startups‐should‐be‐deer‐hunters/ 

Most Startups Should be Deer Hunters

by MARK SUSTER on SEPTEMBER 16, 2009

This post is part of my series “Startup Lessons“

Elephants, Deer and Rabbits – Some thoughts on start-up segmentation

6 
 
Nearly all of the mistakes I made at my first company I fixed by the time of my second
company. This is the only mistake I repeated twice and it is a mistake that I see many, many
companies make.

I know that this advice won’t apply to every possible startup – but I think it applies to many.

When you start your company the very first question you need to ask yourself is which kind of
customers do you want to serve. Many start-ups (and even growth firms) lack this discipline and
they therefore serve customers off all sizes. This leads to suboptimal results for all.

Make sure you know what the size of customer you want to serve is, what the people in a company of
that size do, the problems they have, the features that will resonate and the channels you’ll need to
sell into and service that customer. Because it will vary dramatically by different segments I believe
you need to pick an animal size and go for it.

I’ve stated my animal bias in the title – but each can work for different business types. The segment
breakdowns are below:

Elephants:

7 
 
 It is very tempting for many start-ups to hunt elephants. These
are really massive customers. It’s landing AT&T or Microsoft as a customer when you’re a start-
up. You’ve got 8 people and are serving a business unit that has 5,000.

It’s tempting on many levels to be an elephant hunter. If you manage to kill an elephant they have
so much meat they’ll feed you for a long time. But elephants are hard to catch and take whole teams
of people to bring down. They take special tools. If you’re not successful you may starve. If you do
catch them, it could be even worse. Avoid elephants in your early stages. Learn from my mistakes.

Here is the real world story. I worked for Andersen Consulting for more than 8 years. Initially as a
systems designer and programmer and post MBA as a strategy consultant. We knew how to land
huge corporate customers. We knew how to “call high” into board rooms and get meetings. So
when I started my first company I naturally went for elephants.

The problem is that they were initially very easy for me to find. I could easily go into the board
rooms of major European companies (I was based in London) and land $500k – $1 million
contracts so my order book grew rapidly. The problem is that to win each of these deals I had to
promise high service levels. We typically committed to building “missing” features and therefore
steered off of our MVP (minimum viable product).

We had to promise really steep service SLAs and help desk hours. We had to do intense training
sessions. And when things didn’t go perfectly these organizations had huge leverage over us. In
short, servicing the elephants consumed us. It soaked up all of our development resources and didn’t
allow us to focus on what we felt our company strategy was.

We started out with such big dreams about changing the world. On some level we felt we did
because being a SaaS company in 1999 was trailblazing. But in the end we ended up building
esoteric features that we knew our clients would never use because they paid us lots of money. See
definition of a whore.

And this is not just a problem at start-ups. I remember working for Salesforce.com and we were
bagging elephants relative to our size. We were obsessed with landing Merrill Lynch, Dell and
Cisco. I watched the first two of these customers consume significant portions of our internal
programming resources. I personally felt that we would have been better served putting more
resource into building out cloud services, for example, to make Salesforce more scalable in terms of
our user base. (note: my internal friends at Salesforce tell me that they’ve really fixed this now and
internal dev teams are much more focused on bigger, more strategic development).

8 
 
Elephant hunting does work for some companies. Some companies / products are designed for
large organizations from day 1. But I believe that if you go down this road you will struggle to
simultaneously serve the SMB market. The needs are too different as are the sales channels and
marketing messages. If you want to hunt elephants optimize your tools for just that. And know that
VC will be hard to come by.

Rabbits:

Equally deceiving are rabbits. There are so many of them – they seem like they’re everywhere. So
you chase them. But as you get closer to them you realize that they’re quick little buggers. They
scatter and get away. You wonder whether they were really worth the effort after all.

Rabbits for me are the equivalent of having a low-end version of your product that you feel you’ll
make up for in volume. I see it all the time. Companies post the $5 / month product designed for
self-service clients. Or they have products that cost $40 / month but that require a direct sales
person to close them.

This is especially problematic in the Web 2.0 / Freemium world where too many company build
their business models around trying to build massive scale of free customers and then convert a
small share to low monthly payments. I guess it has worked for some companies? (Basecamp? Who
else?)

My second company, Koral, tried to go down the freemium route. We found that at the low end
there wasn’t enough revenue to make it worth our while. Then Salesforce.com asked us to
implement our solution to all 3,000 employees (before they decided to buy us). So we were trying to
optimize for freemium while building in all of the special requests Salesforce asked for in order to
win the deal. We went after it because it was worth some serious elephant meat.

Sometimes it is acceptable for companies to focus on low-level entry customers – Rabbits. Obviously
if you’re going to build a massively scaled business like Twitter, Facebook or Zynga you’re going for
huge volumes and the small transaction value model can work. I’m told this model has worked well
for Zoho in the small business sector. But unless you’re a very large volume business and focused on
transactions rabbits are deceptive.

I came across a company today at TechCrunch50 called Outright that is perfectly suited to rabbits. I
believe it can actually build a big Rabbit Business and it’s strategy seems perfectly suited to reaching
this customer base through partners.

But few companies are good at trapping rabbits.

9 
 
Want to be the SharePoint killer? Avoid rabbits. Have a better version of BaseCamp? Ditto. Want
to build a product that relies on converting local mom-and-pop businesses into online advertisers –
see if a regional approach might work better. Have a product for online backups? Avoid the low end
of the market – too elusive and hard to shake enough money out of them.

In short, when you hunt rabbits they’re not as easy to catch as you might think. When you catch
them they don’t have much meat. So you need a lot of them to feed the village.

Deer:

The analogy is now obvious. Deer are easy to

kill. When you do bag deer they have plenty of meat on them to have made it worth you while. Deer
are right-sized for a start-up.

Deer are not so big that they can make huge demands on you for your development resources or
customer support. They can barely get you to agree to make changes to your standard terms &
conditions. If you catch lots of them you’re not beholden to one big one that if they cancel their order
you’d be devastated.

When you’re a start-up it is far easier to cut your teeth on companies that are easy to serve, not as
demanding yet can afford to pay you fair prices for your product. If their demands are too high you
can easily move on to the next customer. They allow you to stay focused on your defined company
strategy without having to compromise.

That’s why I believe most early stage companies should be deer hunters.

Final question I’m often asked – how big financially are Elephants, Deer & Rabbits? That’s for you
to determine for your own business because it depends on your customer base and the value you’re
providing them. Many of my friends who were initially focused on low-entry price point consumers
have moved up market to focus on slightly smaller markets with customers willing to pay. For me,
classic definition of deer segmentation.

Apologies to all vegetarians.

   

10 
 
 Entrepreneurs: Know Thy Marketing! – Brant Cooper 
http://market‐by‐numbers.com/2009/11/marketing_help/ 

Entrepreneurs: Know Thy Marketing!

By brantcooper, November 18, 2009 7:04 pm

I don’t know who is more exasperated, entrepreneurs flummoxed by marketers or me,

upset that another entrepreneur has been flummoxed by marketers!

People, language is for communication and marketing terms, abused as they are, fall
somewhere within the scope of language. To communicate you need to learn the
terms. To practice marketing or to hire a marketer you need to grasp some
basics. Please.

Marketing Help Rule 1.

(<> means “not equal to”)

Blogging <> PR <> Brand <> SEO <> Logo <> Advertising <> Tagline <> Messaging
<> FaceBook <> Positioning <> Twitter <>Lead Gen <> [Enter mktg term here]

Marketing Help Rule 2.

Trust me, you don’t need all the marketing tactics listed in Rule 1.

Marketing Help Rule 3.

The right marketing tactics for you, right now depend on WHO your prospective
customers are and WHAT stage your company is in.

Marketing Help Rule 4.

All Marketers have a core competency (or two). Regardless, (almost) all Marketers will
sell (almost) all marketing services.

Marketing Help Rule 5.

You need marketing to grow your business. And more likely than not, you need or will
soon need help marketing. Admit it.

For a moment, forget everything you know or think you know or have heard about
marketing. Start with a clean slate.

Now imagine you are a new customer of a particular product or service. You just
finished buying. You are a bit giddy:

You’re eager to get started.

You’re excited at the prospect of reaping serious value.

You’re determined to at least get your money’s worth.

11 
 
You have a small fear in the back of your mind that you spent too much or made the
wrong choice.

You both want to show it off and hide it from view until you’ve proved it’s worth.

Now like a bad movie flashback, go back to this morning right before your alarm clock
sounded. Better yet, go back to the moment BEFORE you realized you had a NEED that
you MIGHT eventually purchase SOMETHING from SOMEONE to RESOLVE the
need. Your experience from this moment –pre-realization –to the moment of sale is
marketing.

Your maybe want to tell me it’s sales. But no, the seller sells. The buyer experiences
marketing. Whether you agree or not, analyze all the marketing advice you’ve received
in this context. Think about all the people telling you that you must use social media
marketing. Think about magazines, news, commercials, blogs. Think about your logo
and your clever slogan. Think about “your brand must be consistent!” Think about your
color palette. Did any of these things affect your path from pre-realization to purchase
(as far as you know)? No, yes, maybe?

Ruminate on this concept:

Ms. pre-realization will eventually buy from me because:

I’m a good person

I try hard

My technology is the best

I don’t oversell

I’m ethical

General Haig interviewed me on some TV show on a plane somewhere, sometime. I

think.

I tweet

Marketing feels daunting because you are being shown a dozen yellow brick roads that
weave off gloriously into the colorful horizon. That and the promise that the chosen path
is flowering with ROI poppies. Walk forward in your customer’s shoes from before
purchase; from pre-realization. How do you get to you?

   

12 
 
 Startup Marketing: Tactical Tips From The Trenches – Dharmesh Shah 
http://onstartups.com/tabid/3339/bid/9008/Startup‐Marketing‐Tactical‐Tips‐From‐The‐Trenches.aspx 

Startup Marketing: Tactical Tips From The Trenches

I’m speaking at the Inbound Marketing Summit later this month in San Francisco. There
are some really great speakers lined up (David Meerman Scott, Chris Brogan, Charlene
Li, Paul Gillin and others). If you’re looking to learn more about inbound marketing and
how to get found in Google, social media and blogs, this should be a great event. If you
decide to attend, use the code HUB200 for a special $200 discount. Drop me a note if
you’re going to be there, would love to meet-up.

My session’s going to be called “Startup

Marketing: Tips From The Trenches”. As I get my
thoughts together for this, I started making a list of
all of the things I’d advise a new startup to do to
get things kicked off with a limited budget. As it
turns out, there are a lot of tactical steps that
individually don’t do much, but in aggregate start
laying the foundation for much bigger things. So, I
thought I’d share some of these things with you. This list is not intended to be a
comprehensive “here are all the things you should do”, but more of a “if I were starting
a company today, here’s what I would do in the first 10 days…” It’s written in a short,
punchy style. I’ll likely revise it in the future as I add more things, but I wanted to get
“Version 1.0” out there for you and see what you think.

Tactical Tips for Startup Marketing

1. Pick a name that works. Needs to be simple, memorable and unambiguous. The
“.com” domain should be available without playing tricks with the name (like dropping
vowels or adding dashes). Also, just because there’s no website on a domain doesn’t
mean it’s “available”. Available means something you can register immediately, or that
has a price that you’re willing to pay attached to it. Don’t wander down the rabbit hole
of finding the perfect name if you have no indication that it’s for sale. This will waste a
bunch of your time.

2. Put a simple website up. Doesn’t have to be fancy. The goal is to put enough
content on the site to start the Google sandbox clock. Don’t worry about the site not
saying much (nobody’s going to be looking at it anyways). Make sure to use a decent
content management system (CMS) and not Dreamweaver or (shudder) FrontPage. Just
because you can hand-craft HTML doesn’t mean you should for your startup
website. The structure and features of a CMS are going to be important someday. Trust
me.

3. Get some links into the new startup website. If you have a personal website, link to
it from there. If you have friends/associates/family with websites, cash in some favor
chips and get them to link to it. The goal is to get the Google crawler to start indexing
your site. You only need one decent link to get things going. To check whether your

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site is being indexed by Google, do a search like site:yoursite.com (not perfect, but good
enough).

4. Setup a twitter account. Name of the account should match your

company/domain name. Link to your twitter account from your main site and to your
main site from your twitter account. (Note: If you have a natural skepticism of the
value of twitter, you are welcome to this skepticism. But, go ahead and grab your
twitter account anyways. You can resume your skepticism after you do that).

5. Add e-mail subscription. Let people sign-up to get an email when you’re ready to
show them the product. A simple email signup form is sufficient.

6. Get a nice logo. Run a quick contest on CrowdSpring or 99Designs and you’ll wind
up with something decent enough. Make sure you get the vector file (Illustrator or EPS
file) as part of the final deliverable. If you've got design skills yourself, or know
somebody really good that can do it, even better.

7. Setup a Facebook business page (known as a “fan” page) for your startup. You’re
not going to get many fans in the early days. That’s OK. Just get something out
there. Add a simple description of your startup, link back to your main website. The
usual stuff.

8. Create a clean Facebook URL. Facebook doesn’t allow simple/vanity URLs (unless
you're big and established). So, to make things easier on yourself (and your users),
setup a sub-domain and redirect it to your Facebook page. For example, here’s what I
did: facebook.hubspot.com (notice that when you visit this link, it takes you
automatically to the ugly Facebook URL). Setting up this sub-domain is free and usually
pretty easy (it’s done through whoever your registrar is for your domain).

9. Kick off a blog. You can use one of the free hosting tools (like WordPress.com),
but don’t use their domain name. Put your blog on blog.yourcompany.com — or if
you’re proficient and can install WP locally, make it yourcompany.com/blog. Do NOT
make it yourcompany.wordpress.com. The reason is that you want to control all the
SEO authority for your blog and channel it towards your main website. And, chances
are, WordPress.com doesn’t need your help on the SEO front.

10. Write a blog article that describes how you got to this point. What problem
you’re hoping to solve. Why you picked this problem. It should feel
a little uncomfortable revealing what you’re revealing. If you have tendencies towards
being in “Stealth Mode”, read “Stealth Mode, Schmealth Mode”. With inbound
marketing, you’re going to need to get used to revealing things that might be
uncomfortable. Get over it.

11. Setup Google Alerts for at least the following: Your company name,
link:yourdomain.com and “industry term”. Try to find a good balance for your industry
term so you don’t get flooded with alerts that you simply will start ignoring. This may
take some iteration and refining. (Oh, and use the “As It Happens” option in Google
Alerts so you’re not waiting around for new alerts to show up).

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12. Find three closest competitors. Pretend like someone is paying you $10,000 for
locating each competitor. Really try hard. Barely managed to find three? Take a lot of
effort? Great. Now find 3 more. Of these 6, pick the two that you think are the most
marketing savvy. They should have aWebsite Grade > 90, a blog with some readers, a
website that you can envision people using, a twitter account that they actually post to,
etc. These are the competitors that you’re going to start “tracking”. Add their names
and websites to your Google Alerts.

13. Update your LinkedIn profile (you do have a LinkedIn profile, right)? Mention
your new startup, and add a link to your startup website to one of the three slots for this
purpose. Make sure you specify the anchor text. Don’t go with the default of “My
Website”. The anchor text should be your startup name and maybe a couple of words of
what it does. You can look at my profile to get a
sense:http://www.linkedin.com/in/dharmesh (note: I don't accept LinkedIn invites from
people I don't know. If you're looking to get to know me, follow me on twitter
@dharmesh).

14. Get business cards printed. Don’t go overboard, but don’t use a “free” option
(because it’s not really free, it’s just subsidized). I don’t believe much in business cards,
but you need them to simply avoid the 30 seconds of discussion as to why you don’t
have a card when people ask you for one at conferences and meetings and
such. They’re worth the price to avoid that uncomfortableness.

15. Use the Twitter Grader search feature to find high-impact twitter users in your
industry. Start following them. You want to start forging relationships. Start building
your twitter network. Resist the temptation to mass-follow a bunch of random people or
play other games just to get your follower count up. That’s not going to matter. Get
some high quality relationships going. If you’re really serious, start using an app like
TweetDeck so you can more easily monitor the needed conversations.

16. Create a StumbleUpon account. Specify your areas of interest (part of

registration). Spend 10 minutes a day (no more!) stumbling and voting things
up/down. Start befriending those that are submitting sites that are relevant and
interesting for your startup. Don’t submit your own stuff — just start contributing.

17. Subscribe to the LinkedIn Answers category that best fits your area of
interest. Answer one question a day that you feel like you’ve got some expertise
in. Don’t self-promote. You’re seeking to build credibility and trust — not sell anything.

18. Find the bloggers that are writing about your topic area. Subscribe to their feed,
and read their stuff regularly. Leave valuable comments and participate in the
conversation. (Do not spam them or write “fluff” comments. If you don’t have
something useful to add to the conversation, don’t comment).

19. Start building some contacts on Facebook. Organize your users into groups
(one for your business and another for friends/family). This will come in handy
later. Don’t spam people and ask them to visit your website. At this point, your website
is still probably not worth visiting.

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20. Grade your website on Website Grader. Fix the basic things. You should be able
to get a 50+ just by doing the simple things it suggests. [Disclaimer: I wrote Website
Grader].

21. Get Some Analytics: Install some web analytics software and start watching your
traffic. Where is it coming from? How is it growing? What keywords are people using to
find you? What content are they looking at? It's ok to get a bit maniacal and obssessed
about it at first. Many of us do that (and some of us never get over it).

If you liked this article, you'll probably love the Inbound Marketing book that I co-
authored. It includes similar practical advice for getting found in Google, social media
and blogs.

If you’re interested in startups, you can follow me on twitter @dharmesh.

What have I missed? What ideas do you have on tactical things for startup
marketing? What do youdo?

Update: Oh, and by the way, if you liked this article, you will love my recently released
book,Inbound Marketing: Getting Found Using Google, Social Media and Blogs. The book
is a practical guide to marketing on the web and has been an Amazon Top 100 book
since the day of it's release.

Love startups? Join the OnStartups community on Facebook.

Marketing for early stage tech startups  – Mark Suster 
http://www.bothsidesofthetable.com/2011/06/27/10‐lessons‐for‐managing‐marketing‐at‐an‐early‐stage‐
startup/ 

10 Marketing Lessons for Early-Stage Tech Startups

by MARK SUSTER on JUNE 27, 2011

I made every textbook mistake at my first startup, which is why I believe I was much more effective
at my second one. I have adopted the motto “good judgment comes from experience, but experience
comes from bad judgment.“ We need to learn from doing, by trial-and-error.

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If I can help you avoid some of my first-time mistakes it would be a victory. The following are some
lessons I learned about early-stage startup marketing. Because market is such a broad topic, I’m
restricting these lessons to PR marketing (as opposed SEO, SEM, product marketing, etc.).

1. Where Stealth is Good – There’s a lot of discussions on the web about whether startups should
be stealthy before they launch or not. The truth is – there isn’t a “right” answer so for your
company. You need some guidelines to make decisions. My general rule is that it’s good to be stealth
in the early days while you’re building your product and testing your market. Stealth does not mean
constipated, paranoid and totally untrusting of others. It does mean not telling more people your
future plans than is necessary. It means avoiding drinking too much at cocktail parties with other
tech people and bragging about your plans. It means not over-sharing your deal with VCs or other
investors.

The truth is that we work in a very small, tight-knit industry and news & plans spread fast. In the
early days you don’t really want 3 extra teams hearing your ideas and gearing up to compete before
you feel you’ve got a solid head start. Most people totally advise against stealth. They think that only
by being open and testing your ideas in an open marketplace can you be successful. Be careful about
this advice.

Also be careful about VCs. Most ones that I know have very high ethical standards so I’m not
concerned about that. But once a VC has heard your idea he can’t “un-think” it. And these ideas have
ways of seeping into board discussions with portfolio companies as in, “have you ever thought about
trying A, B or C?” It’s mostly unintentional but tacit knowledge about ideas spreads quickly amongst
the chattering elite.

I actually like finding entrepreneurs who are more circumspect, less braggadocios and generally
more planned about their actions.

2. Where Stealth is Bad – I do meet entrepreneurs who clearly fall on the other side of spectrum
and are totally closed. I worked with an entrepreneur who was to appear at a startup networking
event where he was to talk about his company’s plans. He considered pulling out of the event

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because he wanted to stay in “stealth mode” and felt an event like this compromised him.
I counseled him to do the event (it was high profile) and talk in broad themes about the areas in
which his business would compete. There are very few truly novel ideas so talking in broad themes
certainly wouldn’t give away any grand strategy. In stead he went to the event and told everybody
“we’re in stealth mode and can’t yet reveal what we do.” It went down like a lead balloon.

I think he really learned from this experience: Experience comes from bad judgment. Nobody likes to
hear you say, “we can’t tell you anything we’re in stealth mode” so develop some generic talking
points that don’t give anything away when you’re asked what you do.

The biggest problem with over-stealthing yourself is that you cut off some of your most valuable
resources in terms of testing your ideas, getting feedback from smart entrepreneurs & investors and
helping you figure out the potential flaws in your approach.

In my experience, entrepreneurs who are overly paranoid or are information hoarders rarely do
well. They certainly struggle to find mentors as there is nothing more frustrating than trying to help
a company who is afraid to tell you anything.

3. Market Today’s Puck, Not Where It’s Going – I often tell startups to “skate where the puck
is going” as a metaphor for not just copying what every other company is doing today but to think
about where the future lies and planning for that now.

But it is a big mistake to tell too many people where you’re heading. I call this “marketing futures.”
Marketing futures can be really good for enterprise software companies where the information is
passed between sales rep and potential customer in terms of near-term roadmap. The buying cycles
are often 3-6 months so you want to put your best future foot forward. But don’t let this information
get out into the general press and don’t market more than a few months out.

For early-stage consumer companies I would be careful not to market futures at all.

We all know that much of early-stage technology startup success comes from execution and often
what you’re working on today will be rolled out more seriously over the next several months. So I
recommend that companies talk in detail about the puck at their feet but avoid talking about where
the puck is going. While all your competitors are trying to copy your model, you’re already on to the
next thing on your engineering team.

Nobody seems more disciplined at this tight-lipped future marketing than Apple and you can see
how it has served them.

4. Don’t Market a Bad Product – Perhaps the most important lesson for first-time
entrepreneurs is that you can’t have great marketing for a bad product. The corollary is that it is
very hard to recover from a crappy marketing campaign that over-hyped. I think I first heard this
from Guy Kawasaki but it’s kind of obvious. In a world in which you’re encouraged to launch early
and get feedback from customers you can often confuse “product launch” with “marketing.”

I think a great example right now is turntable.fm. It’s a buggy product but pretty damn cool. I
haven’t heard them pounding their chest and running big marketing campaigns. And the product
itself is invite-only so they can control volume and everybody has expectations managed. By the
time they go GA (generally available product) I’ll be the kinks are all worked out. And the
anticipation of wanting to see the product will build.

The strategy they’re employing is called “velvet rope” as in what nightclubs do to build scarcity and
interest in getting on the inside. It also helps to keep down issues with crowds getting too big, too
early.

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5. Don’t Blow Your Wad Early – There is a temptation of startups to announce that they’re
“first” at something so they rush to market with announcements. I know because I did this in early
2000. We rushed to market to be first and got great coverage in the Financial Times (we were in
London). But our product wasn’t ready for prime time and we struggled to live up to the hype we
had created.

As you can imagine that once you’re compared to Ishtar (the movie) you’ve got a higher bar of
success to get people interested the second time. Not everyone has a spare 40 mill for a re-do.

6. Market to Your Target Audience – I’ve seen a lot of startups who like to write blog posts on
life as an entrepreneur. That’s fine if entrepreneurs are your target market. But be clear on whom
your target market is and what the messages you want to communicate to them are. I talked about
that in detail on this post about how to blog as a startup.

But whom you’re marketing to is not always an easy topic. At one company I work with it’s clear
that our target user today is youth-oriented and middle America as opposed to 20-something and
Silicon Valley or New York. We’ve been very successful at the former. But we also need to be mindful
that often the influencers are on the coasts (LA/NY/SF) and that we can’t ignore them. So we’ve
launched some campaigns to be sure we’re picking up these crowds with different messages.

7. Don’t Believe the Hype – Perhaps one of the biggest mistakes in marketing is to get caught up
in your competitors marketing noise. When you’re inside the bubble and paying attention to every
announcement of your nearest 3-4 competitors it’s easy to get despondent when they get their killer
press articles or announce new features.

Those of us that have been around the block tend to not get too worked up on any big competitor
announcements. They come and go. They’re mostly fleeting. Life goes on. iMessage is announced.
The NY Times puts Group Messaging companies on their list of companies crushed by Apple’s
WWDC. But life doesn’t end. It’s a narrow product. Most app-to-app products are inter-operable,
Apple isn’t. You have tons of differentiation. Life goes on.

8. Your Competitors Look the Same as You When They’re Naked in the Mirror – One
thing that startup CEOs often overlook is the impact of marketing on team morale. Every day your
team members are reading about all of the great things happening at your competitors company.
You’re reading their press releases or blog posts. Insider your company everything feels like
it’s going to hell in a hand basket.

That’s because that’s how it ALWAYS feels at a startup. You always have too much technical debt,
too many problems, staff members quitting, not enough capital, customer complaints, etc. That is
EXACTLY how your competitors feel, too. And they’re reading your press articles and thinking,
“shit, they have everything figured out.” You don’t. Make sure your team knows this and stays
confident. Iwrote about it in detail in this article.

9. Build Relationships – Many startups make the mistake of thinking that they simply approach
a journalist any time they have a story and get coverage. IIt doesn’t work that way. Journalist are
constantly harangued by over-eager entrepreneurs. Go slowly. Get to know journalists when you
don’t need stories. If you care about this topic a more detailed article is here.

Follow them on Twitter. Respect their profession. Read their articles. Comment. Ask if you can help
be a source for other stories. Say hello to them at conferences. Understand how their job works.
Understand that for every article they write they need “an angle” and if you can’t help shape that
you’re not likely to get inches. The more helpful you are over time the more likely you are to get
inches when you need them.

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10. It’s a Marathon, Not a Sprint – Some startup teams I speak with try to lump a bunch of
announcements all into one release to try and have more effect. And example is lumping your VC
funding announcement into a story about major customers wins, product features or key milestones.
Don’t do this.

A funding announcement is a stand-alone event. It’s an angle. There are journals who dedicate a lot
of time & energy into covering funding. Focus solely on that event. When it’s time later to talk about
some major customer wins or big biz dev partnerships you’ll do so. If you announce killer product
features worthy of coverage then talk about that.

One strategy I encourage is to break up mini-releases into exclusives that you give to different
journalists to spread the love around and give everybody something unique to write about. Nobody
likes writing re-hashed stories.

The Ultimate Online Marketing Recipe ‐ KISSmetrics 
http://blog.kissmetrics.com/ultimate‐online‐marketing‐recipe/ 

The Ultimate Online Marketing Recipe 

The basis for any good online marketing plan is an awesome landing page. But regardless of how
incredible your landing page is, you still need to get people there. That’s often the part that breaks
down when a company actually starts marketing a new product or service online. They’ve got the
landing page that’s been expertly designed and follows all the best practices, but they’re not getting
conversions because they’re not getting traffic.

There’s tons of information out there for crafting an online marketing program that won’t cost you
much more than time. One little problem: there’s so much information available that it’s often
overwhelming. Even things like infographics that try to break it down can be too much.

So we’ve crafted the ultimate online marketing recipe. One that’s easy to follow and breaks everything
down into steps. We’ve linked more information about most steps throughout the article so you can
easily access more in-depth information if you need it.

Stage One: Gather Your Ingredients

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Image by Like_the_Grand_Canyon

The first stage of your marketing recipe consists of gathering up your ingredients. You’re laying the
groundwork here for the rest of your marketing efforts, so make sure you don’t skip anything. Think
about what happens when you leave out an ingredient in a recipe for a cake. Leave out the flour, and
you get a soupy mess. Leave out the sugar and the taste is horrible. Leave out your eggs and the
whole thing crumbles. The same thing happens if you leave out a key ingredient of your online
marketing plan.

So let’s start by claiming your brand on the major social networks: Google+ (as soon as brand pages
are available), Facebook, and Twitter. Depending on your industry, there might be niche social
networks where you also want accounts (for example, an author might want to set up an account on
Goodreads and LibraryThing as well). Make sure you customize your Twitter background. This can
serve as your social landing page until your website and other landing pages are ready.

At this point you also want to set up your corporate blog and start posting right away. Make sure you
submit your content to social sharing services (like StumbleUpon) and bookmark it on sites like
Delicious. Research popular keywords related to your content and make sure you tag your posts with
those words, and include them naturally within the content itself.

On the technical end of things, you’ll want to set up a Google Analytics account, a Google Webmaster
Tools account, and a Feedburner account for managing and monitoring your RSS feeds. Analytics will
help you monitor exactly what’s happening on your website, where your traffic is coming from, etc.
Make sure you set up some goals and conversion funnels there, and annotate any important events
(like a mention on a big blog) so you can remember six months from now why you saw a spike or a
dip in traffic at a particular time.

At the same time, you should be gathering up leads for your product or service launch. Make sure you
use a hosted email provider like Gmail, not a program like Outlook. Create your email template at this
time, too.

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Step-by-Step Breakdown

Set Up Your Website Correctly.

Build a website. Chances are your company already has one. But if they don’t you can’t go any
farther. Your website is the central hub of your entire online marketing strategy.

Install Google Analytics. Make sure the analytics code is on every page of your website.

Set up a Google Webmaster Tools account. Create a sitemap XML file and submit it to Google
Webmaster Tools. Be sure to have your web designers or developers fix any errors that Google
Webmaster Tools may alert you to. We have a pretty comprehensive guide to Google Webmaster
Tools here.

Claim Your Social Networking Profiles.

Sign up for a Twitter account. Think about your Twitter name because people will naturally “mention
you” on Twitter by typing @yourcompanyname. Therefore you’ll most likely pick a Twitter name and
URL like: http://twitter.com/yourcompanyname. Be sure to link back to your website in your profile.

Have a professional designer create your Twitter background. Your Twitter background should be
consistent with your website branding and offer some basic contact information. Consider
communicating your value proposition on the background or in your profile description.

Create a Facebook page (not a profile). Like Twitter, create a Facebook page and claim your
Facebook URL to be something like: http://facebook.com/yourcompanyname.

Set up Your Company Blog.

Keep your blog on your company domain name. The whole point of blogging is to attract relevant
traffic back to your website. Blogging on another domain other than your company domain, defeats
this purpose. This is the fundamental reason why blogging is good for SEO. For example, your blog
should be located somewhere like: http://www.yourcompanyname.com/blog or
http://blog.yourcompanyname.com.

Keep your blog design consistent with your website design. They don’t have to look identical, but for
the same reason you keep your Twitter profile in alignment with your company branding and design
style, you should do the same for your company blog.

Get your Email Marketing Ready.

Choose an email distribution service. Sending mass emails from your personal computer email client
or web based email account is a sure fire way to shoot your email marketing campaign in the foot.
Choose an email distribution service like Mailchimp, Constant Contact or Aweber to send out your
company newsletter. Each of these services are great for making sure your emails get through to your
email base while minimizing the dreaded spam folder. On top of that, they make adding new emails to
your marketing list a snap.

Create an Email Template. Again keep your email template consistent with your website branding and
design style.

Stage Two: Initial Prep Work

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Image by Wapster

By this point you’ve got all the basics gathered. You’ve got your social media accounts, you’ve set up
your blog, and you’re tracking your efforts. Now it’s time to start building up more content and
reinforcing your first efforts.

You should be working to build a Twitter following on a daily basis. There are a number of ways to do
this, including following other users who might be interested in what you’re offering, and posting
useful tweets. You should also be starting your drip marketing campaign with the leads you’ve
gathered, to build up awareness and educate your potential customers.

Continue to refine your SEO based on the keyword research you’ve done. The goal is to maximize
your placement for both primary keywords and longtail search results (which is where you’ll probably
gain the most traction initially). Make sure you’ve set up custom reports in Analytics for both search
optimization and other important metrics.

Finally, it’s a good idea to set up an editorial calendar for your blog and stick to it. If you know what
you’re going to post ahead of time, it helps ensure that you’re updating regularly. Forming the habit of
regular blog posts can be a difficult thing to do for new bloggers, but is essential if you want to be
successful. And while we’re on the topic of blogs, make sure you’ve set up social sharing buttons on
your blog posts to make it easy for others to share your content.

Step-by-Step Breakdown

Build a Twitter Following

Start tweeting gently. Get your feet wet and get comfortable with the “Twittersphere”. Tweet a few
times a day at first, retweet other people’s posts you find valuable. Follow people you know really well
to start instant and meaningful Twitter relationships.

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Follow people who might be interested in what you offer. You can search twitter to find people who
are talking about what you have to offer. See what kind of interactions you get from this. However,
sometimes it’s best just to follow people related to your industry (like experts and gurus) than to
bother potential customers. Figure out what’s right for you.

Be personable. Don’t just spam your twitter account with your own blog content. Interact with your
followers and share other people’s content when it makes sense.

Download our Twitter Marketing Guide. Read this guide a little bit every day and you’ll be a Twitter
expert in no time.

SEO

Conduct keyword research. Use keyword research tools to figure out what key phrases attract the
most relevant traffic to your website. It’s very important at this step to determine
what languageattracts the right kind of customers to your website. Don’t just aim for the keywords with
the highest search volume.

Create keyword rich title tags and H1 headings. The most basic and powerful SEO you can do is
simply place the top key phrases you have selected from your keyword analysis and place them in the
title tags and H1 heading tags of your webpages. DO NOT REPEAT KEYWORDS ON MULTIPLE
WEBPAGES. This will cause keyword cannibalization and ruin your SEO efforts. Also, be sure you
have only one H1 heading per webpage which can be easily detected by viewing the webpage source
code and searching for “h1″.

Don’t forget about videos and image content. Images are really important for SEO. Be sure every
webpage has a couple unique images with the appropriate alt tag information filled out (alt tags
contain keywords related to the image). If you have videos, be sure to upload them to a branded
Youtube channel and think about the title of your videos. They are important keywords for search as
well.

Create an Editorial Calendar

Prepare a list of topics you want to publish. This is an excellent process to make sure you have
enough content to publish for months to come. It’s also a great time to think about what content will
attract the audience you’re are trying to market to. Spend a lot of time on this part!

Schedule your posts. After you have determined what content you want to create, it’s important you
have a plan to ensure you can execute the content delivery. Determine who will write what content,
what the due date is for each post, and allow time for content review.

Stage Three: Mix Your Ingredients

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Image by Jamie

It’s time to really start pushing your online marketing campaign. You’ve got all the basics down,
you’ve settled into a bit of a routine in terms of blog updates and other efforts, and now you want
results. All too often, people falter at this stage, thinking they’re not going to see results, when in fact
this is just the point where they should really be stepping up their efforts.

Up to this point, you’ve probably just been tweeting whenever it was convenient. That’s great, except
that there are optimal times for sending out tweets, depending on what you want your followers to do.
Rather than sending out tweets randomly, use an app that lets you schedule your tweets (like
HootSuite or Seesmic).

Up until now, you haven’t done too much with your social media accounts other than Twitter. It’s time
toset up a Facebook page. You want to create a page that focuses on gaining more “likes” (followers),
so that your updates are being broadcast to those interested in what you’re offering. Make sure
yourFacebook page is connected to your blog so that news items are posted whenever you publish a
new post.

You should also, at this point, consider segmenting your email lists so you can better target your
email newsletter. If your mailing list isn’t growing as fast as you’d like, there are a couple of ways you
can add new leads. The first is to answer questions on sites like LinkedIn or Quora (make sure your
profile is filled out completely on both sites) to establish yourself as an expert. The other way is to
offer some kind of giveaway in exchange for signing up for your mailing list. Make sure it’s something
of value, so that your visitors will be happy to turn over their email address or other information in
exchange.

Directly tied into the second part of that is creating an ebook or whitepaper that solves a need your
prospective customers will likely have. Giving that away only to newsletter or feed subscribers is a
great way to get more people to sign up.

25 
 
This is also a good time to start advertising with Google AdWords. There are plenty of coupons out
there that give you a credit (sometimes upwards of $100) to try AdWords. Find these and use one to
set up a test campaign using landing pages. Figure out which ad and landing page combinations work
best (using your Quality Score), and then start spending your own money on further AdWords
advertising.

Make sure that the landing pages you use are designed with a single purpose in mind and with a
single call to action on each page. Cluttering up your pages with too many options or too much
information only serves to lower your conversion rates. To make sure your landing pages are the best
they can be, make sure you use the Unbounce.com scorecard. Generate a to-do list for
improvements from your score there.

Use your Analytics reports to look for areas on your website that are underperforming and find ways
to fix them. This step becomes even more important if the underperforming pages are vital parts of
your conversion funnel.

Another great way to drive more traffic to your site is to write guest posts for other blogs with similar
visitor demographics. Look for sites in related niches and get in touch with the blog owners about
guest posting. For example, if you’re selling a financial product to small business owners, look for
blogs that address marketing for small business, or something similar. Same demographic, but not a
direct competitor.

Step-by-Step Breakdown

Schedule Your Tweets.

Pick a Tweet scheduling tool. Use a service like Bufferapp to schedule your tweets throughout the
day. Write compelling tweets that should entice click throughs and seed some of your previously
written blog content for future delivery.

Don’t leave your Twitter account on auto-pilot. Remember to interact and be personable throughout
the day. If your company Twitter account is only spitting out content from the company blog and there
isn’t any real human interaction visible on the profile, the more “spammy” your company profile will
look.

Set up Your Facebook Page.

Fill out your information. Include your company contact information, year founded, links to your
website and blog.

Upload images. Upload images such as advertisements, pictures of your team and company events.
Show the world that your company is a living, breathing, and exciting entity.

Connect your blog to your company Facebook page. Use a tool like Hootsuite to use your blog RSS
feed as a way to update your Facebook page automatically.

Download our Facebook Marketing Guide. This comprehensive guide will help you get the most out of
your Facebook marketing efforts.

Segment Your Email List

Design your email segments. Since every person on your email list isn’t meant to receive every email
you’re going to send out, design the appropriate segments (i.e. product updates, press releases,
gender, region etc.).

26 
 
Let your customers choose which emails they would like to receive. Wherever you have an email sign
up form, be sure to ask your subscribers what kind of emails they want to receive. This will put your
subscribers in the appropriate buckets and should improve your email marketing metrics.

Start Advertising Online

Google Adwords. If you want instant website traffic and new business, Google Adwords is the place to
be. But watch out, it can be very expensive and highly competitive.

Yahoo / Bing. Google might be the largest pay-per-click advertising network, but Yahoo and Bing tend
to have a better return on investment.

Facebook. Facebook Advertising allows you to target potential customers by interest, age and gender
demographics which gives it a completely unique advantage over Google and Yahoo/Bing.

Consider hiring a professional. Online advertising is an extremely competitive, expensive and time
consuming task. Unless you have someone in-house that can be dedicated to this activity full time, it’s
wise to hire a reputable firm or PPC marketer to manage your internet advertising campaigns. Done
right, this can be one of the most lucrative ways to generate new business.

Doing it yourself. If your don’t have the budget to hire a professional and insist on doing internet
advertising in-house or yourself, be sure to read this guide.

Stage Four: Bake

Image by Kevin Spencer

We’re getting to the stage where everything is about refining and reinforcing what you’re already
doing. There aren’t a lot of new steps at this point, but if you really want to get the most out of your
efforts, you need to continuously refine and test what you’re doing.

27 
 
On that note, try some A/B testing with your landing page ideas to see whether there are better ways
to do what you’ve been doing. You might even try some “live” tests with real visitors to see what
they’re drawn to on your pages, and if they respond to your call to action.

You should also be A/B testing your emails to make sure that you’re getting the best response
possible. Don’t just monitor open rates, though, make sure you’re measuring overall conversions.
Who cares if people open your email if it ends up in their trash two seconds later? What you want are
emails that are converting in high numbers, regardless of their open rates. Of course, the ultimate
goal is to find an email with a high open rate and a high conversion rate.

Link building at this point becomes much more organic. You’re getting some traffic at this point, and
the best way to capitalize on that is to create great content that people want to link to. Monitor these
incoming links to see where your traffic is coming from, and to see if your content is reaching the right
demographics. One great way to get more incoming links is to write about influential people your
visitors would be interested in reading about. In the best case scenario, this can get you attention
from the actual influencer.

You should be using LinkedIn more at this point to extend your reach. This is particularly important for
anyone selling a B2B service or product, but even B2C companies can benefit from using LinkedIn.
Just look for people or groups who are likely interested in what you’re selling. Don’t overlook the
power of recommendations, either. Make sure you’re not neglecting any one social media platform;
balance your time so you can manage them all.

Step-by-Step Breakdown

A/B Test

A/B test Pay-Per-Click landing pages. You’re most likely going to be sending traffic from your Pay-
Per-Click marketing, social media marketing and sometimes even email marketing to special landing
pages (instead of your website home page). Therefore you should A/B test these landing pages to
see which variations perform better. This is the surest way to see instant marketing improvements.

A/B test your website webpages. A lot of people forget that their website pages are landing pages.
These should also be A/B tested (whether it for lead generation, sign ups or sales).

A/B test your email campaigns. Finally, you can A/B test your email campaigns to see which
headlines, layouts, and copy performs best.

Engage in Link Building

Write great blog content. The key to ranking well on the search engines is to provide your customers
and audience with great content. Think of creative articles you can publish on your blog that will
attract other bloggers and industry people to link to your posts.

Ask for links. Sometimes it’s as simple as asking the right people to link to you. Perhaps someone has
written a blog post about your site and forgot to link to you. In other cases you can ask vendors to and
business partners to link to your website. Be sure to have them include the key phrases you picked
during your keyword analysis in the link text that points back to your website.

Create infographics. Infographics are a great way to communicate ideas in a very creative way. They
generally get linked to a lot. However this activity should most likely be outsourced to a professional
design firm. Here are some examples of infographics created for KISSmetrics.

Use Linked-In

28 
 
Connect with people or groups who are likely interested in what you’re selling. Similar to Twitter,
nurturing these relationships correctly will help spread the good word of your brand.

Give recommendations. This is somewhat like social networking karma. Recommend people who
have helped your business or company and see what happens in return!

Stage Five: Serve and Enjoy

Image by Kimberly Vardeman

At this point, it’s all about maintenance. You need to make sure you don’t lose any of the ground
you’ve gained, while continuing to build your platform and reputation.

Try being more interactive on social media. Leaving Twitter open throughout the day so that you can
interact “live” with your followers or those talking about your brand is a great way to improve your
reputation. Make sure that Twitter is being monitored throughout the day and interact whenever
possible. You might make a schedule so that different employees can manage Twitter at different
times throughout the day, so that a single person doesn’t get overwhelmed.

You should try creating a viral landing page for a contest to get more attention. Make sharing the
page (either by liking or sharing it on Facebook, or retweeting on Twitter) a requirement for contest
entry for the best results.

Start using surveys and feedback widgets to get real-time data from those visitors coming to your
website to make sure you’re not losing any leads due to technical or usability problems. This is vital at
this stage if you want to continue growing. You should also make sure that your incoming marketing
traffic is being segmented so that you can better monitor the effects of your efforts (Analytics has
great tools for this).

29 
 
You’ve already done a whitepaper or ebook to get more visitors, so now why not try an infographic
related to your industry? Infographics are a great way to share data. Make sure your logo and website
address are highly visible on the graphic for the best results.

And finally at this stage, you may want to consider using expert services (like KISSmetrics) to get
even more out of your efforts.

Step-by-Step Breakdown

Monitor Your Social Network.

Assign or hire someone to actively monitor. Great opportunities can be gained by actively monitoring
your social networks. However this task can be 100% time consuming, so it wise to hire a support
person to perform this task or assign “on guard times” for certain employees. If cost is an issue when
it comes to hiring someone for this task, consider using Odesk.com

Determine how to handle complaints and reputation issues. Having a game plan on how to handle
people complaining about your brand can be very crucial to your online success. Devise a process
and protocol to handle complaints and cries for help.

Surveys, Tracking and Feedback

Sign up for website monitoring. You should sign up for a website monitoring service that will alert you
if your website goes down for any reason.

Sign up for KISSinsights. One of the bests way to provide content, products or services that your
customers want is to ask them by using a survey tool like KISSinsights.

Track everything with UTM tracking. Get in the habit of tracking all your online marketing activities by
using UTM tracking on all links. This is the reason why internet marketing is so awesome, nearly
everything is trackable and measurable! Using analytics like Google Analytics or KISSmetrics, you
can see the effects of all your internet marketing activities.

Use KISSmetrics!

Sign up for a KISSmetrics account. If you really want to take your internet marketing to the next level,
KISSmetrics allows you to A/B test every marketing activity, calculate ROI of each online marketing
activity, provides segmentation analytics, event tracking and more.

Talk to us anytime and ask us for help.. Trying to do every possible online marketing activity is really
hard to accomplish. This is why KISSmetrics is such a useful tool. With KISSmetrics you can
determine which online marketing activities are helping you achieve your goals, therefore allowing you
to focus on the marketing tasks that are actually making a difference to your bottom line. Click here to
try KISSmetrics and you’ll be surprised at how much more you can get out of your online marketing
efforts with our tool. We’re more than happy to discuss the ways in which we can improve your
business. Feel free to talk to us!

About the Authors:

Cameron Chapman is a freelance designer, blogger, and the author of Internet Famous: A Practical
Guide to Becoming an Online Celebrity.

Sean Work is the Marketing Director at KISSmetrics. You can follow him on Twitter right here :)

30 
 
 

Naming your startup– Chris Dixon 
http://cdixon.org/2009/04/18/naming‐your‐startup/ 

Naming your startup

The Name Inspector has a good post today regarding 6 naming myths to ignore. I think it’s
generally right on. Naming is so important and so incredibly hard, especially for consumer internet
companies that not only have to find a good name but also get the URL. I am convinced that a big
part of Twitter’s success, for example, is it has such a great name. Simple word, easy to spell, great
imagery, and also evocative of what the product does without being overly literal.

I have been involved in naming a number of startups, including my two most recent
companies: Hunch and SiteAdvisor. Each time it was a long and painful process. Here are some
things I’ve learned along the way.

1) Probably the most important thing is that the name be easy to spell after someone hears it
pronounced. I was involved in one startup before where every time you said the name the person
says “what?” and then you have to spell it. Trust me, it becomes really tedious and also adds friction
to word-of-mouth buzz.

2) You should have different naming goals for different products. For example, SiteAdvisor was a
security product. You really can’t make security “cool” so we didn’t even try to bother to do that with
the name. Instead we went for a name that helped explain in a very literal way what the product
did. Before we came up with the name SiteAdvisor, I probably had 100 meetings where people said “I
don’t understand what you are building – is it an anti-phishing toolbar, a spyware blocker or
what?”. This included meetings with VC’s who focus on security and other experts. I knew the name
SiteAdvisor was a winner when my father in law wrote the name on a high school blackboard and
asked the kids what they thought the company did and one kid said “They advise you about websites”
(and then he said ” … or construction sites” ). Also we liked the name because we imagined in
the future doing more than just security – for example warning about adult content. (Alas, we never
got that far).

3) I tend to disagree with The Name Inspector about name length. Shorter is definitely better. In
particular the number of syllables is important. SiteAdvisor, while good at describing the product, is
really clunky to pronounce. I also tend to really dislike Latin-y portmanteau names like “Integra”
“Omnitrust” etc. Sounds like a pharmaceutical product.

4) A few things I’ve learned about methodology. I think it’s very rare to have an epiphany where you
come up with a great name. First of all, even if you do, the domain is probably taken and too
expensive. For systematically brainstorming, I really like the Related Words function on
RhymeZone. I try to make lists of words that are sort of related to the product and then look at all the
related words, look at all those words’ related words, etc, making lists of words and word fragments
that sounds good. Then I have a systematic process for checking domains to see if they are
buyable. If you are super lucky (and picked a multiword domain name) you might get it retail, but at
this point almost all .com names (yes, I think you still need to own the .com) are owned by someone
and the question becomes whether they will sell it at a reasonable price. The best case is usually that
it’s owned by a professional domainer and it’s not very monetizable via Adsense (domainers make a
lot of money from Adsense on sites like candy.com so you’d need to offer them a tons of money to
sell it).

31 
 
Naming is tough!

Underhyping your startup – Chris Dixon 
http://cdixon.org/2010/04/06/underhyping‐your‐startup/ 

April 6, 2010

Underhyping your startup

I recently tweeted:

New early-stage start up trend: get big quietly, so you don’t tip off potential competitors.

Chris Sacca agreed:

@cdixon Agreed. As of this morning, I have four companies who don’t want investors mentioning that
they’ve been funded.

Business Insider took these tweets to mean “Stealth mode is back.” But that’s actually not what I
meant. The companies I’m referring to (and I think Chris is referring to) are publicly launched,
acquiring users and generating revenue. They are modeling themselves after Groupon, where the first
time the VC community / tech press gets excited about them, they are already so successful that it’s
hard for competitors to jump in.

This trend strikes me as a response to the fact that 1) raising money from certain investors can be
such a strong signal that it triggers massive investor/tech press excitement, 2) things are “frothy”
now – meaning lots of smart people are starting companies and easily raising lots of money, 3) word
seems to travel faster than ever about interesting startups, and 4) there are big companies like
Facebook and Google who are good at fast following.

I don’t know what to call this but it’s not stealth mode. Maybe “underhype” mode?

Both sides of the marketing equation – Chris Dixon 
http://cdixon.org/2010/10/16/the‐ladies‐night‐strategy/ 

October 16, 2010

The “ladies’ night” strategy

Many singles bars have “ladies’ night” where women are offered price discounts. Singles bars do this
for women but not for men because (heterosexually-focused) bars are what economists call two-
sided markets – platforms that have two distinct user groups and that get more valuable to each
group the more the other group joins the platform - and women are apparently harder to attract to
singles bars than men.

Businesses that target two-sided markets are extremely hard to build but also extremely hard to
compete against once they reach scale. Tech businesses that have created successful two-sided
markets include Ebay (sellers and buyers), Google (advertisers and publishers), Paypal (buyers and

32 
 
merchants), and Microsoft (Windows users and developers). In some cases individuals/institutions are
consistently on one side (buyers and merchants) while in other cases they fluctuate between sides
(Ebay sellers are also often buyers).

In almost every two-sided market, one side is harder to acquire than the other. The most common
way to attract the hard side is the ladies’ night strategy: reduce prices for the hard side, even to zero
(e.g. Adobe Flash & PDF for end-users), or below zero (e.g. party promotors paying celebrities to
attend). Rarer ways to attract the hard side is 1) getting them to invest the platform itself (e.g. Visa &
Mastercard), and 2) interoperating with existing hard sides (e.g. Playstation 3 running Playstation 2
games).

If you are starting a company that targets a two-sided market you need to figure out which side is the
hard side and then focus your efforts on marketing to that side. Generally, the more asymmetric your
market the better, as it allows you to market to each side more in serial than in parallel.

Platform distribution risks – Chris Dixon 
http://cdixon.org/2012/02/14/platform‐distribution‐risks/ 

Platform distribution risks

When your product extends a platform’s functionality, one of the main risks you face is that the
platform could embed your product’s key features within the platform – what is sometimes
called subsumption risk. This happened to a lot of startups in the 90s that built products for the
Windows platform.

When you depend on a platform for distribution (acquiring and retaining users), you take on
different risks. Specifically:

1) Oversaturation . The risk that supply of products on the platform significantly outpaces demand.
This seems to have happened recently to the iOS App Store: there are over 500,000 apps and
counting, and popularity tends to be highly concentrated, making it very difficult for new apps to get
noticed. Oversaturation also happened to Google (organic) results in most query categories in the
last 2000′s.

2) Barriers to discovery . The risk that the discovery methods on the platform aren’t meritocratic.
iOS apps depend upon appearing in iTunes’ Top 25 lists, leading to a “rich get richer” bias, along with
aggressive attempts to game the system. Apple has other app discovery mechanisms like its
Featured Apps and Genius features, but those seem to drive far fewer downloads than the top lists.
Google search has increasingly been favoring Google’s own products and also seems to heavily favor
older, well-entrenched websites, making it very hard for new sites to gain significant SEO traction.
Currently, social networks like Twitter and Facebook seem to have the most meritocratic discovery
mechanisms, which is one reason so many startups target them for distribution.

3) Throttling . The risk that the platform will throttle distribution or monetization (for apps that rely on
paid advertising, throttled monetization also means throttled distribution). Facebook started out letting
apps send unfiltered notifications to users’ timelines but then introduced algorithms that heavily

33 
 
filtered them (thereby entrenching the position of leading app makers like Zynga). Facebook also
started out letting apps charge users directly, but laterchanged that policy and imposed a rev-share.

If you are launching a new website or app, you should have a distribution strategy beyond just “people
will love it and tell their friends about it”. Your strategy should probably involve at least one major
platform. And you should think through the distribution characteristics of the platform and decide if
they are a good fit for your product and how best to mitigate the risks.

Finally, it is worth noting that 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. Today, the most
interesting new platforms are probably Android tablets and emerging social networks like Foursquare
and Tumblr. Betting on new platforms means you’ll likely fail if the platform fails, but also dramatically
lowers the distribution risks described above

MVP to landing page – Ash Maurya 
http://www.ashmaurya.com/2009/11/from‐minimum‐viable‐product‐to‐landing‐pages/ 

From Minimum Viable Product to Landing Pages

A lot (okay a ton) has been written already on landing page design. A great starting point is Chance
Barnett’s Landing Pages That Convert. One of the most important elements of a landing page is the
unique value proposition (UVP). It’s a headline, image, or tagline that needs to engage the visitor in
the first 5 seconds. The “experts” agree that a great UVP can more than compensate for getting
everything else wrong on the page. Since CloudFire is primarily distributed through our website,
getting the UVP right sounded like the next MVP (maximum learning for minimum effort) to tackle.
My strategy was to

Start with a simple layout for the landing page

While keeping all other elements the same, just vary the UVP

Measure engagement

Rinse and repeat

Version 1: A Starting Point

While testing my MVP, I started building a basic landing (and pricing) page in parallel that I would
show potential customers at the end of the interview. CloudFire’s UVP was predicated on the
problem that “Sharing lots of photos and videos is a hassle” so my initial reaction was to come up
with a quantifiable statement that could be verified. I started with:

34 
 
The initial reaction from customers was that they didn’t view the value proposition of CloudFire as
“performance based” but “convenience based”. The 5 minute promise was also a little vague.

This version did also not explicitly call out “who” the product was for, which was part sub-conscious
and part by design. We all want to build mainstream products but trying to act mainstream from
the start is a mistake. You can’t afford to be all things to all people.

Version 2: The Emotional Hook

I then turned to Chance Barnett’s rule on leading with “finished story” benefits and tried connecting
at a more emotional level:

This version did actually get nods of approval from interviewees. It hit the “sharing is a hassle” point
and called “parents” out explicitly.

Of course, testing this way was very skewed as I had the benefit of first pitching and demoing the
customer in person. I decided it was time to drive (buy) a little traffic and test. A concern I had was
that everyone we interviewed had found their existing photo sharing solution through a friend
referral and not through Google. I decided to test StumbleUpon, Facebook, and Adwords anyway.

No lean testing approach would be complete without some A/B split testing, so I came up with 3
variants which I set up using Google Website Optimizer. I thought competition would be fierce in an
existing market such as Photo Sharing, so at this stage, I decided to measure engagement simply as
the visitor reaching the pricing page. This also sped up testing iterations which is key to learning. I
did track signups but wasn’t ready to optimize the signup process just yet.

Variation 1: Simple Way

35 
 
Variation 2: Dead-simple

Variation 3: Fastest Way

Testing Approach 1 – StumbleUpon: A New Alternative

I had read a post on the lean startup circle group about StumbleUpon advertising being a much
cheaper alternative ($0.05 per visit) to Adwords and decided to start there. For those that don’t
know their model, StumbleUpon suggests pages to users that have expressed interest in a particular
topic. Users rate stumbled pages and can recommend them to others. You can select some
demographics (sex, age) but the categories are pretty broad. I tested both Male/Female and Female
only, ages 25-45, under Family and Photography categories. I signed up for $5/day which drove
100 visits per day. While StumbleUpon had no problems driving visits, the bounce rate was 100%.

36 
 
I liken StumbleUpon to a TV remote. People are clicking for pages with some entertainment value
and like TV, engagement for other pages is pretty low. It didn’t take long to realize it was time to
move to another test channel.

Testing Approach 2 – Facebook: Where Customers Hangout

Facebook was appealing because a lot of our customers already had their social networks on
Facebook and used it quite regularly. However, with Facebook, I had the reverse issue from
StumbleUpon. I didn’t get enough visitors per day. The suggested CPCs were high and our CTR
really low. I had heard of similar low performing reports from others and rather than tweaking the
ad copy on Facebook, I decided to test against the elephant in the room – Adwords.

Testing Approach 3 – Adwords: The Elephant in the Room

A ton (maybe too much) has also been written about creating and testing PPC campaigns. I used
some of these techniques to group and test keywords and ad copy variations. The more general
keywords were highly competitive and seemed to get even more expensive from one day to the next.
It was good to learn I wasn’t alone. With highly niched keywords (parent targeted), the competition
was moderate, but the search volume was too low. It wasn’t even a question of advertising budget –
Simply not enough people were searching for “Sharing baby photos” to drive any meaningful search
traffic. Interestingly enough most of the click-throughs were coming from Google’s content
placement channels like YouTube which were expensive ($2-5) and with low engagement (85%
bounce rate).

This validated my earlier finding that SEM might not actually be a viable distribution
channel for CloudFire.

Social proof seems to be king when it comes to reaching and connecting with parents. Influence
based channels like blogs, social media, and viral loops are probably the distribution channels that
will work here.

The biggest frustration, however, was dealing with the lack of learning. There wasn’t enough traffic
to even make the A/B split tests statistically meaningful. These weren’t cheap click throughs and I
had no visibility into why people were bouncing. The message just wasn’t getting through but why…

Testing Approach 4 – UserTesting.com: A Breakthrough

It was time to turn to some usability testing minus the pitch. I had some experience with face to face
usability testing with BoxCloud. They can be done fairly cheaply but require time to find testers,
script the test, and then conduct the test. Cindy Alvarez has a great presentation on User Testing
Tactics. While gearing up for this, I ran acrossUserTesting.com which is a way to run usability
testing over the web for $29 per 15 minute test. The test session is recorded with a screencast (audio
+ video). The only thing you really miss out on is body language. But the advantage of not having to
conduct the test session made it a no-brainer to try.

While $29 per test might sound like a lot, it costs more to run face to face usability testing – gift
certificates, coffee, your time. More importantly though “yet more experts” have shownthat all you
need are 5 testers to uncover 85% of the problems. I was spending as much on Adwords a week, with
not enough learning, so it was worth A/B testing both approaches.

With UserTesting.com, you can be highly selective on the target demographic of the tester. No
checkboxes, just plain text. Mine read:

37 
 
***YOU MUST BE A PARENT THAT CURRENTLY SHARES FAMILY PHOTOS AND/OR VIDEO
ONLINE TO ACCEPT THIS TASK***

Then you give the tester a script to follow. I asked the tester to view the page for 5 seconds and
recount what they remembered. Then asked them to explain the service and highlight what was
different about it and if the difference mattered to them. In other words: Can people understand
the UVP from the landing page and is it really a Unique Value Proposition?

After the first 3 tests it was pretty obvious that people did not get the UVP. They viewed CloudFire as
yet another photo/video sharing service that promised no hassle and ease of use – which were just
empty words to them. CloudFire’s most unique feature was “no uploading required” but I had
purposely kept the headline benefits based leaving the product details to the video. Surely people
would want to watch the 2 minute tour. Only 1 person clicked on that link and she only watched it
half way before concluding she had seen enough. Not one person could see how CloudFire was
different from their existing service.

Version 3: The Video Alternative

Since people weren’t clicking the video, I decided to supplement the headline with more descriptive
text and replace the image area on the right with a slideshow that cycled through highlights of the
video on a set interval.

This version started getting better UVP comprehension but people found the slideshow too busy so I
reverted back to the screenshot and came up with some alternate headlines.

Version 4: Alternate Headlines

The big change here was stating the UVP as a unique feature since the benefit was not resonating.
The usability tests had shown that the term “uploading” was very much part of our customers
everyday vocabulary. So much so that they automatically assumed every photo sharing service
required it. I decided to lead by challenging that assumption.

38 
 
I found the word “instant” didn’t really register with people. I think it’s because “instant” is one of
those abused marketing terms that isn’t always equated to mean “immediately” or “in zero seconds”.
I remember seeing a Google ad one time that read: “Instant Website – Up and running in 30
minutes”.

That said, this version did a lot better than the last in getting the “no uploading required” point
across. Some testers saw this difference immediately, others realized it at some point during the test
window. There were a few that just didn’t see it no matter how much time they spent on the page.

Version 5: Busy Parents

So I made one other change where I put a “No uploading required” starburst on the image itself and
that seemed to do the trick. Almost every tester was now immediately reporting “No uploading
required” and were curious as to what that meant.

Curiosity is the first step towards Engagement

Awesome!

This version is fast-forwarded a few iterations. By then, I had also split-tested a new headline:
“Photo and Video Sharing for Busy Parents” which answered the “what” and “who” of the product as
well as used the words “busy parents” to connect at a more emotional level than just “parents”. It

39 
 
also showed a different call to action button from “Download Now” to “Try us for Free”. The point
was not to hide the fact that CloudFire is downloaded software but to test if that affected
engagement. I’ll go into more on optimizing the signup process later.

Takeaway

The most important takeaway for me was realizing that marketing optimization was not like code
optimization. It’s much harder to correlate causality from raw data and there is no substitute to
talking to real people. So as Steve Blank loves to say: “Get out of the building”.

Avoid the launch – Eric Ries 
http://www.startuplessonslearned.com/2009/03/dont‐launch.html 

Don't launch

Here's a common question I get from startups, especially in the early stages: when should we
launch? My answer is almost always the same: don't.

First off, what does it mean to launch? Generally, we conflate two unrelated concepts into the term,
which is important to clarify right up front.

Announce a new product, start its PR campaign, and engage in buzz marketing activities. (Marketing
launch)

Make a new product available to customers in the general public. (Product launch)

In today's world, there is no reason you have to do these two things at the same time. In fact, in
most situations it's a bad idea for startups to synchronize these events.

Launching is a tactic, not a strategy. In the right situation, it's a very useful tactic, too. In particular, a
marketing launch can help you do three things (courtesy, as is most of my marketing advice, of The 
Four Steps to the Epiphany):

Drive customers into your sales pipeline. This is the usual reason given for a marketing launch, but
for most early stage startups, it's a failure. That's because a marketing launch is a one-time event,
and rarely translates into renewable audiences. Worse, if you are not geared up to make the best use
of those customers when the launch sends them your way, it's a pretty big waste. And, as we'll talk
about in a moment, you don't get a second chance.

Because this reason is so often used as an excuse, I recommend giving it extra scrutiny. Are you
really choosing to engage in marketing in places where your potential customers pay attention? Do
your customers really read TechCrunch? If not, do not launch there. Even if you must launch to your
customers, avoid the urge to also launch in extra places, just because your PR firm can do it at the
same time.

Establish credibility with potential partners. In some businesses, especially in certain industries like
traditional enterprise software, you simply cannot bring a new product to market on your own. You
need to combine your product with others, and this requires partners like OEM's or system

40 
 
integrators. A marketing launch can help you get in the door with those partners, if you're having
trouble getting their attention. Again, it's critical to focus your marketing launch on those
publications, venues, and channels that your potential partners are paying attention to. If you don't
know who the partners are, what they pay attention to, or what kind of message they are open to
receiving - it's too early to launch. Do some Customer Development instead.

Help you raise money. If you are having trouble raising money, sometimes a little PR can help. But
don't be too sure. When VC's and other investors see PR activity, they are going to expect to see
significant traction as a result. If you launch and see only mediocre results, it may actually make it
harder to raise money. Sometimes, it can be easier to raise money pre-launch, if the launch is not
imminent and there is some fear on the part of investors that they might lose the deal when the
launch drives awareness of your company to all their peers.

Those are the potential goals of a marketing launch, but those are not its only effects. It also has
causes other tectonic shifts that many startups don't consider:

A marketing launch establishes your positioning. If you don't know what the right positioning is for
your company, do not launch. Figuring this out takes time, and few entrepreneurs have the patience
to wait it out, because the business plan does such a good job of explaining what customers are
going to think. The problem is that customers don't read your business plan.

When you launch with the wrong positioning, you have to spend extra effort and money later
cleaning it up. For example, we did some early press (in Wired, no less) for IMVU that called us the
next generation of IM and compared us positively to AOL. At the time, we thought that was great.
Now, I look back and cringe. Being compared to AOL isn't so great these days, and IM is considered a
pretty weak form of socializing. When we finally launched for real, we had to compensate for that
early blunder.

Of course, we didn't realize it was a blunder at all. We were actually really proud of the positive
coverage. In fact, at that time we were auditing Steve Blank's class at Haas, since he was an early
investor. Since we hadn't shown him much in the way of progress recently, we actually brought in the
article to show off. I won't recount what happened next (although your can hear us recount it in audio).
Suffice to say I can trace my understanding of what it means to launch to that day. We're lucky we
had a mentor on board who could call us on the bad strategy before it was too late. Most startups
aren't so fortunate.

You have to know your business model. Most startups launch before they've figured out what
business they're in. Pay attention to your fundamental driver of growth. If the product needs to be
tweaked just a little bit in order to convert users into customers, you want to figure that out before
the launch. If the viral coefficient is 0.9, keep iterating until it's 1.1 before you launch. And if your
product doesn't retain customers, what's the point of driving a bunch of them to use it? Spend your
time with renewable sources of customers and iterate.

You never get a second chance to launch. Unlike a lot of other startup activities, PR is not one where
you can try it, iterate, learn, and try again. It's a one-way event, so you'd better get it right.
Remember the story about IMVU's early encounter with Wired? When we finally did launch the
company, even though our product had grown and changed significantly, Wired didn't cover it.

41 
 
I wrote a little bit about the epic launch we had at a previous startup in my post Achieving a failure.
We really did it well, with a great PR firm and great coverage. New York Times, Wall Street Journal,
CNN, the works. But it turned into a crushing defeat, because we couldn't capitalize on all that
attention. The product didn't convert well enough, the mainstream customers we were driving
weren't ready for the concept, and the event fed expectations about how successful the product was
going to be that turned out to be hyper-inflated.

Worse, we tricked ourselves into thinking that what the press said about our success was actually
true. And even worse, we'd cranked up the burn rate in order to be ready to handle all those millions
of mainstream customers we anticipated. When they failed to materialize, the company was in big
trouble.

Why do startups synchronize marketing launch and product launch? I think it has mostly to do with
psychology.

Investors push for it. Many investors have a desire to see their companies lauded publicly. This
actually makes a lot of sense, if you see the world from their point of view. Third-party validation is
one of the few forms of feedback they have available to them. Most investors in startups have a 3, 5
or even 10 year horizon for liquidity. That means they don't really know if they made a good
investment for a very long time. Seeing the press talk about what a great investor they are is a great
form of feedback. As a bonus, it gives them something to show their partners and LP's.

This trend is so strong, this is actually a question I recommend to screen potential investors: "How do
you know it's time to launch the company?" See if their answer is about tactics or strategy.

Founders push for it. Who doesn't want to see their name in print? Investors aren't the only ones
with ego invested in the company. In some ways, founders are even worse. How do they know they
are making progress? They spend so much of their time trying to convince everyone around them
that their idea is great and the company is doing well: employees, investors, partners, friends, family,
significant others - it's a long list. But when they go to sleep at night, who's there to
convincethem that they are making progress? My experience is that many founders actually have a
deep anxiety that maybe they are not succeeding. Sure, they are keeping everyone busy, but are
they really working on the right things? A marketing launch is a temporary salve for these kinds of
worries. Plus, it gives you something you can send home to mom (hi, mom!). Unfortunately, it's not a
long-term solution, so it can become a bit of an addiction and, therefore, a huge distraction.

There is also fear of the accidental launch. Companies that are thinking strategically sometimes
reason like this: "if we do a product launch, members of the public will see our early product. They'll
form their own opinions, maybe see our wrong positioning, and maybe talk to members of the press.
By the time we're ready for a marketing launch, it will be too late. Better to launch now and get
ahead of the story, or stay in closed beta until we're ready."

In most situations, this fear is misplaced. Here was our experience at IMVU, which I have seen
replicated at many other consumer internet startups. We did alienate and mis-position to our early
customers. Luckily, if your product isn't good enough to have traction, you simply cannot alienate
very many customers - because you can't get them engaged with the product. When you finally do
get traction, the millions who see the right positioning will dwarf the few who saw the wrong one.
And you can get an astronomical amount of traction before anyone will write about your company of
their own accord. IMVU was a top-1000 website in the world, with millions of customers and making

42 
 
millions of dollars without getting any significant press coverage.

In fact, we often felt frustrated when new startups with a fraction of our success got terrific write-ups
in Silicon Valley-centric venues. We had to resist the urge to launch just to make that frustration stop.
And, more often than not, we'd watch those companies flame out and die while we continued to grow
steadily every month. If we'd wasted energy chasing their PR coverage, we'd probably have died too.

So don't combine your product launch with a marketing launch. Instead, do your product launch first.
Don't chicken out and do a closed beta; get real customers in through real renewable channels. Start
with a five‐dollar‐a‐day SEM campaign. Iterate as fast and for as long as you can. Don't scale. Don't
marketing launch.

How do you know you're ready for marketing launch?

When you have a strategy for the launch, which means knowing why you're doing it. Make sure it's
solving a problem you actually have, and not one that you think you might have some day.

Know what the success metrics are for the launch. If you know what the strategy is, you'll know how
to tell it was a success. Write it down ahead of time, and hold yourself accountable for hitting those
objectives.

Know what your fundamental driver of growth is. Make sure the math for your model makes sense.
That way, you'll be able to predict the future. When customers come in from your marketing launch,
you'll know exactly what they are going to do and how that benefits your business.

Know where, when, and how to launch. If you know what your strategy is, and you know your target
well (customers, partners, investors) you will also know where they are paying attention, and what
messages they are able to absorb. Hold yourself and your PR agency accountable for developing a
high level of understanding of these questions ahead of time.

One last suggestions. Think about the psychological motivations that are driving you to want to
launch earlier than makes sense for your company. See if there's anything you can do to address
those underlying needs that does make sense. For example, if your employees are feeling frustrated
that they don't get much third-party validation for their work, use a board of advisers to fill that role.
Bring in people that they (and you) respect to evaluate your progress and make suggestions. In my
experience, this has provided an effective boost to morale and also helpful guidance.

When you're ready, enjoy the launch. Until then, resist the urge.

Fred Wilson on marketing – Fred Wilson 
http://www.avc.com/a_vc/2011/02/marketing.html 

Marketing

You asked for it Arnold and 84 others (so far). So I'm gonna talk about marketing.

43 
 
I believe that marketing is what you do when your product or service sucks or when you make so
much profit on every marginal customer that it would be crazy to not spend a bit of that profit acquiring
more of them (coke, zynga, bud, viagra).

A very experienced and successful entrepreneur came into our office a week ago to pitch his latest
company. At the end of his pitch he showed us some numbers. Normally for a raw startup we see
almost all product and engineering expenses (headcount). But his plan had a monthly budget for
customer acquisition. After he left, we talked about his plan and my partners focused on the customer
acquisition number. It bugged us. It felt wrong.

So a few days later, I called him. We talked about what we liked about his plan and pitch and what we
didn't like. I brought up the customer acquisition line item at one point in that call. He said "every
company needs a marketing budget." It seemed like a strong reply but in truth not one of our top
performing companies had a marketing budget in their initial business plan.

Zynga has spent millions on customer acquisition and continues to do so. But in the beginning, when
Zynga was three or four people and they launched Texas Hold'em on the brand new Facebook
Platform, they didn't spend any marketing dollars. That was the beauty of that time and that plan. The
Facebook Platform was free distribution. Zynga rode that free distribution to millions of users, profits,
and additional games. Only then did they start marketing.

In my talk at Harvard Business School, I said "Early in a startup, product decisions should be hunch
driven. Later on, product decisions should be data driven". I've seen that line tweeted a thousand
times since then. Clearly people like that rule. Here's another.

Early in a startup you need to acquire your customers for free. Later on, you can spend on
customer acquisition.

So if you need to acquire customers for free early in a startup, how do you do that? There is no one
right answer, it depends a lot on who your customer is and how hard the sell will be
(consumer/enterprise and free/paid). I'm not an expert on enteprise focused SAAS businesses. I am
not going to address that part of the market here.

For the consumer/free part of the web, there are some obvious things you will want to do:

1) Twitter - so many entrepreneurs have asked me "how did you start a company before Twitter?"
Twitter is that free distribution that Zynga got on the Facebook Platform. You can and should get the
word out about your product/service on Twitter and Facebook. You should encourage your friends to
post about it, retweet about it, and encourage people to try it out. The digerati hangs out on Twitter
and will see the tweets and RTs and many of them will try it out.

2) Social hoooks - Your product/service must be social. It must encourage your users to invite others
to try it out. Hooks into Facebook and Twitter are obvious. Email invites are another obvious feature.
The product should allow people to express themselves in it. Profiles, personalization, etc will allow
the users to feel ownership of the product and tell others about it. Foursquare's adoption of a game
dynamic when it launched is a particularly clever implementation of a social hook. Games are the
most social of all things on the web.

3) Find entry points - MySpace launched in the holywood crowd that were friends of Tom and Chris.
Twitter launched in the SF tech community that were friends of Ev and Biz and Jack. Tumblr launched
in the "roll your own blog" avant garde community that David was part of. Quora launched in the
Facebook alumni community. Facebook launched on Ivy League campuses. You get the idea. Find

44 
 
an obvious group of like minded people who know each other and launch into that community. If they
like it, it will spread throughout that community and eventually beyond.

4) Events - Find live events to launch at. SXSW is famous for breakouts. Twitter and Foursquare are
the two most talked about examples. I worry that SXSW has become so big and so many companies
are planning to breakout there now, that it can't happen anymore. We will see. But there are many live
events that you can attend and galvanize users at. GroupMe did a version of that at the Austin City
Limits music festival. I've heard of companies breaking out at Burning Man, The Democratic National
Convention (Airbnb), and the Sundance Film Festival.

5) PR - Do not hire a PR firm to do your free marketing for you. This is a core capability you must
own. You can and may want to hire a PR firm to supplement your efforts, but that's a different story.
The best companies know how to become the story and work it. Being in NYC helps a lot. Foursquare
is a great example of this. You can laugh at Dennis and Naveen doing fashion shoots but think about
how many new users they got for doing that. It was a stunt like any other stunt they've done. And they
have done hundreds of them. The media eats it up as they always need something to write about.
Twitter is another example of a company that owned its PR. Biz is a master. At the same time Biz and
Jack were iterating on the product, Biz was thinking about the brand, the story, the bird, the logo, the
meaning of Twitter in the world. And he got out there and started telling the story. He is an evangelist
and he did it so well. Twitter would not be Twitter without that effort. If you don't have a Biz or Dennis
on the founding team, find someone who can do this for you. But I will say that the best PR centric
startups have the "media DNA" in the founding team.

6) Search - It is not first on the list for a reason. I don't think search driven businesses are interesting.
Live by SEO, die by SEO. Don't be a google bitch. But you will notice that many of the top consumer
web brands are higly SEO'd. Try searching on a person's name who is active on Twitter. I bet their
Twitter feed will be one of the first five results. It is for my name (if you take out dups). Flickr did this
very well. So does LinkedIn and Crunchbase. SEO is something that takes time to pay dividends. But
you should build your product day one to be search friendly and keep at it. You can break your SEO
with product changes and be careful not to do that.

7) Developers - I've said many times that developers are the new power users. Twitter is the iconic
example. By launching with an almost totally open plaform and a dead simple API, Twitter got
thousands of developers to build products that had "Twitter inside." Those developers and their
products pulled Twitter into the market. Soundcloud is another great example. There are a ton of apps
that people use to create music and other audio experiences that have "soundcoud inside." Each and
every one of those apps is a distribution channel for soundcloud. They are pulling Soundcloud into the
market. So build your product as platform from day one. And once you get traction on your product,
do things that will cause it to become a platform, Foursquare is doing this well. They first got millions
of users and now they are developing a vibrant ecosystem of third party developers. They did
a hackday this past weekend that was very successful.

8) Build a great product - I'll end with a return to where I started. Marketing is for companies who have
sucky products. If you build something that is amazing (think Flipboard or Instagram or Instapaper)
people will adopt it because it is amazing. And you won't have to do much marketing, at least at the
start.

So that's what I got on marketing Arnold. What do you think?

45 
 
 The role of marketing – Rand Fishkin 
http://www.seomoz.org/blog/i‐disagree‐with‐fred‐marketing‐is‐for‐companies‐that‐have‐great‐products 

I Disagree with Fred; Marketing is for Companies that Have Great Products

February 26th, 2011 - Posted by randfish to Entrepreneurship

One of the people I admire and respect most in the technology, startup world is Union Square Ventures' Fred
Wilson. A little more than a year ago, I had the opportunity to sit down and chat with Fred in his New York
offices, just as SEOmoz was ending a failed fund raising attempt. The writer I'd come to know and love through
his blog and tweets shone through - he's affable, humble, smart and considerate. And his firm employed (at that
time anyway) an analyst with professional SEO experience, who also sat in on the meeting.

Today, Fred wrote a post on his blog titled "Marketing."

I strongly disagree with the statement "marketing is what you do when your product or service sucks," and I
mostly disagree that it only pays to use marketing when profit margins are insanely high. As I read it, part of me
wondered , "Isn't the goal of venture capital to help a company scale faster than it could without funding?"

To be fair to Fred, what he calls "marketing" is what I believe many of us in the startup/tech space would call
"advertising" or "paid customer acquisition channels." Later in the post, he says:

46 
 
I disagree less with this point. For some startups, "free" customer acquisition in early stages certainly makes
sense as the primary channel, though I'd question whether the right amount to spend is always $0.00. That
strikes me as both extreme and rarely correct. At the very least, startups should be experimenting with paid
acquisition channels that look compelling - ignoring them simply because they aren't free could really hurt your
growth potential.

My Perspective on Startup Marketing

I've helped a lot of startups in various stages with marketing - through SEOmoz's old consulting business,
through lots of personal relationships, through our Q+A and through events and conferences. Last year,
YCombinator's Paul Graham invited me down to their Silicon Valley offices for a pizza party where I talked
about SEO for startups. I gave a similar talk at Seattle's Techstars a few months ago and a brand new one that I
presented at Twiistup in Los Angeles just a couple weeks ago. I've embedded that presentation below:

Inbound Marketing for Startups in 2011

View more presentations from randfish

I'm a huge believer in inbound marketing, which includes social media, content marketing (blogging,
whitepapers, research, infographics, etc.), SEO, video, Q+A and comment marketing and loads of other free (or
mostly free) channels. Inbound marketing is a powerful way to make consumers aware of your business and
your products, and in my opinion, it's one in which people don't invest nearly enough. I'm worried that Fred's
post will re-inforce a harmful stereotype that I see a lot in the tech startup world.

Product is All That Matters?

For the first few years that I was in the "web world," 1997-2001, there was a dangerous and obvious bias in
startups toward sales and marketing - and branding in particular. But, in the past few years, that pendulum has
swung to the equally dangerous paradigm that product is everything.

47 
 
Don't get me wrong - I think a product-bias in a startup is an extremely healthy thing to have. SEOmoz's focus is
~65% product, 35% everything else, and that ratio is likely to be more product-biased in the future. But I see so
many great startups who need, more than anything, to GET THE WORD OUT.

Let's look in Union Square's Ventures portfolio:

Zemanta - one of USV's companies that everyone who reads this blog should probably know about, yet I'd guess
that <10% do. Certainly, Zemanta has cool product opportunities that it can and should execute, but they also
seriously need to better reach the search marketing community. I've seen them doing so somewhat actively -
sponsoring and speaking at events, some content marketing and outreach, case studies and networking (and
that's just what I've personally observed).

Clickable - another USV-backed venture that's in the marketing space; Clickable helps advertisers manage all
their account on Google, Bing, Facebook and more in one place (which is awesome). Again, I think a 70/30
product/marketing balance makes sense, but there's no way they shouldn't be using the power of inbound
marketing to build awareness and bring their market to their site. No offense intended, but the Clickable blog,
with its anonymous icons and erroneous Facebook integration (note that the same number of people "like" every
post) could use some marketing TLC.

Etsy - back in 2009, when SEOmoz had a small consulting arm, we helped Etsy on some SEOand community
outreach features. From what I've heard and seen, that effort paid off. Here's some Google Trends data (which,

48 
 
granted, is far from perfect):

Some of USV's companies - Twitter, Foursquare, Meetup and, to a slightly lesser extent, Stackoverflow - may
indeed have product built around natural marketing. The very act of using the services creates an incentive to
share, to participate and to discover. But, quite honestly, this is not the reality for most startups, especially
those who are B2B focused.

In fact, there are a ton of great startups that need at least as much marketing as they do product growth. For
example:

Trunk.ly - already a phenomenally useful and addictive product. My understanding is they're seeking
investment to help grow/scale and, more than anything, they need a few dozen to hundred more evangelists and
articles extolling their virtues. I think even Fred would agree that marketing is a "must."

Namesake - a very cool conversation and opportunity platform, Namesake is another example of a startup that
could benefit from significantly more brand-awareness and participation. Whatever dirt Quora has on
TechCrunch's editors - yeah, they should get some of that.

The Resumator - following several years of successful operation and growth, Resumator has a lot of customer
feedback and a fairly mature product that's truly useful and powerful. Awareness among HR professionals and
SMBs who struggle with the inefficiencies of hiring, however, is low. It's possible some unique product features
would skyrocket Resumator to the moon, but I'd guess that marketing (both inbound and through paid channels)
is one of the best investments they can make.

Markup.io - this seriously slick and useful app could certainly benefit from additional features and product
maturity, but it's already solving a big pain for web workers of all stripes. More people who have this pain need
to know about Markup - marketing is the answer (at least, to that problem).

I'm not a believer that a market will simply flock to a great product. Many great products have died due to
obscurity; only a few great products have succeeded in spite of rejecting marketing. Fred uses the examples of
Twitter and FourSquare; Google could be another reasonable example. Those are outliers, and while they
might be the types of companies Fred is seeking to invest in, they're the exception, not the rule, and thus I worry
that the advice and perspective will have the wrong impact.

An Update from Fred

As I was writing this post, Fred published an update he called "The Bug Report." Unfortunately, in my opinion,
there's still a lot of bad advice.

49 
 
Ack! Fred is, whether intentionally or not, one of the startup world's most influential marketers and that carries
over to the companies he invests in as well. When Zemanta's team reached out to talk to me, they had only to
mention Fred's backing to get my attention. When Fred first started writing about Disqus, using their plug-in on
his site and evangelizing their value, he became one of their biggest marketing channels.

Fred Wilson is, undeniably, a powerhouse of an inbound marketer. When I saw that he was writing about
marketing, I hoped to hear his perspective on the incredible channels he's built through content and social
media. I wanted to know how he helped to bring legitimacy and media attention to New York as an emerging
startup epicenter. I was curious about how he built a following on his blog, how he picked topics to write about,
how he coached his companies to build their own inbound marketing. I was hoping for the same transparency
on his clearly strategic and well-planned marketing campaigns (e.g. the startup visa) that he offers with
his MBA Monday series.

And reading his posts, I felt let down. Perhaps I've just been so impressed with the rest of his written work that
my standards are too high.

The final point of contention between us is Fred's view on marketing professionals:

Being not only a marketing professional, but someone who's done work to help Fred's portfolio companies with
marketing, it's hard not to take personal offense. I don't know if he'd loop in the consulting efforts we provided
to Etsy or the small amounts of pro bono assistance I've given to Zemanta in that group, but I know that any
attack on marketing professionals of this magnitude is going to cause ripple effects.

So, instead of engaging directly, let me just point out some examples of amazing marketing professionals who've
had dramatic, positive impacts on our businesses and others:

Probably no one is more famous for startup marketing than Sean Ellis, who's helped companies like Dropbox,
Xobni, LogMeIn, Eventbrite and many more with early stage, inbound marketing. I've spoken to founders from
several of those companies and they've raved about him.

The team at Unbounce has built a great product in a somewhat crowded space, and while their engineering
differentiation is quite remarkable, it's been the efforts of Oli Gardner, Director of Inbound Marketing, who's
gotten them onto the radar of the web marketing community (at least, from my perspective).

50 
 
UK-based Conversion Rate Experts has showcased a lot of their incredible work, which needs little introduction
here. They helped SEOmoz scale from a business that focused almost entirely on product to one that finally took
some pride in its conversion funnel and ability to sell. I rave about them every chance I get.

SEOmoz's own marketing team, under the direction of Jamie Steven, has accelerated the business in a way that
can't be underestimated. Yes - we've got a fantastic engineering team, we built some uniquely useful products in
Linkscape, Open Site Explorer, the Web App and the mozBar, but without our marketing efforts, we'd probably
be a much smaller, more niche company and the amazing efforts of our product and engineering teams could
impact only a fraction of the customers we serve today.

There's many, many more examples I can and should showcase, but reflecting on it, I don't need to. I think this
is a great opportunity to use the comments to showcase what you - as inbound marketers - have been able to
accomplish. Let's take Fred's assertion that "marketing professionals do a lot of damage" and prove it wrong,
example by example.

I can't wait to read what you've got to share, and as an added incentive, the moz team will send a nice care
package to the comment (or comments) exemplifying the power of inbound marketing with the most thumbs up.

The 5 Minute Guide To Cheap Startup Advertising – Rob Walling 
http://onstartups.com/tabid/3339/bid/43774/The‐5‐Minute‐Guide‐To‐Cheap‐Startup‐Advertising.aspx 

The 5 Minute Guide To Cheap Startup Advertising

The following is a guest post by Rob Walling. Rob Walling has been an
entrepreneur for most of his life and is author of the book Start Small, Stay
Small: A Developer's Guide to Launching a Startup. He also authors the top
20 startup blog Software By Rob, that's read by tens of thousands of startup
entrepreneurs every month and he owns the leading ASP.NET invoicing
software on the market in addition to a handful of profitable web properties.

Imagine that you've just completed version 1 of your product and you're preparing for
launch. You’ve greased the wheels with a few bloggers, targeted some keywords with
SEO, created a bit of linkbait, and scheduled the press release to launch in the morning.
At this point your co-founder turns to you and says: “What are we going to do with the
$300 we have stashed away for advertising?” Consider this your lucky day. The goal of
this article is to provide you with the core of what you need to know about cheap startup
advertising as quickly as possible, so you can start spending that ad budget wisely. Let's
get started.

Two Key Advertising Strategies

The half-life of advertising traffic is zero. This means that the moment you stop shelling
out cash, the traffic stops. The problem is that with typical conversion rates of 1-2%
you're paying for 98 or 99 out of every 100 people to walk away and never come back to
your site. To combat this inherent wastefulness of advertising, I have two key strategies
I recommend no matter which method of advertising you use.

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Strategy #1: Try to Get Permission

Seriously consider offering something in exchange for a visitor's email

address . It can be a free trial, a free report, or maybe even a free book. But gaining
the means and permission to contact that customer again will increase your
conversion rate over time in most cases. There is great power in an email list.

Strategy #2: Use Advertising to Test

Use advertising as a testing tool rather than a long-term stream of customers .

Very few startups can withstand the cash outlay required to turn advertising into a
marketing activity with positive ROI. Even if you figure it out, advertising is a volatile
marketing medium. Prices increase rapidly in online advertising as new competition
crops up or prospects grow bored of your ad and your click through rate drops. When
this happens, all of the time you invested in optimizing your ad campaign is
*poof*...gone. So instead of relying on ad traffic as an ongoing stream, use it for what
it's best at: the ability to generate a slew of visitors very quickly, and to be turned off
just as quickly. This kind of traffic source makes it great for split testing and user
behavior testing using tools like Clicktale and Crazyegg. It also gives you insight into
how certain traffic converts for you. With properly tracked conversions and an ad on
Facebook, you can determine that men from 35-45 convert at a rate 15% lower than
women of the same age. This is valuable information, especially early in your marketing
effort when you're still trying to figure out the ideal market for your application. Often
this is not the largest market; it's the one to whom you can market for the lowest cost.
As another example, with AdWords you can learn in a hurry which keywords convert for
you, and which don't. This is insanely valuable as you invest the time and money on the
long-haul of search engine optimization. Knowing the keywords that really convert for
your business, as opposed to the ones that you think will convert, can save you piles
of cash and many months of SEO effort.

The "First Five" Advertising Options

With the above strategies in mind, let's look at the first five advertising options you
should consider.

Option #1: Niche Advertising

As a startup, there are hundreds of general advertising options available, and thousands
more niche opportunities. Depending on the niche you're catering to you should be able
to find a forum, blog, magazine or website in which to spend some ad dollars. The
tighter the niche the better. Remember that niche sites tend to be cheaper to advertise
on and drive more targeted traffic, which makes a huge difference in your conversion
rate. (And if you're not targeting a niche because you want your audience to be the
"whole world," you're going to need a lot more than $300 in your ad budget). In general,
if you are marketing to a niche you will know the sites to target. If you don't it's time to
pound the pavement and find out what they are. By "pound the pavement" I mean
search on Google and contact people in the niche to find out where they hang out online.
Two reputable niche ad networks I've worked with in the past are:

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InfluAds - With an increasing number of advertising "communities" covering design &
UX, startups and entrepreneurs, work & productivity and web development, InfluAds can
work with budgets as small as the $300-400 range. They sell a minimum set of granted
impressions, and if more traffic is available during a month then existing advertisers
receive it for free. Image ads only.

BuySellAds - Though they've traditionally focused on the design & UX space, BuySellAds
is in the process of branching into many other niches. This image-only ad network was
the primary source of traffic for a design-oriented website I owned, and made the
difference between a few hundred dollars a month in sales, and a few thousand.
Advertising is purchased by impression or on a monthly basis from individual advertisers,
meaning each offers different pricing. But the minimum buy is very cheap - in the $10-
$20/month range.

Option #2: Google AdWords

Ad Format: Text or image

Ad Components (for text ads): 25-character deadline, 2 lines of body copy @ 35

characters each, 35-character display URL

Approval Process: Automated, with manual review if you trip a filter

A few years ago, Google AdWords was great for startups. Many niches were untouched,
and 5 and 10 cent clicks were commonplace. But these days, the vast majority of niches
worth pursuing have ever-escalating click prices as more advertising dollars move online,
including dollars from large corporations that don't blink an eye about spending $5 to
produce a single visitor to their website. With a 1% conversion rate you need a $500
lifetime customer value to break even. This is more than a stretch for most startups who
are scraping by on 0.5% conversion rates and sub-$100 lifetime customer values (at
least to start with). But with Google carpet-bombing $75 AdWords coupons to every
business in the civilized world, the number of advertisers, and thus the competition, is
increasing. For the most part, the days of cheap clicks are over. The $1-2 per click I
used to pay to advertise my invoicing software has become a negative ROI for me at $4-
5 per click. But all is not lost. There is still a place in the backwoods of AdWords where
the wild-west mentality (and cheap clicks) reign. That place is the content network.
People traditionally think of Google AdWords as the ads that appear to the right of the
search results. But the lesser known cousin of search ads are the ads that appear in
every AdSense block you see around the web. These are ads placed through the Google
AdWords content network. The content network is less targeted, higher volume, and
typically much cheaper to advertise on, than the search results. While we don't have
time here to delve into specifics of how to place ads on the content network, the most
consistent approach I've seen that works over the long-term is to use their cost-per-
action tool called the Conversion Optimizer. There's a great write-up of how it works
from Patrick McKenzie of Bingo Card Creator fame, here. There are also some helpful

53 
 
tips on advertising on the content network here. And if you're willing to drop a few
bucks, by far the best AdWords book available is the Ultimate Guide to Google AdWords,
which includes a section on using the content network.

Option #3: Facebook

Ad Format: Text with required image

Ad Components: 110x80 image, 25 character headline, 135 characters of body copy

Approval Process: Manual (sometimes slow)

Facebook is still viable for startups with its ability to deliver 10-15 cent clicks under the
right circumstances . But it's a bit like the Wild West: if you approach Facebook
advertising incorrectly you will pay a premium, around 75-90 cents per click. The value
of Facebook is its ability to show your ads to exactly who you want to see it based on
information in a user's profile. You can easily segment on gender, age, location,
relationship status and a number of other fixed parameters, along with thousands of
interests and occupations you can target using keywords. The key to low cost Facebook
clicks is having a high click through rate (CTR). The key to a high CTR is a combination
of a powerful image, an engaging headline, and laser-focused targeting. Due to space
constraints we're not going to cover the basics of choosing a powerful image or writing
an engaging headline. Not when there are perfectly good articles already written on the
subject for those who would like to know more: choosing an image / writing a headline.
But once your ad is written, there is a trick to achieving those 10 cent clicks. Based on a
tip from my friend JD, I now use the following method with Facebook ads:

Target your demographic information so tightly that you can write a headline that
addresses them specifically. Example: if you are selling shoes online to the U.S. market,
create 10 different versions of the ad, one for each of the major metro areas in the U.S.
Also include the qualifying "interests" keyword: shoes. Now make each ad headline
address its group specifically, using a formula like "Need Shoes in [city name]?"

Start the ads with a modest budget of, say, $5-10 per ad per day.

After 12-24 hours review the ads. Some will have high CTRs and costs per click around
10-15 cents. Others will have low CTRs and clicks in the 80-90 cent range.

Pause the higher cost ads and increase the budget for the low cost ads to whatever you
can afford; $100 per day or more per ad.

For a few days you will receive extremely low-cost, targeted traffic. But since you've
chosen a small group of people, they will start to tune out the ad rather quickly. At this

54 
 
point your CTR will drop and your cost will climb. Pause the ad, and start over with new
cities, new images or new headlines.

This approach requires ongoing maintenance but if you can generate targeted, 10-cent
clicks it's worth the effort.

Option #4: StumbleUpon

Ad Format: not applicable

Ad Components: just your URL

Approval Process: Manual

I recently advertised my developer's guide to launching a startup on StumbleUpon. The

plus side of StumbleUpon is that all clicks are 5 cents. The downside is the bounce rate is
high since people are basically channel surfing. I achieved a 96.88% bounce rate in my
experiment, with an average stay of 2 seconds. I wonder if it was something I said? In
my test, only 25 visitors stayed longer than 5 seconds. I paid $50 for 1000 clicks, but
since only 25 of them stayed long enough to read anything, I effectively paid $2 per
click. Your mileage may vary, but through this and other experiments I've gathered the
following tips for advertising on StumbleUpon:

Your #1 goal is to get stumblers to stay longer than 5 seconds. Your #2 goal is to get
them to up-vote your page. Paying $50 for 1000 clicks is one thing. Having it go viral
and receiving 10,000 clicks for the same price is another.

Don't send StumbleUpon traffic to a landing page that asks for an email address.
StumbleUpon users are notoriously fickle about providing their email.

People stumble to be entertained, so if your page doesn't have the potential to go viral
or turn into linkbait, you will not likely fare well.

Blog-like content and videos seem to work best. Anything that resembles a traditional
landing page will bomb.

Option #5: Reddit

Ad Format: Text with optional image

Ad Components: 70x70 image, title, URL

Approval Process: Manual (two-day lead time)

Reddit uses an interesting approach for their ad pricing: advertisers bid a certain amount
per day, all of the money goes into one big pot, and each advertiser receives their share
of the impressions based on the percetage of funds they contributed. It's a simple
system, but it means there's a bit of uncertainty about what you're going to get for your

55 
 
money. However, Reddit has the potential to provide some very cheap clicks - I've seen
as low as 3 cents - if you play your card right. Similar to StumbleUpon, Reddit provides
your ad with the potential to go viral. Gabriel Weinberg has agreat write-up of the
20,700 clicks he scored for 3.14 cents each for his new search engine Duck Duck Go. His
eye-catching image and tech-focused startup served him well with the audience. As he
says:

First, a search engine ad is a good fit for reddit ads in general. It has broad market
appeal and redditters in general like trying out new technology. Second, I think the ad is
particularly well structured. The circular duck icon draws your attention, is contrasting to
site colors, and sticks out because it is a circle (as most images are square). I believe
the title also has appeal.

Gyutae Park also has a nice write-up of the 434 clicks he purchased for 9 cents
each here. One of my recent experiments was a bit more pricey: 187 clicks at 40 cents
each. My lackluster performance was a combination of landing on a competitive
advertising day, and using a poor-quality header image. In retrospect, I have no idea
what I was thinking using this unreadable

image: Redd
it ads are so simple (just two visible components) that the only tip I have is self-evident:
your image has to rock, and so does your title. It's all about choosing an image and
headline that makes people click.

Conclusion

To conclude, I want to reiterate what I said early in this article: unless you have deep
pockets think of advertising not as a long-term traffic strategy, but as a testing tool to
improve your website and find out more about your ideal visitor. Few bootstrapped
startups can withstand the cash outlay required to turn advertising into a marketing
activity with a positive ROI, but that shouldn't keep you from testing the waters to find
out for yourself. I look forward to hearing about your advertising experience and
recommendations in the comments. 

   

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 Marketing strategy 
Marketing strategy 

Pick Your Early Beta Customers Very Carefully– Ben Yoskovitz 
http://www.instigatorblog.com/be‐selective‐in‐early‐beta‐programs/2011/11/16/ 

Pick Your Early Beta Customers Very Carefully

The goal of a startup is to find a sustainable, repeatable and scalable business model. And so
much of a startup’s success is dependent on the early “beta period” where you provide access (to
your product) to a limited group of prospects. If the beta period is a complete flop (no one uses the
product, feedback is poor, etc.) it doesn’t mean the startup is a failure, but the company has to be in a
position to learn from those setbacks, adjust and try again. If the beta period is a roaring success,
then fantastic, you’re most likely ready for the next step (which typically involves opening up access,
starting to charge money, etc.)

I’d bet that most beta periods end up somewhere in the middle. And many go off the rails through the
process because of a startup’s eagerness to scale (before proving sustainability and repeatability)
and a lack of focus.

Getting people to sign up for your beta is getting easier and easier. GoInstant has ~2,000 people on
its waiting list. I’ve seen startups with 100x that number. But finding the perfect people or customers in
that list is another story. This is where it’s so important to have a hypothesis and assumptions around
the ideal customer. This is true whether you’re B2B or B2C (but more relevant for B2B companies.)
Without a strong definition of your supposed ideal customer, it becomes too tempting and too easy to
hand out beta accounts like candy. Being able to say you have thousands of “customers” at the
beginning sounds great and may feel like momentum, but it’s the worst vanity metrics
possible. For starters, they’re not customers (unless they’re paying), and secondly, it’s so early in the
process you really have no clue if any of them will use your product successfully.

For each beta account that you hand out you want to be actively soliciting feedback and working with
them. Adding too many people into an early beta increases your workload, while decreasing your
focus. And if the customers range quite extensively, their use cases are different, and their
requirements, product demands, etc. are all over the map. Now you’re left confused and uncertain as
to what you should be doing, and you’re suddenly building a product with too many masters.

With a strong hypothesis around your ideal customer and ideal use cases, you can be
extremely selective around who comes into the beta. Screen your beta customers. Make it clear
that its a selective process, and your goal isn’t big numbers of mediocre users, but a small number of
insanely passionate and successful users.

Think of it as an initial cohort that you’re going to actively work with. If the results are less than stellar,
you can evaluate the reason(s) for that. Maybe the product really isn’t ready, but hopefully the
feedback from this small and similar group of beta customers is consistent and can drive the
appropriate learning and change. Or maybe they’re the wrong type of customer. You can then find
another group/category of beta customers and try again.

You can also let in a few outliers into your beta program — chase a few of the (potentially) interesting
but diverse leads — and see what happens. One of these may turn out to be your ideal customer and

57 
 
lead to a lot of significant learning and change for your startup. But only do this in an extremely
controlled way. And make it clear internally, that you’re taking on added risk by doing so.

Your initial beta customers have an incredible amount of influence over the direction of your
startup, whether intentionally or not. If the group is too big and de-focused you run the risk of
losing yourself in the noise. The experiment (which is exactly what a beta program should be) will
have too many variables to tease out the most important lessons, and leave you with some great big
vanity metrics (like # of users) but incredibly poor actionable metrics that really matter.

How to get your first 1,000 users – Vinicius Vacanti 
http://viniciusvacanti.com/2011/02/08/how‐to‐get‐your‐first‐1000‐users/ 

How To Get Your First 1,000 Users

FEBRUARY 8, 2011 COMMENTS

The good news is that it’s easier than you

think to get 1,000 people to try your site.

The bad news is that it’s really hard to get those people to turn into users, users that
create an account, users that come back repeatedly and users that tell their friends
about your site.

This post is about how to get 1,000 people to try your site so you can find out what isn’t
working, iterate and keep trying to build a site that people, other than your mom,
actually come back to. I’ll write a future post on how to retain those users.

Get Yourself a Domain Name and a Splash Page

You should set up your splash page today. Not tomorrow, today. In terms of the
domain name, it’s okay if you don’t love your domain name; you can change it later
though it’s always easier to pick a good one from the start.

Once you get your domain name, you should use a service like unbounce to create a
simple splash page. You don’t need a programming background to create this page.

The goal of the splash page is to collect email addresses from visitors. How do you do
that? The splash page tells a user very clearly what problem your site will solve for
them. If the user submit their email address, you’ll give them early access to the site

58 
 
when it’s ready. For Yipit, the splash page said: “Get All the Best Daily Deals in Your
City”. For Tumblr, it’s “The Easiest Way To Blog”.

Those email addresses become your early test users. When your prototype is ready to be
tested, you’ll email a portion of these users and get them to test-drive your prototype.
You’ll iterate and invite more users from your list till the product works.

Now, how do you get people to visit your splash page?

How To Drive People to Your Splash Page

There is no shortage of ways to get people to your splash page. The following are things
we at Yipit did and things we’ve seen our friends do:

Add Link to Your Email Signature. Seems obvious, but most people don’t do this. You
should have your value proposition at the bottom of your email with a link to your splash
page. For us, it was: “Get All the Best Daily Deals in Your City: http://yipit.com”

Add Link to All Your Web Profiles. Add a link to your splash page on your Facebook,
Linkedin, Twitter and every other account you have. Now you might see why it helps to
be a high profile social media user.

Create a Demo Video. Even if your prototype isn’t ready, create a demo video of what
your prototype will be doing. Dropbox did this and their video appeared at the top of
Digg giving them 100,000 email addresses wanting access to their site. You can also add
this video to your splash page to help increase conversion of people submitting their
email addresses

Be Full Entrepreneur. When I went to tech events, friend’s drinks, family gatherings, I
would pitch everyone on Yipit. Painful, yes. But, it got me good at pitching Yipit and
those people would go home and sign-up to check it out.

TechCrunch and other tech blogs. It will be hard to get press for your site if you can’t
give the blogger a prototype to use. But, if you do have a working prototype, this the
easiest way to get people to your splash page. For all three of our projects, 140it.com,
UnHub.com and Yipit.com, we were able to get TechCrunch to write about us just by
submitting it to through their news submission form. If you can give the bloggers
some beta codes for their readers, that makes it more likely they’ll write about your
site. Just make sure you’re ready for it. If you have a very good demo video, they
might be willing to write about you without the prototype.

HackerNews. HackerNews is a great community of entrepreneurs who are willing to

give you good advice on your startup. You need to have a working prototype and let
them look at the site directly, though. Here’s some great advice on how to submit to
HackerNews.

Facebook Ads and Google Adwords. This is actually really hard and often pretty
expensive. We were never able to really pull this off despite several attempts.

Start a company blog. The blog should be focused on providing helpful advice on the
problem you are helping consumers solve. Kissmetrics, a startup focused on helping

59 
 
websites with analytics, runs an excellent blog on helping startups think through
user acquisition. This strategy involves a lot of work so only do it if you have a really
good idea for the content you want to create and think that users will appreciate it.

Some final tips and notes:

Your list will get stale. The longer you wait to invite people to your prototype, the
smaller the percentage that will respond to your invite email. You can try to keep the list
active by sending them occasional updates on the product.

I recommend you give the users a survey after they submit their email
addresswhere you collect information from them regarding what they are hoping your
site will accomplish for them. I have heard good things about surveymonkey

Encourage users to tweet, share on facebook, or email your site to their friends.
One way people have done this successfully is to promise the user earlier access to the
prototype if they invite 3 friends.

Now that you know how to get people to your site, I’ll write a future post on what you
need to do to make sure those 1,000 people actually stay on your site.

If you have employed any other techniques that have worked well, comment below and
I’ll add them to the list.

1000 true fans – Kevin Kelly 
http://kk.org/thetechnium/archives/2008/03/1000_true_fans.php 

1,000 True Fans 

The long tail is famously good news for two classes of people; a few lucky aggregators,
such as Amazon and Netflix, and 6 billion consumers. Of those two, I think consumers
earn the greater reward from the wealth hidden in infinite niches.

But the long tail is a decidedly mixed blessing for creators. Individual artists, producers,
inventors and makers are overlooked in the equation. The long tail does not raise the
sales of creators much, but it does add massive competition and endless downward
pressure on prices. Unless artists become a large aggregator of other artist's works, the
long tail offers no path out of the quiet doldrums of minuscule sales.

Other than aim for a blockbuster hit, what can an artist do to escape the long tail?

One solution is to find 1,000 True Fans. While some artists have discovered this path
without calling it that, I think it is worth trying to formalize. The gist of 1,000 True Fans
can be stated simply:

A creator, such as an artist, musician, photographer, craftsperson, performer, animator,

designer, videomaker, or author - in other words, anyone producing works of art - needs
to acquire only 1,000 True Fans to make a living.

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A True Fan is defined as someone who will purchase anything and everything you
produce. They will drive 200 miles to see you sing. They will buy the super deluxe re-
issued hi-res box set of your stuff even though they have the low-res version. They have
a Google Alert set for your name. They bookmark the eBay page where your out-of-print
editions show up. They come to your openings. They have you sign their copies. They
buy the t-shirt, and the mug, and the hat. They can't wait till you issue your next work.
They are true fans.

To raise your sales out of the flatline of the long tail you need to connect with your True
Fans directly. Another way to state this is, you need to convert a thousand Lesser Fans
into a thousand True Fans.

Assume conservatively that your True Fans will each spend one day's wages per year in
support of what you do. That "one-day-wage" is an average, because of course your
truest fans will spend a lot more than that. Let's peg that per diem each True Fan
spends at $100 per year. If you have 1,000 fans that sums up to $100,000 per year,
which minus some modest expenses, is a living for most folks.

One thousand is a feasible number. You could count to 1,000. If you added one fan a
day, it would take only three years. True Fanship is doable. Pleasing a True Fan is
pleasurable, and invigorating. It rewards the artist to remain true, to focus on the unique
aspects of their work, the qualities that True Fans appreciate.

The key challenge is that you have to maintain direct contact with your 1,000 True Fans.
They are giving you their support directly. Maybe they come to your house concerts, or
they are buying your DVDs from your website, or they order your prints from Pictopia.
As much as possible you retain the full amount of their support. You also benefit from
the direct feedback and love.

The technologies of connection and small-time manufacturing make this circle possible.
Blogs and RSS feeds trickle out news, and upcoming appearances or new works. Web
sites host galleries of your past work, archives of biographical information, and catalogs
of paraphernalia. Diskmakers, Blurb, rapid prototyping shops, Myspace, Facebook, and
the entire digital domain all conspire to make duplication and dissemination in small

61 
 
quantities fast, cheap and easy. You don't need a million fans to justify producing
something new. A mere one thousand is sufficient.

This small circle of diehard fans, which can provide you with a living, is surrounded by
concentric circles of Lesser Fans. These folks will not purchase everything you do, and
may not seek out direct contact, but they will buy much of what you produce. The
processes you develop to feed your True Fans will also nurture Lesser Fans. As you
acquire new True Fans, you can also add many more Lesser Fans. If you keep going, you
may indeed end up with millions of fans and reach a hit. I don't know of any creator who
is not interested in having a million fans.

But the point of this strategy is to say that you don't need a hit to survive. You don't
need to aim for the short head of best-sellerdom to escape the long tail. There is a place
in the middle, that is not very far away from the tail, where you can at least make a
living. That mid-way haven is called 1,000 True Fans. It is an alternate destination for an
artist to aim for.

Young artists starting out in this digitally mediated world have another path other than
stardom, a path made possible by the very technology that creates the long tail. Instead
of trying to reach the narrow and unlikely peaks of platinum hits, bestseller blockbusters,
and celebrity status, they can aim for direct connection with 1,000 True Fans. It's a
much saner destination to hope for. You make a living instead of a fortune. You are
surrounded not by fad and fashionable infatuation, but by True Fans. And you are much
more likely to actually arrive there.

A few caveats. This formula - one thousand direct True Fans -- is crafted for one person,
the solo artist. What happens in a duet, or quartet, or movie crew? Obviously, you'll
need more fans. But the additional fans you'll need are in direct geometric proportion to
the increase of your creative group. In other words, if you increase your group size by
33%, you need add only 33% more fans. This linear growth is in contrast to the
exponential growth by which many things in the digital domain inflate. I would not be
surprised to find that the value of your True Fans network follows the standard network
effects rule, and increases as the square of the number of Fans. As your True Fans
connect with each other, they will more readily increase their average spending on your
works. So while increasing the numbers of artists involved in creation increases the
number of True Fans needed, the increase does not explode, but rises gently and in
proportion.

A more important caution: Not every artist is cut out, or willing, to be a nurturer of fans.
Many musicians just want to play music, or photographers just want to shoot, or
painters paint, and they temperamentally don't want to deal with fans, especially True
Fans. For these creatives, they need a mediator, a manager, a handler, an agent, a
galleryist -- someone to manage their fans. Nonetheless, they can still aim for the same
middle destination of 1,000 True Fans. They are just working in a duet.

Third distinction. Direct fans are best. The number of True Fans needed to make a
livingindirectly inflates fast, but not infinitely. Take blogging as an example. Because
fan support for a blogger routes through advertising clicks (except in the occasional tip-
jar), more fans are needed for a blogger to make a living. But while this moves the

62 
 
destination towards the left on the long tail curve, it is still far short of blockbuster
territory. Same is true in book publishing. When you have corporations involved in taking
the majority of the revenue for your work, then it takes many times more True Fans to
support you. To the degree an author cultivates direct contact with his/her fans, the
smaller the number needed.

Lastly, the actual number may vary depending on the media. Maybe it is 500 True Fans
for a painter and 5,000 True Fans for a videomaker. The numbers must surely vary
around the world. But in fact the actual number is not critical, because it cannot be
determined except by attempting it. Once you are in that mode, the actual number will
become evident. That will be the True Fan number that works for you. My formula may
be off by an order of magnitude, but even so, its far less than a million.

I've been scouring the literature for any references to the True Fan
number. Suck.com co-founder Carl Steadman had theory about microcelebrities. By his
count, a microcelebrity was someone famous to 1,500 people. So those fifteen hundred
would rave about you. As quoted by Danny O'Brien, "One person in every town in Britain
likes your dumb online comic. That's enough to keep you in beers (or T-shirt sales) all
year."

Others call this microcelebrity support micro-patronage, or distributed patronage.

In 1999 John Kelsey and Bruce Schneier published a model for this in First Monday, an
online journal. They called it the Street Performer Protocol.

Using the logic of a street performer, the author goes directly to the readers before the
book is published; perhaps even before the book is written. The author bypasses the
publisher and makes a public statement on the order of: "When I get $100,000 in
donations, I will release the next novel in this series."

Readers can go to the author's Web site, see how much money has already been
donated, and donate money to the cause of getting his novel out. Note that the author
doesn't care who pays to get the next chapter out; nor does he care how many people
read the book that didn't pay for it. He just cares that his $100,000 pot gets filled. When
it does, he publishes the next book. In this case "publish" simply means "make
available," not "bind and distribute through bookstores." The book is made available,
free of charge, to everyone: those who paid for it and those who did not.

In 2004 author Lawrence Watt-Evans used this model to publish his newest novel. He
asked his True Fans to collectively pay $100 per month. When he got $100 he posted
the next chapter of the novel. The entire book was published online for his True Fans,
and then later in paper for all his fans. He is now writing a second novel this way. He
gets by on an estimated 200 True Fans because he also publishes in the traditional
manner -- with advances from a publisher supported by thousands of Lesser
Fans. Other authors who use fans to directly support their work are Diane
Duane, Sharon Lee and Steve Miller, and Don Sakers. Game designer Greg
Stolze employed a similar True Fan model to launch two pre-financed games. Fifty of his
True Fans contributed seed money for his development costs.

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The genius of the True Fan model is that the fans are able to move an artist away from
the edges of the long tail to a degree larger than their numbers indicate. They can do
this in three ways: by purchasing more per person, by spending directly so the creator
keeps more per sale, and by enabling new models of support.

New models of support include micro-patronage. Another model is pre-financing the

startup costs. Digital technology enables this fan support to take many
shapes. Fundable is a web-based enterprise which allows anyone to raise a fixed amount
of money for a project, while reassuring the backers the project will happen. Fundable
withholds the money until the full amount is collected. They return the money if the
minimum is not reached.

Here's an example from Fundable's site;

Amelia, a twenty-year-old classical soprano singer, pre-sold her first CD before entering
a recording studio. "If I get $400 in pre-orders, I will be able to afford the rest [of the
studio costs]," she told potential contributors. Fundable's all-or-nothing model ensured
that none of her customers would lose money if she fell short of her goal. Amelia sold
over $940 in albums.

A thousand dollars won't keep even a starving artist alive long, but with serious
attention, a dedicated artist can do better with their True Fans. Jill Sobule, a musician
who has nurtured a sizable following over many years of touring and recording, is doing
well relying on her True Fans. Recently she decided to go to her fans to finance the
$75,000 professional recording fees she needed for her next album. She has raised close
to $50,000 so far. By directly supporting her via their patronage, the fans gain intimacy
with their artist. According to the Associated Press:

Contributors can choose a level of pledges ranging from the $10 "unpolished rock,"
which earns them a free digital download of her disc when it's made, to the $10,000
"weapons-grade plutonium level," where she promises "you get to come and sing on my
CD. Don't worry if you can't sing - we can fix that on our end." For a $5,000
contribution, Sobule said she'll perform a concert in the donor's house. The lower levels
are more popular, where donors can earn things like an advanced copy of the CD, a
mention in the liner notes and a T-shirt identifying them as a "junior executive producer"
of the CD.

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The usual alternative to making a living based on True Fans is poverty. A study as
recently as 1995 showed that the accepted price of being an artist was large.
Sociologist Ruth Towsesurveyed artists in Britian and determined that on average they
earned below poverty subsistence levels.

I am suggesting there is a home for creatives in between poverty and stardom.

Somewhere lower than stratospheric bestsellerdom, but higher than the obscurity of the
long tail. I don't know the actual true number, but I think a dedicated artist could
cultivate 1,000 True Fans, and by their direct support using new technology, make an
honest living. I'd love to hear from anyone who might have settled on such a path.

Updates:

One artist who partially relies on True Fans responds with a disclosure of his
finances: The Reality of Depending on True Fans

I report the results of my survey of artists supported by True Fans: The Case Against
1000 True Fans

10 obvious strategies to ruthlessly acquire users ‐ Andrew Chen 
http://andrewchenblog.com/2007/04/13/10‐obvious‐strategies‐to‐ruthlessly‐acquire‐users/ 

10 obvious strategies to ruthlessly acquire users

Every consumer internet company needs to think about user acquisition, even if the site is built to be
viral. You need to bootstrap user base, content, and all the other neat effects that kick in when you hit
50k+ users. This is obviously true in the case of social media sites that depend on UGC content.

I’ve been looking for a list for how people go about acquiring users, and I haven’t found a great one.
So here’s a group of obvious, standard strategies to acquire users, and details about a couple of
them.

10 (obvious) strategies to acquire users

Email/IM features for invites and content

Blog/MySpace widgets

Auto-invite for email, social networks, etc

Auto-embed for blog widgets

A/B tested signup pages

Smart adwords buying

Viral referrals

SEO/landing page generation

Push through RSS/Email, etc.

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Reduce user “drag” through the entire funnel

Let’s drill into more details.

#1 – Email/IM features for invites and content

It’s obvious that you need to make it very easy to share content, invites, and other things for your site.
So anything that might be an e-mailable article or detail page, put an “Email this to a friend” link there.
Same for invites. And don’t have it just be e-mail, remember that lots of people use IM and you can
use “aim:goIM” as a prefix to make it easy to send it to a AIM buddy.

#2 – Blog/MySpace widgets
Another super obvious feature is to widgetize the most core content on the site, and allow people to
embed it into their blogs. They might do that because your site is solving something they want for their
site (music-sharing/chat/slideshows), but it might also be something to help them make the site more
sticky or content-rich (popular links, interesting news, etc.)

#3 – Auto-invite for email, social networks, etc

This is not new, but requires a bit more work. In the case of Flixster, after you sign in, it recognizes
that you’re a hotmail.com or gmail.com or whatever user, and asks you for a username/password for
that e-mail service. If you agree, it’ll go through and invite users from your address book and folks
you’ve corresponded with. Annoying, but a great way to blast several hundred people all at once.

#4 – Auto-embed for blog widgets

Same for blog widgets – why trust users to copy and paste when you can get their MySpace
credentials, save them, and make it a 1-click experience to add your widget to their spaces?

#5 – A/B tested signup pages

Using one headline versus another can create a 5x difference in signup percentages. If you want to
make sure you’re not using a bad one, make sure you A/B test your signup pages. Try different value
propositions – focus on Free versus Sharing versus MySpace versus whatever Web 2.0 proposition
you have. Try them out, and keep a hidden field in the signup on the source. Then track them over
time to see what works.

In fact, before you even launch your product, you can build a landing page through something
like Survey Monkey. Then, drive traffic to it, and see how people respond to differences in layout,
headlines, copy, and others.

Offermatica is the king of this kind of stuff. If someone would like to build a long-tail version of this
used by bloggers and such, that’d be a great business.

#6 – Smart adwords buying

Once you start getting content, you can get a lot more creative on search keywords buying as well. A
lot of people don’t know what keywords to buy, but you should realize that you want to buy literally
10s of thousands of keywords. If you’re a music site, obviously you want to buy things related to
“music” but you also want musical genres, artist names, CD names, etc., etc. In fact, once you get
some content from your users, you’ll want to take that data and process it for keywords. If you were a
fashion site, you want to be buying fashion brands, celebrities, genres, item names, etc.

The folks at comparison shopping engines are complete masters at this, since it’s not easy to score
what keyword combinations are the best, and which ones drive the best ROIs.

A good place to understand where you should start is to look at Google referrals and what keywords
people are already coming through as.

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#7 – Viral referrals
Why should people invite people to your site, other than the fact they love your content? Well, people
create these incentives in a couple ways – if your site is invite-only, then people give each other value
through the invites, regardless of whether or not the sites are good. If your site is like LinkedIn, and it
provides a way to manage contacts, that’s another great inherent way to generate e-mails. One
interesting vector on MySpace, from people I’ve interviewed, is oftentimes their experienced friends
set up their accounts so that they have a way to keep in touch more easily. A lot of thinking can be put
into the viral nature of sites.

#8 – SEO/landing page generation

When it comes down to it, every site is really divided into two groups – first, you have the sticky
audience that is there because they are part of your core userbase. Then, secondly, you have
newbies that are coming into your site because of Google. Often the latter is much bigger than the
former.

A great question to ask, then, is the following: How do you create more landing pages and
opportunities for people to stumble onto your site?

For that, you need to make sure that the titles of your pages reflect the item you’re viewing detail on.
You also want your URL to do the same. You want to add links to other sites when appropriate, and
syndicate interesting content. Another SEO tactic is to actually generate landing pages that may not
even be user-accessible, but rather, just for bringing in folks from Google. This is yet another deep
area where you can spend a lot of money.

#9 – Push through RSS/Email, etc.

Obviously, another great way to create stickiness is to offer RSS feeds and e-mail subscriptions for
everything. This makes it so that people can disengage from the site, and weeks later come back.
Emails also offer the great artifact that people will forward them on to friends, if you offer enough
content.

#10 – Reduce user “drag” through the entire funnel

A bunch of the above points have to do with how you squeeze more people into the top of the funnel,
but a final point is that it’s important to optimize (and A/B test) across many different points in the
funnel. For example, if someone’s password is too short, you want to alert them immediately, not
once they hit submit. If your login forms are multi-step, it’s better to hide the optional stuff and ping
them slowly later on. Once they’ve signed on, give them something to do so that they are immediately
having fun, rather than leaving the site since there’s nothing to do.

Conclusion
The above is a pretty basic list! Feel free to add additional strategies in the comments.

10X Your Business – Elad Gil 
http://blog.eladgil.com/2010/10/10x‐your‐business.html 

10X Your Business

Often when I meet with a startup I will ask them to put aside their existing product/distribution
roadmap for a minute and brainstorm around a simple question -

Question 1: "What circumstances would lead to a 10X increase in the value of your product or

67 
 
business?"

Most product and distribution roadmaps are incremental. Do x, then y, then z, each of which has
a linear increase in the value of the product or company. I think it is good to periodically get out of
that way of thinking and ask what sorts of deals, adoptions, or customers would completely change
the game for the company. These things should be at least borderline realistic - i.e. if you devoted
a small set of resources, the stars aligned perfectly, and luck went the right way, it might, just might,
work out. But you will never know if you can make something amazing happen if you don't think
audaciously and actually devote some small subset of resources to just go for it.

As an entrepreneur or business manager, you should periodically ask yourself, what can create a big
step function in company or user value? And then you need to figure out, how can I execute that 10X
step?

Question 2: "What can you realistically *do* to accomplish the circumstances that will 10X
your company?"

Can you dedicate a person to fly out and camp out for the next 6 months until you close that
company-making deal?

Can you spend all your funding on acquiring users and manufacture a network effect?

Can you lobby for a partnership in a company's home headquarter's newspaper or turn their users
into a lobby for you on Twitter and Facebook in order to make an impossible deal possible?

Examples of things that 10X'd Companies:

AOL/Apple deal in the 1980s. In the 1980s, Steve Case was on the marketing team at Quantum
Computer Services (later renamed AOL). The QCS management sent Case to stake out Apple
offices and asked him to not come back until they had an Apple deal. It took many months of living
out of a hotel room, but Case eventually sealed the deal.

PayPal paying $10 a user. PayPal raised tens of millions of dollars of funding but its users base was
not growing as quickly as they would have liked. Rather then sitting on the money and waiting for
something organic to happen, PayPal's leadership decided to make a bold bet - spend a large portion
of the funds they raised ($10s of millions) buying users in order to bootstrap a network effect. The
company went on to go public before being acquired by eBay.

Microsoft/IBM deal. Microsoft famously told IBM they had an operating system when they didn't in
order to win IBM's business. They then scrambled to find an OS they could quickly license from
another software developer. A number of lessor entrepreneurs would have said "sorry, we can't help
you". Of course, within a few years the OS franchise became the foundation of Microsoft's meteoric
rise.

Google/Yahoo! deal. Yahoo! outsourced search to Google and allowed Google branding on the
Yahoo! homepage. This lead to two outcomes: (a) Google had a massive spike in both traffic and
data that is could use for analytics and to refine its search engine (b) The Google branding on the
Yahoo! site caused non-early adopters to become aware of Google as a brand and drove significant
traffic directly to the Google site. Since Yahoo! paid Google for the service, it also partially funded
Google as a business.

Zynga raising a crapload of cash for media buying and "overpaying" for social gaming
startups. When Zynga got started there were dozens of other social gaming startups. Zynga

68 
 
changed the game for itself by realizing scale is what would cause it to win. Zynga raised large
amounts of money to buy scale - both via media buying (ads) as well as via buying lots of small
startups for more then its competitors would pay (by projecting the future value of the assets, vs
current value). One of these acquisitions turned into Farmville, their core franchise. All the other
startups that could as easily have been Zynga? 99% of them are acquired for small change or are
dead.

What are other examples of companies making unexpected 10X moves? Let me know in the
comments.

How to bring a product to market – Nivi / Sean Ellis 
http://venturehacks.com/articles/sean‐ellis‐interview 

How to bring a product to market / A very rare interview with Sean Ellis

by Nivi on December 14th, 2009

Sean Ellis recently sat down with us and explained how to bring products to
market. You should listen to this interview for ideas on how to get to product/market
fit, how to measure fit, and how to survey your users so you can improve fit.

If you don’t know Sean from his blog or tweets, he lead marketing from launch to IPO filing at
LogMeIn and Uproar. His firm, 12in6, then worked with Xobni (Khosla), Dropbox (Sequoia),
Eventbrite (Sequoia), Grockit (Benchmark)… the list goes on. 12in6 “helps startups unlock their full
growth potential by focusing on the core value perceived by their most passionate users.”

This is the first time Sean has done an interview on the record. I’m really psyched he’s making his
insights public — this interview is a must-listen. We’ve broken the interview into two parts: 1) before
fit and 2) after fit. This post contains Part 1 (and here’s Part 2.)

SlideShare: How to bring a product to market

Audio: Interview with chapters (for iPod, iPhone, iTunes)
Audio: Interview without chapters (MP3, works anywhere)
Transcript with highlights: Below

This inteview is free — thanks to KISSmetrics

We’re bringing this interview to you free, thanks to the kind

support of KISSmetrics. Sean is an advisor at KISSmetrics and we interview their CEO, Hiten Shah,
in How to measure product/market fit.

KISSmetrics built survey.io with Sean — now they’re collaborating on KISSMetrics, a new tool for
funnel optimization.

69 
 
Prerequisites

You’ll get more out of this interview if you also read:

An example of the survey.io survey Sean uses before fit. (Several phrases we use in the interview
mean the same thing: Product/market fit = Fit = 40% of surveyed users consider the product a
“must-have” = 40% of surveyed users would be “very disappointed” if they could no longer use the
product.)

The startup pyramid.

Some of our favorite posts by Sean.

Outline

Here’s an outline and transcript of Part 1.

Half the marketing battle is the product

Must-have products make marketing much easier

How PayPal built a must-have product

Understand the must-have users

How to get to product/market fit

How not to get to fit

Should I launch?

You can’t set a deadline on fit

How to communicate with the board during fit

70 
 
How to use positioning to improve fit

It’s frustrating to try to grow without fit

How many users do you need to determine fit?

Who do you survey?

What is promise?

Don’t over-position your product during fit

Pivot the business around the love

Focus the product on the love

Create a great experience around the love

Create a business model around the love

First find the love

Are recommendations a good indicator of fit?

The must-have metric is a good indicator of fit

Preview of Part 2: What comes after fit?

Transcript

Nivi: Hi, this is Nivi from Venture Hacks, and I’m here with Sean Ellis. We’re going to talk about
how to bring a startup’s product to market.

This interview is broken up into two parts: before product/market fit and after product/market
fit. Or to put it another way, what are the set of activities you have to do to get the
product/market fit, and then once you’re there, what are the set of activities you have
to do to prepare for sustainable growth.

I’m super psyched about this interview. This is Sean’s first-ever interview on the record. We’re going
to jump right into it.

Half the marketing battle is the product

Sean Ellis: The whole idea that’s gotten me to where I am right now, where I’m doing multiple
companies, is basically that I’m just trying to get lots of cycles, up front, in that really critical zone —
I call it the fail zone — that if you don’t get that done right, the company will fail. And if you figure
that part out, then it’s really a question of how much success is the business going to have?

Particularly, one of the things that I’ve learned that’s been a little humbling through the experience is
that if nobody wants the product, it doesn’t matter how effective the marketer is, you’re going to
have a really hard time being successful. And if people want the product, you don’t have to be that
great a marketer — the product is just so much easier to market. So half the battle, I’ve realized
over time, is just finding the right company with a product that people actually need,
and that there’s a big enough market that can support growth for that business.

Must-have products make marketing much easier

71 
 
Nivi: Yeah, and what might be interesting for some people to hear is what’s in that grey zone
between nobody wants the product, to a lot of people consider the product to be a must-have. For
example, sites that have great marketing and distribution through viral marketing, but they don’t
necessarily have any real must-have-it-ness with their customers or with their users.

Sean: All right, so the question really being: the grey-zone products that fall between those must-
have products, and products that maybe aren’t as strong of a must-have, but can you be successful
with those?

I am just figuring this out as I go along. I know that there is no right answer on any of these things.
What I do know is that if you have a must-have product, your chances of success are very high.

And the way that I figure out if a product is a must-have or not is: what percentage of
people are telling me that they’d be very disappointed if they could no longer use
it? But it seems like you find a lot of categories where you might say that it’s a nice-to-have, rather
than a must-have.

And I think that the difference is that for a nice-to-have product — so, something where not a lot of
people say they’d be very disappointed without it — that you probably can be successful, but it’s
going to take a lot of effort on the marketing side to make up for those product deficiencies.

I think if you really step back and say, as a business, that ultimately our goal is to create a
successful, fast growing business, that people really need our product, and that over time we have a
defensible business where it’s really hard for somebody to come in and provide an alternative
product where we start losing customers, that in an early stage startup you have an opportunity to
put a product out there, get that initial user feedback, and then you have two choices.

If that feedback is really strong and the users say that they’d be very disappointed without it, in a
large percentage, then you can try to grow the business.

Alternatively, if they come back and say that they wouldn’t be that disappointed without the
product, then you have the choices where you can either try to grow it or you can decide that you’re
not going to try and grow the business. And to me, my recommendation has always been to
decide not to grow the business if it doesn’t have a lot of people that are real
passionate about the solutions.

Actually, you can operate a startup at a pretty low cost if you basically have a small engineering
team and you’re putting product out there and you’re not spending a lot to get people on there, but
you’re really engaging the people that do come in. You can engage them much better if there aren’t
that many people, so you’re in a position where it may take you a year or two years, but you can
really, over time, start to evolve a product into being something that someone wants.

Maybe you find early on that absolutely nobody wants the product, and in that case you might want
to do a complete restart on the business.

And when I’m presenting to groups, the example that I always point to, mostly so that people know
that there’s hope if they don’t have great product/market fit initially….

How PayPal built a must-have product

Sean: That product/market fit is how I describe having a large percentage of people that would be
very disappointed without the product. If you’re above 40% of the people saying they’d be very
disappointed, I tend to say you’ve found product/market fit, and if you’re less than that, you haven’t.

72 
 
So a lot of times I meet with companies that are maybe in the 15% to 20% range on that, and it’s very
discouraging. You’ve worked very hard to put out a product, so the example that I give them is
PayPal, where the initial product that they came out with was a cryptography product where you
would use a PDA to store access codes for servers, and it was better than carrying a bunch of
individual devices to access those servers. And the problem they were solving was that there was a
lot of clutter in carrying those devices, and they were going to consolidate them all onto a single
hand-held.

In “Founders at Work” there is a great case study on this. What Max Levchin says in “Founders at
Work” is that they put the product out there and “nobody really needed it.” That was a direct quote
— “nobody really needed it.” So what they decided…. Most companies would try to interpret the data
and keep blasting away and say that somebody needs it. They just don’t get it yet.

Nivi: We need more distribution….

Sean: Yeah, they blame marketing, they blame sales, but ultimately, it took a lot of
guts, and just honesty, to say: You know what? We created something that nobody
really needs.

So what they did at that point was they stepped back. They asked what are we good at? We’re good
at developing for a handheld PDA. We’re good at security. What else can we do with these skill assets
that we have? And they decided that they were going to get into the mobile PDA payment space,
where basically, people could beam payments back and forth.

And on the initial vision they were able to raise a couple hundred thousand dollars. On this new
vision, they were able to get a prototype out on that initial money that they had raised, and they
were able to raise… I think it was four million dollars. I don’t remember the exact number on it. And
they actually beamed the VC money over so they had a good enough prototype to be able to accept
the payment via this PDA payment. And then they were off to the races, and they started executing
the business.

I think, in that case, my guess is that if they had surveyed those users who were using PDAs to make
payments; it was more of a party trick. It was something that there wasn’t a real big need for, but
they got users on there. They got lots of users on there, and they were able to get those users coming
back. But, I’d put it in that probably-nice-to-have category.

Nice-to-have is kind of a scary thing, because you get enough success that you want to keep at it. But
they were very fortunate in that they sort of stumbled into what ultimately became their market,
which was, of course, the web-payment platform that PayPal is today. And that was really a
function of people just starting to use it that way. And so, that’s why I focus a lot with companies on
helping them figure out the use cases behind their product. If the people who have one use case
consider it much more of a must-have than people who have a different use case, then
that’s probably the business you’re going to be able to build a successful business on.

Understand the must-have users

Nivi: So, do you ask the must-have users what they use the product for?

Sean: I ask everybody what they use the product for, and I’m trying to see, really, who
has the most passion around the product. And usually it breaks down by use cases,
sometimes by user types. It’s really just looking through the initial data to really
understand who really needs this product, and it can be on demographics, it can be on
use cases, it can be on a lot of different things. But once you really understand a group that
really needs the product, then you start to have that true North for the business — the part that you

73 
 
can actually start to build a business that will grow and thrive around if they represent a big enough
market.

Nivi: Right. In that product/market fit stage that you’re talking about, which is basically the bottom
layer of your pyramid, what don’t you do? For example: PR, trying to get a lot of distribution,
increasing your burn.

Sean: Well, it depends a little bit on the type of business that you have.

So just one quick thing on wrapping up the PayPal example was, by the time they pulled the plug on
their mobile-payment business they actually had, I think it was 1,000 times more people using the
web payments. They had obvious traction, so they didn’t need to necessarily get that from a survey.
They could just see that they had the traction there at that point. They could say: You know what?
That’s where our real business is. Even though they fought it, initially, because they had different
preconceptions about where their business would be.

How to get to product/market fit

Sean: I purposely try to avoid working with companies that are pre-product/market fit, because
they’re in such a risk zone that, one, it’s going to hurt my reputation if I string too many of those
together, and two, to ask people, who have a product that people don’t need, to pay me to help them
with marketing would just not be the right thing to do. It would be a mistake for them to pay me,
and it’s just not smart, from my perspective, to stake my reputation on their success.

But I found myself working with one fairly recently, on a very short, almost advisory project, of just
helping them out. And my advice to them was to really be laser focused on that number and to really
monitor that very-disappointed number.

So, one of the things that I’ve seen work well for companies that are in the 20% range, or even lower,
of the user saying they’d be very disappointed without it, is to focus on, one, why those people would
be very disappointed without it, and to really start to say, OK, this is our best signal of value that
we’re creating.

And then, to look at the feedback from the people who would only be somewhat disappointed
without it. Ignore the people who say they would not be disappointed without it, because they’re so
far from being satisfied.

But then look at those somewhat disappointed people, and look at feedback from those
people — particularly on what changes they’d like to see in the product. And look for
things that relate to the very-disappointed feedback. If you take all feedback equally, you’re
going to have a very broad product experience that is very disjointed.

And I think one of the mistakes when people are too responsive to user feedback is that it’s a product
that does everything, because if you try to please everybody, you’re essentially going to have a very
unfocused product. But if you use the feedback from your very-disappointed people to give you that
focus, and now you’re looking for feedback from everyone else that relates to what the very-
disappointed people have told you…

Nivi: Like with PayPal, for example.

Sean: I think, using PayPal as an example, if they had surveyed all of their users, I’m assuming that
a lot of the people who were doing the hand-held payments would basically have been saying that
they’re only somewhat disappointed without it. And then the people who were doing the web
payments would be saying that they’d be very disappointed without it. But some of the people on the

74 
 
web payments would be saying somewhat-disappointed, and they would say: if only I felt more
comfortable about security; or, if only I could do it faster; or, if only you could give me better
records of payments that have been made.

So you could take the feedback from the somewhat-disappointed who were using
hand-held payments, and act on that to try to get there, but then you’re not really
honing in on where the passion is.

Or, you could take it from the other side, saying, OK, these people may be a little pickier about what
defines something that’s a must-have, but the feedback that they’re giving would improve the
experience for the people who already say it’s a must-have. So, it’s really trying to just hone a
consistent, core-product vision that is already starting to crystallize based on the feedback from the
really passionate users.

Nivi: Yeah, that’s great. So in this case, it’s related in the sense that somewhat-disappointed people
are using the same segment of features in PayPal.

Sean: Yeah. It’s that use case.

Nivi: Use case.

Sean: Yeah. They’re suggesting improvements to the use case that’s consistent with the most
gratified users there are.

How not to get to fit

Nivi: Great! Yeah. So that’s a great idea in terms of getting what you need to do to get
product/market fit, and I’d like to talk more about that, but it would also be great to hear what you
don’t do.

Sean: I think the thing that you don’t do — and I’ll make one caveat in a second, on this — is that
you don’t aggressively try to grow the business. Particularly, you’re not trying to do business
development relationships. Maybe you can spend enough to create some flow so you
actually get people giving you the feedback on the product, but one thing I wouldn’t do
is obsess over ROI on that flow.

Your goal is not to figure out that repeatable, scalable customer acquisition engine at
that point. Your goal is to get enough people in there to where you can react to their feedback and
hone the product experience on their feedback.

Should I launch?

Nivi: How about a launch?

Sean: This is very debatable. A lot of people would say that a launch is a really important event. For
me, I’ve never been big into launches. Launch is a one-off. With launch, you’re going to get a
group of people in one time, and you’re going to get some feedback on them. And yes, they may be
cheaper because you got some good press around it, but you haven’t learned anything about how to
grow the business with a launch. So for me, I’m much more….

I wrote a blog post way back when. I think it was called “Launch with a Trickle,” and that’s much
more of my focus on things. Just get enough people on there as early as you can, so that you can
react to their feedback. And you may find that they absolutely love the product. Then hone in on why
they love the product. And then get the messaging right and the experience right, so that you’re
delivering that better. Once you’ve kind of tightened up and you’ve got that validation that a lot of

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people love your product — hopefully more than 40% say they’d be very disappointed without it —
then you can step on the accelerator and a big launch might make sense at that point.

You can’t set a deadline on fit

Sean: But what I see too many companies do is set a date. They say, we’re going to have our launch
on January 14th, and they’re two months away from that and they’re working towards… I mean, it’s
either time or it’s not time.

Nivi: Yeah, and you can’t set a deadline on product/market fit. Right? That is the point
in time, in the growth of a company, where you basically are unable to predict
anything.

Sean: Right. And all you’re going to do then is make the mistake of being too aggressive too early,
or piss off your investors by missing that date for the launch.

So it’s much better to say, our clear objective — the next milestone that we need to get to before we
do all of these things — is to actually make sure that enough people love this product. As soon as we
get there, then we have to figure out why, and make sure that we’re really honing every piece of the
business to reflect why people love the product.

How to communicate with the board during fit

Nivi: Right. So, on that topic, how do you communicate with the board and set expectations when
you’re trying to get to the product/market fit stage?

Sean: What I’ve found is that people either get it or they don’t.

Nivi: What are the responses of the people that don’t get it, like from a board perspective? What
have you heard board members say directly, or secondhand?

Sean: They’re just: You’ve got to go for it! You’ve got to go for it! It’s good enough. It’s good enough.
And they just want to accelerate the business.

I have a great example of a company that was about 15% or 20% on product/market fit and I loosely
advised them at no cost, because I was going to spend some time in Scotland and they’re based in
Scotland. And I wanted to get to know these guys better because I was going to be spending a week
over there. So we just worked together over a period of time.

And when we first started working together they were at the 15% or 20% very-disappointed
number, and they explained to me that their board of directors was just pushing them on: We’ve got
to get to this growth number! We’ve got to get to this growth number!

And they took the time to really explain: This is our goal right now. We don’t think our product is
good enough to accelerate this business. Our goal is to take the feedback from the users that we have
and keep getting our product better.

In the process of doing that, they had the very painful process of actually having to lower projections
on growth, and doing it week after week, and frustrating their board of directors through that
process. But they did exactly the right thing, because today their very-disappointed number is over
50%.

And when I met with them when I was in Scotland about a month-and-a-half ago, they were at a
really exciting point where they said they keep going back to their board of directors and saying:
Hey! We’re going to revise those numbers up. They kept going and saying the numbers are too low.

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It’s going to be better than that, because now that they have the product right they could really focus
on that, and they weren’t going to have the….

You can grow when your product/market fit is lower than that, but you’re going to grow a lot
slower than you otherwise would, and you’re not going to address the real problem. And you’re
going to have a very frustrating experience trying to grow that business over the next several years,
versus saying: Let’s keep our costs really low, let’s get the product right, and when we’re focused on
growth, no excuses. Now we’re absolutely accelerating that business and it’s going to be much easier
to grow the business at that point.

And ultimately, you take it a year out or two years out, you’re going to have a much bigger userbase
doing it that way than if you’re trying to grow through the whole period of time.

How to use positioning to improve fit

Nivi: Now, what changes should they make to get to that number, without getting into the specifics
of the business?

Sean: I don’t know. I didn’t work with them, so all I know is that they did the things that I’ve
mentioned, where they really took the feedback of the very-disappointed people, really tried to look
for the signal of who loves this product. Somebody loves it. Who loves it? Why do they love it? How
can we really put a stake in the ground around that and try to make that piece better, and try to
play down the other pieces?

Nivi: Then maybe reposition?

Sean: Yes. Some of it’s definitely through repositioning.

I have another company that I worked with that was before I had [done] that. This was really the
company that helped me come up with the idea that I was going to survey people ahead of time,
because I got into two companies at the exact same time who were both at about [where] 7% of their
users said they’d be very disappointed, and found myself in the “oh, crap!” moment of figuring out
that now I’m going to have to help these guys transition to growth and grow, but they’re not ready
for it yet. And why did I wait until I had a six-month contract with them to run the survey? From
now on I’m going to survey it ahead of time.

But at one of those two companies, we were able to see a really strong signal in the 7% that said
they’d be very disappointed without it, reposition on that signal… [interrupted]

Nivi: So how do you reposition on the signal. In this case, did you get a little bit more data…?

Sean: We just found out — I mean, I can’t give any specifics on it — they had a product that had
lots of different features, and each one of those products could be a product in itself.
They built a really big suite of tools, within a product, and everyone who said they’d
be very disappointed was focused on just one of those. So we basically only talked
about the one they were focused on, and we didn’t talk about any of the other things.

Nivi: To the user, say, on a landing page or on the home page.

Sean: Exactly — on the home page we only highlighted that and said we’ll introduce the other stuff
after we get them in. One of the benefits with that was that we were really able to simplify
messaging. Having a really complex product set that you have to present people is way harder than
simplifying that and only highlighting one. So, we basically highlighted the most important
must-have product from the group, and hid some of the other products, and as a result

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we could be much clearer in what the benefit was for the people coming through and
what we were actually offering.

So, one week later, on the next cohort of people coming through, we were over 40% because they had
a very different expectation of what this product was, just by changing the messaging and focusing
their first user experience on just this one piece of the business.

Nivi: Right. So, with no real change in the product, but a change in the messaging and
a little bit of first-user experience change, you got a huge uptick in the must-haves.

Sean: Yup, exactly. And the interesting thing is that business, probably out of every business that
I’ve worked with, is the one that I think has the opportunity to be a multi-billion dollar business, and
one that I’m most excited about. And when I first saw that 7% number, it was the one that I thought:
how do I get out of this? So now I’m really happy that I stuck with it, and I’m happy that we were
able to figure those things out. And I’m really good friends with the founders.

It’s frustrating to try to grow without fit

Sean: When everything’s going well, the chemistry gets much stronger and it’s just a much more
enjoyable place to be. That’s just one of the things that I’ve learned, is that in a company with a low
product/market fit, it’s not a fun place to be. It’s frustrating trying to grow that business.

And for a company that can really embrace the fact that: You know what? We missed. The product
that we created just isn’t something that people really seem to want or need.

Nivi: And we don’t really measure ourselves through growth right now, either.

Sean: Yeah. So for us, we’ve got a lot of money in the bank. Somehow we got lucky enough to raise
the venture capital. If we try to grow we’re going to waste a lot of that money trying to grow. Let’s
just keep our costs way down, get just enough users in there and either do a complete reset on the
business — like PayPal did, which I think most companies don’t need to do — or just find the love.

In my last blog post I talk about “just find the love.” Somebody loves it. Somebody really needs that,
and once you find that, that’s the stake in the ground that you can figure out how to create a
successful business.

How many users do you need to determine fit?

Nivi: And what is just enough users?

Sean: That’s a good question. I think it kind of depends on the business, but ideally, if you have a
product that ultimately is going to cost thousands of dollars, then it’s just not going to be realistic
that you can bring in a hundred every day on that product. But if you have a product that’s going to
have a 10% upgrade rate or a 10% purchase rate, and it’s going to be $100, then that’s a product that
you probably want to try to have a pretty constant flow of around 100 new people a day.

And whatever it costs to get to that 100 new people a day is a really good flow to iterate on. If you
can only be at 30 or 40, that’s probably OK.

Nivi: And how about on the output side of that — the people that you’re going to survey, the people
that have gotten to the finish line? How many people do you need to be talking to, to get a good
signal there?

Sean: I look for around 30 responses as a minimum. It really depends. If you have a very low
percentage of users that say they’d be very disappointed… Say you’ve got 30 responses and you’ve

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only got 5% that say they’d be very disappointed without it, that’s not a whole lot to work with on
finding a signal.

But I ran a survey this morning with a business that has 70% of their users that say they’d be very
disappointed. We got a very strong signal on 42 responses.

Nivi: OK. Right.

Sean: Really, it kind of depends, first, on how strong that number is. And then what you’re trying to
do is get enough responses in there to find some sort of signal that either says: We completely
missed, or that [there are] very few people we’ve hit with, so we want to make sure that we
survey enough people that we’ve got maybe 10 or 20 people who say they’d be very
disappointed, that we can start to hone in on the feedback that they’re giving.

Who do you survey?

Nivi: And do you ever have trouble defining what that finish line should be? For example: active
monthly users, people who just signed up for the product, or is it… [interrupted]

Sean: Do you mean on who to survey?

Nivi: Yeah.

Sean: What I tend to do is say, people who have been back at least once.

And I think for a consumer product you shouldn’t be charging at this point; it should be free at this
point, because the money side already starts to put a big filter out there. Even if you had a trial,
people would make up their mind pretty quickly. If they decide they’re not going to buy it, then
they’re not going to say they’d be very disappointed without it, and not buy it. So, just pulling money
off until you can get that signal is pretty important.

For me, I define what is actually the experience that we think is the experience that
gives them a full taste for the product, then I want to make sure that people have at
least done that when they come back to us.

Nivi: So in the case of PayPal what would that be?

Sean: That they’ve at least made a payment with PayPal or accepted a payment.

Nivi: One payment?

Sean: Yeah. And then, that they’ve been on the site within the last two weeks.

Nivi: OK.

What is promise?

Sean: So those would be kind of the two pieces. You just asked about intent and the value
proposition in some of those things, so I think the important starting point is that the promise or the
differentiated value proposition is really based on whatever signal that you find. Where you find the
love on the product, that’s what you’re trying to do there.

Nivi: And you call that promise.

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Sean: Promise is one of the names I use for it, but it’s all synonymous with just the value
proposition, the differentiated value proposition of just what is this product going to do for you.
What is the unique piece about it?

Nivi: Right. So in the PayPal case: send money to friends online.

Sean: Yeah.

Nivi: OK.

Sean: Yeah. I think that would be… And at the time, that was fairly differentiated. Now you can use
credit cards and other things, so something that remembers your log-in information might be trying
to differentiate from just Visa or Master Card or American Express.

Don’t over-position your product during fit

Sean: But what I was going to say with that is that there are two periods where that becomes
important. One, before you have product/market fit you’re trying to find that signal, so you can do
some sort of early positioning to try to highlight that. But the problem is, too much
positioning is going to steer your users in a certain direction. So, early on, a lot of
times it’s good to actually be very feature-function oriented.

Nivi: OK.

Sean: Because unless you have a real strong signal…. You can experiment with it, like, OK, let’s
bring people in and we’ll give them this message and we’ll see what their very-disappointed number
does, just on this group of people. We’ll survey them separately.

But in general, if you don’t have a real strong signal, then it can be kind of dangerous to shape
their experience by highlighting some unique attributes that turn out not to be the
important unique attributes.

Nivi: Because it might be inconsistent with…?

Sean: Because you’re going to shape their experience so much that they may miss the other thing
that would have been the thing that would really thrill them.

Nivi: Right. So give me an example of how I would do that.

Sean: X Corp. is a prime example on that. In the early days at X Corp., it was just one of those
things that I realized that if I really focused on homepage messaging it was going to take me a really
long time to get some level of consensus, and that’s just the way that the business….

The way most startups operate, early on, is that everyone has opinion around what
the homepage looks like and what it says. And so, what I realized is that getting a lot
of those early users, we were going to be getting them through search anyway, so I
basically said I’d let everyone else figure out what’s going to be on the homepage, I’m
just going to take people in through landing pages.

With landing pages you know what the person’s intent is when they’re coming in through a specific
search word, so you can really hone things in a more segmented way.

But our homepage ended up being very feature-function oriented, and the group we initially built
the product for ended up being a relatively small percentage — especially on a revenue side — of
where the business ultimately ended up generating a lot of revenue. So I think if I had taken a

80 
 
traditional marketing approach to that I would have been very benefit-oriented right
from the beginning. And I probably would have positioned it away from what ended
up being the really interesting market for us, because I would have given so many
details about how they should use the product that this other group may not even
have considered using the product.

And so, as a result of having, essentially a group of engineers be able to initially determine the
wording for the homepage, they just focused on the features that they created, with not a lot of why
someone would need it. And that turned out to be the best thing that could happen because,
ultimately for us, by the time I really started looking for that signal, the signal was very different
than what we would have initially had if I had positioned out of the gate for that.

Pivot the business around the love

Sean: A big theme that I keep coming back to is, where is the love? It’s basically just finding out
which users are passionate about the product. What is the use case on the product that those people
have? Why do they actually love the product? And that gives you a good core of information to guide
every part of your business. So messaging, you want to reflect that, but also, now that you know
that, you want to make sure that you can really get a lot more people to that particular type of use
case and that particular type of gratifying experience. So understanding user gratification is really
critical in all of it.

First of all, you want to know that you have enough that you can try to grow the business — that you
actually have something that will be growable. And then in growing the business, having that
gratification should give you guidance on everything. So product roadmap should be a
function of how people are gratified with the product and who’s gratified, so it should
give you a lot more focus on that product roadmap as opposed to a lot of feature
feedback and ideas and different things that, over time…

You know, initially you have to kind of scatter-shoot it. You have to cast a fairly wide net of things
that might please people, but once you really know where that gratification is, that’s where you
really want to double down, and that’s your business. Before, everything’s an experiment. But your
business is really on where that gratification or where that love is.

Nivi: Does that go to what is the primary benefit of the product in your Survey.io?

Sean: Yes. That’s where I start to see it. I start to see it in each of those questions. I can start to see,
in the very-disappointed question there’s a: why did they pick that? You can start to see it in there,
as well.

Ultimately, that’s the first thing that I’m trying to look at. One, do enough people love
this product? And two, why do they love this product? And then everything that I’m
doing is basically helping the business to — I wouldn’t say reposition, because
reposition is associated with messaging — realign itself around that really strong user
gratification . And once you have that alignment around that, it gives you a lot more direction.

Early on, everything is an assumption, everything is vision, but once you have users on there you
can finally start to find that nugget of value.

Focus the product on the love

81 
 
Sean: And one of the things, if you really step back and ask a lot of entrepreneurs why
startups fail, a lot of people rightly focus on lack of focus as being what causes a lot of
startups to fail. But then the question is, OK, if it’s lack of focus, what should you be
focused on? Obviously, lots of focus on the wrong thing is still going to cause you to
fail, so then it’s a big question of what you should be focused on . And for me, ultimately it’s
that strong signal that this is something that users really love about the product. So understanding
who loves that product — who really has that need — that starts to give you guidance on who you’re
going to target going forward.

What other things can we do that can enhance that use case — that can make that particular use
case? How can we prioritize those feature enhancements, the parts of the product roadmap that
relate to that, and maybe drop some of the things that are the wild cards that we’ve had in there for
a while?

The thing that amazes me is a lot of startups have got a little side-product project of a
completely unrelated product or something else, which I think, early on when you
don’t have product/market fit, is probably not a bad idea. You’re throwing a lot of stuff out
there to start to see what sticks.

But once you’ve found that signal, you’re ahead of 90% of the startups out there. So once you find
that strong signal, your ability to be really successful is focusing on that strong user gratification
and passion and figuring out how to get more users to it, more of the right types of users to it. How
can we make it even better — but, that part better, not all parts better, that part better?

Create a great experience around the love

Sean: How can we completely refine that brand experience?

Now is the time to go and get a better designer to come in and really get the graphics perfect on that
part. Now is the time to bring in someone who is the absolute wordsmith to get the descriptions
perfect on the website, but making sure that they’re being very responsive to that user feedback and
they’re not just being a wordsmith by what they think is what’s important to people.

Create a business model around the love

Nivi: Business model?

Sean: Business model is absolutely a function of that. You want to make sure that you are not
trying to monetize something that’s not important to users. If users tell you they’d be very
disappointed without it, the other thing that they’re telling you is that you could keep cranking that
price up for a long time before they change to being somewhat disappointed without it.

And if you’re really focusing on that to determine your price and how you charge for the product,
you’re going to have a lot more signals.

First find the love

Sean: So I think that’s a big theme that startups should look at, is focus, and focus on what and
when.

The “when” — early on your focus is on just trying to find some love within your product. Find
somebody who loves something about your product. And you can get that day one, before your

82 
 
product is even developed, just by talking to people and saying: Hey, this is the problem that we
think people have out there and this is how we’re going to try and solve that. Does that seem like
something that would be useful for you?

Nivi: The customer development approach.

Sean: Yeah, the customer development approach. Steve Blank has a really good book that’s
documenting everything on that and has written a lot more about that.

I purposely, again, have stayed out of that area because it’s so high risk, and you can’t be good at
everything so that’s the part that I’ve said I’m not going to try to be good at.

But essentially from day one, it’s all about that search for something that somebody really needs.

Are recommendations a good indicator of fit?

Nivi: Going back to the must-have — that metric — you don’t see user recommendation in that
metric there, as well?

Sean: It’s interesting; I see a lot of correlation on success in businesses with the must-have.

I had somebody contact me recently who had a 70% must-have number and they are adding 20,000
new users a day with great monetization, and they just started recently. It was just one of those
things that wasn’t surprising to me to see all that success because they have that strong must-have
number without really even having a marketer in the company.

So the must-have, I think, is really big, but there are a lot of people that have good recommendation
numbers that struggle, and part of that is that… I think YouTube videos is a prime example
that sometimes you just see some really funny things that you want to share with
other people, but ultimately would you be very disappointed if you couldn’t? Probably
not.

Nivi: Right. So it could be a false-positive. But let’s say for the folks that do have the 40% must-have,
do you see a correlation of recommendations then?

Sean: Not necessarily. Sometimes I see it really high. A company that I surveyed today, with
surveys rolling in right now, was 90% recommend rate, but sometimes I see it being pretty low on a
company that’s doing really well. Sometimes I see, as I said before, companies that are pretty low on
the must-have, but high on the recommendation rate. So I actually don’t think that’s a good proxy
for success, but I haven’t studied it enough to know for sure.

The must-have metric is a good indicator of fit

The only thing that I do know is, on the must-have number, I’ve probably looked at 150 companies
now on that number and I could maybe point to one or two that were less than 40% that had any
kind of traction and success. And over 40%, everybody had some success. And maybe it’s 35%,
maybe it’s 45%, but somewhere around there you get enough people.

The only thing I tend to find a challenge with is that some companies have a must-have number
that’s around 40%, but then the feedback is all over the board on why they consider it a must-have
and that becomes really hard for being able to find any kind of signal to base the business on. So
that’s a different problem, and I haven’t figured out how to deal with that.

Nivi: There are too many segments in the customer base.

83 
 
Sean: Yeah. Everybody loves it, but for different reasons. Then maybe you have to figure out which
one of those reasons represents the biggest target user group and hone in on that.

What comes after fit?

Nivi: Right. One thing you talk about is, once you have the product/market fit, trying to get through
the next few steps as quickly as possible. So it would be great if you could talk about that, and also,
for people that don’t know what the pyramid looks like, what are the next few steps?

Sean: Sure. As I said, if you don’t have product/market fit, you want to be obsessively focused on
getting there, however you’re defining product/market fit. I think the easiest kind of definition to
work toward is trying to get 40% of your users to say they’d be very disappointed without it.

And during that period you’re trying to stay very low burn and very conservative on all of your
expenses within the business. And once you find 40% of your users that say they’d be very
disappointed without the product, then you’re in a position that you have a business that can grow
now. So then the question is: do you try to grow the business right then or are there
some things that you can still do that are going to make it even easier to grow when
you’re focused on that? And what I’ve found in working with so many companies at this
stage is that you’re definitely better off waiting a little time until you try to grow the
business .

Nivi: And what does it mean to grow the business? You’re talking about spending money to acquire
users, essentially.

Sean: Acquiring users, for a lot of businesses, means starting to spend money, but it might also
mean really trying to crank up the virality of the business, or it might be SEO that doesn’t require a
lot of spending.

Nivi: But it’s time and money that you require for people… [interrupted]

Sean: Yeah, and focus. The time piece, you could say, has time or focus. But it’s essentially saying…

How to bring a product to market, Part 2 — after product/market fit

by Nivi on January 12th, 2010

“Where the #@!*% is Part 2?”

That’s what I’ve been hearing since we published Part 1 of our rare interview with Sean Ellis.

Here’s part 2 .

In Part 1, Sean discussed what you do before product/market fit: how to get there, how to
measure it, and how to survey your users so you can improve fit.

84 
 
In Part 2, he explains what you do after fit: optimizing your positioning, implementing a business
model, and optimizing your funnel — all so you’re prepared to acquire users quickly and profitably.

If you don’t know Sean from his blog or tweets, he lead marketing from launch to IPO filing at
LogMeIn and Uproar. His firm, 12in6, then worked with Xobni (Khosla), Dropbox (Sequoia),
Eventbrite (Sequoia), Grockit (Benchmark)… the list goes on. 12in6 “helps startups unlock their full
growth potential by focusing on the core value perceived by their most passionate users.”

This is the first time Sean has done an interview on the record. I’m really psyched he’s making his
insights public — this interview is a must-listen.

SlideShare: How to bring a product to market, Part 2

Audio: Interview with chapters (for iPod, iPhone, iTunes)
Audio: Interview without chapters (MP3, works anywhere)
Transcript with highlights: Below

This inteview is free — thanks to KISSmetrics

We’re bringing this interview to you free, thanks to our

sponsor KISSmetrics.

Sean is an advisor at KISSmetrics and we interviewed their CEO, Hiten Shah, in How to measure
product/market fit with survey.io. KISSmetrics built survey.io with Sean — now they’re
collaborating on KISSMetrics, a new tool for funnel optimization that we’ll discuss in an upcoming
interview with Hiten Shah.

Prerequisites

You’ll get more out of this interview if you also read:

Part 1 of our interview with Sean.

The startup pyramid.

We use several phrases interchangeably in the interview: Growth = scaling = acquiring customers
with a known ROI. Preparing for growth = after product/market fit = optimizing promise +
implementing economics + optimizing the funnel.

85 
 
Outline

Here’s an outline and transcript of Part 2.

What comes after fit?

Prepare for growth

a) Put the metrics in place

b) Optimize the funnel

c) Optimize the messaging

Prepare for growth as quickly as possible

Remove bottlenecks to preparing for growth

Preparing for growth is not a low-burn period

Preparing for growth doesn’t require growth

Use a business model to grow quickly

Grow and create new channels

Nail the first user experience while preparing for growth

Leave no room for the competition

Marketplaces are an exception to this model

Why Sean decided to focus on startup marketing

Just scratching the surface

86 
 
Transcript

Music: The Equator by Tortoise

What comes after fit?

Nivi: Right. One thing you talk about is, once you have the product/market fit, trying to get through
the next few steps as quickly as possible. So it would be great if you could talk about that, and also,
for people that don’t know what the pyramid looks like, what are the next few steps?

Sean: Sure. As I said, if you don’t have product/market fit, you want to be obsessively focused on
getting there, however you’re defining product/market fit. I think the easiest kind of definition to
work toward is trying to get 40% of your users to say they’d be very disappointed without it.

And during that period you’re trying to stay very low burn and very conservative on all of your
expenses within the business. And once you find 40% of your users that say they’d be very
disappointed without the product, then you’re in a position that you have a business that can grow
now. So then the question is: do you try to grow the business right then or are there some things that
you can still do that are going to make it even easier to grow when you’re focused on that? And
what I’ve found in working with so many companies at this [post-fit] stage is that
you’re definitely better off waiting a little time until you try to grow the business.

Nivi: And what does it mean to grow the business? You’re talking about spending money to acquire
users, essentially.

Sean: Acquiring users, for a lot of businesses, means starting to spend money, but it might also
mean really trying to crank up the virality of the business, or it might be SEO that doesn’t require a
lot of spending.

Nivi: But it’s time and money that you require for people… [interrupted]

Sean: Yeah, and focus. The time piece, you could say, has time or focus. But it’s essentially saying…

Prepare for growth

Sean: Is now the time to orient — especially the CEO and the marketing group and maybe a sales
group — is now the time to build up that group and just say, let’s step on the accelerator and do
everything that we can to get very aggressive about growing this business? And I would say, not
quite.

The reason being, one, up until this point you shouldn’t have really focused on really trying to get the
metrics into your business, so one of the ways that you can effectively grow a business today is, you
can experiment in lots of different areas and figure out, in which areas do I invest a dollar and get
that dollar paid back the most quickly or make a really strong return on the investment? But you
can’t do that if you don’t have the measurement systems in place. So one of the first steps that
you want to do is specify what metrics you really need to be tracking in order to be
able to grow this business. And you want to then work to implement those.

So, to some degree, Google Analytics can help you, but the problem with Google Analytics is that you
don’t really have tracking on a very user-specific level. So maybe you can track with Google
Analytics or with Website Optimizer, even with Google AdWords with action tags, you can track a
first transaction through dollars spent, but what you can’t track is lifetime value. And ultimately,
expected lifetime value is what you should be basing your customer acquisition
investments on.

87 
 
Nivi: With the per-user tracking, is that what KISSmetrics is for?

Sean: That’s what KISSmetrics is working on. For other companies that I’ve worked with, it’s
basically been database driven reports where we’re cookie-ing users when they’re coming in to track
them back to the source, and we’re recording that information in the user’s permanent record in the
database, and that way any revenue that’s generated from that user, we’re able to tie back to the
money that was spent on that referring origin, coming in.

The reason why I started working closely with KISSmetrics is that all of my projects were six
months, and that type of a system that I just described tends to be fairly complicated, especially as
you start to track where you’re losing users along the way, and some of the other pieces. It was
taking a big chunk of the time that we had together to implement that, and there were a lot of
bottlenecks around it, so I was trying to find someone who could build that type of a solution as an
off-the-shelf type solution and KISSmetrics was on their way to doing something like that. So I’ve
been advising them for a couple of years to try to get the full vision out there of something that can
really give the metrics that any business needs to be able to drive and manage growth.

Optimize the funnel

Sean: So metrics is just one part of it. Obviously, as I started to touch on right there a second ago,
most companies initially have a very inefficient customer-acquisition process. So it’s not just how
effectively can you spend money externally, but how can you convert people once they get to your
website to having a gratifying first experience, and then ultimately buying your product? And
metrics are a good way of determining experiments that you run along the way — how can I get
more and more people to actually convert?

That can be through landing-page testing. You can be really effective on that front, or all the way
down to just testing purchase prompts. There are all different areas, so you want to have a pretty
sophisticated measurement system in place to do that.

I’ve worked with businesses where, at the start of that process to the end of that
process, in a matter of just a couple of months, we’ve seen five times as many people
purchasing just by more efficiently on-ramping them into the product and converting
them into being paying customers, which means that when we then focused on trying
to grow the business and buy growth, we could spend five times as much money to get
someone to the website at the same return on investment, after that process.

And when you can spend five times as much money to get someone to the website,
there are a lot more viable marketing channels that are open to you — a lot of times
channels that would not have been effective at all before. If you’re putting a dollar in and
you’re only getting 50 cents back, after you’ve gone through this process and you try that channel
again and now you’re putting a dollar in and you’re getting $2.50 back, you’re going to put as many
dollars as possible into that channel, and you would have cut it previously.

Nivi: And the expected LTV of the user is equal to your allowable acquisition cost per user. Is that
right?

Sean: That would be your allowable acquisition cost for a break even. It kind of depends on what
your objectives are. If you’re trying to do market share you might even be buying users at a loss
initially. If you’re trying to generate a profit, you probably want to build in some profit on that.

Optimize the messaging

Nivi: Right. So, we put the testing in place. What other steps are we going to do before we grow?

88 
 
Sean: So messaging. You want to make sure that you’ve got good messaging. So part of that was to
get the product/market fit. You might be doing some positioning and messaging. But this is where
you want to do a lot of landing page optimization and fine tuning just to see, what’s the best way to
convert users coming in?

Nivi: In terms of positioning.

Sean: Ultimately in terms of converting them, positioning is part of that. To me, positioning is sort
of the qualitative side and then testing and optimization is the quantitative way of getting to the best
result. Hopefully, where you end up is somewhat consistent with what your positioning usage led
you.

Prepare for growth as quickly as possible

Nivi: And what are your thoughts on just going through this whole process as quickly as possible?

Sean: That’s a good question. The mistake that I’ve seen a lot of companies make, particularly those
that struggled to get to product/market fit, is that the whole mentality while you’re trying to get to
product/market fit is to be super conservative and not spend very much money, so a lot of
companies kind of [say]: OK, we got there. Now let’s prepare to grow.

And they, again, are really conservative and they’re taking six months to…. A prime example would
be: I need to spend $100 a day or $200 a day to know that this is the best-performing landing page,
or home page even, or I need to send 1,000 people or 10,000 people through there, and most people
will space it out over two weeks. They’ll say they don’t want to spend more than $100 a day while we
figure that out, so we’ll space it out over two weeks.

In reality, if you have some place where you can spend the money — let’s say you’re doing that
through a Google campaign and you’re not getting the cap on that, but you’re saying, I just don’t
want to spend more than $100 a day, you’re essentially going to spend exactly the same amount of
money to get to the answer if that’s a good page or not. One way it’s going to take you two weeks;
one way is going to take you one day. If you consider that time is money as well, then you’re closer
to being able to accelerate the business after one day than you would have been otherwise and it
costs you the same. But it’s just really hard I think, a lot of times, for people to go through that
mentality.

Remove bottlenecks to preparing for growth

Sean: Another example would be if you are tight on graphic design resources internally, if you test
50 landing pages or 100 landing pages or 1,000 landing pages, you’re going to be so much more
efficient at being able to drive growth in your business that it just doesn’t make sense, if your big
bottleneck is on graphic design, then you want to bring in two or three people. Pay them a little bit
more. It’s a temporary spike in costs to get much faster to the point where you’ve got a lot more
landing pages in there.

So you combine those two things. We’re going to spend more to get people through, and we’re going
to be able to test five landing pages at a time rather than just two. So being able to do all of those
things… The goal should really be….

Preparing for growth is not a low-burn period

Sean: You have two low-burn periods in the business. The first is pre-product/market
fit. You’re trying to spend the least amount possible.

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And then the second low-burn period is once you accelerate the business you’re
working within the parameters of your allowable acquisition costs, so you can
actually go to being cash-flow positive pretty quickly at that point.

One of the companies that I worked with, once we got through this period of — it took
us about four months to transition to being able to really accelerate the business and
we got it to the point where we could scale marketing to close to a million dollars a
month with a fast payback on those marketing dollars.

And at that point we had to raise some more money to be able to fund those campaigns. We raised
the money on some very proven metrics and went cash-flow positive the month after we raised the
money. So it shows that if we had taken 16 months to go through and really optimize that
experience, it probably would have taken a lot longer to get the cash flow positive, but we were very
focused and aggressive on it through that period of time and could really accelerate that business in
a very cash-efficient way once we got through that period.

Preparing for growth doesn’t require growth

Sean: The mistake that most people make is they’re trying to manage growth and
optimization at the same time. For this period of time, growth isn’t important. That’s
the other thing that’s really hard for people to consider. That is not the objective —
efficiency is the objective.

So for the first part of the pyramid, the base of the pyramid, you’re just trying to create a product
that’s good enough, that people want, so growth is definitely not important.

A lot of companies still pat themselves on the back if they grow faster than expected through that
period. You shouldn’t, because what happens, especially if you go to your VCs and you pat yourself
on the back publicly to them, then you’re essentially saying growth is important to us, and you’re
setting expectations that they should want more of it. So basically, say: Hey, we grew. That’s not
what we were trying to do yet, but it’s positive on the hope for the business, but before we really
focus on growth we want to get our product/market fit number to this.

Now, in this case, basically we want to be able to grow as efficiently as possible when we’re focused
on it. And so what we want to do is build in efficiency in the business and the customer acquisition
monetization.

Use a business model to grow quickly

Sean: So this is the time when you put in the business model as well, because you can’t spend real
aggressively if you aren’t confident that you’re going to get that return on the investment.

A lot of companies make the mistake of… at least I believe it’s a mistake. This is probably one of
the most debatable things that I say; a lot of companies believe they can grow faster
without a business model. To me, having seen companies that can arbitrage dollars to
grow and do it really effectively, you can just accelerate the business so much with
that, why would you not spend money to grow? But you can’t do that if you don’t have
a business model in place. So that’s why I tend to want to put a business model in
place at that point.

The mistake of trying to put a business model in earlier, before you have product/market fit, is that
you don’t know if you’re charging for the right things in the right way. You may be charging for
things that are totally irrelevant for people and giving away stuff that is really important to people.

90 
 
So that’s one of the big reasons I like to delay the business model until, one, I have product/market
fit, and two, I know why I have product/market fit — I know why people love the product.

Grow and create new channels

Sean: Now I’m in a position to put the business model in place, work on all the efficiency on the
customer acquisition side, and do everything so that when it comes time to focus on growth, the
marketing group or the CEO or whoever is going to be managing that process can be completely
focused on driving growth — they’re experimenting with lots of channels and finding those that
work and killing those that don’t, and basically just as quickly as they can, adding as many new
customer acquisition sources to the mix.

And you shouldn’t focus on that until you know how to efficiently convert people and until you have
a product that people really need. So that’s why this pyramid just gives you the idea that until you
have really achieved that level, and if you’re trying to do multiple things at the same time, you’re not
going to give things the necessary focus to actually accomplish them.

And your goal is ultimately to be growing a product that has very efficient conversion, that you’ve
got all of the metrics in place to really manage that growth, you’ve got a product that people love,
and at that point you’re starting to become a regular company. You’re organized into product teams
and marketing and sales and finance and all of those things that are needed to create an efficient,
high-growth company that can manage that growth and not implode under that growth.

That’s really why in that center period of time, it’s exciting. What should be driving you, day in and
day out, is that we’re close. We’re right to the point where we’re almost going to accelerate the
business.

Nail the first user experience while preparing for growth

Sean: So, one other piece that I think fits into this is that a lot of times it requires a lot of
experimenting with how you introduce people to your product. What do you show them first? What
is that whole first user experience?

The mistake a lot of companies make is that they try to get that first user experience
right before they have product/market fit, so those companies are essentially pulling
limited resources off of their core product and saying: we’re going to focus those
resources on getting that first user experience right. Then that means that they’re not
really dealing with the problem. They can maybe get twice as many people in to
experience the product, but it still sucks. So they’re not really dealing with the issue.

But now everybody who comes in, or a big chunk of people who come in, are saying that they’d be
very disappointed without this product — there’s a lot of love for that product. At that point,
basically hitting the pause button on core-product development for two months isn’t even going to
hurt the business because people already love it, and taking all of those resources that would have
been focused on honing that core-product development, and refocusing those on: How do you
introduce people to that? What does that first user experience look like?

The mistake that a lot of companies make is that they’ll take one person off to do that, and it’s going
to take them a lot longer to do the development to get that right. But now you’ve got that core-
product experience right, taking the majority of your development resources to get through it in a
few weeks is going to get you there faster and that is going to put huge dividends on your business.

Nivi: You’ll become master of your own destiny much more quickly. Right?

91 
 
Sean: Yeah. The way that I’ve been able to get development teams excited about that is, one, I give
them the context of the whole big picture, and then I essentially say this is not something that we’re
going to ask you to keep coming back and refining the first user experience. Once we’ve really got it
right, backed up by numbers, backed up by saying twice as many or three times as many or ten
times as many people are getting in and experiencing that core-product experience, then you can go
back into just working on that awesome core-product experience that you’ve created, and evolving
that and just continuing to create a great product experience.

But otherwise, we’re going to have to keep asking you for help for the next six months, until we get
that first user experience right. It’s just much better for everybody, for you guys, to put the pause
button on that, help us get this right, and then we’re going to be able to grow the business and it’s
going to be a lot more exciting.

Leave no room for the competition

Nivi: And once you’re growing the business, what do you think about growing quickly to eliminate
slack in the marketplace and basically leave no room for the competition?

Sean: Once you have product/market fit, and once others see you having traction,
you’re going to attract a lot of copycats into the business. And they should be trying to
come in because, like I said, the product/market fit is kind of the hardest thing to get
to, so once somebody sees that you have a lot of passionate users who really love it,
it’s the easiest way to create a moderately successful business — to knock that off.

So you have a short-term advantage, which is you’re able to respond to all the real product feedback
that you’re getting from users who are coming in and experiencing that, so you can start to evolve
your product better.

So partly what you want to do is just buy every related keyword, maxed out, and be very efficient on
those keywords so that you can spend a lot more money on them acquiring users. So, the next guy
can’t even consider spending keywords, so you’ve killed that channel for them. You just want to
basically make it so that by the time someone can respond, it’s going to take them several months to
be able to come out with something that’s close to your product. By the time they come in there,
there’s just no market left for them to play in — you’re really redlining that market.

It’s interesting. In companies that I’ve been with through the growth period, the products that come
easiest are the ones that often get the least focus because, oh, we’re hitting the targets on those
numbers. We have to work harder on these other numbers. But it’s always the products where
the growth comes easiest where the competition comes in because we didn’t take the
slack out of the market in those products, and then suddenly competition that we
didn’t expect, and then it’s not so easy to grow any more.

Marketplaces are an exception to this model

Sean: I think all of the things that I’ve talked through are a snapshot of what I think is best right
now. There are so many exceptions in the different types of businesses that are out there. For
example, marketplaces do need to focus on growth a lot earlier. Their business is a
function of the people that are on there and how they’re using the product, and the
experience changes for everybody else with more people on the product. eBay would
be a good example of that.

92 
 
I think each of these things are some of the guidance that I wish I had in the startups that I was in,
but don’t just take it exactly as-is and think you can just plug it right on your business and that it will
work. You need to sort of interpret what this means for your business.

Nivi: Do you have any experience applying any of this theory to marketplaces at all?

Sean: Yeah, Y Corp. is a company that I’ve worked with that is a marketplace that I’ve definitely
learned a lot and learned that it’s different than a lot of the companies, like Dropbox or Xobni, where
it’s a more specific product that, with a million users or fifty users, there would be experience where
the product doesn’t change that much, where for Y Corp. the experience changed a lot.

Nivi: So how do you still take a thoughtful approach when you’re building a marketplace?

Sean: It’s just a lot more complicated. I think, for me, one of the things that’s kind of come out, in my
head, on marketplaces is that you probably need deeper pockets for it. You don’t have the luxury of
focusing quite as laser focused on each of the steps in the pyramid that I talked about — that you
actually do need to think about growth earlier on, and that even when you’re then focused on
growth you need to make sure that you’re constantly finding out if the love is moving, if it’s on
something else. It’s just a lot more dynamic to try. It’s fun. It’s interesting, but it’s definitely harder.

And I’ve had enough conversations with other people from dating sites to anything that’s got the
experience based on the mix of people that are there, that it’s really something that affects any
businesses like those. So that’s one piece that, don’t just feel like you can plug this in directly. There
are probably exceptions for a lot of these things.

Why Sean decided to focus on startup marketing

Nivi: Why did you decide to focus on startup marketing, and why is it important to you and how
did you come to that conclusion?

Sean: It actually happened when I was coming off of LogMeIn and figuring out what I was going to
do after LogMeIn. I knew that the company had gotten big enough that it was not really the size that
I wanted to be working in anymore, and that I wanted to go back to early stage.

So it was more just thinking, OK, I can jump into another startup and hopefully I can be fortunate
enough to get into a startup where it has the success. But just looking at realistic startup success
rates, LogMeIn was the second in a row of two startups that I had run marketing from launch
through a NASDAQ IPO filing, and I just knew, realistically, that there was not a good chance that I
was going to be able to do that with a third one.

And so partly what I was looking at was just in general…. I kind of went through the thought
process of: did I just get completely lucky, which certainly had something to do with it, or were there
some things that we did that actually led to that success? And when I really started thinking through
both of the companies, I came to the conclusion that the hardest part and the part that really
mattered in building a successful company, was what we did in the first year, and really just
figuring out everything about the business: Who really needs this product? Why do they need it?
How are we going to charge for it? How are we going to acquire new users?

All of these things that needed to be figured out, once we had them figured out then it was much
more about, OK, now how do we get more users? But a lot of the moving parts had stabilized at that
point and we could really focus on just getting more new users. And so I thought, if that’s really the
most important part, I thought that it was also the most challenging part, and so future success that
I have is really going to be based on how well I can do that first part.

93 
 
And then I realized that in 10 years, across these two startups, I’d only spent one or
two years in that really challenging stage, so if I really wanted to get good at that I
was going to need to figure out how to work in that stage a lot.

And the problem with startups is that every person working in a startup full-time, basically has an
option vesting period that’s usually about four years on those initial options. So you work really
hard in the beginning and you get some level of success and then it takes another four years to be
compensated for that success, so there’s no way you’re going to create all this success and then leave
the company right away.

So for me it was more about: how can I work really hard in that stage and actually be compensated
for it? The only thing that I really figured would be the best way to structure it would be as an
interim VP marketing role, and I was introduced, from one of the investors in LogMeIn, to a
company that was in his portfolio called Xobni. They were still in private beta, and he said just talk
to the guys. So we had a conversation that ended up extending for a couple of hours and we really
bonded over some things.

And I got excited about the product and they got excited about potentially working with me and
tried to bring me in long-term, full-time, and that was not something I wanted to jump right into. I
was really passionate about figuring out this early stage and doing cycles there. So we decided that
it made sense to pursue an interim VP marketing role. So I basically went there and thought, I’ll do
interim VP marketing role after interim VP marketing role, for the next several years — essentially
negotiate my exit before I came in so that I’d be able to keep a reasonable amount of options. That
was the initial plan, and the whole idea was just to get the experience, up front, and practice, up
front, to get good at that and to really document what’s important and what’s not important.

I think the challenge that I figured out was that, really, on the marketing side, there’s a lot of
bottlenecks to get a lot of the things done, like optimization and trying to get resources to do a lot of
those things. Everybody’s scrambling to get the overall product out.

So I knew a lot of what needed to be done, but there’s just a lot of waiting around until you have the
tools that you need to do that. So where I’m looking at everyone around me working 14 hours a day,
and wanting to put that time in myself, there just wasn’t that much to do. So I almost felt guilty that
I wasn’t putting in the same amount of effort that everybody else was, so I still spent the time in the
office, but I just found myself doing a lot of things that maybe weren’t that important.

That was why, after Xobni, I decided that I was going to do a more leveraged model
where I could work with a couple of companies where they actually had somebody
inside to manage the execution of things, but that I would actually be more on the
outside, being able to not spend more time in the company than I needed to spend. So
that’s why I did Dropbox and Eventbrite in that sort of way, where I was balancing
two companies at once, and that worked pretty well.

Just scratching the surface

Sean: I feel like I’m still just scratching the surface on what can be learned in early-stage startups.
There are not a lot of people that have deep enough experience and frequent enough experience in
that really critical up-front stage to get good at it. It’s been fun to try and figure it out, but there’s a
big variety of companies. There are certain things that I think are applicable to all businesses.

One of the most important discoveries in the last couple of years, since I’ve been focused on this
stage, is figuring out this very-disappointed number and just understanding that trying to grow a
business that doesn’t have users that would be disappointed without it, or don’t consider the product

94 
 
a must-have, is going to be a difficult and frustrating experience for anybody, including me. It’s
humbling. I can’t do it.

I can’t do it very well, and when I see companies doing it I have a lot of admiration for
them to be able to grow a business that is weak on that [fit] number. Those are the
hard-core marketers that are kind of too good for their own good, because they’ve
basically allowed the business not to focus on what the core issue is that’s holding
them back. But those people would really benefit from taking a step back and
tightening up some of these things.

I’m doing an experiment with Webs.com, for example, that is a later-stage company. They’ve been
around for a long time. They’re a top-100 website and have a ton of user passion and a lot of the
things that I’ve done to help prepare companies to grow are things that Webs hadn’t done, so we’re
working together to see if we can retroactively put some of these things in place to accelerate their
business.

And for me it’s all about learning and just experimenting in companies to find out what’s unique to
startups and what’s unique to later-stage companies and what applies to everything.

Nivi: Great! That’s great. I just want to say thanks very much, Sean, for talking to us.

Marketing science Q&A with Sean Ellis – Nivi / Sean Ellis 
http://venturehacks.com/articles/qa‐sean‐ellis 

Marketing science Q&A with Sean Ellis

by Nivi on December 23rd, 2009

The comments to our interview with Sean Ellis turned into an awesome Q&A — this post is a
roundup.

(Feel free to keep asking questions here or there and I’ll try to get answers from Sean.)

Is my product a nice-to-have or a must-have?

Jae Chung wonders whether his product is a nice-to-have despite the positive press:

“I spent the past 24 hours poring over each of the points [in the interview]. We also formed about 8
months ago and the site is currently undergoing beta testing and has received positive feedback
from many of our users and the press. However, my gut tells me we are in the “nice to have”
category, and could never quite put our finger on what it was that users found appealing. We’ll
definitely be implementing your survey to find out where the “love” is!”

The survey he’s talking about is survey.io.

Should I charge users before fit?

Sean Ellis:

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“I think that it is easier to evolve toward product/market fit without a business model in place (users
are free to try everything without worrying about price). As soon as you have enough users saying
they would be very disappointed without your product, then it is critical to quickly implement a
business model. And it will be much easier to map the business model to user perceived value.”

Michael Harry Scepaniak:

“…freeing yourself (pun intended) of paying customers early on would seem to allow you to make
more radical moves (pivots), since you don’t have to worry about angering anyone that has given
you money and expects you to deliver on their expectations in return.”

Instead of charging users for a part of the product they don’t even want, first find the part they love,
and then figure out how to get users to pay for it. Entrepreneurs who advise you to charge from day
one probably had fit early on in their startups.

How do I tell users that I’m going to charge someday?

Eric Santos:

“Do you communicate to the users that the product will have a price someday?”

Sean Ellis:

“I would communicate that “it is free during Beta” or if “beta” is too techie, then free during the
introductory period. If you plan to have a free version, you can also let people know that.”

Should I pay users to send feedback?

Gregory:

“What about offering a gift or paying users to send feedback? Is this a useful technique, why or why
not?”

Sean Ellis:

“I haven’t needed to offer a gift for feedback yet. However, on SMB targeted products I tend to create
a formal beta program that includes feedback requirements. Those people that participate in the
beta program lock in a discount on the product (generally I don’t announce price at this point, just
that they will receive a 50% discount). In addition to providing great feedback, these people tend to
convert at a very high rate (since they worked for a discount).”

What if my customers aren’t filling in surveys?

Vincent Chan:

“From my experience, many SMB users don’t like to fill in a survey for an unknown startup. Should I
take that as a bad sign? In other words, is the survey response rate an equally important metric as
the “must-have metric”?”

Sean Ellis:

“Yes, I’ve found survey response rate directly correlated to the percentage of users that consider the
product a “must have.” For “must have” SMB products I often see the response rate over 10%.”

How do I find the love in a hardware company?

96 
 
Samuel Bouchard:

“Sean, how can this “find the love approach” apply to hardware companies? What needs to be
adapted to the method when you sell a product that is worth several $k’s?”

Sean:

“Samuel, I haven’t worked on a hardware product, so I’d just be guessing… Given the cost of getting
a hardware product to market, I’d spend a lot more time up front on “where’s the need?” Steve
Blank’s book Four Steps to the Epiphany gives great guidance on this.”

If you can build a product in a day, show customers the product. If the product is going to take
weeks, show customers a PowerPoint instead.

Pace of marketing change – Sean Ellis 
http://startup‐marketing.com/my‐favorite‐online‐marketing‐tactic‐doesn%E2%80%99t‐work/ 

My Favorite Online Marketing Tactic – Doesn’t Work

That’s a pretty safe prediction for two years from now. I’ve seen many hot online marketing tactics
lose their effectiveness over the last decade.

The key cause: Online tracking makes it easier for marketers to quickly figure out what actually
works. As a result we start piling into the most effective tactics. Eventually they get saturated. An
equilibrium is reached where most of the big profit potential is lost. SEM (Google Adwords) is the best
example of this. A few years ago I was able to spend 7 figures per month on SEM with a tracked
payback of three months. Today very few keyword categories offer that fast payback at any kind of
meaningful scale.

The other reason that popular tactics fade so quickly is that popular tactics generate a lot of
noise. Potential customers start tuning out the whole channel as it gets cluttered with advertisers. In
the 90s, I used to get 20X higher click through rates on banners than what’s typical today. There
were several months in the late 90s at Uproar where we ran the most viewed banner on the entire
web (according to Nielson NetRatings). Today banners rarely appear in the marketing mix for my
startup clients.

And now it appears Facebook apps are quickly fading as a viable marketing channel.

So what can startups, marketers and VCs do to combat the short shelf life of online marketing
tactics?

Advice to Startup CEOs: Don’t pay a premium for a marketing veteran’s many years of tactical
online marketing experience – only the last couple years really matter. And most of the critical go to
market projects are very different from traditional marketing functions.

In fact I generally encourage startups to hire a complete rookie. The marketing leader is one of the
most challenging roles for a startup to hire. The best marketing vets are looking for startups that have
a bit of “wind at their back.” It’s the rookie that can create this momentum. Their lack of experience
often means it’s easier for them to adopt new effective tactics as well as concentrating their efforts on
the pre-tactical projects. In exchange for coming in early, give them a legitimate shot at the long-term
marketing leadership role. After a year they will be intimately familiar with your customers. And they

97 
 
will likely be every bit as effective as a veteran marketer but available for a fraction of the equity and
cash.

Finally encourage your VCs to hold regular marketing summits so your marketer can trade effective
customer acquisition tactics with other marketers (share “Advice to VCs” below with your VC).

Advice to Marketers: Don’t specialize in a single tactic. This is counter to the advice of most people,
but hopefully by now you understand the flaw in focusing on a single tactic. They fade too fast and
then you have to start building a new specialty.

Instead, focus on developing marketing skills that will always remain relevant. These include things
like marketing psychology, diffusion of innovation, company building, customer research methods,
persuasive website architecture, actionable marketing metrics… Stay on top of the latest tactics, but
always balance this with developing expertise that will remain important in the long term. And when
you discover effective new tactics, really analyze them to understand why they work. Those
principles will remain important and will help you create/spot the next effective tactic.

And encourage your CEO/VCs to arrange marketing summits with other startup marketers where you
can learn from each other (and please invite me).

Advice to VCs: Encourage your portfolio companies to exchange their most effective tactics. Most
VCs get their CEOs together, but rarely do I hear about VCs bringing together their marketing leaders
(mine never did in any formal way). Marketers probably have much more relevant insights to offer
each other than CEOs. Effective online marketing tactics are surprisingly effective across different
business categories. The collective insight across your portfolio of what works is enormous.

I recently attended one of the rare marketing summits at a VC and found it to be extremely
valuable. Expertise in the group ranged from viral marketing to creative ways of generating press. I
was happy to share my insights at no cost – well actually in exchange for their insights. I also shared
some of my tools/projects that can be leveraged to get better results out of every tactic. I’m sure the
other marketers would agree that it was an extremely valuable use of a few hours of our time.

Startup marketing (Sean Ellis) – Nivi 
http://venturehacks.com/articles/sean‐ellis 

The sultans of startup marketing

by Nivi on November 19th, 2009

I recently re-connected with an up-and-coming venture capital Associate who thanked me for
introducing her to the masterworks of Steve Blank and Eric Ries. I told her to check out Sean Ellis’
blog, and mentioned that I’ve learned just as much from Sean.

Later that night, she sent me a note: “Sean Ellis is awesome. Thanks so much.” Let me tell you why
Sean is awesome.

98 
 
 First, Sean lead marketing from launch to IPO filing at LogMeIn and Uproar. He
later worked with Xobni (Khosla Ventures, First Round Capital), Dropbox (Sequoia Capital),
Eventbrite (Sequoia Capital), Grockit (Benchmark Capital), Flexilis (Khosla Ventures), eduFire
(Battery Ventures)… the list goes on. So all of his theory is backed by a wealth of experience across a
broad range of startups.

Second, his startup pyramid changed my life and increased my bench press by 75 lbs. This is the best
model I’ve seen on how to build a startup. Read it.

Finally, he shares a lot of his knowledge for free on his blog. Here are extracts from a few of his
posts. Make sure you click through and read all of them in full. I read his blog from front-to-back
when I first discovered it (start with the newer stuff).

When Should a Startup Start Charging?

“I’ve recently changed my long held belief that all startups should charge immediately upon the
release of a new product. I now believe that non-enterprise targeted startups should only charge
once you have achieved product/market fit. As explained in this earlier post, I define
product/market fit as at least 40% of your active users saying they would be “very disappointed” if
they could no longer use your product…

“For startups targeting enterprises, it actually does make sense to charge before reaching
product/market fit. This is the best way to help the enterprise figure out how to get value from your
product (somebody on the inside will be motivated to work with you to unlock value since they’ve
already spent the budget). If you haven’t charged anything, your attempts to engage the customer
and find value are likely to be perceived as an aggressive sales annoyance rather than genuinely
helpful…

99 
 
“Startups often delay implementing a business model claiming “we’re focused on growth right now.”
But once you’ve achieved product/market fit, most startups will grow faster with a business model
(I wrote a post on this earlier). A business model gives you rational constraints within which you
can execute very aggressively – otherwise you are held back by fear that you may be wasting money
on paid marketing programs.”

The Startup Pyramid:

“Product/market fit has always been a fairly abstract concept making it difficult to know when you
have actually achieved it…

“I’ve tried to make the concept less abstract by offering a specific metric for determining
product/market fit. I ask existing users of a product how they would feel if they could no longer use
the product. In my experience, achieving product/market fit requires at least 40% of users saying
they would be “very disappointed” without your product. Admittedly this threshold is a bit
arbitrary, but I defined it after comparing results across nearly 50 startups. Those that struggle for
traction are always under 40%, while most that gain strong traction exceed 40%. Of course
progressing beyond “early traction” requires that these users represent a large enough target
market to build an interesting business…

“If you haven’t reached product/market fit yet it is critical to keep your burn low and focus all
resources on improving the percentage of users that say they would be very disappointed without
your product. Avoid bringing in VPs of Marketing and Sales to try to solve the problem. They will
only add to your burn and likely won’t be any better than you at solving the problem. Instead, you
(the founders) should engage existing and target users to learn how to make your product a “must
have.” Sometimes it is as simple as highlighting a more compelling attribute of your product – but
often it requires significant product revisions or possibly even hitting the restart button on your
vision.”

To Pay Or Not To Pay To Acquire Users?

“I recently heard a VC say that startups “should spend the least amount of money possible on
marketing.” This is a healthier attitude than the opposite prescription of undisciplined land grab,
but a better approach is pure ROI marketing. Marketing opportunities that offer a fast payback
with additional profit margin are a key component for reaching your startup’s full market
potential…

“If your growth is accelerating, you will attract competition. And this competition will likely be
savvy enough to replicate the customer acquisition and monetization approaches that you worked
hard to invent. So it is important to make it as difficult as possible for them to get traction. I know
some of you are saying “but yourrecent post told us to ignore the competition.” My point was not to
ignore the competition forever, simply to ignore them while you are figuring out a repeatable,
positive ROI way to acquire customers. Competition (especially those that are spending irrationally)
will distract you from this critical task.

“But once you have optimized the first user experience and introduced a business model that
generates sufficient revenue to fund user acquisition, it’s time to focus your marketing efforts to
aggressively build new customer acquisition channels and scaling existing channels – both free and
paid.”

I am a fan. And so can you.

100 
 
 The 10
0x product la
aunch – Ash M
Maurya 
http://ww
ww.ashmauryya.com/2011//10/the‐10x‐pproduct‐launch
h/ 

The 10x Product Lau

unch

You’ve p
painstakingly
y defined and built an M
MVP through 100+ custom mer interviewws. You’ve co
ollected
thousan
nds of emails from potenttial prospectts through a teaser page. You’re read
dy to launch. But…

The engineer in you is worried about

a some rreal technica
al risks. You’r re pushing thhe envelope using
u a
new typ
pe of databasse – is the da
atabase partiitioned correectly, will it scale,
s should
d you wait annd run
more tessts first?

The marrketer in you

u is worried about
a your p
pricing and positioning
p – can you jusstify chargin
ng for
your MVVP, are you delivering
d en
nough value,, have you piicked the right price, may
aybe you shou uld wait
to add a few more feeatures, or defer
d chargin
ng to later?

A popula
ar solution iss launching as a “privatee beta” – allo
owing you to
o incrementa ally rollout your
y
product,
t, keep early customer exp pectations a
at bay, and defer
d the pricing question
n under the guise
g of
gaining more learniing first. While this apprroach certainnly appeases our inner feears, it is ofteen the
cop-out approach.

The purppose of the MVP

M is gettin
ng your prodduct in front of customerss to start thee process of learning
l
but not a
all learning is equal. Youu need to priooritize learn
ning around the
t riskiest p parts of yourr product
first.

For mosst products, technical

t risk
k ain’t what’’s riskiest.

Launchiing a new prroduct can bee daunting bbecause you have

h to simuultaneously jjuggle multipple
product,
t, customer, and
a market risks.
r I’ve beeen fielding some
s of these
e tradeoffs la
ately with thee
upcomin
ng launch off a new SaaSS product – UUSERcycle, anda devised the
t following g 10x launch plan.

The 10x Product Lau

unch Plan

Here’s th
he general id
dea:

Like the “private-betta”, the 10x launch

l uses a staged rolllout. But unliike the priva
ate beta, it
complettely avoids anny connotatiions around d “being in beeta”. You hav
ve to both dem monstrate sttrong
productt conviction and
a be ready y to rigoroussly test those convictions from day on ne.

101 
 
Addition nally, the sta
aged rolloutss use a logariithmic step function
f (10x
x) that afford
ds the right
prioritizzation of risk
k at each stagge.

What is the right priioritization of

o risk?

The Lean Canvas beelow charts the path I usee for systema
atically tackling the 3 typ
pes of risks:

Productt Risk – Gettiing the produ

uct right

1. First m
make sure yo ou have a prroblem worth h solving.
2. Then define the smmallest possiible solution (MVP).
3. Build and validatee your MVP at small sca ale (demonstrrate UVP).
4. Then verify it at la
arge scale.

Customeer Risk – Building a path

h to customeers

1. First iidentify who has the pain

n.
2. Then narrow dow wn to early adopters whoo really wantt your produuct now.
3. It’s ok
kay to start with
w outboun nd channels.
4. But grradually buiild/develop scalable
s inboound channeels – the earliier the betterr.

Market R
Risk – Build
ding a viable business

1. Identif
ify competitiion through existing
e alterrnatives and
d pick a price
e for your soolution.
2. Test p
pricing first by
b measurinng what custoomers say (v verbal comm mitments).

102 
 
3. Then by what theyy do.
4. Optim
mize your cosst structure to
t make the b
business model work.

Putting 10x in Action

n

Stage 1: Use intervieews to recruiit 10 early ad

dopter custo
omers

Use prob worth solving and identify

blem interviews to find a problem w y your protootypical early
y
adopterr.

Put up a “problem fo
ocussed” teasser page and
d start colleccting email addresses.

Use solu
ution intervieews to definee your MVP aand recruit your
y first 10 “early adop
pter” customeers (not
users) – they pay yo
ou from day one. If you n nail the rightt problem, thhis shouldn’t be difficult. Make
M a
bold pro
omise, keep pricing
p simple, and backk it up with a high-touch concierge
c M
MVP model an nd/or
money-b back guaranntee.

Build yo
our MVP and
d validate tha
at is deliverss on your Un
nique Value Proposition.
P

What’s
s happening
g here?

The firstt objective is finding mottivated early

y adopters no
ot on-the-fen
nce users.

Early ad a visionary as you but ffrom the problem perspective.

dopters are as

Customeer interviewss are a greatt way for qu alifying earlly adopters.

Plan on talking to 10
00 prospectss to find the rright 10 early
y adopters.

Starting
g with just 10
0 customers defers
d techn ical risk for testing mark
ket risk.

First key
y metrics: acctivation, rettention (and
d revenue).

Stage 2:: Use email liist to find neext 100 custoomers

103 
 
Use you
ur 10 early ad
dopters to heelp find the n
next batch off customers (they
( pay you
u too).

Supplem
ment the restt by setting up
u more soluttion intervieews using your email listt.

Collect ccustomer testimonials / case-studies.

c .

Start bu
uilding a marrketing webssite.

What’s
s happening
g here?

R user lifecyccle (adding rreferral) to validate comp

Exercisee full AARRR pelling UVP..

Test earrly channels for

f user acqu
uisition.

Use refin
ned position
ning and sociial proof to b
build a compelling marke
eting websitee.

Plan on 1,000 person email list to

t yield 100 ccustomers.

Stage 3:: Use marketting website to acquire n

next 1,000 cu
ustomers

Use you
ur marketing
g website to sign-up
s userss.

Use you o define multtiple pricing plans includ

ur learning to ding a freem
mium option if one makess sense.

Managee the full userr lifecycle fro

om visitor too sign-up to paid.
p

What’s
s happening
g here?

104 
 
Strong eearly adopteer testimonia
als should he lp drive latteer stage custtomers.

Usage p xisting customers help deefine optima

patterns of ex al pricing pla
ans.

owards a more automateed self-serve model.

Move to

Start tacckling scalin

ng risks.

Stage 4:: Build your engine of grrowth for nexxt 10,000 cusstomers

Start tessting other customer acq

quisition chan
nnels.

Optimizze cost structture.

Optimizze AARRR fun

nnel.

What’s
s happening
g here?

Product/
t/Market Fit

Shift fro
om finding a plan that wo
orks to accellerating thatt plan

Why 10xx works?

Maximizze learning (about

( what’s riskiest) peer unit time.

You don
n’t need a lot of users to leearn. Just a ffew good customers.

If you ca
an’t convert a prospect in
n a 20 minutte face-to-facce meeting, it’s
i much harrder to conveert an
unawarre visitor in 8 seconds on your landinng page.

Pricing is not only part

p of the prroduct but deefines your customers.
c

Start bu
uilding a path
h to customeers from day
y one – start direct to ma
aximize learn
ning before
automatting.

Disclaim
mer

This 10xx Product Launch strateg

gy is only pa rtially impleemented at th
his stage witth
theUSER Rcycle launcch. USERcyclle is a B2B Sa
SaaS productt but I believe
e this launchh strategy sh
hould

105 
 
work as well for a B2C product as long as you stay on the left-hand side for a while i.e. acquire users
in steps of 100, 1,000, 10,000, 100,000, 1,000,000, etc.

Whatever comes out of this experiment, I will share my learning along the way. In the meantime,
please share your comments below…

Marketing is hard – Rand Fishkin 
http://www.seomoz.org/blog/why‐its‐so‐easy‐to‐get‐marketing‐all‐wrong 

Why It's So Easy to Get Marketing All Wrong

April 25th, 2012 - Posted by randfish to Management / Culture

I got a couple emails last week I wanted to share in anonymized format. Here's the first one:

It's me again <redacted>, just wondering I have been learning allot more about how to link
build without software like senuke x and other automatic software and becoming a better
manual link builder with google alerts etc.

And here's the second:

I look after around 6 clients at the moment, but my daily jobs just seem to be very repetitive
e.g. finding related blogs, commenting on them, submiting sites to decent directories and
guest posting, an now and again creating infographics and sharing them with blog owners and
across sites such as reddit/quora etc...mostly I'm just blog commenting though.

I get A TON of emails like this. When folks are relatively new to the field of online marketing, or are moving
from classic marketing into SEO, they often reach out seeking advice and help. Unfortunately, the volume's
become a bit overwhelming of late, and I'm only able to respond to 50%, sometimes less (side note: I tried an
experiment w/ email scalability a couple months back that failed). Thus, I wanted to write a post to express
some empathy.

Yes. Marketing is really, really damned hard.

I understand the temptations to phone it in, to spam instead of creating authentic value, to outsource
responsibility, to proclaim for all to hear that you HATE marketing, to give up. You're not alone. In fact, I've
been just inches from all of those perspectives time and again over the last decade.

But that's also what makes great marketing so powerful. When:

Very few people are qualified or capable to do something

Many people believe that thing to be impossible

Only a handful make exceptional investments to achieve it

That, in my opinion, is when remarkable things are in your grasp.

106 
 
The marketing channels we invest in - SEO, social media, content marketing, community building, virality - fit
these parameters well. It's easy to do the basics, tough to get the intermediate items right and mind-blowingly
challenging to get that last few percent that takes us from mediocrity to extraordinary.

So many times, marketing professionals are called in to execute on Step 3 after being handed half-assed 1s and
2s. My friend Philip Vaughn told me at a lunch some months ago that "startups aren't really an engineering,
product or organizational problem. They're mostly a marketing problem." But if we're handed crap to market,
we can't help but do crap marketing.

Get Found using Inbound Marketing – David Skok 
http://www.forentrepreneurs.com/sales‐marketing‐machine/inbound‐marketing/ 

Get Found using Inbound Marketing 

The web has forever changed people’s buying habits. Instead of needing to rely on sales people to
send them information, buyers now have Google and other search engines to research products, find
competitors, and see how other people rate those products in blogs and reviews. Furthermore they
are greatly influenced by individuals that have emerged as experts in particular subject areas who use
social media to get their messages across.

This sea change in buying behavior requires vendors to re-think how they go to market, and optimize
to make sure that they will get found by buyers using search engines, blogs, reviews, and social
media. The termInbound Marketing was invented by the crew at HubSpot, to describe the
techniques that are needed to get found by buyers, and to make sure that the reviews and blogs
around your industry segment cover what you are doing. (HubSpot is a SaaS company that provides
great software tools, plus education to help you automate Inbound Marketing. The founders,
Dharmesh Shah and Brian Halligan have also written a great book about the topic: “Inbound
Marketing: Get Found Using Google, Social Media, and Blogs (The New Rules of Social
Media)”. Full Disclosure: I am an investor and board member at HubSpot.)

HubSpot produced this great humorous video that highlights the hopelessness of the old techniques
in this new world:

As further evidence of this change in buying behavior, I was recently talking to the CIO of a large
pharmaceutical company, and he told me how he hates spam emails from vendors, and how he had
developed a canned email response to them. I asked him to forward me a copy of that email, and
have excerpted a couple of paragraphs from it that quite clearly describe the change:

107 
 
“Please understand that I get dozens of these types of messages a week. I simply do not have
time to read them, dig into them, follow-up on them, or reply to them. The most effective
solution to this problem is for me to ignore the messages, which is what I usually do. …

… Finally, a small comment. As a customer, I find this type of approach to sales to be largely
annoying to me and unproductive for you. We learn far more about what we want to purchase
by searching the web, looking for customer references in blogs and forums, word of mouth,
and by finding white papers on your site that concretely describe solutions to problems we are
having.”

Remarkable Content is King

A key part of getting found is making sure you show up on the first page of a Google search. The lazy
marketer’s approach to doing this is to purchase Google Adwords, and pay by the click (referred to as
SEM, Search Engine Marketing). However 85% of people ignore the paid ads, so to be really
effective, you will need to perfect your SEO (Search Engine Optimization) skills.

SEO requires you to develop great content that your buyers will find sufficiently interesting, different or
insightful, that they will want to remark on it. (The authors of Inbound Marketing refer to that
as remarkable content.) When your readers remark on your content on-line, using tools like Twitter,
Facebook etc., they spread the word virally to other readers and broaden your reach. These
comments lead to links back to your site, which lead to ever increasing page ranking in the search
engines.

To be successful at this, you will need to keep the content fresh. Traditional web sites don’t work in
this regard, as they don’t change frequently enough. What is needed is a blog that you update
regularly.

Your blog cannot simply be a sales pitch for your product, but needs to be about topics that your
buyers care to read about. The tone could be educational; or humorous; or controversial. But above
all it needs to be highly engaging and relevant to them – i.e. remarkable.

When you post a new blog entry, you will see your site traffic surge for a few days, then die back to a
level slightly higher than before.The more you post, the faster your traffic will build. But in the end, it is
the really great articles that you post that will have the most impact.

Once you have interesting content, you can use social media like Twitter, Facebook, LinkedIn, Digg,
StumbleUpon, etc. to get the word out. Your goal is to get other bloggers to link to you, and to have
people tweet about your content.

An interesting thing about a marketing department that focuses on Inbound Marketing: it will place a
high value on people that know how to write and develop content that draws in an audience. A silver
lining to the damage that the internet has inflicted on the publishing industry, is that there are plenty of
very talented journalists seeking employment, and they possess the perfect skills for this job!

SEO versus SEM

Like most of things that are good for us in life, SEO requires work and patience before it will payback.
So it can be tempting to take shortcuts, and just use SEM (paid search ads). However if it is done
right, the results will continue to build, and you will start to build your own audience, and own your
own traffic.

108 
 
We havee also seen that
t the cost of paid searrch increases
s as the need
d to scale thee lead volum
me
grows.

The Pow
wer of Free

Anotherr extremely powerful

p way to create inb bound traffic and qualified
d leads is to use a free product
p
or servicce. A great example
e of th
his is the Web bSiteGraderr service fromm HubSpot. (I (If you haven’t tried
this, I recommend giiving it a try now.n It will on
nly take a few
w minutes.) WebSite Graader has a co ouple of
interestining attributess that are worrth studying::

It is free of charge

It takes very little wo

ork by the cus
stomer to ge
et some very valuable res
sults

It provid
des its resultss in the form of a score ouut of 100. Hu
uman beings
s are very com mpetitive, an
nd when
they don n’t get a goodd score, theyy want to find
d out how to improve theiir score. Thaat leads them
m to
wanting to find out more
m about HubSpot
H whicch can help them
t improve
e their scoree.

It allowss them to commpare thems selves to theiir competitorrs. All businesses care abbout how the ey are
doing reelative to theiir competition
n. If they are doing worse e, this is a po
owerful motivvator to drive
e them to
change.

Think ha
ard about you
ur audience and whetherr there is an opportunity to
t build a sim
milar free web
b service
that wou
uld draw them
m in, and pro
ovide great vvalue.

If you arre interested in learning more

m about h
how Free pro
oducts and se
ervices can hhelp your ma
arketing,
please rrefer to this section:
s The Power
P of Fre
ee.

Building
g your reach

109 
 
Once you have great content and possibly a free product/service, you will want to find ways to drive
the maximum traffic to that content. In the last couple of years we have seen some powerful new tools
emerge to help with this process in the social media space. Get yourself accounts on Twitter,
Facebook and LinkedIn, and join in the conversation. (For Twitter, I also recommend downloading the
Tweetdeck application.) Start by listening. Watch what people are talking about in your topic areas,
and take note of their interests. Once you have an idea of how the conversation works join in. Be
careful not to take a sales stance to promote your products, as that will rapidly lose you your
audience. However you can draw your audience in with short url’s (see http://bit.ly/) that link to your
blog posts and other non-sales oriented content.

This short paragraph is not going to be enough to fully educate you on the ins and outs of using social
media to build your audience, so if the topic interests you, I recommend going here to learn more:

Internet Marketing Webinars (see the section on Social Media Marketing).

Influencer Campaigns

In every product area, there are usually already influencers that write the most about that area, and
have the largest audience that follows them. To conduct a successful social media campaign, you will
want to identify those influencers, and reach out to them to get them to write about your
product/service.

To get them to pay attention to you, you will first need to understand what they care about. Read their
blog posts and tweets, and try to get inside their minds. Try to determine what appeals to them, and
what has clearly turned them off. Then prepare your pitch, and use social media to engage with them.

You will then want to monitor the results by tracking their blog posts, links to the articles, tweets, etc.

For more information…

Inbound marketing is a rich topic area that would take more than a single article like this to describe.
For more information, try these links:

Marketing to match the channel – Steve Blank 
http://steveblank.com/2011/08/05/bonfire‐of‐the‐vanities/ 

Bonfire of the Vanities

Posted on August 5, 2011 by steveblank

When I was in my 20’s, I was taught the relationship between marketing and sales over a bonfire.

Over thirty years ago, before the arrival of the personal computer, there were desktop computers
called office workstations. Designed around the first generation of microprocessors, these computers
ran business applications like word processing, spreadsheets, and accounting. They were an
improvement over the dumb terminals hanging off of mainframes and minicomputers, but ran
proprietary operating systems and software. My third startup, Convergent Technologies (extra credit
for identifying the photo on page 2) was in the business of making these workstations.

110 
 
The OEM Business
Convergent’s computers were bought and then resold by other computer manufacturers – all of them
long gone: Burroughs, Prime, Monroe Data Systems, ADP, Mohawk, Gould, NCR, 4-Phase, AT&T.
Convergent had assembled a stellar team with founders from Digital Equipment Corporation and Intel
and engineers from Xerox PARC. And once we went public, we hired a veteran VP of Sales from
Honeywell.

As the company’s revenues skyrocketed, Convergent started a new division to make a multi-
processor Unix-based mini-computer. I had joined the company as the product marketing manager
and now found myself as the VP of marketing for this new division. We were a startup inside a $200
million company. A marketer for 5 years, I thought I knew everything and proceeded to write the data
sheets for our new computer.

Since this new computer was very complicated – it was a pioneer in multi-processing– I concluded it
needed an equally detailed data sheet. In fact, when I was done, the datasheet describing our new
computer, proudly called the MegaFrame, was 16 pages long. I fact-checked the datasheet with my
boss (who would be my co-founder at Epiphany) and the rest of the engineering team. We all agreed
it was perfect. We’d left no stone unturned in answering every possible question anyone could ever
have about our system. As we typically did, I printed up several thousand to send out to the sales
force.

The day the datasheets came back from the printers, I sent the boxes to the sales department in
Convergent’s corporate headquarters, a separate building across the highway, and sent a copy to our
CEO and the new VP of Sales. (I was thinking it was such a masterpiece I might get an “attaboy” or
at least a “wow, thanks for doing all the hard work for our sales organization.”)

So when I got a call from the VP of Sales who said, “Steve, just read your new datasheet. Why don’t
you come over to corporate. We have a surprise for you,” I smugly thought, “They probably thought it
was so good, I’m going to get a thank you or an award or maybe even a bonus.”

Fahrenheit 451
I got in my car to make the five minute drive over the freeway. Turning into the parking lot, I noticed
smoke coming from the far end of the lawn. As I parked and walked closer I noticed a crowd of people
around what seemed to be an impromptu campfire. “What the heck??” As an ex Sales and Marketing
VP, our CEO had a Silicon Valley reputation for outrageous stunts so I wondered what it was this time
- a spur-of-the-moment BBQ? A marshmallow roast?

Heading to a meeting with the VP of Sales, I almost walked past the crowd into the building until I
heard the VP of Sales call me over to the fire. He was there with our CEO feeding things into the
fire. In fact as I got closer, it looked like the campfire was being entirely fed by paper. “Here, toss
these in,” they said as they handed me a stack of…

111 
 
Oh, my g-d they’re burning my datasheets!!!

The Bonfire of the Vanities

I stood there stunned as I realized that my 16-page carefully constructed, brilliantly written, technically
accurate datasheets were being destroyed en masse. I guess I was speechless for so long that the
VP of Sales took pity on me and asked, “Steve, do you know we have a sales force?” I managed to
stammer out, “Yes, of course.” He asked, “Do you know how much we pay them?” Again, I managed
to answer, “A lot.” Then he got serious and started to explain what was going on. (In the meantime
our CEO watched my reaction with a big grin on his face.) He said, “Steve, I’ve never seen such a
perfect datasheet. It answers every possible question a prospective customer could have about our
product. The problem is that our computer sells for $150,000. No one is going to buy it from the
datasheet. In fact, reading these, the only thing your datasheet will do is give a prospective
customer a reason for saying “no” before our salespeople ever get to talk to them .

“Do you mean you want a datasheet with less information?!” I asked, not at all sure that I was
hearing him correctly. “Yes, exactly. Your job in marketing is to get customers interested enough to
engage our sales force, to ask for more information or better, to set up a meeting. No one is going to
buy our computer from a datasheet, but they will from a salesman.”

Marketing to Match the Channel

It took me a few weeks to get over the lesson, but it stuck. When selling a physical product through
direct sales, Marketing’s job is to drive end user demand into the sales channel. Marketing creates
a series of marketing activities at each stage of the sales funnel to generate awareness, then interest,

then consideration and finally purchase.

Ironically, over the last decade, I’ve seen web startups have the opposite problem. For web sites with
an ecommerce component, the site itself is supposed to both create demand and close the sale. Web
designers have to do the work of both the marketing and the sales departments.

Lessons Learned

Marketing materials need to match the channel

Marketings job in direct sales channels with consultative sales need to drive demand to the salesforce

Indirect channels require marketing material with more information than a direct channel

Web sites that sell products combine sales and marketing

Confusing these can get you your own bonfire

   

112 
 
 AARRR
R by businesss model – Bra
ant Cooper 
http://market‐by‐num
mbers.com/201
11/02/aarrr‐iss‐from‐the‐pirrates‐point‐off‐view/ 

The Ord
der of AARRR
R

By bran
ntcooper, February 14,
1 2011 1::59 pm

Back in
n Decemberr 2009 whe en Patrick Vlaskovits s and I firstt contempla ated
our Cusstomer De evelopmen nt book, I was noodliing around with a grap aphic to illu
ustrate
the inte
egrate Dav
ve McClure e’s Pirate MMetrics with Custom mer Develo opment acttivities.
I posted
d the graph
hic in a blog
g post whicch garnered
d lots of atttention, inccluding an
importaant commeent from Da ave himself:
f:

btw, no
ote that AAR RRR isn’t exactly sequ uential… in fact, i’d em
mphasize Acctivation &
Retentiion *first*, then go affter Acquisittion & Refe
erral, then optimize
o forr Revenue

Recentlly, I have caught

c a co
ouple of myy Customer r Developm ment cliennts optimiz
zing the
metrics
s in the “wrrong” orderr, so Dave’ss comment bears repe
eating and p
perhaps so
ome
expounnding upon.

The Piraate Says “AAR

ARRR”

The ana
agram is orrdered by user
u experie
ence:

A – Acq
quisition – User
U is dire
ected to you
ur site;

A – Acttivation – User
U u or is oth erwise eng
signs up gaged;

R – Rettention – User
U keeps coming
c bacck, i.e., is engaged
e over time;

R – Refferral – Use
er invites otthers;

R – Rev
venue – Us
ser pays or is otherwisse monetize
ed;

This is not, howev

ver, the ord
der in which
h you shoulld optimiz
ze your pro
oduct while
e
building
g your busiiness. The order (and
d truly, the metrics the
emselves)
are deppendent upon your buusiness moddel.

For B2C
C Free, Say RRAAR
R

113 
 
 Retention – Nail engagement so that users want to or must come
back;

Referral – Your business model requires massive user growth, so your product must
require referrals to work or must be so cool it just happens;

Activation – Once your users are here to stay and inviting others, optimize their
conversion funnel.

Acquisition – Now you’re ready to blow up acquisition. (Good time to get investment
funding.)

Revenue – Millions of users? Time to monetize.

For B2C or B2B Freemium, Cheer RRRAA!

Retention – Nail engagement so that users want to or must come

back;

Revenue – If your business model requires users or businesses to pay, you need to
figure out what they’ll pay for before you blow-up anything;

Referral – Since you’re likely not a true network-effects business, you optimize referral
after revenue. Optimizing referral is actually part retention, part funnel
optimization. Users are so happy they will refer others to your site or provide you
testimonials or speak to the press, etc. Not much sense in blowing up your acquisition,
however, until you have that level of passion.

Activation – This refers to Blank’s “Sales and Marketing roadmap.” Here you understand
and optimize your sales funnel.

Acquisition – OK, now you can hire that PR firm.

For Enterprise B2B, Cheer an alternative RRRAA!

R – Revenue – If you’re selling to businesses the number one thing you need to prove is
that someone cares enough about what you’re providing to give you money for it.

114 
 
R – Referral – As above, referral in this context means that your customers are willing to
sing your praises publicly.

A – Activation – In this context, activation is understanding your sales and marketing

roadmap.

A – Acquisition – After you nail your sales and marketing roadmap, you’re ready to feed
the top of the funnel.

R – Retention – In enterprise B2B, you often don’t have a subscription model, but may
be charging annually for maintenance and support.

Note that you will always need to do some level of “acquisition” in order to figure out
and optimize the other stuff. But the point is that you’re
not concentrating on or optimizing acquisition at the start. Exact order of AARRR is
debatable from one business to another, so use above as guidelines only.

Content targeting is no match for persuasion architecture ‐ Mariel Bacci 
http://www.grokdotcom.com/2012/04/04/content‐targeting‐is‐still‐no‐match‐for‐persuasion‐architecture/ 

Content Targeting Is Still No Match for Persuasion Architecture

By Mariel Bacci

April 4th, 2012

This is the first of a two part series that will help you to
understand and implement a proven and cost effective alternative to content targeting. The first post
in this series will outline the pros and cons of content targeting, a useful alternative to setting up a
content targeting program and how to start identifying the different persona’s that land on your
site. The second pot of the series will cover how to use those persona’s to help guide prospects into
conversions with persuasion architecture.

What is Content Targeting and is it right for you?

There is a lot of buzz about how to tailor your site to specific types of visitors. Content targeting is
surfacing in Beta within the internet marketing arena. Many people are serving different landing
pages to repeat customers who are looking for specific information. For instance, if you are a
mortgage lender and someone searches for a $400,000 mortgage rates on your site, if they return,
you can serve them a landing page that promotes a special offer on a $400,00o mortgage. Or maybe
you gather your visitor has poor credit, next time they come to your site, you can serve a landing page

115 
 
that assures them they can get a mortgage even if their credit is sub par. This type on content
targeting seems great when you’re looking at it from a surface level perspective. A few questions
you should ask yourself before you consider investing in content targeting:

1. How many of your visitors are actually repeat customers or are conducting a follow up action that
makes this worthwhile?

2. How will you collect and organize data so you know what content to serve next time your repeat
visitor arrives or proceeds through a follow up action that you’ve identified? What kind of assumptions
will you be making about your visitors?

3. How much money will it cost to set up an effective content targeting campaign? Costs to consider:
Strategy, Designing, Coding, Testing, and Opportunity Cost.

4. Is there a more effective way to spend your money at this point in your optimization process? Not
everyone is going to benefit from content targeting and not every site is at the point that it’s ready for
this type of optimization. In other words, most have got bigger fish to fry first.

How To Identify Persona’s

Here at Future Now, we advocate Persuasion architecture and using Persona’s over content
targeting. We appreciate content targeting because it focuses on the customer’s buying process and
speaks to the visitor based on a behavior they are demonstrating. The problem is that, it’s impossible
to know the buying modes and idiosyncracies of all the different visitors to your site based on a single
data point that demonstrates a behavior. There are very few things you can assume by a visitors
initial experience with you, and the problem becomes even greater when you are a company
whose visitors usually only stop by once. With persuasion architecture, you can lead them all
happily to a sale or lead by planning out the experience in advance. Persuasion Architecture
helps you to combine the data that can tell you some important things about your visitor’s buying
behavior, with other aspects of their buying behavior and personality types because it involves
conducting research in advance to understand your segments of visitors at a much deeper level.

You can have two visitors coming from the same keyword, from the same zip code, both experiencing
your site for the first time and those two people can have very different needs and intent when on your
site. With Persuasion Architecture, you can pre- plan the buying styles of your visitors and
create rewarding experiences for them before they even land on your site. With content
targeting, you’re limited by the data; so you can only know so much about your visitors and how to
prepare for them.

We can intuitively understand that everyone is an individual and has a different personality. The
following is an example of how this plays out online:

Let’s say you’re creating a web site promoting Cancun vacation resorts to professional women, 25-54,
with household incomes of $100,000 and up, and families with an average of 2 children. The objective
of their vacation is some relaxation time and the assurance that their family will stay comfortable and
occupied.

With a demographic like the one we described, it should be easy to create a site for this specific set of
women, right?

Wrong. They approach the buying process in very different ways. One type of visitor may be an
extroverted go-getter. She loves challenges and makes decisions quickly. The other type is an
introverted woman who doesn’t like to be rushed. She likes to do a lot of research and take her time

116 
 
when making a buying decision. Even though these women look exactly the same on
paper, they will all be looking for something different on your website. Plus, different women
have very different visions of what “relaxation” looks like.

So, lets take a look at 4 types of women who may end up landing on your Cancun resort website

1. Gillian – Gillian will plan her vacation 6 months in advance. She will research every resort
available in the Caribbean on the whole of the internet. She will pay attention to every detail. She will
research the resorts and their amenities but will pay special attention to price while shopping. She
wants to take this vacation opportunity to relax, and she will book well in advance.

2. Miriam – Miriam wants to go on a cruise with nice people. She’s looking for a vacation where
they offer the opportunity to swim with dolphins because she knows that will excite her children. She
will ask her friends for recommendations on Cancun Resorts. Miriam will be slow to make a decision.
She will browse the site and look for a resort that makes her excited to get to Cancun.

3. Agnes – Agnes wants the most luxurious room she can afford. She wants to stay in a resort
with a reputation for outstanding service. She wants to be able to do what the locals do in Cancun so
she can think of her trip as an exotic adventure and learn something from the experience. She would
also like a resort that includes a fitness center so she can come home looking good and feeling
refreshed.

4. Patty – Patty will decide where she wants to go at the last minute.She’ll check out the
amenities each resort offers, the more the better. Patty is looking for fun. She likes the personal
touch, like chocolates on her pillow or a family picture taken outside the resort framed as a gift left in
her room. Price is not a factor for her.

These women all look the same on paper, but they approach the buying process in very
different ways and are looking for very different things.To accommodate them, you need
to combine demographics, psychographics, and topographical information. You need to
understand how your customers approach their buying decision. Most importantly, you need to speak
to ALL of them on your website. It is a lot easier and more cost effective to welcome all of these
women into their buying process than to try and predict which of them is landing on your site
to give them a specific experience.

To see how these 4 women can be convinced to convert on your website, stay tuned for the second
post in this series, Persuasion Architecture in Action. You will be able to use some of the ideas to
implement conversion strategies on your own website.

Do you have any experience with content marketing? What about persona’s? We would love to learn
what has worked well for you in the past and what you would never try again. We have experience
increasing conversions using both content targeting and persuasion architecture, so if you need help
implementing eiterh on your site, you can reach out to us!

Persuasion architecture in action – Mariel Bacci 
http://www.grokdotcom.com/2012/04/09/persuasion‐architecture‐in‐action/ 

Persuasion Architecture In Action

By Mariel Bacci

117 
 
April 9th, 2012

This post is a follow up from last weeks post, ‘Content

Targeting is Still No Match for Persuasion Architecture’that describes how to create personas for
your website so you can use persuasion architecture to convert your visitors. It also briefly covers
content targeting and whether or not using it as a strategy is a good solution for your website. In this
post, we will give some suggestions on how to convert each of the four personas we recognized in the
last post.

Persuasion Architecture In Action

We have 4 different women from the same demographic to consider. You can read more about them
in part 1 of this post.

Gillian – Gillian will plan her vacation 6 months in advance.

Miriam – Miriam wants to go on a cruise with nice people.

Agnes – Agnes wants ro pack in the most adventure possible.

Patty – Patty will decide where she wants to go at the last minute

Here are some methods to speak to each of the four women who land on your page in a way that
will help lead them to converting on your site.

Gillian- We know Gillian is looking for a lot of information and a great deal. You want to send her to a
page that lists all of your different resorts and their amenities. Grab the part of her that likes to book in
advance and save money by featuring a link on the resort/amenities page that lists special low prices
for those who book in advance. By providing a link with a call to action like ‘Book in advance and
take advantage of early bird specials,’ you propel Gillian forward in the buying process.

Miriam- Miriam wants a resort that will make her feel good about herself and that will keep her family
happy. Send her to a page that lists resorts designed to help her entertain her children and make the
most of her vacation. Feature local attractions and images of families enjoying themselves. From
there,include a link for Miriam to a testimonial page that lets her see how other women just like
her have enjoyed the resort in the past and plan to return.

Agnes- Agnes is looking for new experiences and challenges. When you list your resorts make
sure to offer Agnes a link to a page that lists local artisans and adventures she can go on. Use
that page to show her how a trip to one of your resorts will change her life for the better.

Patty- Patty will be attracted by a page that lists last minute bookings; resorts that still have availability
that she can book within 2 weeks. Feature a link on your homepage for Patty that will take her to
a list of last minute booking deals. On the resort pages themselves, make sure you show off how

118 
 
your resorts provide a personal touch. A good way to do this would be via testimonials or reviews
from people like Patty who were surprised at their extraordinary experience with your resorts.

You can personalize each woman’s online shopping experience by understanding their
individual needs and offering an intentional path of navigation through your site that satisfies
those different needs. All 4 women may travel from the Home Page to the Book Now page, yet each
will get there by her own path, driven by her own interests and buying needs. You can present them
all the same landing pages, and let them navigate based on their own buying process.

Do you have any experience with content marketing? What about persona’s? We would love to learn
what has worked well for you in the past and what you would never try again. We have experience
increasing conversions using both content targeting and persuasion architecture, so if you need help
implementing eiterh on your site, you can reach out to us!

Big picture customer development – Sean Ellis 
http://startup‐marketing.com/big‐picture‐customer‐development‐revisited/ 

Big Picture Customer Development Revisited

Working with four startups at the same time has steepened my customer development learning curve
(and also explains why it has been a month since my last update). To help balance the load, I’ve
brought on a conversion designer and a researcher; we’re finally firing on all cylinders.

Our customer development goal with every startup essentially boils down to a race to be able to focus
on growing the business. But in order to avoid wasting effort and money on tactical growth
drivers, the following steps need to be completed first:

Validate the product/service is gratifying a reasonable percentage of users.

Create a value proposition that will attract the right type of users and pull them through the conversion
funnel to gratification (and ultimately a transaction).

Eliminate friction from the conversion funnel.

Fine tune a business model that supports scalable customer acquisition channels.

If these steps have been executed well it is relatively easy to grow a sustainable business. But many
startups skip these steps and jump right into trying to grow the business – making their job much
harder or even impossible. Some will get lucky, but most will fail.

Given the importance of getting customer development right, I’m certain that eventually most startups
will contract a specialist to help them navigate the challenges of this pre-scale phase. I’m often asked
how I plan to expand 12in6 to help more startups. Most people are surprised when I tell them I don’t
have a desire to expand the business. I really enjoy being able to work hands on with two new
startups per quarter. If I built a large team to fill the current void of specialists, I’d be too busy
managing the team. This would mean less time learning how to improve my customer development
approach.

As I explained in my last post, I’m now validating that a startup’s product is gratifying users before I
commit to working with them. While I love to hear from as many funded startups as possible, I can
barely scratch the surface of the number of startups that need help. If I don’t have the capacity to

119 
 
help you, here are a few others that specialize in customer development: (I haven’t dug into their
approach enough to be able to endorse them, but I encourage you to check them out)

Brant Cooper (San Diego)

Rajiv Kapoor (New York)

Sean Murphy (SF Bay Area)

If you are specializing in customer development or know someone else that you can recommend,
please add names/recommendations in the comments. The main things to consider when evaluating
a specialist is their track record building successful companies. And be sure to check references
(especially around chemistry with the team).

I have been sharing discoveries on Twitter (follow me @ http://twitter.com/seanellis) and

hopefully I’ll resume regular blog posts next week (after I get back from a short vacation in Hawaii).

Founders Make the Best Startup Marketing Leaders – Sean Ellis 
http://startup‐marketing.com/founders‐make‐the‐best‐startup‐marketing‐leaders/ 

Founders Make the Best Startup Marketing Leaders

CEOs often ask for my advice on the ideal candidate profile to lead their ongoing customer growth
efforts once we’ve completed the key steps to unlocking growth. You would think that after running
marketing at two startups through IPO filings that I could easily answer that question. But I’ve
struggled to define the ideal profile of a successful startup marketing leader. After many course
corrections, I finally believe I have it figured out. But to really understand the ideal profile, it is
important to comprehend why the role is so challenging.

Based on anecdotal evidence, I’d guess that 90% of startup marketing leaders don’t work out. This
corresponds to the overwhelming majority of startups falling short of expectations of founders and
early investors. When a startup falls short of expectations, the startup marketing leader is the first to
go. Even those fortunate enough to gain early user traction still face the uphill battle of finding cost
effective ways to acquire users at scale. And if they do succeed, then startups are often tempted to
hire a “next level marketer” to replace them.

A successful startup marketing leader must be undaunted by these risks and believe they uniquely
have what it takes to succeed. That sounds a lot like the profile of most startup founders. So it’s not
surprising that the best startup marketers are entrepreneurs at the core. Entrepreneurs are willing to
take the risk and are generally tenacious enough to uncover the channels necessary to drive long-
term growth.

I came to this conclusion after finding the common thread between myself and the two most effective
people I’ve met at uncovering growth channels. One is still CEO of his company but has done more to
drive customer adoption with a fraction of his time than most startup marketers do with undivided
attention. The other highly effective startup marketer is a founder that transitioned to leading
marketing. They share a persistent desire to connect their innovative solutions with the people that
really need them. After implementing critical tracking systems and an efficient customer acquisition
process, they are now relentless about experimenting with channels until they find things that work.

120 
 
Contrast this to a typical marketer, who is generally more focused on marketing activities than
marketing results. Most of these activities do nothing to move the needle on the business, but make
the marketer feel good because they are working hard.

It may be tempting for a startup CEO to read this and think that aggressive targets can steer the
marketer in the right direction. I don’t think that will work. Effective marketing leaders will challenge
themselves by pushing the boundaries of the startup’s growth potential. The CEO should be a partner
in this process rather than setting arbitrary unrealistic goals. If you don’t have confidence in your
marketing leader, the founding CEO should micromanage the process by being an active participant
in channel brainstorming sessions and challenging the marketer to ensure tests have been
implmented to perfection. Once you have created a product that people really want, most of the
remaining company risk and upside lies in your ability to aggressively drive customer adoption. This is
not something a CEO should abdicate to the marketer until they’ve demonstrated a relentless drive to
uncover profitable customer acquisition channels.

The CEO can also facilitate channel discovery by ensuring that the marketing leader gets the tracking
systems they need to execute marketing efficiently. Of course the marketer should be able to make a
case for why these resources are important.

What about successful startups that had an initial marketing leader with a more traditional
background? First, there is nothing wrong with a traditional marketing background if at the core the
marketer is entrepreneurial. Second, the marketer does not always deserve credit for strong user
growth. Sometimes great products really do market themselves. My experience with Dropbox certainly
supports this assertion. Also, I recently spoke to the former VP Marketing at a company that sold for
billions and he agreed that his most important growth contribution was not getting in the way of the
viral growth engine.

Of course the risk in hiring an entrepreneur to lead your marketing is that they’ll eventually leave to
start their own company. Agree that this is an acceptable outcome if they are willing to give you at
least a couple years.

Finally, only the marketing leader needs to be entrepreneurial. In my experience, it is not an essential
characteristic for the rest of the marketing team.

Growth hacking – Sean Ellis 
http://startup‐marketing.com/where‐are‐all‐the‐growth‐hackers/ 

Jul 26th 10

Find a Growth Hacker for Your Startup

Once startups are ready to scale, their biggest challenge is often hiring someone capable of leading
the growth charge. A marketer with the right talents and approach can kick some serious ass once
product-market fit and an efficient conversion/monetization process have been proven.

But the problem is that most startups try to hire for skills and experience that are irrelevant, while
failing to focus on the essential few skills. Typical job descriptions are often laden with generic but
seemingly necessary requirements like an ability to establish a strategic marketing plan to achieve
corporate objectives, build and manage the marketing team, manage outside vendors, etc.

121 
 
Generally speaking, the job requirements/skills mentioned above are not paramount for startups in
orbefore the early growth phase.

After product-market fit and an efficient conversion process, the next critical step is finding scalable,
repeatable and sustainable ways to grow the business. If you can’t do this, nothing else really
matters. So rather than hiring a VP Marketing with all of the previously mentioned prerequisites, I
recommend hiring or appointing a growth hacker.

What is a Growth Hacker?

A growth hacker is a person whose true north is growth. Everything they do is scrutinized by its
potential impact on scalable growth. Is positioning important? Only if a case can be made that it is
important for driving sustainable growth (FWIW, a case can generally be made).

The good news is that when you strip away everything that doesn’t have a direct impact on growth, a
growth hacker should be easier to hire than a VP Marketing (or maybe an insider already has the
needed skills). I’ve met great growth hackers with engineering backgrounds and others with sales
backgrounds.

The common characteristic seems to be an ability to take responsibility for growth and an
entrepreneurial drive (it’s risky taking that responsibility). The right growth hacker will have a burning
desire to connect your target market with your must have solution. They must have the creativity to
figure out unique ways of driving growth in addition to testing/evolving the techniques proven by
other companies.

An effective growth hacker also needs to be disciplined to follow a process of prioritizing ideas (their
own and others in the company), testing the ideas, and being analytical enough to know which tested
growth drivers to keep and which ones to cut. The faster this process can be repeated, the more
likely they’ll find scalable, repeatable ways to grow the business.

When VP Marketing?

Not all growth hackers can or should evolve into VPs of marketing. A VP marketing needs to be able
to help shape the overall company strategy, build and manage a marketing team and coordinate
outside vendors among many other responsibilities. Some growth hackers will be great at this, while
others will be bored out of their minds. The important thing to note is that without some proven
scalable, sustainable ways of growing the business, these things will not matter.

Are You A Growth Hacker?

Some of my favorite conversations are those I have with fellow growth hackers. Last week in San
Francisco, I had breakfast with three fantastic growth hackers and we traded insights that benefited
each of us (don’t bother asking me for names to try to recruit them, two are CEOs and the other is VP
User Growth at a very hot company).

I’m a big proponent of establishing and building a broader community of growth hackers. The
problem is that not all people are cut out to be growth hackers. If you think you are a growth hacker,
please post a link to your LinkedIn profile below so other growth hackers in your area can connect.

Customer feedback ‐ Andrew Chen  
http://andrewchenblog.com/2009/05/04/talk‐to‐your‐target‐customer‐in‐4‐easy‐steps/ 

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Talk to your target customer in 4 easy steps

Answer this question honestly…

When’s the last time you spoke to your target customer? Like really talked to them?

If it’s been more than a month, then shame on you!

Consumer internet companies are often overly dependent on quantitative data like Google Analytics,
but without understanding the qualitative parts – the consumer psychology that actually goes into
making purchase decisions. It’s a good idea to balance out the data aspects, particularly if you are not
your target customer.

If you haven’t finished developing your product yet, that’s no excuse! After all, there are many
methods of doing qualitative user research without writing a single line of code. In fact, in many ways
talking to your customer and understanding them great detail is often much more powerful before you
even go through the product development process.

How to recruit target customers to talk to, in 5 easy steps

It’s very very easy to talk to people on the internet. You really don’t have to do much work. Here’s
what I will often do, in order to get some opinions about a particular set of products, or to deeply
understand user behavior (like gifting! or decorating), or to get a better picture of what people do day
to day.

Step 1: Write a recruiting survey

First off, go to Wufoo.com or a similar site (Surveymonkey.com works well too).

The most important part is to title the survey “Get a $20 Amazon gift certificate for 1 hour on the
phone” or something similar.

Make a survey that includes the following questions:

First name (text)

Phone number (phone number)

Email so we can send you a gift certificate (text)

Best time to call, morning, afternoon, evening, weekend (multiple choice)

Tell me about yourself! (textarea)

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That is usually a good base, and you should make all the entries required. Then you also want to
provide a couple questions that can help you screen or otherwise prioritize your questions. For
example, for a Facebook app you might ask:

What types of games do you like (multiple choice)

What kind of phone do you have? (multiple choice)

Why do you like game X? (textarea)

Have you ever spent money on a game? (multiple choice)

etc.

Anyway, you get the point. I usually try to keep these pretty short.

Step 2: Recruit your participants

Now that you have a survey set up, then you can take the URL and start getting people to fill it
out. There are a couple obvious areas to recruit people, and I typically do the following:

Link the survey from your product (if it’s out there)

Buy ads on Facebook and send traffic to your link

Post your survey on Craigslist

Buy ads on Google Adwords and send clicks to your survey

For the ad-based solutions, I will usually limit the buy to $50 per day, and spend $0.50 or so per click.
I usually find that it costs about $1-2 per survey completion. After I recruit a couple dozen, then you
can start moving forward with the call.

Step 3: Do your phone interviews and learn something!

This where you’ll learn the most – you can just pick up the phone and start talking. I usually structure
the interviews into a couple distinct sections, depending on what I’m trying to learn.

The first section I usually try to learn about basic internet usage:

Tell me about yourself

What’s your typical day like?

Tell me about your computer setup – what do you have? When do you use it?

What are your favorite internet sites? What sites do you use every day?

Then depending on the topic, I’ll usually drill into 3 or 4 different areas with a couple questions each.
The entire point is to ask open-ended questions without leading them too much. I will do as many of
these calls as makes sense until I am hearing the same information over and over. Then I’ll start
tweaking things and changing the interview to adjust.

Also, I will usually not show them a product unless the entire discussion is focused on that – the point
of these conversations for me is usually qualitative understanding, not usability. Having them
thoroughly test competitive products can be interesting also. You want to use this information to drive
product strategy, and not be reactive.

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I guarantee you’ll learn something!

Step 4: Buy your interviewees a gift card

When you’re done, don’t forget to send your interviewees a gift certificate – $20 card from Amazon is
a good idea – to thank them for their time.

One of the best things is that once you get some relationships going with the best interviewees, you
can go back to them for updates or to identify some of the most extreme cases.

Conclusion
The point is, it’s easy to talk to people, and it’s this type of detective work that separates customer-
focused companies from technology-driven ones. There’s even a fun tool to suggest a bunch of other
methodologies like this also – the IDEO method card deck.

If you have other additions to this, please suggest in the comments!

Lessons from the casino industry ‐ Andrew Chen  
http://andrewchenblog.com/2008/05/12/lessons‐from‐the‐casino‐industry‐on‐engagement‐metrics‐and‐
lifetime‐value/ 

Lessons from the casino industry on engagement metrics and lifetime value 

Great book covering the modern casino industry

I recently
stumbled on "Winner Takes All," which is a great overview of the modern
casino industry starting with Steve Wynn, Kerk Kerkorian, and Gary
Loveman. It starts out mainly talking about the amazing vision of Steve
Wynn, and how he was able to create some of the world’s more expensive
and opulent casinos, including the Mirage and the Bellagio.
In it, they also talk about a bunch of techniques that the casinos use
to maximize on revenue, including vertical integration, in which they
build "cities within cities" at a casino, so that you can eat, sleep,
shop, entertain, and gamble all without leaving a single complex.

(scroll below for more)

Harrah’s, the casino run by quants

The big story for me was the formation and operations of Harrah’s, which mostly constituted lower-tier
casino boats for much of their history. They were decidedly unglamorous, and seemed uncompetitive
to the entire high-touch Vegas scene. Think of them as Wal-Mart of casinos, versus Wynn’s Prada of
casinos. Whereas the Vegas casino scene was very focused on "art" and the creating massive
experiences, Harrah’s was run by the numbers and very methodical about how they grew their
business.

Harrah’s eventually became the largest casino company in the world, and is led by Gary Loveman,
who got his PhD in Economics from MIT. And they grew their business like a business run by a quant.
Here were the major steps they took, as outlined from the book:

First, they created a loyalty card to centralize identities and create consistent experiences

They created a granular calculation of LTV for their customers

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Then, Harrah’s segmented their key clients based on usage, and then based on "lifecycle"

All in all, a very interesting approach – I jotted down a couple notes as I was reading the book, and
wanted to share some of these thoughts below:

Building a single identiy – the loyalty card

Unlike on the Web, it’s not easy for businesses to keep track of their customers – this becomes a big
problem in an industry like gambling, where a small % of your customers make up a big % of the
profits (aka, these guys are the "whales"). So if a gambler went to their regular Harrah’s casino,
people would recognize them and they’d get differentiated service – but if they went to a different
Harrah’s, for example on vacation, their history didn’t follow them. That way they couldn’t differentiate
between the $100k spender versus the casual looky-loo, which was bad for business.

So Harrah’s introduced a series of loyalty cards called Total Rewards, which were used for "comps"
and other free stuff. For the games folks out there, notice that you can "level up" as a member from
Gold, Platinum, Diamond, Seven Stars, and for one member – Harrah’s "best" customer – there’s a
Chairman’s Club card. They go so far as to fly you around, give you free hotel and accomodations,
and other great perks.

This loyalty card gave them the underlying data which they could now use to drive the other parts of
their data strategy.

LTV on a per-user basis

The next step once they had all this data was to create models against the lifetime value (LTV) of their
customers. This was done in two ways – first, you can imagine a visit to a casino, where a customer
comes in, plays cards/slots/whatever, and then leaves. Based on their actions, a "theoretical win $" is
calculated, which is an expression of what the casino should expect to get from that person.
Combining this number and other services consumed and comps, you end up with a net profit
calculation. You can imagine that this number is a rolled up view of:

How much money that person brought with them

What games they played, in what mix

How long did they play for

What other services did they consume

etc.

Once you can value an individual session, then you can also chain together multiple visits to calculate
an aggregate value. This means that you can now tell the approximate difference between a rich
customer that visits every July 4th, once a year, versus someone who plays frequently but also
spends less money.

Targeting based on customer lifecycle

Josh Kopelman from FirstRound Capital recent wrote a great blogpost called Lifecycle Messaging that
I’d encourage you guys to read. It basically talks about the lifecycle of a customer, and how you want
to send them differentiated messaging based on what stage they’re in.

Harrah’s did exactly this – once they had the ability to model out a customer’s LTV, then when new
customers arrive, you can start to put them into buckets of profiles that are already "like" them, in
order to predict future LTV. Then based on LTV and their stage in the lifecycle, you can start to do
some very interesting things: For new high-value customers, they can try to engage them quickly and

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get them highly personalized service right away, so that they’ll stick. For low-value customers who
don’t fit the Harrah customer profile, it may be better to ignore than group than spend too much cash
chasing it.

One of Harrah’s most profitable customer segments turned out to be older, retired gamblers who
came by very often, and mostly played slots. They called these guys Avid Experienced Players
(AEPs) and targeted this group for both new customer acquisition as well as retention. This group was
not the "whales" of the Vegas casinos, but had a similar financial heft to the company.

Conclusion
There’s a ton to learn from external industries, and I’d like to add casinos as an interesting place to
extract lessons for Web entrepreneurs. It has an interesting blend of quantitative data, in gambling
transactions, as well as the qualitative, which drive the emotions behind why people prefer the
Bellagio to other hotels. It’s one of the industries that is at a fascinating intersection of both, and like
the social web, you need both perspectives in order to thrive.

Facebook click to action – Brian Solis  
http://www.briansolis.com/2012/05/facebook‐to‐marketers‐its‐time‐for‐a‐click‐to‐action/ 

Facebook to Marketers, It’s Time for a Click to Action

You Like me…you really Like me. Wait. Maybe you don’t really Like me after all. According to
our Facebook engagement metrics, only 1% of you actually react when we post. So, to keep
the numbers up, our team posts more often, asks questions, runs polls, curates content,
introduces more and more contests, and asks for your help to submit your pics and videos as
part of our “user-generated” content campaigns. We measure success by the Likes,
comments, shares, the number of conversations, and reach. While the Likes are rising, we’re
starting to recognize the pattern…I guess we never really defined why you should “Like” us
beyond the initial click. We just took for granted that a Like equated to an opt-in.

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This general scenario is more common than you may think. That’s all about to change however.
Marketers must now rethink their Facebook strategy to define click paths and results. As Josh
Constine recentlyreported, Facebook is now giving advertisers access to its API to improve post-click
actions. In his post, Constine walks through a series of various scenarios for brands, developers and
also local businesses to take advantage of the new Ads API. Here, we’ll talk more about how to start
with strategy.

With the updated Ads API, advertisers must now think beyond the “Like.” Facebook’s Ads API will
allow advertisers to present ads most likely to take specific post-click action such as content sharing,
in-app purchases, Facebook Offers, among a list of other actions (see below). In the great pursuit of
ROI, Facebook is also taking a lot of the guesswork out of ad campaign development and deployment
to enhance desired performance. The new improvements give Facebook advertisers an
unprecedented opportunity to connect with specific market segments based on intelligence to
introduce more informed campaigns that trigger relevant clicks, conversions, and return.

Source: Techcrunch

What does “more informed” actually mean? Facebook is studying the behavior of its consumer
population and as it does, it will provide deeper insights to brands seeking specific actions, such as
those who are more likely to be a virtual good buyer, someone who actively shares content, who
attends events, individuals who appreciate deals and offers. Over time, ads can be optimized for
audiences based on this behavior as well. As such, brands must not only compete for attention and
clicks, but also context and relevance based on behavior and preferences.

For brands and agencies, advertising based on keywords is no longer good enough. Now that you
have a better shot at reaching the right people based on behavior, advertisers must now also become
architects of experiences and outcomes.

Now advertisers can specifically optimize for…

1. People talking about this page

2. Page likes
3. Page post likes
4. Page post comments
5. Page post shares
6. @ mentions

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7. Check-ins
8. Photo tags
9. Offers shared
10. Offers claimed
11. App installs
12. App used
13. Credit spend events (number of times someone uses credits in the app)
14. Credit spend amount (value of credits that were spent in the app)
15. Number of RSVPs

This is a click to action…

Designing campaigns now require brands and advertisers to think about the “click to action” they want
to encourage. I refer to this as the A.R.T. of Engagement, where brands intentionally design
campaigns to provoke relevant actions, reactions, and transactions. To take advantage of Facebook’s
API, brands must now employ sophisticated advertising approaches that combine segment and
contextual research, segment-specific strategies, app and channel development for each approach,
UX, creative design, and real-time conversion metrics, review and optimization.

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It’s more than Likes or forcing people through Like-gated apps or campaigns. Now it’s about
performance and conversion science where…

1) Contextually relevant content appears in front of qualified and desirable audiences that…

2) Triggers a defined, useful action that…

3) Leads to optimized click paths that result in material content or activity, which then…

4) Motivates conversions to preferred outcomes and…

5) Delivers a more integrated, consistent, and efficient experience.

To engage more effectively through Facebook’s social advertising platform requires that all strategies
and campaigns commence with a stated purpose. I believe that the best way to outline these
scenarios is to begin with the end in mind and work backwards from there. By starting with the end in
mind, the ability to research desired behavior and who to reach as a result becomes incredibly
clear…and also inspiring.

The dimensions of engagement you’ll need to define are 1) what are you trying to accomplish, 2) what
the experience looks/feels like, 3) what benefits you’ll offer and what they mean to the people you’re
trying to reach, 4) the desirable outcomes you wish to measure, 5) How people feel as a result of the
A.R.T. experiences you evoke, and 6) What the experience will look like in the most prominent
channels of your connected customers.

This is why you’re now an architect of experiences and outcomes. It takes vision. It takes design. It
takes measurement and optimization. The A.R.T. of Engagement is realized through a Social
Experience Framework that starts with intentions and ends with resulting sentiment…not just the
outcome.

There’s an old saying, “it’s not the gift that counts, it’s the thought behind it.” The same is true for
social advertising, marketing and well, business overall. Intentions count for everything. Therefore
your intentions must be realized as experiences where technology serves as the enabler to creatively
and contextually engage to create experiences that meet or exceed expectations and ultimately
inspire desirable outcomes.

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Social network marketing – Andrew Chen 
http://andrewchenblog.com/2008/05/14/social‐network‐marketing‐getting‐from‐zero‐to‐critical‐mass/  
Social network marketing: Getting from zero to critical mass

(above is a picture of fun San Francisco tradition called Critical Mass in which cyclists take
over the street! Thank god I don’t drive much around the city)

What does it mean to hit critical mass?

I’ve heard several pitches in which an entrepreneur outlines a marketing plan for their business which
is lots of hard work, but eventually they reach a "critical mass" point where all of a sudden magic kicks
in, and smooth sailing is ahead. What these discussions often leave out is, what exactly is a critical
mass point anyway? How do you know where it is, and how do you know if you’ve hit one?

To answer this question, let’s return to the original definition of "critical mass" from the Physics world:

The smallest mass of a fissionable material that will sustain a nuclear chain reaction at a constant
level.

What does fissionable material means? What is the chain reaction that happens for a web property?
Let’s look at it from two separate contexts – user acquisition and retention.

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User acquisition
One way to interpret this is that initially, your site has difficulties with user acquisition, until you hit
some scale points in terms of total userbase. Then all of a sudden, your site goes "viral" and you start
getting lots of users coming in. To formalize this idea, you could imagine the following happening:

Initially, you are getting users through ads or PR, and your viral factor is <1

As your site grows, word of mouth effects (bloggers, friends, etc) give you some name recognition

This brand recognition increases your conversion rates across the board, thus boosting the
percentages that make up your viral factor, increasing it to >1

That’s one way of viewing it, although I don’t believe that’s what most people mean. They usually
mean that their site is not that useful until there’s a certain # of people on it, and when you cross the
critical mass point, then the site becomes engaging. So let’s talk about this idea in an engagement
context:

Engagement
As discussed above, there’s an idea that for a user-generated content site, you have an early
bootstrapping problem. If you’re YouTube, but have no content, then no users will stick around. Yet if
you have no users, then you have no one to upload content. So you need to break out of this local
minimum until you cross some threshold – this is the critical mass point. To formalize this idea, here’s
the retention focused view:

Early on, you are getting users through PR or ads, but all your users bounce off the site

However, each user you acquire have some chance of creating content (profile/pictures/video/etc)

Eventually, new users have enough content to consume that they stick around on the site, perhaps
messaging older users, who now return

Once you have a "critical mass" of users, then there’s enough activity to keep everyone coming back

In this perspective, you can imagine that there are actually multiple phases that your user passes
through – initially, they have a passive experience where they are pulled back onto the site because
of notifications like friend adds, messages, etc. And it’s possible for your site to never get past this
phase. However, if you acquire enough people, new users pull back old ones, who then start coming
back, until they start using the site on a regular basis.

What "scale" of network does your website depend on?

However, the discussion above also neglects that users want to consume different kinds of content
depending on how they view the site. For example, the following scenarios are probably FAIL states,
even if on the surface they look good:

1,000,000 users composed of 100 strangers in 10,000 different locations

1,000,000 users who created 1,000,000 different forums with no cross-visiting

The reason is that the above scenarios represent ultra-fragmentation, with no ability to reach critical
mass points. This illustrates that there are different scales of network, which reflect different product
designs. These include:

Networks of "real friends"

Networks of online friends united around an activity or interest (WoW, anime, etc)

132 
 
Networks of people in the same local region

etc.

It takes careful thought to figure out what network your product is really built on. It’s very common to
see companies that are primarily targeting purely online friends build features that are really meant for
people that know each other offline.

Similarly, even within a type of network, it’s important to consider the level of adoption within that
network. You could argue that there’s a concept for a "minimum social group" which represents the
smallest number of friends within the appropriate network, before a social tool is useful. This minimum
social group concept is kind of interesting because
some applications only need a small number of friends to get off the
ground, and others need more:

Skype: 2 minimum

Mailing list: 4-5 minimum

Forum: 10 minimum

Social network: 10? 15? 20?

… etc.

So I’d encourage anyone building a social site to really consider what type of network they are
building for, and how many people they need at the local level. Once you can figure that out, then the
next goal is to aggregate these smaller groups into a larger one. This is essentially what Facebook did
– by understanding how to dominate a smaller space like a college, they could roll up lots of small
spaces into a larger population.

Aligning your user acquisition to your network goals

As many have observed, startups working on the Local space have had a very very tough time, with
the exception of Yelp. In Seattle, where I’m from, Judy’s Book raised a ton of money and then
promptly closed shop because it was hard to get traction.

The reason of course, is that a regional network is a pretty specific one – there are tons of them –
plus the minimum social group is actually pretty high. You need a lot of diverse people on the site,
reviewing everything in site, before you hit a reasonable coverage % for reviews.

Similarly, if you are doing blind addressbook importing as the way to grow your userbase, but you
aren’t targeted about what traffic you’re pointing into the viral loop, then you might end up with a
bunch of users from Turkey or some other random part of the world. Probably also not what you
wanted.

So to review:

Critical mass is defined by what type of network your social product operates on, and how many users
you need on that network before the product becomes useful

Thus, critical mass is a product-by-product discussion – there’s no one-size-fits all

Similarly, people that use your product go through a collection of "phases" – from ranging from
passive usage where there isn’t enough content to consume, to the point where they are very active

133 
 
and creating content themselves. The threshold point between the phases is a local observation of
critical mass

Sites that are useful for "online friends" and don’t require too many people are the easiest to get off
the ground (but have other issues, like they might be too niche)

Site that are useful only for large numbers of "real life friends" (local review sites are a good example)
are the hardest to get off the ground, yet are hugely useful if you can get people on board

As always, comments appreciated.

   

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Driving user engagement 
Driving user engagement 

Value of a user ‐ Andrew Chen 
http://andrewchenblog.com/2008/05/20/whats‐the‐value‐of‐a‐user‐on‐your‐site‐why‐its‐hard‐to‐calculate‐
lifetime‐value‐for‐social‐network‐audiences/
What’s the value of a user on your site? Why it’s hard to calculate lifetime value for social network audiences 

Who is this, and where can I find more pics??

For those of you who aren’t familiar, the photo above is of Christine Dolce, aka Forbidden, who is a
famous MySpace celebrity (and will surely get her chance to star in a VH1 reality TV show). I can
hear a rush of clicks googling her for pictures, so I’ll just provide you the link to herMySpace profile
here. Let’s get back to Forbidden in a second, since she fits into a larger discussion.

LTV and the goal of infinite segmentation

The core of many marketing programs is segmentation – you take your core audience, identify
differences between their motivations, spending patterns, and behaviors, and tailor your messaging to
hit that audience. The better defined your segments are, and the more granular they are, the more
opportunities you have to personalize your message when you reach out to them.

One way to do this segmentation is to look at "Lifetime Value" (LTV). Calculating lifetime value (LTV)
of your customers is a great way to understand how they fit into the core of your business. Typically,
your best customers will represent a significant amount of revenue, and you want to make sure
they’re happy. Having a granular LTV calculation where you plug in a user’s historical data allows you
to come up with infinite segmentation in terms of how you want to differentiate the experience high-
value customers get versus low-value ones.

LTV for retail sites versus social sites

For retail sites, the calculation of LTV is pretty clear. In plain English, you might define it as:

The stream of all previous and future profits that a user generates from their purchases

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So for a given user, you’d add up all their previous transactions and then add that to whatever model
you’ve created about their likely future transactions. Part of what makes this work is that:

Transactions in a retail setting are unambiguous

Each individual makes an isolated impact on the system, in the form of a transaction

Retail buying has a long established history of data, both online and offline

Now let’s look at social properties, particularly ones that have the characteristics that they are ad-
supported, are heavily based on UGC content, and incorporate viral marketing. If you were *just* to
consider the advertising portion, then it might be easy – the LTV of a user would be defined as:

The stream of all previous and future ad impressions that a user generates from their usage

So that seems pretty clear – if you’re a user who generates 100 ad impressions a day, you are worth
more than someone who generates 10.

The problem is when you try to incorporate the value of the UGC that a user generates, or the users
they help acquire (or retain!) as part of the LTV calculation. And for this discussion, let’s go back to
talking about Forbidden.

Forbidden as an LTV outlier

The problem with a user like Forbidden, and possibly even more so Tila Tequila, is that only a small
amount of value that they create comes from their actual usage of the site. Instead, they provide
additional value through user acquisition, retention, and content creation that is poorly measured by
the definition above.

Another way to think of this is that if you were to remove these users from MySpace, you would not
simply be subtracting their LTV from your overall site’s value. In fact, it would be an outsized decrease
in value, since users like Forbidden and Tila Tequila bring many millions users onto MySpace, and
entertain millions of people, keeping them on the site.

A couple commenters of my LTV in casinos blog post said as much:

QDub writes:
"Great post! I’d add that for online
businesses, LTV is further complicated by a user’s role as a
net-promoter and a content creator. Otherwise, LTV should be easier
than ever for online businesses vs offline–you have direct access to
customer demographic and value data, and creating differentiated
outreach is easy as pie.

Problem is, given the state of the web today, we’re still struggling
with finding value, period. Segmenting by non-existent LTV may be a
moot point for many startups."

Douglas Galbi writes:

"LTV value calculations are a good
tool, but they tend to place in the background the "social value"
that’s central to a lot of new internet businesses. So perhaps you and
others who know a lot about social software have some knowledge that
you in turn can share with casino business folks.

136 
 
Perhaps gambling in casinos is highly individualistic. But I’d guess
that participants prefer the room to be crowded but not too crowded,
and to have some beautiful people who are part of the crowd (not just
marked performers). Playing games with others who one finds interesting
and fun, word-of-mouth marketing, the negative social value of
particular personality characteristics (dour, whiny, griefer) might
also be factors with business significance to casinos but that might be
overlooked in an individual LTV calculation. Someone in the business
should be able to get some data and do some analysis for insight into
the quantitative significance of these social factors."

These are great points, and I agree with these issues as difficulties in applying LTV. The overall gist is
that when you have interactions between users, all of a sudden the dependencies that are caused
become difficult to measure.

Let’s talk about how to think about assigning credit based on those dependencies.

Assigning credit in LTV calculations is the hard part

Even in the most simple case for assigning credit in the LTV calculation, there are problems. Here’s
the smallest example, in which one might ask:

If a User A views a piece of content uploaded by User B, who get credit for that pageview?

Well, the answer to this question is actually quite complicated. First off, it depends on whether or not
User A is likely to have that pageview anyway. That this, even if this content uploaded by User B
didn’t exist, perhaps User A would be bored anyway and would have consumed that piece of content.
In the opposite scenario, if User A came to the site for the express purpose of viewing User B’s
content, then User B ought to get a lot of the credit.

Similarly, a case like this exists on the user acquisition side. The question in that case is:

If User A invites her friends B, C, and D onto the site, should she receive any credit for their
pageviews?

You think they would, at least a bit, but it ultimately depends on whether or not B, C, and D were
going to end up on the site anyway. If your acquisition is great, and you would likely have gotten them
through some other acquisition scenario, then it doesn’t seem like A should get much credit. But if
they are incremental users, then it’s great, and A should be rewarded.

The point is, a lot of this exercise becomes about figuring out the incremental value. You’re trying to
extricate the value that would have already been there versus the new value that gets created by a
user.

If Forbidden didn’t exist on MySpace, would users simple go to a different trashy blond girl to look at
their pictures?

That’s a very philosophical question, I know

Conclusion
To summarize the blog post above:

Lifetime value calculations can and should be used to value your audience

It’s pretty clean to calculate in retail, and much harder to calculate on social networks

137 
 
The value of content creators and social linchpins gets mixed up in the calculations

And finally, what we all knew already: MySpace girls are much hotter/trashier than Facebook girls

How cost of customer acquisition kills startups – David Skok 
http://www.forentrepreneurs.com/startup‐killer/ 

Startup Killer: the Cost of Customer Acquisition

December 22, 2009 • David Skok

In the many thousands of articles advising entrepreneurs on what they have to focus on to build
successful startups, much has been written about three key factors: team, product and market, with
particular focus on the importance of product/market fit. Failure to get product/market fit right is very
likely the number 1 cause of startup failure. However in all these articles, I have not seen any
discussion about what I believe is the second biggest cause of startup failure: the cost of acquiring
customers turns out to be higher than expected, and exceeds the ability to monetize those customers.

In case you are not familiar with the importance of Product/Market fit, Marc Andreessen has a great
blog post on this topic: The Pmarca Guide to Startups, part 4: The only thing that matters.

In this blog, Marc argues that out of the three core elements of a startup, team, product, and market,
the only thing that matters is product/market fit. I agree with Marc’s view that product/market fit is
extremely important. However after closely watching several hundred startups that have failed, I
observed that a very large number of these had solved the product/market fit problem, but still failed
because they had not found a way to acquire customers at a low enough cost.

Business Model

I would like to propose that in addition to team, product, and market, there is actually a fourth, equally
important, core element of startups, which is the need for a viable business model. Business model
viability, in the majority of startups, will come down to balancing two variables:

Cost to Acquire Customers (CAC)

The ability to monetize those customers, or LTV (which stands for Lifetime Value of a Customer)

Successful web businesses have long understood these metrics as they have such an easy way to
measure them. However there is a lot of value in looking at these same metrics for all other
businesses.

To compute the cost to acquire a customer, CAC, you would take your entire cost of sales and
marketing over a given period, including salaries and other headcount related expenses, and divide it
by the number of customers that you acquired in that period. (In pure web businesses where the
headcount doesn’t need to grow as customer acquisition scales, it is also very useful to look customer
acquisition costs without the headcount costs.)

To compute the Lifetime Value of a Customer, LTV, you would look at the Gross Margin that you
would expect to make from that customer over the lifetime of your relationship. Gross Margin should
take into consideration any support, installation, and servicing costs.

138 
 
It doesn’t take a gen
nius to unders
rstand that buusiness moddel failure com
mes when CA
AC (the costt to
acquire customers) exceeds
e LTV
V (the ability to monetize those custommers.

A well ba
alanced business model requires tha
at CAC is significantly less than LTV:

Since thhe above twoo diagrams arre so obviou us, you may wonder
w why I have includded them. Thhe goal is
give the reader a sen nse of the ba
alancing act required to create
c a profi
fitable busineess. Hopefullly the
value wiill become more
m obvious with the third
d version of the diagram that shows tthe different factors
that affe
ect the balancce.

Anotherr reason for stressing

s the point using d
diagrams is that many en ntrepreneurss have realize ed that
since the
e web provid des some am mazing new w ways to acqu uire customerrs at low cosst, several ne
ew
businessses have beccome possib ble. The onlyy thing that yo
ou have to co
onsider is caan you monettize your
custome er level than the cost to a
ers at a highe acquire them m.

The Entr
trepreneur’s Achilles
A Hee
el: Optimism

139 
 
To be an entrepreneur requires great optimism, and a very strong belief in how much customers will
love your product. Unfortunately this same attribute can also lead entrepreneurs to believe that
customers will beat a path to their door to purchase the product. This frequently causes them to
grossly underestimate the cost it will take to acquire customers.

A common scenario is an entrepreneur that has dreamt up a cool new service that they can offer via
the web. As a VC, I have sat through many presentations like this, and in most cases the service is
actually interesting and compelling. However in the majority of these presentations there is little or no
focus on how much it will cost to acquire customers. As I ask questions to understand the thinking,
what usually comes out is something vague along the lines of web marketing, and/or viral growth with
no numbers attached.

A quick look around all the B2C startups shows that, although viral growth is often hoped for, in reality
it is extremely rare. When it does happen, the associated businesses are usually extremely attractive,
provided they have a way to monetize their customers. (For more on the topic of Viral Growth, refer to
my blog post on that topichere.)

Far more common is a need to acquire customers through a series of steps like SEO, SEM, PR,
Social Marketing, direct sales, channel sales, etc. that will cost the company significant amounts of
money. What shocks and surprises many first time entrepreneurs is just how high the numbers are for
CAC using these kinds of techniques.

Some examples of CAC calculations

For example, if you are using Google Ad Words to drive traffic to your site, take a look at the following
interactive spreadsheet. This example shows a cost per click of 50 cents, and the resulting website
visitors converting to a trial at the rate of 5%. Those trials are then shown converting to paid
customers at the rate of 10%. What the sheet shows is that each customer is costing you $100 in just
lead generation expense. For many consumer facing web sites, it can be hard to get the consumer to
pay more than $100 for the service. And this cost does not factor in the marketing staff, web site
costs, etc.

(In case the model does not show above, please click here to view the spreadsheet.)

One of the more interesting things that this model shows is how rapidly cost of customer acquisition
climbs If your leads require human touch to convert them, (compare cell B23 with cell B22.) This
human touch can be as light as email follow ups, or as much as inside sales people doing multiple
sales calls and demos. I have seen this cost vary from around $400 to $5,000 per customer acquired,
depending on the level of touch needed.

Another shocking computation is to look at the cost of a direct field sales force:

(In case the model does not show above, please click hereto view the spreadsheet.)

This shows is that it is not unusual for the cost of acquiring a customer to be as high as $100,000.
This number is heavily dependant on the productivity of your sales teams. In the model above, this
was set to 10 deals per year per team. Given the need to cover R&D and G&A costs, the average
gross margin on a deal needs to be at least $150k.

Lessons Learned – Business Planning Stage

My advice to entrepreneurs working on a new business plan is to build a model similar to those above
to estimate the cost of customer acquisition. This is going to show you the dependency on several
critical variables:

140 
 
Cost per lead

Conversion rates at each stage of your sales process

Level of touch required

Then compare this to your expected monetization. As a very rough rule of thumb here are two
guidelines that you might find helpful:

LTV > CAC. (It appears that LTV should be about 3 x CAC for a viable SaaS or other form of recurring
revenue model. Most of the public companies like Salesforce.com, ConstantContact, etc., have
multiples that are more like 5 x CAC.)

Aim to recover your CAC in < 12 months, otherwise your business will require too much capital to
grow. (Banks and wireless phone companies ignore this rule, but they have access to tons of capital.)

In the early days of the business, you will not be able to accurately predict your conversion rates, and
the viability of your entire business may depend on this. So I recommend building an execution plan
that focuses on finding out what these numbers will be as soon as possible in the lifecycle of the
business. Good numbers will enable you to raise funding easily, and bad numbers may indicate that
this is not a viable business.

The good news is that if you can monetize your customers at a higher rate than the cost to acquire
them, you probably have a great business on your hands.

Next Generation Business Models

Because a number of smart entrepreneurs realized the importance of lowering CAC, they created
new business models such as Open Source, SaaS, Freemium, etc. that directly tackled the problem
of acquiring customers. Some of the early B2B pioneers in this space were companies
like JBoss (story here), SolarWinds, ConstantContact, HubSpot, etc. Once others started to see the
success these companies were having, they started copying the techniques.

These new business models focused heavily on how buying behavior has changed because of the
power of the web. Think about your own behavior: if you are like me, you hate having to deal with
sales people, and greatly prefer to do your own research starting with search engines, and leveraging
free trials, on-line videos, blogs, reviews, and your social network. To adapt to this, the new business
models make use of a variety of techniques described below:

Extensive use of the web to drive lead flow. In particular, the best practices include using Inbound
Marketingto build traffic, instead of paying for traffic with search ads. (Read Get Found using Inbound
Marketing to find out more.)

Use of a free product or service to attract web visitors, and aim for a viral spread as they tell their
friends. Examples of free products include Open Source software, services like HubSpot’s Website
Grader, free versions of a SaaS service that have limited, but still valuable, feature sets, etc. For more
info on this topic refer to The power of Free.

Use of a free trial, where the customer can easily download, or use a SaaS version of the full product
to see if it works for them.

Leveraging the power of your customers’social networks to get viral growth where possible.

Use of the touchless conversion to convert trials to paying customers.

141 
 
Using lo
ow cost inside
e sales when
n the touchle
ess conversio
on is not possible.

Extensivve use of sofftware to auto

omate all pro
ocesses such
h as SEO, SEM, social nnetworking, le
ead
scoring, lead nurturin
ng, CRM, etc c.

Metrics o
on all aspectts of the custtomer acquissition proces
ss to find out what can bee improved.

These te
echniques arre frequently
y referred to a
as the Low Cost
C Sales model,
m or as S
Sales 2.0.

Balancin
ng Monetizattion with CAC
C

The wayy in which the ese techniqu hniques to dririve up monetization

ues can workk together witth other tech
(e.g. reccurring reven
nue) are illusttrated in the diagram belo
ow:

Lessonss Learned – Ways

W to redu
uce custome
er acquisition
n costs

Converssion rates pla

ay an extrem
mely importan nt role in your customer acquisition
a coost. Anything
g you can
do to imp
prove conveersion rates is
s obviously a good thing.. For more onn this topic, pplease refer to
the Build
ding a Sales and Marketiing Machine part of this web
w site.

Consideer using A/B testing

t to imp
prove conve rsion rates. Web
W traffic can be easilyy split so thatt parts
are fed tto different la
anding pagess with differe ng conversioon rates measured.
ent offers, and the resultin

142 
 
Look at the level of touch required to complete a sale. Some products are easily understood, while
others may require a careful walk-through by a sales person. Sometimes, the customer will want a
trial with their own data. With certain complex products, this will need an on-site installation by a sales
engineer, which sends costs through the roof. Consider every possible way to minimize this. For
example:

Create demo videos that answer every likely sales question.

List the common sales objections that come up in the sales cycle, and provide answers to these on
the web site.

Try using customer references to avoid the need for a trial

If your customers are going to compare you to the competition as part of their process, consider doing
this for them, with a section of your site that has a comparison matrix with appropriate check marks.

If you have a light touch sales model, consider setting yourself the goal of a “Touchless Conversion”,
i.e. getting rid of, or minimizing the touch required to close the sale. As shown in the model, this has a
huge impact on cost of customer acquisition.

Options for products requiring high touch

The toughest business models are those that employ expensive field sales organizations. The high
salaries and commissions for sales people, sales engineers, travel costs, and office costs add up to
an extraordinarily high figure. And this is before you factor in the failure rate (the percentage of sales
people hired that don’t become productive). It is not too surprising that VCs are not aggressively
pursuing these kinds of businesses. There are some ways you can look to address the problem:

If you are currently using a field sales organization that sells direct, look at whether it is possible to
sign up OEM deals with strategic partners to leverage their customer base and distribution power.
What generally works best here is allowing the OEM to sell only a base layer of your product with co-
branding. Then you can go back into their customers and upsell them. Owning the customer base is
an important way to control your own destiny, and will also earn your company a higher valuation. In
addition to distribution power, these kinds of relationships solve the “safe choice” concern of many
buyers, and can transform your business.

Consider converting to a channel sales model at some stage in the lifecycle of the business. Many
times this requires that you “prime-the-pump”, as most resellers won’t sell a product until they see
clear customer demand. Channel sales models usually only work when the company commits to them
fully, and passes all orders through the channel, so be prepared for the loss of margin this will
represent to your current order flow.

Another option is to evaluate whether you can move from field sales to inside sales people. Insides
sales people are not only less expensive in direct salary costs, but also in travel costs. Other
advantages of inside sales people is that they are far more efficient due to remaining in one location,
and can contact more people in a typical workday. At a minimum, look at combining inside sales with
field sales to improve the efficiency of field sales people.

Conclusions

If you are entrepreneur planning your next business, you can’t afford to ignore the cost of customer
acquisition. The earlier you work on this the better, as many of the best techniques require you to
build your product differently.

143 
 
It is also important to ask yourself the question: can my business realistically expect to acquire
customers for considerably less than the amount that I can monetize them?

Once you have completed the product, you will want to familiarize yourself with all the latest
techniques involved in the low cost sales model, or Sales 2.0.

From a funding standpoint, it is useful to know that your ability to raise capital will dramatically
improve as soon as you have proven that you have a viable business model. Think of that as two
equations:

CAC < LTV (3x appears to be a rough minimum for SaaS businesses)

CAC should be recovered in < 12 months (for subscription businesses)

Once you have proven out the business model, hit the accelerator pedal, and invest as much as you
can afford. You’ll want to grow the business as fast as possible before a competitor realizes what you
have done, and tries to steal your market!

Acknowledgments

I would like to thank my partner Nick Beim and the management teams at JBoss and HubSpot, Gail
Goodman of Constant Contact, Sheila Marcelo of Care.com, for contributing greatly to the ideas in
this post.

Cost of customer acquisition – David Skok 
http://www.forentrepreneurs.com/startup‐killer/ 

Startup Killer: the Cost of Customer Acquisition

December 22, 2009 • David Skok

In the many thousands of articles advising entrepreneurs on what they have to focus on to build
successful startups, much has been written about three key factors: team, product and market, with
particular focus on the importance of product/market fit. Failure to get product/market fit right is very
likely the number 1 cause of startup failure. However in all these articles, I have not seen any
discussion about what I believe is the second biggest cause of startup failure: the cost of acquiring
customers turns out to be higher than expected, and exceeds the ability to monetize those customers.

In case you are not familiar with the importance of Product/Market fit, Marc Andreessen has a great
blog post on this topic: The Pmarca Guide to Startups, part 4: The only thing that matters.

In this blog, Marc argues that out of the three core elements of a startup, team, product, and market,
the only thing that matters is product/market fit. I agree with Marc’s view that product/market fit is
extremely important. However after closely watching several hundred startups that have failed, I
observed that a very large number of these had solved the product/market fit problem, but still failed
because they had not found a way to acquire customers at a low enough cost.

Business Model

144 
 
I would llike to propose that in ad ddition to team
m, product, and
a market, there
t is actuually a fourth, equally
importan nt, core elem
ment of startu ups, which is the need forr a viable bus
siness modeel. Business model
m
viability, in the majorrity of startup
ps, will come down to ballancing two variables:
v

Cost to A
Acquire Customers (CAC
C)

The abillity to monetiize those cus

stomers, or L
LTV (which stands
s for Life
fetime Value of a Custom
mer)

Successsful web busiinesses have

e long underrstood these metrics as th hey have succh an easy wayw to
measuree them. Howwever there is
s a lot of valu
ue in looking at these sam
me metrics foor all other
businessses.

To comp pute the costt to acquire a customer, CCAC, you wo ould take youur entire costt of sales and
d
marketinng over a givven period, in
ncluding sala
aries and other headcoun nt related exppenses, and divide it
by the number of cusstomers thatt you acquire e web busineesses where the
ed in that perriod. (In pure
headcou unt doesn’t need
n to grow as customerr acquisition scales, it is also very useeful to look customer
c
acquisitiion costs with
hout the hea
adcount costss.)

To comp pute the Lifettime Value of

o a Custome er, LTV, you would look at a the Gross M Margin that you
y
would exxpect to makke from that customer
c ove
ver the lifetim
me of your relaationship. Grross Margin should
take into
o consideratiion any suppport, installatiion, and servvicing costs.

It doesn’t take a gen

nius to unders
rstand that buusiness moddel failure com
mes when CA
AC (the costt to
acquire customers) exceeds
e LTV
V (the ability to monetize those custommers.

A well ba
alanced business model requires tha
at CAC is significantly less than LTV:

145 
 
Since thhe above twoo diagrams arre so obviou us, you may wonder
w why I have includded them. Thhe goal is
give the reader a sen nse of the ba
alancing act required to create
c a profi
fitable busineess. Hopefullly the
value wiill become more
m obvious with the third
d version of the diagram that shows tthe different factors
that affe
ect the balancce.

Anotherr reason for stressing

s the point using d
diagrams is that many en ntrepreneurss have realize ed that
since the
e web provid des some am mazing new w ways to acqu uire customerrs at low cosst, several ne
ew
businessses have beccome possib ble. The onlyy thing that yo
ou have to co
onsider is caan you monettize your
custome er level than the cost to a
ers at a highe acquire them m.

The Entr
trepreneur’s Achilles
A Hee
el: Optimism

To be ann entrepreneeur requires great

g optimissm, and a very strong bellief in how m
much custome ers will
love you
ur product. Unfortunately
U this same atttribute can also
a lead enttrepreneurs tto believe tha
at
customeers will beat a path to their door to puurchase the product.
p This frequently ccauses them to
grossly u
underestimate the cost itt will take to a
acquire custo
omers.

A comm mon scenario is an entrep preneur that hhas dreamt upu a cool new w service thaat they can offer
o via
the web. As a VC, I have
h sat thro
ough many p presentations s like this, an
nd in most caases the serv vice is
actually interesting and
a compellin ng. Howeverr in the majorrity of these presentation
p ns there is litttle or no
focus onn how much iti will cost to acquire cusstomers. As I ask questio ons to undersstand the thin nking,
what usuually comes out is sometthing vague a along the line
es of web ma arketing, andd/or viral growth with
no numb bers attached d.

A quick look around all the B2C startups

s sho ows that, although viral grrowth is oftenn hoped for, in reality
it is extre
emely rare. When
W it does
s happen, the d businesses are usually extremely atttractive,
e associated
provided d they have a way to monnetize their ccustomers. (FFor more on the topic of V Viral Growth, refer to
my blog post on thatt topichere.)

Far more
re common iss a need to acquire
a custoomers throug gh a series off steps like S
SEO, SEM, PR,
P
Social M
Marketing, dirrect sales, ch
hannel saless, etc. that wiill cost the co
ompany signiificant amoun
nts of

146 
 
money. What shocks and surprises many first time entrepreneurs is just how high the numbers are for
CAC using these kinds of techniques.

Some examples of CAC calculations

For example, if you are using Google Ad Words to drive traffic to your site, take a look at the following
interactive spreadsheet. This example shows a cost per click of 50 cents, and the resulting website
visitors converting to a trial at the rate of 5%. Those trials are then shown converting to paid
customers at the rate of 10%. What the sheet shows is that each customer is costing you $100 in just
lead generation expense. For many consumer facing web sites, it can be hard to get the consumer to
pay more than $100 for the service. And this cost does not factor in the marketing staff, web site
costs, etc.

(In case the model does not show above, please click here to view the spreadsheet.)

One of the more interesting things that this model shows is how rapidly cost of customer acquisition
climbs If your leads require human touch to convert them, (compare cell B23 with cell B22.) This
human touch can be as light as email follow ups, or as much as inside sales people doing multiple
sales calls and demos. I have seen this cost vary from around $400 to $5,000 per customer acquired,
depending on the level of touch needed.

Another shocking computation is to look at the cost of a direct field sales force:

(In case the model does not show above, please click hereto view the spreadsheet.)

This shows is that it is not unusual for the cost of acquiring a customer to be as high as $100,000.
This number is heavily dependant on the productivity of your sales teams. In the model above, this
was set to 10 deals per year per team. Given the need to cover R&D and G&A costs, the average
gross margin on a deal needs to be at least $150k.

Lessons Learned – Business Planning Stage

My advice to entrepreneurs working on a new business plan is to build a model similar to those above
to estimate the cost of customer acquisition. This is going to show you the dependency on several
critical variables:

Cost per lead

Conversion rates at each stage of your sales process

Level of touch required

Then compare this to your expected monetization. As a very rough rule of thumb here are two
guidelines that you might find helpful:

LTV > CAC. (It appears that LTV should be about 3 x CAC for a viable SaaS or other form of recurring
revenue model. Most of the public companies like Salesforce.com, ConstantContact, etc., have
multiples that are more like 5 x CAC.)

Aim to recover your CAC in < 12 months, otherwise your business will require too much capital to
grow. (Banks and wireless phone companies ignore this rule, but they have access to tons of capital.)

In the early days of the business, you will not be able to accurately predict your conversion rates, and
the viability of your entire business may depend on this. So I recommend building an execution plan
that focuses on finding out what these numbers will be as soon as possible in the lifecycle of the

147 
 
business. Good numbers will enable you to raise funding easily, and bad numbers may indicate that
this is not a viable business.

The good news is that if you can monetize your customers at a higher rate than the cost to acquire
them, you probably have a great business on your hands.

Next Generation Business Models

Because a number of smart entrepreneurs realized the importance of lowering CAC, they created
new business models such as Open Source, SaaS, Freemium, etc. that directly tackled the problem
of acquiring customers. Some of the early B2B pioneers in this space were companies
like JBoss (story here), SolarWinds, ConstantContact, HubSpot, etc. Once others started to see the
success these companies were having, they started copying the techniques.

These new business models focused heavily on how buying behavior has changed because of the
power of the web. Think about your own behavior: if you are like me, you hate having to deal with
sales people, and greatly prefer to do your own research starting with search engines, and leveraging
free trials, on-line videos, blogs, reviews, and your social network. To adapt to this, the new business
models make use of a variety of techniques described below:

Extensive use of the web to drive lead flow. In particular, the best practices include using Inbound
Marketingto build traffic, instead of paying for traffic with search ads. (Read Get Found using Inbound
Marketing to find out more.)

Use of a free product or service to attract web visitors, and aim for a viral spread as they tell their
friends. Examples of free products include Open Source software, services like HubSpot’s Website
Grader, free versions of a SaaS service that have limited, but still valuable, feature sets, etc. For more
info on this topic refer to The power of Free.

Use of a free trial, where the customer can easily download, or use a SaaS version of the full product
to see if it works for them.

Leveraging the power of your customers’social networks to get viral growth where possible.

Use of the touchless conversion to convert trials to paying customers.

Using low cost inside sales when the touchless conversion is not possible.

Extensive use of software to automate all processes such as SEO, SEM, social networking, lead
scoring, lead nurturing, CRM, etc.

Metrics on all aspects of the customer acquisition process to find out what can be improved.

These techniques are frequently referred to as the Low Cost Sales model, or as Sales 2.0.

Balancing Monetization with CAC

The way in which these techniques can work together with other techniques to drive up monetization
(e.g. recurring revenue) are illustrated in the diagram below:

148 
 
Lessonss Learned – Ways
W to redu
uce custome
er acquisition
n costs

Converssion rates pla

ay an extrem
mely importan nt role in your customer acquisition
a coost. Anything
g you can
do to imp
prove conveersion rates is
s obviously a good thing.. For more onn this topic, pplease refer to
the Build
ding a Sales and Marketiing Machine part of this web
w site.

Consideer using A/B testing

t to imp
prove conve rsion rates. Web
W traffic can be easilyy split so thatt parts
are fed tto different la
anding pagess with differe ng conversioon rates measured.
ent offers, and the resultin

Look at the level of touch

t ed to comple te a sale. So
require ome products s are easily uunderstood, while
others m may require a careful walk k-through byy a sales pers
rson. Sometim mes, the cusstomer will want
w a
trial with
h their own daata. With cerrtain complexx products, this
t will need
d an on-site innstallation by
y a sales
engineer, which sends costs thro ough the rooff. Consider every
e possiblle way to minnimize this. For
F
example e:

Create d
demo videoss that answerr every likelyy sales questiion.

List the common salles objections

s that come up in the salles cycle, and
d provide annswers to the
ese on
the web site.

Try using customer references

r to
o avoid the n
need for a tria
al

If your ccustomers arere going to co

ompare you tto the compeetition as parrt of their proocess, consid
der doing
this for tthem, with a section of yo
our site that h arison matrix with approppriate check marks.
has a compa m

149 
 
If you have a light touch sales model, consider setting yourself the goal of a “Touchless Conversion”,
i.e. getting rid of, or minimizing the touch required to close the sale. As shown in the model, this has a
huge impact on cost of customer acquisition.

Options for products requiring high touch

The toughest business models are those that employ expensive field sales organizations. The high
salaries and commissions for sales people, sales engineers, travel costs, and office costs add up to
an extraordinarily high figure. And this is before you factor in the failure rate (the percentage of sales
people hired that don’t become productive). It is not too surprising that VCs are not aggressively
pursuing these kinds of businesses. There are some ways you can look to address the problem:

If you are currently using a field sales organization that sells direct, look at whether it is possible to
sign up OEM deals with strategic partners to leverage their customer base and distribution power.
What generally works best here is allowing the OEM to sell only a base layer of your product with co-
branding. Then you can go back into their customers and upsell them. Owning the customer base is
an important way to control your own destiny, and will also earn your company a higher valuation. In
addition to distribution power, these kinds of relationships solve the “safe choice” concern of many
buyers, and can transform your business.

Consider converting to a channel sales model at some stage in the lifecycle of the business. Many
times this requires that you “prime-the-pump”, as most resellers won’t sell a product until they see
clear customer demand. Channel sales models usually only work when the company commits to them
fully, and passes all orders through the channel, so be prepared for the loss of margin this will
represent to your current order flow.

Another option is to evaluate whether you can move from field sales to inside sales people. Insides
sales people are not only less expensive in direct salary costs, but also in travel costs. Other
advantages of inside sales people is that they are far more efficient due to remaining in one location,
and can contact more people in a typical workday. At a minimum, look at combining inside sales with
field sales to improve the efficiency of field sales people.

Conclusions

If you are entrepreneur planning your next business, you can’t afford to ignore the cost of customer
acquisition. The earlier you work on this the better, as many of the best techniques require you to
build your product differently.

It is also important to ask yourself the question: can my business realistically expect to acquire
customers for considerably less than the amount that I can monetize them?

Once you have completed the product, you will want to familiarize yourself with all the latest
techniques involved in the low cost sales model, or Sales 2.0.

From a funding standpoint, it is useful to know that your ability to raise capital will dramatically
improve as soon as you have proven that you have a viable business model. Think of that as two
equations:

CAC < LTV (3x appears to be a rough minimum for SaaS businesses)

CAC should be recovered in < 12 months (for subscription businesses)

150 
 
Once yoou have provven out the bu usiness mod
del, hit the ac
ccelerator pe
edal, and inveest as much as you
can affo
ord. You’ll wa
ant to grow thhe business a
as fast as poossible before
e a competittor realizes what
w you
have doone, and triess to steal you
ur market!

Acknowl
wledgments

I would llike to thank my partner Nick

N Beim an nd the management team ms at JBoss aand HubSpo ot, Gail
Goodma an of Consta ant Contact, Sheila
S Marce
elo of Care.com, for contrributing greaatly to the ide
eas in
this postt.

- David S
Skok

Optimiising the con
nversion funn
nel – David SSkok 
http://ww
ww.forentrep
preneurs.com//sales‐funnel//

Optimiziing your Cusstomer Acquiisition Funne

el

July 15, 2010 • David

d Skok

This blog
g post focuses on how B2B
B companiies can optim mize their cus
stomer acquiisition funnells using
a custommer-centric methodology
m to analyze a
and remove blockage
b poiints.

Acquirin
ng customerss in the B2B world involve es using a vaariety of mark
keting and saales steps with
w the
goal of cconverting prrospective cu
ustomers intoo paying cusstomers. The process is ooften thoughtt of as a
funnel (ssee diagram above) where you pour iin suspects at a the top, an
nd various stteps in the prrocess,
some pe ercentage off prospects su
uccessfully cconvert to the
e next stage,, making the funnel narroower as
the proccess evolves..

No matte er how largee or successfful your businness is, you will have at least
l one plaace that is a blockage
b
point in yyour custommer acquisition funnel. Thiis is the poinnt where the conversion
c ra
rates from onne stage
to the ne
ext are not sa atisfactory, or
o the point w
where you ha ave a scalingg problem, (i. e. you cannoot
profitably
ly increase th he number of people com ming out of th e funnel becaause you have
hat part of the
maxed o out the capab bility of one marketing
m orr sales technique). If you solve that bllockage poinnt,
usually iit will cause another
a to ap
ppear somew where else inn the funnel.

151 
 
As an exxample, you may have to oo few visitorrs coming to your web sitte, which youu see as the top of
your funnnel. Or you might
m have plenty
p of visittors to your website,
w t few of th em signing up
but too u for
your tria
al.

In this bllog post, I wiill talk about a method th at I have fou und to be highly effective at removing
g
blockage e points. The ere is enormo ous power in n this exercis
se, as removing blockagee points will increase
i
conversiion rates in your
y funnel. Readers
R of m
my prior blog
g posts on thee importancee of lowering
g the cost
of custom mer acquisittion (CAC), willw know thatt increased conversion
c ra
ates have a hhuge impact on
increasinng sales and d lowering the e cost of cusstomer acquiisition.

Identifyin
ng Blockage
e Points

The eassiest way to id

dentify your blockage po
oint is to ask the
t question: “What is stoopping us fro
om
increasin
ng sales by 5x?”.
5 Comm mon answerss to this mighht include:

We don’t have enough leads com op of the funnel.

ming in the to

We have
e plenty of viisitors to our web site, bu
ut not enough
h are converrting to registtered users.

We have e plenty of ussers signing up for our fre

reemium prod
duct (or free trial), but noot enough are
e
convertin
ing to paid ussers.

We can’’t get meeting

gs with the key
k decision makers.

We’re do o sign up as customers, but there is not

oing OK gettting people to n enough ggrowth in the
e account
after the
e first sale.

The Mosst Common Causes

C of Bllockage Poin
nts

Product//Market Fit

ng to market, one of the greatest

If you arre a new starrtup just goin g caus ses of probleems in your customer
c
acquisitiion funnel is that you havve not yet fou und product/m /market fit. It is important to diagnose if that is
the casee, as the wroong diagnosis s will likely le
ead to manag gement wastting a lot of m money on salles and
marketin ng for a prod
duct that is no
ot right. The correct cours rse of action ifi this is the ccase, is to fo
ocus all
your ene ergy and atteention on sollving product/ t/market fit. While
W you are e doing this, you should limitl your
spending g on sales and marketing g to just the m minimum lev vel required tot have adeqquate amoun nts of

152 
 
custome er interaction
n to determine where you ur customers have the higghest levels oof pain and urgency,
u
in an are
ea that you can
c provide a solution. Yo ou will need to conserve your cash too continue to pay for
product developmen nt to evolve a product tha
at does fit the
e market need.

Solving for product/m market fit is a topic that h

has been wid dely discusseed elsewheree on the web,, with
great co
ontributions coming
c from Steve Blank, k, and Eric Riies with the Lean
L Startupp concept. Th
his
primary topic of this post is aimed at compan oduct/market fit, and
nies that are confident about their prod
who are now working g on the nexxt problem tha at should bee addressed: optimizing thheir customeer
acquisitiion funnels.

Beyond Product/Marrket Fit

After ma
any years of helping to diiagnose prob
blems in diffe
erent compannies’ custome
mer acquisition
funnels, I have obse
erved that the
ere is a comm
mon cause of o blockage points:
p

For exam mple, you maay be hopingg your prospeects will com me to your we eb site in drooves. Howeve er you
may nott have solved d the problem
m of how to mmake them aware
a of yourr site, and seecondly of prroviding
a motiva ation or reaso
on for them to
t want to vissit it. (A quick
k look at youur web site m might reveal th hat it is
entirely ssales oriente
ed, and conta
ains no conteent of interes st to them.) Alternatively,
A you may be e hoping
that you ur prospects complete
c you
ur on-line reg
gistration forrm and give youy their emaail address, but b they
will find that step ann
noying, and be
b concerne ed that you will
w spam them m in the futurre.

This happpens becau use most com sition processs around the
mpanies desiign their custtomer acquis eir own
view of tthe world, insstead of first taking the tim
ime to unders
rstand the customer’s buyying processs, and
their con
ncerns at eacch stage.

Readerss of my otherr article, Build

ding a Saless and Marketting Machine, will know thhat I recomm mend
designin
ng sales proccesses from the outside iin. i.e from thhe customer’’s point of vieew. This invo olves
mappingg out the cusstomer’s buyiing cycle firsst, and then designing
d a process
p to fitt that. Howevver since
most commpanies havve already go ot a sales pro
rocess in plac ce is less hellpful to them. For
ce, that advic
those sta
tartups, the te
echnique I will
w describe b below will be
e more helpfuul as it will foccus on fixing
g what is
most bro
oken in their current funnnel.

153 
 
Solving Blockage Po
oints

Once yo
ou have identified your bllockage poin
nts, the best way
w to start tot solve themm is to get ins
side your
custome
ers head and
d study their concerns
c at this particula
ar stage of th
he sales proccess:

These cconcerns reprresent the friiction in yourr sales proce

ess. Mapping g these out cllearly in a wrritten
form willl give you the
e basis for th ves studying the possiblee things that you
he next step, which involv
could usse to motivatte them to takke the step o
or action thatt you want th
hem to take:

154 
 
Think off the concernns as being th
he friction in the process, and the mo
otivations as being the forrward
pulling fo
forces that yo
ou can use too overcome tthe friction.

The art iis finding the

e right motiva
ation that is g
great enoughh to overcome their conceerns, and have them
move forward in the sales proces ss. This is wh
where you nee ed to musterr your brighteest and mostt creative
thinkers to brainstormm the issue. Since custom mers have such
s an avers
sion to beingg sold to, and
d now
have rea al control ove
er the buyingg process, th e old ways of
o moving the em through a conversion funnel
will usua
ally have mediocre resultts. Getting su uperb results
s requires thinking outside
de the box an nd
creativityy.

Below I will walk you

u through a few
f example
es to help illu
ustrate how th
his works.

Problem
m: Driving Tra
affic to your Web
W Site

One of tthe most com mmon blocka age points forr startups is right at the very
v top of th e funnel: i.e. how to
get foun
nd on the web b. If you can’t even start a dialog with
h a prospective customerr, then you ha ave no
opportunnity to sell th
hem.

A very ccommon misp perception amongst first time entreprreneurs is “If you build it, they will com me”.
Given th he huge presssures of toda ay’s always--on lifestyle with
w iPhones,, BlackBerriees, instant
messagiing, SMS, Tw witter, social networks, ettc., the avera
age buyer is suffering froom severe
informattion overload d. Their mostt scarce and valuable com mmodity is raapidly becom ming their tim
me and
attentionn. Getting the
eir attention by
b simply creeating a web b site and hop
ping for virall spread will not
n work
in this ennvironment.

Lets starrt by writing down their concerns and

d motivations
s:

155 
 
Concern
ns

Don’t wa
ant to waste time on anytthing that is n
not
immediaately valuable
e and directly
y relevant to
o me

Hate beiing sold to

If it doessn’t come up
p in the first page
p of Goog
gle search
results, I can’t be bo
othered to loo ok further

Concernn about whetther they hav ve found the best

product//service for th
his category.. (i.e. is there
e a better
product out there tha at I haven’t yet
y found?)

Concern n about whetther this is the best deal ((price) they

can find
d for this prod
duct categoryy

etc. (please add morre in the com

mments sectio
ion)

Motivatio
ons

I do havve a problem to solve, and

d would love
e to find a sollution to it.

If my frie
ends recomm
mend this pro
oduct then I’llll want to che
eck it out, and will be favoorably dispos
sed
towards it

If I can g
get somethin
ng for free, an
nd it will help
p me with my
y life/work, th
hen that is vaaluable to me
e

I am rea
ally interested
d in learning about XYZ ((where XYZ may be totallly unrelated to your prod
duct
area)

I trust th
his review site
e/individual/c
consulting firrm/etc. as an
n expert in thiis area, and would like to
o know
what the ey have to saay about the topic, and w which productts they rate asa the best

hang out on Web sites th

I like to h hat entertain and educate
e me on area
as that I am ppassionate about
a

etc. (please add you

ur own though
hts in the com
mments section)

To get th
hem to pay attention
a to you,
y you will w
want to think
k about giving
g them someething valuab
ble to
earn the
eir attention.

Example
e 1: Use a Frree Product (HubSpot’s W
WebSite Gra
ader)

A good eexample of using

u a free product/servi
p vice as a mottivator to drivve traffic to yoour web site is
HubSpo ot’s WebSite Grader tool. HubSpot is a company that t sells a SaaS
S productt aimed at he elping
small an
nd medium siize businessses implemen nt Inbound Marketing.
M Th
he componennts of their prroduct
include b
blogging, SE
EO, social meedia, etc. (In full disclosu
ure, I am an innvestor in HuubSpot.)

HubSpo ot’s two mostt powerful too

ols for driving
g traffic to the
eir web site are
a a) their bblog, which is
s full of
valuable
e educational material on Inbound Ma arketing, and d b) the free
productss, WebSiteG
Grader, Alerts sGrader,Twitt tterGrader, etc. The first of
o these, WeebSiteGraderr, gives
customeers a way to find out howw well their we eb site will pe
erform in Gooogle searchees (SEO), an nd what

156 
 
can be im
improved to make
m it perfo
orm better. T This leveragees the third motivation
m in oour list above
e: “If I
can get something fo
or free, and iti will help mee with my life
e/work, then that is valuaable to me”:

There arre several poowerful lesso

ons to take frrom WebSite
eGrader in ho
ow it works too drive custo
omer
motivatio
ons to pull th
hem through their sales fu
funnel:

It is a fre
ee tool that offers
o custom
mers a lot of vvalue. Becau
use of that, bloggers will rrecommend the
product and users willw tweet about it, spreadiing the word.. (High value e, low cost.))

It require
es a very smmall amount of
o non-private
e information
n to get going
g (just a webb site URL), and
a
gives baack a lot of va
alue from tha
at small amo
ount of input. (Low custoomer effort.)

It offers a rating (sco

ore out of 1000) which take es advantage e of the competitive natuure of humans. They
want to g get the best score, so if their
t score iss low, they will
w likely wantt to improve iit, and if thatt’s the
case, Hu ubSpot has the
t answer. (Leverages
( customer’s s competitivee instincts.))

It positio
ons HubSpott as an experrt in the SEO
O space, and
d it shows the
eir ability to uuse technolog
gy to
perform a task that iss normally do ly paid SEO-experts. (Leverages thee respect accorded
one by highly
to experrts.)

It builds trust betwee

en the custom
mer and Hub
bSpot, by cre
eating a value
e for the cusstomer (Trust is key
to makin ing sales.)

157 
 
It has minimum sales pitch, and yety has a cleear call to action at the ennd (see below w). The two calls to
action arre carefully pitched
p in such a way as to offer more
re value for frree to the cusstomer. (The
e
connection to the nextn step is obvious an natural.)

Contrast HubSpot’s approach to driving traffiic and and prroviding valu ue for free witith the worst types of
website that require you to give themt an ema ail address before
b w allow you watch a marrketing
they will
video thaat will tell you about theirr product. If yyou’re like me, this will drrive you madd, and make you
immedia ately dislike the
t vendor.

The keyy to success is

i to provide value first, wwhich builds trust. Then at
a an approprriate time the
e
customeer will be morre willing to offer
o their em
mail address.

Using En
Engineering fo
or Marketing

HubSpoot’s WebSiteGGrader tool is

s a great exaample of ano
other idea thaat is really poowerful: using
engineering resourcees for marke
eting. The poower of your engineers
e is that they cann build things that
can be u
used by yourr customers and
a provide value to them m. These are e powerful m motivators to
overcom
me friction.

These to ools can also o be hugely scalable.

s Commpared to th
he traditional spend that yyou might puut into
marketinng programs,, this can frequently be a far better innvestment, an nd be more eeffective at building
b
the rightt kind of relattionship with your prospe
ective custom
mers.

The pow
wer of Educa
ation as a sellling tool

If you arre wondering er to your cusstomers to provide value, I have a suuggestion to make:
g what to offe m
think Edducation. Hub
bSpot’s highlly trafficked b
blog is a grea
at example of
o this in actioon.

Get insid
de your custo
omers head, and undersstand what arrea they are most interessted in learnin ng
about, a
and offer edu
ucational matterial in that a
area. It helps
s if this is in the
t same areea as your

158 
 
product/service, but it is not essential. There is an interesting thing that happens when someone
learns from material that is well put together and intelligent: They develop respect and trust for the
person that is educating them, and will listen to suggestions that come from that person, including for
products and service. Think of the following situation: you attend a course on social media marketing,
and really like the material and the teacher. At the end of the course, they tell you that the product
they use to manage their Tweets and other social interactions is XYZ. You are highly likely to go out
an buy XYZ for that job.

You may have heard of consultative selling. In that role, the consultant places themselves at the same
level as the customer. In the educational model, the teacher who does great work is automatically
placed into a superior role to the person that is doing the learning. This is an important insight, and
can be used as powerful tool.

Important note: most companies that I talk to think that they are doing this well, but a quick review of
their materials reveals that what they think are educational materials are just thinly disguised sales
collateral. This will not work, and will actually turn customers off. To do this well, you may need to hire
a dedicated writer who is measured on the quality of material, traffic, and positive comments they
generate.

Example 2: Using Data to drive customers to your website

Many companies collect interesting data as part of their business. Frequently it is possible to use
insights gained from that data to create interesting articles or services that can be used to drive traffic
to your website.

One good example of this is a company called Sysomos (recently acquired by Marketwire). Sysomos
provides a SaaS service to help enterprises monitor the conversations going on in blogs and social
media that might affect their company. The backbone of the service is a series of crawlers feeding
data in to a huge and constantly expanding database. Sysomos uses the data that they have to
search for interesting insights on any current topic, and then publish blog posts. Topics they have
covered include insights on Twitter usage, social media and the Iranian election, the oil spill,
Facebook, etc. Since the topics they look at are of high interest, these blog posts often get picked up
by national media, such as The New York Times, and many other bloggers. These published articles
and blog posts have led to major traffic increases for Sysomos’s main web site, which they convert to
free trials, and then closed customers.

If you don’t have your own data, then collect it from customers

After reading the above, you might be wondering how you could do something similar, but realizing
you are held back by not having a data source. Don’t let this hold you back. There are several
examples of companies that decided to issue surveys to get collect that data, promising people that
participated that the would have access to the results. Amongst businesses there is a strong desire to
learn how they stack up relative to the peers and the best in the industry.

One example of a firm doing this is PriceWaterhouseCoopers, who collect data on venture funding,
and publish a report called the MoneyTree. This helps them get the attention of VCs and venture
backed companies who are their prospective customers.

Another example of this is a Dutch SaaS business intelligence company called Mirror42. Mirror42 has
created an on-line KPI repository that tracks the Key Performance Indicators (KPIs) that are used in
various different vertical industries. They have over 200,000 users signed up to use and contribute to
the database. Customers can also compare their performance in this KPIs to industry benchmarks,

159 
 
which iss highly valua
able. Mirror42
2 then uses tthese custom
mer relations
ships to markket their SaaS
S
offering.

Top of th
he Funnel: Harvesting
H De
emand versu
us Creating Demand
D

A importtant note for those readers considerin ng the conceerns and mottivations of ppeople that th
hey are
wanting to attract to the top of their funnel: th
here are two actually two different classses of custo
omers
that you
u will be dealiing with:

Type A: Those that are

a aware that they wantt a solution where
w your prroduct fits thee bill

Type B: Those that are

a not awarre of your pro
oduct catego
ory, and aren’t aware thatt it could ben
nefit them

For Type
e A custome
ers, you need
d to Harvest D
Demand. Fo stomers you will need to Create
or Type B cus
Demand d.

For Typee A custome ers, the most likely startin

ng point for an interaction will be a Gooogle Searchh, since
they are
e likely lookin
ng for a produuct to solve a particular need.
n For Typpe B custom mers, the prob
blem is
much haarder, and wiill likely cost you more efffort and mon ney. You will have to reacch them in soome
other wa
ay, and get th hem to hear about your p product. The very best method is havving them hea ar about
you from
m a trusted so ource such asa a friend, reespected bloogger, main stream
s presss, etc.

These tw
wo audience
es require diffferent marke
eting program
ms, and have
e different mootivations.

2nd Prob
blem: Getting
g Customers
s to Registerr

Anotherr frequent pro

oblem are in conversion ffunnels is the
e point wheree you want yyour visitors to
t
register and provide you with the
eir email addr
dress or otherr contact info
ormation.

Let’s loo
ok at their like
ely concerns
s and motivattions:

Concern
ns

Don’t likke to give the

eir email addrresses, as th
hey hate gettting
spam em mails from veendors

Distrust vendors with h my email. Not

N sure how w they may
abuse thhis in the futu
ure. You nee
ed to earn myy trust that yo
ou
won’t ab
buse this.

That info
ormation is personal,
p and
d the time it ttakes for me to
deal with
h your future
e emails has considerable e value. You
need to earn the righ
ht to ask for that.
t

You are asking me to t put my valluable time aand effort in to

t
trying ou
ut your produuct. I have co
oncerns abou ut whether it
will be e
easy to use, fast
f ate, and effe ctive at mee
to evalua eting my need
ds.

etc. (please add you

ur own though
hts in the com
mments section)

Motivatio
ons

160 
 
I have a problem, an nd would like to find a sollution. I havee seen enoug
gh about thiss product/serrvice in
your intrro video/conttent, that I be
elieve it will w
work and tak
ke away my pain.
p

This site
e seems to have enough positive feed mments from users, and rreviews from
dback in com m the
press that I feel it is likely
l a good
d product, an
nd worth my time
t to try

I care a lot about beiing amongstt the best in m

my industry. These guys have data thhat will allow w me to
benchmark myself against my pe eers. That is valuable. (Iff I find out I am
a below thee industry top
p
performeer group, or not following
g best practicces, I will wan
nt to improve e.)

I’d like to
o impress myy boss/co-wo
orkers with m
my ability to come
c up with
h clever ideass and solutio
ons to
problem ms that we haave

I am passsionate abo
out XYZ and like to learn more about things in that area

I have heard about this

t from my friends, whicch means I believe
b that itt is very likelyy to be good
d, and
worth myy time

etc. (please add morre in the com

mments sectio
ion)

Example
e 3: Move grratification up
pfront

Many off the good ma arketers thatt I have workked with talk about the tim
me to Wow!. That is how long it
takes be
efore your cuustomer gets to the point of Wow! (i.e. experiencin ng some grattification from
m use of
the prod onventional approach to rregistration is
duct). The co s to make thee customer rregister beforre they
can get to experiencce the Wow! moment and d get some gratification.
g

If you arre doing this, you may wa

ant to try a di
different appro
roach, and place the Wow
w!
momentt before you ask them to register.

Example
es of compan
nies that hav
ve done this w
well are:

uberVU (www.ubervvu.com), a so ocial media m monitoring seervice which allows you too enter your
website’’s URL and sees a partial version of th
heir reporting
g before signiing up for a ffree trial (which
requiress registration)).

Posterou us (www.Possterous.com)), a blogging g site which doesn’t

d require you to siggn up to starrt using
it. You ssimply email them your firrst post, and
d it get’s yourr registration information ffrom your emmail
addresss (pretty cleve
er!).

161 
 
Example 4: JBoss

JBoss, the Open Source Java middleware company, leveraged two powerful customer insights to
create a very high growth business. The first was that giving the product away completely free would
create immediate interest and viral growth. This worked extremely well: the free product was
downloaded over 5 million times.

However that first insight created the next bottleneck in the funnel to solve: the millions of users that
had downloaded the product for free had not registered, as JBoss felt that putting a registration in
front of the download would greatly reduce download volume. In order to market paid services to that
user base, JBoss needed to get the contact information for these users. At the time that we did the
brainstorming session to apply this methodology, they were charging money for the documentation,
which was bringing in a very nice steady revenue stream of $27,000 every month. The solution to the
blockage point was to offer the documentation for free, and use that as an incentive to get them to
give us their email address. Because of the significant revenue hit this entailed, it took a while to get
everyone’s buy-in, but once implemented, the process generated 10,000 leads per month, which grew
over time to 16,000. (The full story behind JBoss’s success can be found here.)

Example 5: Getting a meeting with a Decision Maker

The second company that I started in 1986 was called International Software, which later became the
European branch of Corporate Software. 1986 was the time when PCs were just starting to be
adopted by enterprises. Before International Software, the typical way you purchased a PC and
associated software was through a store like ComputerLand, or BusinessLand. However the problem
with these stores is that they primarily focused on the hardware, and didn’t stock more than 5-6
software titles, and certainly didn’t know how to demo them or support them. We spotted an
opportunity, create a new channel that only sold software, and focused on the needs of enterprise
buyers. We would stock a huge range of products, and provide excellent consulting advice on which
products to use, as well as great support.

When I first started the business, I purchased a copy of the Times 1,000 top companies in the UK,
and started at the top, dialing the biggest companies, trying to reach their PC buyers. Not too
surprisingly, I would get to voicemail, leave a message, and not get a call back. This was a frustrating
blockage point, and there was clearly lots of buyer friction at this stage in the sales funnel.

I started brainstorming for a solution: One of the key parts of our service was content. We published
The International Software Guide, a 600 page book that reviewed almost all the software products
available for the PC at that time. The book was given to our customers as part of our service if they
purchased their software from us. It was highly impressive (see below).

162 
 
My insigght was that ifi I sent them
m a free copyy of the book first, and the
en asked theem for a mee eting, I
might prrovide them with
w proof tha at we were ddifferent, and
d capable of providing
p moore value to them
t
than all the other ven
ndors calling g on them. Thhe results weere spectacu ular: I went fro
rom a 2-3% success
s
rate in g
getting meetin
ngs to around 90%!

(Once in
n the meeting g, our value proposition
p w
was so comppelling that we
w convertedd approx. 50% % to
customeers within a month
m of the first meeting
g. The compa
any grew to $100m
$ in salles in four ye
ears, and
was incrredibly capita
al efficient.)

In todayy’s world we have

h the web
b, and print m
media like th
hat book are a thing of thee past. Usingg
compelliing high valu
ue content on
n the web is tthe modern equivalent
e off the above sstory, and is exactly
how com mpanies usinngInbound Marketing
M are driving web traffic.

Example
e 6: Getting to
t Executive Decision Ma
akers

One of m my portfolio companies,

c Enservio,
E sellls high value
e products annd services tto Insurance
companies. As part of o their sales
s process, th ey need to get
g to senior executives inn the insurannce
industryy that are cap pable of makiing decisionss. Not surpris verage saless person will struggle
singly, the av
if they siimply try to cold
c call thos
se executivess.

While siitting in the audience of a TechCrunch h 50 presenttation, the CE

EO, Jon McN Neil, had the brilliant
idea to h
hold a similarr conferencee for executivves in the ins
surance indusstry, bringingg together the very
best starrtup compan nies that were
e innovating in the insuraance industryy. They put toogether an annual
a
Claims IInnovation Summit, and pulled
p in presstigious speaakers from highly respectted analyst and
a
consultinng firms, andd invited spea
akers from wwithin the inddustry to add valuable conntent around d the
startup p
presentationss.

163 
 
The net result was a great succe ess, attractingg executives s that their sa
ales people ccould never get
g to.
Not onlyy did they gett hard-to-reach executive es to the eve ent, but due too the incredib
ibly professio
onal way
in which
h they manag ged the event, they built ttrust with tho
ose executive es, which is a key requireement
before a sale can be e completed. (A key part o of that profes
ssionalism was
w to avoid tthe temptatio on to use
the evennt as a selling
g platform, and
a to stick to o valuable ed ducational coontent.)

The othe er benefit of getting exec

cutives to an event like this is the amo
ount of time tthat was ava ailable for
relationsship building.. This worked
d far better th
than a typical short meetiing in an officce setting.

Example
e 6: Applying
g the technique to Web S
Site Design

Most we
eb sites repreesent a mini--funnel in a m
marketing proocess where you’d like too move your
customeer from throu
ugh a series ofo steps/pagees to the poiint where the
ey will sign upp to purchase your
product, download your
y trial, etc..

The greaat thing abou

ut web sites is
i that we caan get precisee analytics th
hat tell us whhere the botttlenecks
are occuurring. To im
mprove the co onversion rattes at these bottlenecks, I have foundd it highly valuable to
apply thiis same tech
hnique: i.e. document the e customer co oncerns and d brainstorm tthe possible
motivatio
ons that could be used to o help get the
em to move through the bottlenecks.

164 
 
One of tthe other pow
werful techniq ques I highlyy recommend d for this purp
rpose is A/B ttesting. Whe en
coming up with new ideas for con ntent on pagges, split the traffic so tha
at one half gooes through the t new
page an
nd the other half
h goes thro ough the old
d page. Or try y two variatioons of the neew page with different
wording to optimize the conversiion rate. Oncce you have found
f the win
nner, repeatt until it’s clea
ar which
messagiing is havingg the best efffect.

Take a llook at the Posterous

P scrreen shot bellow. It has so
ome great ex
xamples of hhow to addres
ss
customeer concerns:

You havve to like how

w they put a redline
r throu
ugh Step 1: Create
C and ac
ccount, highllighting the fact
f that
you don’t need to reg
gister to set up a Postero
ous blog.

Use a quuote from a well

w known name,
n in this case Leo La
aporte, to reinforce the faact that it really is
easy to g
get going.

Make them feel com mfortable thatt thousands o of other custoomers are us sing the site,, so they can
n feel
comforta able that othe
ers like the site,
s so they p
probably willl, and the risk
ks of anythinng going wron ng with
their perrsonal inform
mation are likeely to be low
w.

The “Wh ho is it for?” provides

p a niice way to alllow each user type to geet comfortablle that this siite has
featuress that make itt well suited to their needds. Without th
his, there is a risk that a ppower user could
c
see the site as too simple for the em, given all the focus onn simplicity in
n the messagging.

165 
 
One thing missing from the above screen that might add value to lesser known sites is some quotes
from reviews that say positive things about the product. (I also personally like to see a video
demonstrating any new product right on the front page, as it is the easiest way for me to see how a
web service works.)

Brainstorming

It is important point to realize that all sales and marketing funnels have blockage points. As soon as
you remove one blockage point, another one will appear elsewhere in the funnel. This means that
there is always room to improve. I recommend using quarterly brainstorming sessions where the key
execs including the CEO, heads of sales, marketing, and product, get together to work on coming up
with creative ways to address the latest blockage point using the technique described in this post:
Analyze the customer’s concerns and seeing if it is possible to come up with a motivation that will
overcome those concerns.

When running these sessions it is highly valuable to have a flow chart diagram of your sales and
marketing funnel process as one of the starting places for discussion. Without this diagram, you are
unlikely to find that all the players have the same picture of what is going on.

I also recommend that the customer concerns, and possible off-setting motivations, are written down
on a white board or similar during the meeting.

Assigning a person to become the customer

In my own startups, I found that I naturally gravitated into the role of being the person who tried to
think like the customer, and represented their point of view to the rest of the group. In other
companies, it is not always going to be clear which executive has the best natural tendencies to play
that role. I recommend that you choose one person from the executive team to play that role, and
encourage them to become intimately familiar with how your customers think. This will only happen as
a result of them spending time with a lot of customers listening and and asking questions. Then in the
quarterly brainstorming meetings their job will be to ensure that the voice of the customer is heard
loud and clear.

The importance of Metrics

Elsewhere in this blog, I have talked a lot about the importance of metrics (here and here). If you don’t
measure your funnel’s performance, you have very little chance of understanding how to improve it.
also when designing any of these creative solutions, you will likely want to understand how effective
your solution is, and whether is providing a good return in the investment you made. They key metrics
you need are shown in the diagram below:

166 
 
You will want to mea asure the nummber of prosspects going into each staage, and thee conversion rate to
the nextt stage. You will also care
e about the o
overall conve
ersion rate off prospects fr
from the top of
o funnel
to closedd deal, and the
t average deal
d size.

The sha ape of your fu

unnel will like
ely vary for e ach differentt lead source
e. e.g. a leadds from Facebook
ads mayy not convertt well into tria
als, but those nvert to trials may have a higher conv
e that do con version
rate to cclosed deals than normal web traffic, a and the deall sizes may be b larger. Thhat means yoou will
need to track the funnnel metrics separately
s by lead sourcce.

These mmetrics will sh

how you you ur funnel blocckage points,, and help yo
ou understannd whether yo
our
actions tto improve fu
unnel flow arre working.

Summarry

All saless and marketting funnels have

h blockag
ge points, an
nd as soon as
s you removve one, the bllockage
will movve to anotherr place.

ges are frequently caused

Blockag d because yoou are hoping g your custom
mer will takee a step in yo
our
process where they are not adeq
quately motivvated to do th
hat step.

By analyyzing their co
oncerns, and brainstorm
ming with creaative thinking
g executives,, it is often possible
to figure
e out customeer motivatio
ons that can be used to offset
o their co
oncerns, andd get them to willingly
take that step.

The besst solutions often

o require out-of-the-bo
ox thinking.

oducts, educational conte

Free pro ent, and insig
ghts based on
o data that you
y may possssess or colle
ect are
examplees of tools that can be us
sed as motivaations for you
ur prospectiv
ve customerss.

167 
 
Removing blockage points increases conversion rates in your funnel, which is one the most important
things you can do to increase revenues and profitability. (A small improvement in conversion rates
can dramatically lower your cost of customer acquisition.)

I recommend setting up quarterly brainstorming sessions to focus on removing blockage points, which
could also be referred to as increasing conversion rates.

I also recommend choosing one executive to become the voice of the customer, and setting them the
task of getting inside your customers’ heads to understand how they think and react to all stages of
your sales and marketing process.

Cost per acquisition ‐ Andrew Chen 
http://andrewchenblog.com/2008/11/17/how‐to‐calculate‐cost‐per‐acquisition‐for‐startups‐relying‐on‐
freemium‐subscription‐or‐virtual‐items‐biz‐models/
How to calculate cost-per-acquisition for startups relying on freemium, subscription, or virtual items biz models

Buying ads make sense for direct monetizing products

When it comes to products that directly monetize their audience using subscription, ecommerce,
virtual items, etc., it can make a lot of sense to rely on advertising as a distribution channel. The
reason for although there are 100s of millions of internet users, only a small fraction (usually <1%) will
be in-market for your services at any given time. As a result, you are looking to acquire these users,
and only these users, and everyone else is considered wasted energy.

Note that the freemium model is a variation on this concept – where you acquire a large base of
“casual users” that stick around, and you slowly convert some % of them to subscribers. You can
think of it as vertically integrating your distribution, and instead of spending money to buy ads, instead
you are spending money to support this large base of free users.

Run an ad-supported consumer internet app? You better understand ad-buying too
These days, it’s simple to think that advertising is about placing javascript code on a page, and seeing
what numbers AdSense gives back to you. Instead of thinking about it that way, publishers would do
their customers (their advertisers) a great service by understanding what it means for ad inventory to
perform or not perform. They should really understand how advertisers analyze their cost-per-
acquisition so that the publisher can better service them – that’s at the heart of indirect monetization.
If you’re not selling directly yourself, you’re helping someone else sell.

CPA, the common currency of user acquisition

The first step is to understand your user acquisition funnel, from start to end. Although there are many
ways to price things, be it CPM, CPC, or CPA, the key is that it all rolls back to how much it costs you
to have a registered user. You need this cost-per-acquisition number to be lower than the lifetime
value number, and what you have left is profit (before cost of infrastructure, etc).

So you want to build something that looks like this:

Ads  Signup  Upload 

Source  CTR  Clicks  Users  Cost  CPA 
bought  %  pic 

Google  1M  0.50%  5,000 20% 50% 500 $5,000.00  $10.00

168 
 
Ad.com  20M  0.10%  20,000 10% 50% 1000 $20,000.00  $20.00

The above is an example of two traffic sources, Google and Advertising.com (the latter being an ad
network), as well as clickthrough rates, signup %s, and the cost per acquisition.

A couple important notes on the above:

the SOURCE of your traffic is the most important segmentation – make sure you track acquisition and
LTV numbers, since you often get vastly different numbers depending on where you are buying ads

you want to break down your funnel into as small of steps that make sense, from the clicks into the
signup page into any intermediate profile forms and then the final registered numbers. Your funnel
may be larger or smaller

Google might charge you CPC and Ad.com might charge you CPM, but you have to normalize that
back into how much it costs you to acquire a registered account. In a CPC model, you don’t care
about the CTR much since you don’t pay for impressions that don’t result in clicks, whereas you do
care about CPMs

the only difference between a good CPA and a bad CPA is whether it’s above or below your customer
LTV

In addition to tracking source of traffic, you may also want to track important factors like what
campaign it was in, what creative it corresponded to, the banner ad size, and other things that might
affect CPA. The last thing you want is a variation that is very unprofitable, but is obscured by being
grouped together

You may also want to group all your marketing channels into the above, including email, partnerships,
blog traffic, viral invites, etc. Obviously for stuff that’s free traffic, the CPA is infinity, but it’s good to
know what kinds of funnel %s the other traffic throws off, for comparison’s sake

Got all that? Good

What factors influence ad performance?

The second thing worth considering is what factors actually influence GOOD numbers for CPAs
versus what numbers are generally bad.

I made a quick, anecdotal table below to enumerate some of the factors:

Type  Options  Importance

Source of traffic  Ad networks, publishers ++

Cost model  CPM, CPC, CPA +

User requirements  Install, browser plug‐in, Flash +++++

Audience and theme  Horizontal vs vertical ++

Funnel design  Landing page, length, fields +++

169 
 
Viral marketing  Facebook, Opensocial, email +++++

A/B testing process  None, homegrown, Google +++++

A couple additional notes:

As mentioned previously, the source of traffic is very important – you should dedicate a significant
amount of time buying lots of different kinds of traffic to see what works

Cost model is something you should be able to normalize into CPA and mostly ignore, except for
cashflow and risk reasons

User requirements can be a huge issue – if you are forcing users to download, that will kill your CPA.
Similarly, asking a demographic that doesn’t have credit cards for their credit number can kill you.
Make sure that you understand your audience and that your funnel is optimized for them

Audience Theme revolves around the concept that strongly themed products are often quite vertical in
nature, which causes a large % of users to reject the product. For example, a site for teens obsessed
with vampires is much narrower than a web email site. The narrower the theme is, the harder it is to
find appropriate ad inventory to buy

Funnel design and A/B testing is key – definitely worth investing in

Similarly, for those who can find a viral angle in their product, that can be a huge benefit as well. It
has the capability to create order-of-magnitude decreases in the CPA, which can be the difference
between profitability and bankruptcy! But this also has issues if your product is not widely appealing
enough, since virality depends on a horizontal offering to work

If you have questions or comments, feel free to leave a message!

Paying to acquire users – Sean Ellis 
http://startup‐marketing.com/to‐pay‐or‐not‐to‐pay‐to‐acquire‐users/ 

Apr 20th 09

To Pay Or Not To Pay To Acquire Users?

I recently heard a VC say that startups “should spend the least amount of money possible on
marketing.” This is a healthier attitude than the opposite prescription of undisciplined land grab, but a
better approach is pure ROI marketing. Marketing opportunities that offer a fast payback with
additional profit margin are a key component for reaching your startup’s full market potential.

Work from Free to Paid Drivers

Ultimately my goal with any startup is to acquire the highest number of qualified users possible – at a
positive return on investment . But it often takes several months after “launching” to transition to
aggressive scaling.

I like to start with free customer acquisition channels since they obviously offer the best opportunity to
generate a positive ROI. Free drivers may include viral marketing, self-implemented SEO and listing
with any directories that are appropriate for your product. Leveraging this early user flow we optimize

170 
 
the first user experience for the right target users and introduce a business model that generates
sufficient revenue to fund future paid user acquisition. When we start developing paid channels, we
work our way through the lowest hanging fruit first, beginning with demand harvesting channels, later
adding demand creation channels.

Kill the Opportunity for the Competition

If your growth is accelerating, you will attract competition. And this competition will likely be savvy
enough to replicate the customer acquisition and monetization approaches that you worked hard to
invent. So it is important to make it as difficult as possible for them to get traction. I know some of
you are saying “but your recent post told us to ignore the competition.” My point was not to ignore
the competition forever, simply to ignore them while you are figuring out a repeatable, positive ROI
way to acquire customers. Competition (especially those that are spending irrationally) will distract
you from this critical task.

But once you have optimized the first user experience and introduced a business model that
generates sufficient revenue to fund user acquisition, it’s time to focus your marketing efforts to
aggressively build new customer acquisition channels and scaling existing channels – both free
and paid.

Product distribution (Gaining user traction) – Peter Thiel (Blake Masters) 
http://blakemasters.tumblr.com/post/22405055017/peter‐thiels‐cs183‐startup‐class‐9‐notes‐essay 

Peter Thiel’s CS183: Startup - Class 9 Notes Essay

Here is an essay version of my class notes from Class 9 of CS183: Startup. Errors and omissions are
my own. Credit for good stuff is Peter’s entirely.

Class 9 Notes Essay—If You Build It, Will They Come?

I. Definitions

Distribution is something of a catchall term. It essentially refers to how you get a product out to
consumers. More generally, it can refer to how you spread the message about your company.
Compared to other components that people generally recognize are important, distribution gets the
short shift. People understand that team, structure, and culture are important. Much energy is spent
thinking about how to improve these pieces. Even things that are less widely understood—such as
the idea that avoiding competition is usually better than competing—are discoverable and are often
implemented in practice.

But for whatever reason, people do not get distribution. They tend to overlook it. It is the single topic
whose importance people understand least. Even if you have an incredibly fantastic product, you still
have to get it out to people. The engineering bias blinds people to this simple fact. The conventional
thinking is that great products sell themselves; if you have great product, it will inevitably reach
consumers. But nothing is further from the truth.

There are two closely related questions that are worth drilling down on. First is the simple question:
how does one actually distribute a product? Second is the meta-level question: why is distribution so
poorly understood? When you unpack these, you’ll find that the first question is underestimated or
overlooked for the same reason that people fail to understand distribution itself.

171 
 
The first thing to do is to dispel the belief that the best product always wins. There is a rich history of
instances where the best product did not, in fact, win. Nikola Tesla invented the alternating current
electrical supply system. It was, for a variety of reasons, technologically better than the direct current
system that Thomas Edison developed. Tesla was the better scientist. But Edison was the better
businessman, and he went on to start GE. Interestingly, Tesla later developed the idea of radio
transmission. But Marconi took it from him and then won the Nobel Prize. Inspiration isn’t all that
counts. The best product may not win.

II. The Mathematics of Distribution

Before getting more abstract, it’s important to get a quantitative handle on distribution. The
straightforward math uses the following metrics:

Customer lifetime value, or CLV

Average revenue per user (per month), or ARPU

Retention rate (monthly, decay function), or r

Average customer lifetime, which is 1 / (1-r)

Cost per customer acquisition, or CPA

CLV equals the product of ARPU, gross margin, and average customer lifetime.

The basic question is: is CLV greater or less than CPA? In a frictionless world, you build a great
business if CLV > 0. In a world with some friction and uncertainty, you build a great business if CLV >
CPA.

Imagine that your company sells second-tier cell phone plans. Each customer is worth $40/month.
Your average customer lifetime is 24 months. A customer’s lifetime revenue is thus $960. If you have
a 40% gross margin, the customer’s lifetime value is $384. You’re in good shape if it costs less than
$384 to acquire that customer.

One helpful way to think about distribution is to realize that different kinds of customers have very
different acquisition costs. You build and scale your operation based on what kinds of things you’re
selling.

On one extreme, you have very thin, inexpensive products, such as cheap steak knives. You target
individual consumers. Your sales are a couple of dollars each. Your approach to distribution is some
combination of advertising and viral marketing—hoping that the knives “catch on.”

Things are fundamentally different if you’re selling a larger package of goods or services that costs,
say, $10,000. You’re probably targeting small businesses. You try to market your product
accordingly.

At the other extreme, you’re selling to big businesses or governments. Maybe your sales are $1m or
$50m each. As the unit value of each sale goes up, there is necessarily a shift towards more people-
intensive processes. Your approach to these kinds of sales must be to utilize salespeople and
business development people, who are basically just fancy salespeople who do three martini lunches
and work on complex deals.

III. The Strangeness of Distribution

A. Fact versus Sales Pitch

172 
 
People say it all the time: this product is so good that it sells itself. This is almost never true. These
people are lying, either to themselves, to others, or both. But why do they lie? The straightforward
answer is that they are trying to convince other people that their product is, in fact, good. They do not
want to say “our product is so bad that it takes the best salespeople in the world to convince people to
buy it.” So one should always evaluate such claims carefully. Is it an empirical fact that product x sells
itself? Or is that a sales pitch?

The truth is that selling things—whether we’re talking about advertising, mass marketing, cookie-
cutter sales, or complex sales—is not a purely rational enterprise. It is not just about perfect
information sharing, where you simply provide prospective customers with all the relevant information
that they then use to make dispassionate, rational decisions. There is much stranger stuff at work
here.

Consider advertising for a moment. About 610,000 people work in the U.S. ad industry. It’s a $95bn
market. Advertising matters because it works. There are competing products on the market. You have
preferences about many of them. Those preferences are probably shaped by advertising. If you deny
this it’s because you already know the “right” answer: your preferences are authentic, and ads don’t
work on you. Advertising only works on other people. But exactly how that’s true for everybody in the
world is a strange question indeed. And there’s a self-referential problem too, since the ad industry
has had to—and did—convince the people who buy ads that advertising actually works.

If you buy Levis jeans, your apartment blows up. Or is it the other way around?

Comparisons to price or how fast computers work? No. Something strange is going on.

The U.S. sales industry is even bigger than advertising. Some 3.2 million people are in sales. It’s a
$450bn industry. And people can get paid pretty well. A software engineer at Oracle with 4-6 years
experiences gets a $105k salary and an $8k bonus. But a sales manager with 4-6 years experiences
gets $112k and a $103k bonus. The situation is very much the same at Google, which claims to be
extremely engineering driven; at a $96k base, $86k in commissions, and a $40k bonus, Google
salespeople earn quite a bit more than their engineering counterparts. This doesn’t mean everyone
should go into sales. But people who are good at it do quite well.

Self-referential version of sales question.

B. Salesman as Actor

The big question about sales is whether all salesmen are really just actors of one sort or another. We
are culturally biased to think of salespeople as classically untrustworthy, and unreliable. The used car
dealer is the archetypical example. Marc Andreessen has noted that most engineers underestimate
the sales side of things because they are very truth-oriented people. In engineering, something either
works or it doesn’t. The surface appearance is irrelevant. So engineers tend to view attempts to
change surface appearance of things—that is, sales—as fundamentally dishonest.

What is tricky about sales is that, while we know that it exists all around us, it’s not always obvious
who the real salesperson is. Tom Sawyer convinced all the kids on the block to whitewash the fence
for him. None of those neighborhood kids recognized the sale. The game hasn’t changed. And that’s
why that story rings true today.

173 
 
Look at the images above.
a Whichh of these pe
eople is a sa
alesman? Pre esident Eisennhower? He
doesn’t look like a salesman.
s Th
he car dealerr in the middlle doeslook like a salesm
man. So what about
the guy on the right?
?

The guyy on the rightt is Bill Gross

s, who founde
ded IdeaLab, which was morem or less the Y-Combinator of
the late 1990s. IdeaL Labs’ venturere arm investted in PayPaal. In late 200
01, it hosted a fancy inves
stor
lunch in southern Ca alifornia. Durring the lunch
h, Gross turn
ned to Peter Thiel and saiid something g like:

“I must ccongratulate you on doing a fantasticc job building PayPal. My 14-year-old son is a very y
apathetiic high schoool student and very much h dislikes writting homewo ork assignmeents. But he just
j
wrote a beautiful e-m
mail to his frie
ends about h
how PayPal was w growing g quickly, whyy they should
d sign up
for it, an
nd how they could
c take addvantage of tthe referral structure
s thatt you put in pplace.”

On some e level, this was

w a literaryy masterpiecce. If nothingg else, it was impressive ffor the many y nested
levels off conversatio on that were woven in. Otther people were
w talking to other peopople about Pa ayPal,
possiblyy at infinite le
evels on downn. The son w was talking too other peoplle about thosse people. Bill Gross
was talkking to his so on. Then Gross was talkin ng to Peter Thiel.
T And at the most opaaque and important
level, Grross was talkking to the otther investors
rs at the table ying up how ssmart he was for
e, tacitly play
having innvested in PayPal.
P The message
m is th
that sales is hidden.
h Adveertising is hiddden. It work
ks best
that wayy.

There’s always the question

q of how far one sshould push this.
t People push it prettyy far. Pretty much
m
anyone involved in any
a distributio on role, be itt sales, markketing, or adv vertising, shoould have jobb titles
that havve nothing to do with thosse things. The e weak versiion of this is that sales peeople are account
executivves. A somew what stronge er version is tthat people trying
t to raise
e money are not I-bankerrs, but
rather arre in corpora
ate developm ment. Having a job title tha at’s different from what yyou actually dod is an
importan nt move in th
he game. It goes
g to the qu uestion of ho
ow we don’t wantw to admiit that we’re being
sold to. There’s sommething aboutt the processs that’s not strictly
s rationa
al.

To thinkk through howw to come to an organizin ng principle for

f a compan ny’s distributiion, considerr a 2 x 2
matrix. O
One axis is product:
p it eith
her sells itse
elf, or it need
ds selling. The
e other axis iis team: youu either
have noo sales effort, or a strong one.

Conside
er the quadra
ants:

Productt sells itself, no

n sales effo
ort. Does nott exist.

Product needs sellin

ng, no sales effort.
e You h
have no reve
enue.

Product needs sellin

ng, strong salles piece. Th
his is a sales
s-driven com
mpany.

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Product sells itself, strong sales piece. This is ideal.

C. Engineering versus Sales

Engineering is transparent. It’s hard. You could say it’s transparent in its hardness. It is fairly easy
evaluate how good someone is. Are they a good coder? An ubercoder? Things are different with
sales. Sales isn’t very transparent at all. We are tempted to lump all salespeople in with vacuum
cleaner salesmen, but really there is a whole set of gradations. There are amateurs, mediocrities,
experts, masters, and even grandmasters. There is a wide range that exists, but can be hard to pin
down.

A good analogy to the engineer vs. sales dynamic is experts vs. politicians. If you work at a big
company, you have two choices. You can become expert in something, like, say, international tax
accounting. It’s specialized and really hard. It’s also transparent in that it’s clear whether you’re
actually an expert or not.

The other choice is to be a politician. These people get ahead by being nice to others and getting
everyone to like them. Both expert and politician can be successful trajectories. But what tends to
happen is that people choose to become politicians rather than experts because it seems easier.
Politicians seem like average people, so average people simply assume that they can do the same
thing.

So too in engineering vs. sales. Top salespeople get paid extremely well. But average salespeople
don’t, really. And there are lots of below average salesmen. The failed salesman has even become
something of a literary motif in American fiction. One can’t help but wonder about the prehistory to all
these books. It may not have been all that different from what we see today. People probably thought
sales was easy and undifferentiated. So they tried it and learned their error the hard way. The really
good politicians are much better than you think. Great salespeople are much better than you think.
But it’s always deeply hidden. In a sense, probably every President of the United States was first and
foremost a salesman in disguise.

IV. Methods of distribution

To succeed, every business has to have a powerful, effective way to distribute its product. Great
distribution can give you a terminal monopoly, even if your product is undifferentiated. The converse
is that product differentiation itself doesn’t get you anywhere. Nikola Tesla went nowhere because he
didn’t nail distribution. But understanding the critical importance of distribution is only half the battle; a
company’s ideal distribution effort depends on many specific things that are unique to its business.
Just like every great tech company has a good, unique product, they’ve all found unique and
extremely effective distribution angles too.

A. Complex Sales

One example is SpaceX, which is the rocket company started by Elon Musk from PayPal. The
SpaceX team has been working on their rocketry systems in Southern California for about 8 years
now. Their basic vision is to be the first to send a manned mission to Mars. They went about doing
this in a phenomenal way. Time constrains make it impossible to relate all of Elon’s many great sales
victories. But if you don’t believe that sales grandmasters exist, you haven’t met Elon. He managed to
get $500m in government grants for building rockets, which is SpaceX, and also for building electric
cars, which is done by his other company, Tesla.

That was an even bigger deal than it may initially seem. SpaceX has been busy knocking out
dramatically inferior rocket technologies for the past 10 years, but it’s been a very tricky, complicated

175 
 
process. The company has about 2,000 people. But the U.S. Space Industry has close to 500,000
people, all distributed about evenly over the 50 states. It’s hard to overstate the extent of the massive
congressional lobbying that goes to keeping the other space companies—almost the entire industry—
alive. Things are designed to be expensive, and SpaceX’s mission is to cut launch costs by 90%. To
get where it is now—and to get to Mars later—SpaceX basically took on the entire U.S. House of
Representatives and Senate. And so far, it seems to be winning. It’s going to launch a rocket next
week. If all doesn’t go well, you’ll certainly here about it. But when things go well, you can predict the
general response: move along, nothing to see here, these aren’t the rockets we’re looking for.

Palantir also has a unique distribution setup. They do government sales and sales to large financial
institutions. Deals tend to range from $1m to $100m. But they don’t have any salespeople—that is,
they don’t employ “salespeople.” Instead they have “forward deployed engineers” and a globetrotting
CEO who spends 25 or 26 days each month traveling to build relationships and sell the product
firsthand. Some argue that the traveling CEO-salesman model isn’t scalable. It’s a fair point, but the
counterpoint is that, at that level, people really only want to talk to the CEO. You certainly can’t just
hire army of salespeople, because that sounds bad. So you have forward deployed engineers double
up in a sales capacity. Just don’t call them salespeople.

Knewton is a Founders Fund portfolio company that develops adaptive learning technology. Its
distribution challenge was to figure out a way to sell to big educational institutions. There seemed to
be no direct way to knock out existing players in the industry. You would have to take the disruptive
sales route where you just try to come in and outsell the existing companies. But much easier is to
find a non-disruptive model. So Newton teamed up with Pearson, the big textbook company. Without
that partnership, Knewton figured it would just be fighting the competition in the same way at every
school it approached, and ultimately it’d just lose.

B. Somewhat Smaller Sales

As we move from big, complex sales to sales, the basic difference is that the sales process involves a
ticket cost of $10k-100k per deal. Things are more cookie cutter. You have to figure out how to build a
scalable process and build out a sales team to get a large number of people to buy the product. David
Sacks was a product guy at PayPal and went on to found Yammer. At PayPal, he was vehemently
anti-sales and anti-BD. His classic lines were: “Networking is not working!” and “People doing
networking are not working!” But at Yammer, Sacks found that he had to embrace sales and build
out a scalable distribution system. Things are different, he says, because now the sales people report
to him. Because of its focus on distribution, Yammer was able to hire away one of the top people from
SalesForce to run its sales team.

ZocDoc is a doctor referral service. It’s kind of a classic internet business; they are trying to get
doctors’ offices to sign up for the service at a cost of $250/month. Growth is intensively sales-driven,
and ZocDoc does market-by-market launches. There is even a whole internal team of recruiters who
do nothing else but try to recruit new salespeople. Toward the lower end of things—and $250 per
month per customer is getting there—things get more transactional and marginal.

C. The Missing Middle

There is a fairly serious structural market problem that’s worth addressing. On the right side of the
distribution spectrum you have larger ticket items where you can have an actual person driving the
sale. This is Palantir and SpaceX. On the extreme left-hand side of the spectrum you have mass
marketing, advertising, and the like. There is quite possibly a large zone in the middle in
which there’s actually no good distribution channel to reach customers. This is true for most
small businesses. You can’t really advertise. It wouldn’t make sense for ZocDoc to take out a TV

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commercial; since there’s no channel that only doctors watch, they’d be overpaying. On the other
hand, they can’t exactly hire a sales team that can go knock on every doctor’s door. And most doctors
aren’t that technologically advanced, so internet marketing isn’t a perfect solution. If you can’t solve
the distribution problem, your product doesn’t get sold—even if it’s a really great product.

The opposite side of this is that if you do figure out distribution—if you can get small businesses to
buy your product—you may have a terminal monopoly business. Where distribution is a hard nut to
crack, getting it right may be most of what you need. The classic example is Intuit. Small businesses
needed accounting and tax software. Intuit managed to get it to them. Because it nailed distribution,
it’s probably impossible for anyone to displace Intuit today. Microsoft understood the great value of
Intuit’s distribution success when it tried to acquire Intuit. The Department of Justice struck down the
deal, but the point is that the distribution piece largely explains Intuit’s durability and value.

D. Marketing

Further to the left on the distribution spectrum is marketing. The key question here is how can one
advertise in a differentiated way. Marketing and advertising are very creative industries. But they’re
also quite competitive. In order to really succeed, you have to be doing something that others haven’t
done? To gain a significant advantage, your marketing strategy must be very hard to replicate.

Advertising used to be a much more iconic and valued industry. In the 1950s and ‘60s it was iconic
and cutting edge. Think Mad Men. Or think Cary Grant, who, in the classic movie North by Northwest,
played the classic advertising executive who is cool enough to be mistaken for a spy. Advertising and
espionage were debonair enterprises, roughly equal in glamorousness.

But it didn’t last. As the advertising industry developed in 70s and 80s, more people figured out ways
to do it. Things became much more competitive. The market grew, but the entrants grew faster.
Advertising no longer made as much money as they had been before. And ever since there has been
a relentless, competitive push to figure out what works and then dial up the levers.

Advertising is tricky in the same way that sales is. The main problem is that, historically at least, you
never quite know if your ads are working. John Wanamaker, who is billed as the father of advertising,
had a line about this: “Half the money I spend on advertising is wasted: the trouble is I don’t know
which half.” You may think your ad campaign is good. But is it? Or are the people who made your ad
campaign just telling you that it’s good? Distinguishing between fact and sales pitch is hard.

In most ways, Priceline.com represents certain depressing decline of our society. It points to a very
general failure. But one specific thing Priceline does well is its powerfully differentiated marketing,
which makes it very hard to replicate or compete against. PayPal once staged a PR event where
James Doohan—Scotty from Star Trek—would beam money using a palm pilot. It turned out to be a
total flop. It turns out that Captain Kirk—that is, William Shatner—is in a league of his own.

Advertising’s historical opaqueness is probably the core of why Google is so valuable; Google was
the first company that enabled people to figure out whether advertising actually worked. You can look
at all sort of metrics—CPM, CTR, CPC, RPC—and do straightforward calculations to determine your
ROI. This knowledge is important because people are willing to pay a lot for advertising if it actually
works. But in the pre-internet magazine age before Google, ad people never really had a clue about
how they were doing.

Zynga has excelled at building on top of Google’s ad work. Everyone knows that Zynga experienced
great viral growth as its games caught on. Less known is that they spent a lot of money on targeted
advertising. That allowed them to monetize users much more aggressively than people thought
possible. And then Zynga used that revenue to buy more targeted ads. Other gaming companies tried

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to do just viral growth—build games that had some social element at their core. But Zynga went
beyond that distribution strategy and got a leg up by driving rapid growth with aggressive marketing.

The standard bias on the internet is that advertising does not work. But that’s an interesting double
standard. There are an awful lot of websites whose businesses model is ad sales. And then they turn
around and say that they don’t actually believe ads are good way of getting customers. The Zynga
experience shows that creatively rethinking the standard narrative can be quite lucrative. There is a
lot of room for creativity in distribution strategy.

E. Viral Marketing

Viral marketing is, of course, the classic distribution channel that people tend to think of as
characteristic of Internet businesses. There are certainly ways to get it to work. But it’s easy to
underestimate how hard it is to do that. William Shatner and James Doohan seemed similar. In fact
they were a world apart. Salesmen may seem similar. But some get Cadillac’s, while others get steak
knives. Still others get fired and end up as characters in novels.

[Section on viral marketing math excluded. You can learn about this stuff elsewhere, e.g. here. The
gist is twofold: first, viral cycle time is important. Shorter is better. Second, there is a metric called
viral coefficient, and you need it to be > 1 to have viral growth.]

PayPal’s initial user base was 24 people. Each of those people worked at PayPal. They all knew that
getting to viral growth was critical. Building in cash incentives for people to join and refer others did
the trick. They hit viral growth of 7% daily—the user base essentially doubled every 10 days. If you
can achieve that kind of growth and keep it up for 4-5 months, you have a user base of hundreds of
thousands of people.

Certain segments grow fasters than others. The goal is to identify the most important segment first, so
that anybody who enters the market after you has a hard time catching up. Consider Hotmail, for
instance. It achieved viral growth by putting sign-up advertising at the bottom of each e-mail in their
system. . Once they did that successfully, it was really hard to copy with the same success. Even if
other providers did it and had similar growth curves, they were a whole segment behind. If you’re the
first mover who is able to get a product to grow virally, no one else can catch up. Depending on how
the exponential math shakes out in a particular case, the mover can often be the last mover as well.

PayPal is a classic example. The first high-growth segment was power buyers and power sellers on
eBay. These people bought and sold a ton of stuff. The high velocity of money going through the
system was linked to the virality of customer growth. By the time people understood how and why
PayPal took off on eBay, it was too late for them to catch up. The eBay segment was locked in. And
the virality in every other market segment—e.g. sending money to family overseas—was much lower.
Money simply didn’t move as fast in those segments. Capturing segment one and making your would-
be competitors scramble to think about second and third-best segments is key.

Dropbox is another good example of a very successful company that depended on viral growth.
Pinterest may be as well. It’s sort of hard to tell at this point. Is Pinterest actually good? Or is it a fad?
Will it become a ghost town that no one uses? It’s not entirely clear. But it has certainly enjoyed
exponential growth.

Marketing people can’t do viral marketing. You don’t just build a product and then choose viral
marketing. There is no viral marketing add-on. Anyone who advocates viral marketing in this way is
wrong and lazy. People romanticize it because, if you do it right, you don’t have to spend money on
ads or salespeople.But viral marketing requires that the product’s core use case must be
inherently viral. Dropbox, for example, let’s people share files. Implicit is that there’s someone—a

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potential new user—to share with. Spotify does this with its social music angle. As people use the
product, they encourage other people to use it as well. But it’s not just a “tell your friends” button that
you can add-on post-product.

F. The Power Law Strikes Again

We have seen how startup outcomes and VC performance follow a power law. Some turn out to be a
lot better than others. People tend to underestimate how extreme the differences are because our
generally egalitarian society is always telling us that people are essentially the same.

We’ve also heard Roelof Botha explain that LinkedIn was the exception that proves the rule that
companies do not have multiple revenue streams of equal magnitude. The same is true for
distribution, and exceptions are rare. Just as it’s a mistake to think that you’ll have multiple equal
revenue streams, 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. If you are an enterprise software company with a sales team, your key
strategic question is: who are the people who are most likely to buy the product? That will help you
close in on a good channel. What you want to avoid is not thinking hard about which customers are
going to buy it and just sending your sales team out to talk to everybody.

Distribution isn’t just about getting your product to users. It’s also about selling your company to
employees and investors. The familiar anti-distribution theory is: the product is so good it sells itself.
That, again, is simply wrong. But it’s also important to avoid the employee version: this company is so
good, people will be clamoring to join it. The investor version—this investment is so great, they’ll be
banging down our door to invest—is equally dangerous. When these things seem to happen, it’s
worth remembering that they almost never happen in a vacuum. There is something else going on
that may not be apparent on the surface.

G. PR and Media

PR and Media add yet another layer to the distribution problem. How the message of your company
gets distributed is worth thinking hard about. PR and media are very linked to this. It is a sketchy and
very problematic world. But it’s also very important because we live in a society where people don’t
usually have a rational idea of what they want.

Consider an example from the VC world. It’s almost never the case that a company finds just one
interested investor. There are always zero or several. But if the world were economically rational, this
wouldn’t be true at all. In a perfectly rational world, you’d see single investor deals all the time. Shares
would be priced at the marginal price where you get a single highest bidder—your most bullish
prospective investor. If you get more than one person interested in investing, you’ve done it wrong
and have underpriced yourself. But investors obviously aren’t rational and can’t all think for
themselves. So you get either zero investors or many.

It’s easy and intuitive for smart people to be suspicious of the media. For many years, Palantir had a
very anti-media bias. But even if media exposure wasn’t critical for customers or business partners, it
turned out to be very important for investors and employees. Prospective employees Google the

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companies they’re looking at. What they find or don’t matters, even if it’s just at the level of people’s
parents saying “Palantir? Never heard of it. You should go work at Microsoft.” And you can’t just plug
yourself on your own website; PR is the art of getting trusted, objective third parties to give you press.

H. On Uncertainty

It’s fairly difficult to overestimate how uncertain people are and how much they don’t know what they
actually want. Of course, people usually insist that they arecertain. People trick themselves into
believing that they do know what they want. At the obvious level, “Everyone wants what everyone
wants” is just a meaningless tautology. But on another level, it describes the dynamic process in
which people who have poorly formed demand functions just copy what they believe everyone else
wants. That’s how the fashion world works, for instance.

V. Distribution is Inescapable

Engineers underestimate the problem of distribution. Since they wish it didn’t exist, sometimes they
ignore it entirely. There’s a plot line from The Hitchhiker’s Guide to the Galaxy in which some
imminent catastrophe required everybody to evacuate the planet. Three ships were to be sent into
space. All the brilliant thinkers and leaders would take the A ship. All the salespeople, consultants,
and executives would take the B ship. All the workers would take the C ship. The B ship gets
launched first, and all the B passengers think that’s great because they’re self-important. What they
don’t realize, of course, is that the imminent destruction story was just a trick. The A and C people just
thought the B people were useless and shipped them off. And, as the story goes, the B ship landed
on Earth.

So maybe distribution shouldn’t matter in an idealized, fictional world. But it matters in this one. It can’t
be ignored. The questions you must ask are: how big is the distribution problem? And can this
business solve it?

We live in a society that’s big on authenticity. People insist that they make up their own minds. Ads
don’t work on them. Everything they want, they want authentically. But when you drill down on all
these people who claim to be authentic, you get a very weird sense that it’s all undifferentiated.
Fashionable people all wear the same clothes.

Understanding this is key. You must appreciate that people can only show tip of the iceberg.
Distribution works best when it’s hidden. Question is how big the iceberg is, and how you can
leverage it. Every tech company has salespeople. If it doesn’t, there is no company. This is true even
if it’s just you and a computer. Look around you. If you don’t see any salespeople, you are the
salesperson.

Corporate development is important for the same reasons that distribution is important. Startups tend
to focus—quite reasonably—on the initial scramble of getting their first angel or seed round. But once
it scales beyond that—once a company is worth, say, $30m or more—you should have a full-time
person whose job it is to do nothing but travel around the world and find prospective investors for your
business. Engineers, by default, won’t do this. It’s probably true that if your company is good,
investors will continue show up and you’ll have decent up rounds. But how much money are you
leaving on the table?

Say your company could reasonably be valued at $300m. Valuation is as much art as it is science. At
that range it can fluctuate by a ratio of 2:1. If you raise $50m at $300m, you give away 16% of the
company. But if you raise that $50m at $500m, you give away 10%. A 6% delta is huge. So why not
hire the best person you can and give them 1% of the company to make sure you capture that value?

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A similar thing exists with employee hiring. It’s trickier to know what to do there. But traditional
recruiters do not take the distribution problem seriously enough. They assume that people are always
rational, and that by giving them information, people will make good decisions. That’s not true at all.
And since the best people tend to make the best companies, the founders or one or two key senior
people at any multimillion-dollar company should probably spend between 25% and 33% of their time
identifying and attracting talent.

Getting traction – Gabriel Weinberg 
http://www.gabrielweinberg.com/blog/2010/04/in‐the‐pursuit‐of‐traction‐have‐you‐considered‐all‐
verticals.html 

Traction Verticals

By  

Gabriel Weinberg 

April 27, 2010 7:43 AM

The second major thing I've learned from interviewing people on getting tractionis
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.)

Given that the first inflection point is unpredictable, it makes sense to consider all traction "verticals" in
the pursuit of product/market fit. Here's a list I hope to make exhaustive over time (by updating this
post).

Note: this list is no particular order.

Traditional PR. Justin.tv gained an early loyal following from getting written up in national
newspapers. Justin Kan tells the story in my interview with him.

Non-traditional PR, e.g. Publicity Stunts. Josh Kopelman had a town renamed half.com, which got
him on a lot of national TV shows. He tells the story here.

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Search Engine Marketing (SEM). At NextTag, Mark Cramer bought mortgage ads off of Google and
found a way to monetize them (for more than he paid). He explains the tactic in my second interview
with him.

Non-SEM Online Ads. DuckDuckGo has gotten some success out of reddit ads. There's also lots of other
platforms, e.g. Facebook, StumbleUpon, MySpace. Then there are thousands of smaller sites that will take
your ads directly.

Search Engine Optimization (SEO). At Bingo Card Creator, Patrick McKenzie operates a collection of
sites that get hundreds of thousands of people each year interested in his offerings coming in for free
from organic search (mainly through Google). He walks through in detail how it all works in my
interview with him.

Business Development (BizDev). Kayak secured an early partnership deal with AOL. Paul English tells
the story in my interview with him.

Target Market Blogs. Reddit gained early users after Paul Graham mentioned them in one of his
essays. Alexis Ohanian talks about it my interview with him.

Your Blog. SEOMoz eventually took off after years of tireless blogging. Rand Fishkin tells us about it
in my interview with him.

Community Building. At Wikipedia, Jimmy Wales spent a lot of initial effort courting early editors and
building a community around them. He recalls the history in my interview with him.

Viral. Posterous took off through posting and sharing. Garry Tan recounts the series of events inmy
interview with him.

Trade Shows. Steve Welch gained momentum for Mitos through innovative marketing at industry
conferences. He tells us how it happened in my interview with him.

Speaking Engagements, e.g. Conferences. Eric Ries told me (after our interview) that his blog really
got traction after he started doing speaking engagements.

Open Source. Zimbra took hold by making their product open source. Statish Dharmaraj opines on the
strategy in my interview with him. You could consider this a special case of the next vertical.

Existing Platforms. SurfCanyon has gotten 1.5M downloads of their Firefox add-on. Mark Cramer
explains how in my interview with him. And of course don't forget iPhone/iPad, Twitter, Facebook,
LinkedIn, Ning, etc.

Sales. Steve Barsh kick-started his company through endless cold-calling and networking, which he talks
about in my interview with him. In my interview with Todd Vollmer, Todd lays out a pretty
comprehensive approach to startup selling.

Creating a Popular Event. I think the recent Startup Lessons Learned conference by Eric
Ries andCharles Hudson is a good example of this strategy.

Here are other verticals I know about though don't have great examples for yet:

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Off-line Ads. I've heard infomercials can work wonders for the right products. And of course there is TV,
radio, billboards, magazines, newspapers, etc.

Buying Smaller Sites. I've heard axod bought a site to jump-start Mibbit. Can I interview you about it?

I'm sure there are more, and I'd appreciate you sharing your examples and stories. I hope to do at least
one interview on each vertical for the book I'm doing on getting traction.

As you can see from the above, basically everyone I've interviewed has gotten traction from a different
vertical. Yes, partially that was by my design (in the picking of interviewees). However, it is clear that
usually they didn't start out thinking they would get traction from that particular vertical. So I think it
makes sense to systematically examine each of them and brainstorm how they might work for your
startup.

Engaging new users – Chris Dixon 
http://cdixon.org/2010/12/26/the‐thin‐edge‐of‐the‐wedge‐strategy/ 

December 26, 2010

The “thin edge of the wedge” strategy

Establishing relationships with new users is the hardest part of growing a startup. For consumer
products establishing relationships can mean many things: installs, registrations, purchases, or even
just getting users to think of your website as a place to go for certain purposes. For B2B products,
establishing relationships means getting internal users or testers and eventually contracts and
payments. For business development partners – for example API/widget partners – establishing
relationships usually means getting functionality embedded in partners’ products (e.g. a widget on
their website).

One common strategy for establishing this initial relationship is what is sometimes known as the “thin
edge of the wedge” strategy (aka the “tip of the spear” strategy). This strategy is analogous to
the bowling pin strategy: both are about attacking a smaller problem first and then expanding
out. The difference is that the wedge strategy is about product tactics while the bowling pin strategy
is about marketing tactics.

Sometimes the wedge can be a simple feature that existing companies overlooked or saw as
inconsequential. The ability to share photos on social networks was (strangely) missing from the
default iPhone camera app (and sharing was missing from many third-party camera apps like
Hipstimatic that have popular features like lo-fi camera filters), so Instagram and Picplz filled the
void. Presumably, these startups are going to try to use mobile photo sharing as the wedge into
larger products (perhaps full-fledged social networks?).

Sometimes the wedge is a “single player mode” – a famous example is early adopters who used
Delicious to store browser bookmarks in the cloud and then only later – once the user base hit critical
mass – used its social bookmarking features. Other times the wedge lies on one side of a two-sided
market, in which case the wedge strategy could be thought of as a variant of the “ladies night”
strategy. I’m told that OpenTable initially used the wedge strategy by providing restaurants with

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terminals that acted like simple, single-player CRM systems. Once they acquired a critical mass of
restaurants in key cities (judiciously chosen using the bowling pin strategy), opentable.com had
sufficient inventory to become useful as a one-stop shop for consumers.

Critics sometimes confuse wedge features with final products. For example, some argue that mobile
photo sharing is “just a feature,” or that game mechanics on geo apps like Foursquare are just faddish
“toys.” Some go so far as to argue that the tech startup world as a whole is going through a phase of
just building “dinky” features and companies. Perhaps some startups have no plan and really are just
building features, likely with the hope of flipping themselves to larger companies. Good startups,
however, think about the whole wedge from the start. They build an initial user base with simple
features and then quickly iterate to create products that are enduringly useful, thereby creating
companies that have stand-alone, defensible value.

Demand harvesting – Sean Ellis 
http://startup‐marketing.com/demand‐harvesting‐the‐easiest‐driver‐for‐startups/ 

Feb 25th 08

Demand Harvesting – The Easiest Driver for Startups

I always begin a new startup marketing assignment by looking for any untapped existing
demand. Demand harvesting is much easier than demand creation – and it has a faster sales
cycle. You don’t have to convince someone they need your category of product, you just need to be
easier to find/buy and have a better value proposition than the other guys.

The first question to ask is “where would someone seek my product category?” Twenty years ago the
most obvious answer would have been the yellow pages, but today it is Google. A lot of information
has been published on getting the most out of SEO or SEM and there are also many experts you can
tap in this area. Beyond Google, I’ve found it is helpful to survey existing users for other places they
would potentially look. It’s great news when discover healthy demand for your product category.

The next step is to analyze the solutions competing for that demand. The best situation is to discover
heavy unmet demand and no competition. That is about as likely as winning the lottery, so don’t
count on it. More realistically, there will be a few companies with varying offers competing for that
demand. In this case, you should hope for weak execution from these existing competitors. If you
can be significantly more effective at extracting money from each prospect, you can afford a more
prominent promotion at the initial point of connection and begin capturing market share.

If you discover that the existing competitors are executing well, you’ll have to differentiate your offer
with a better value proposition for at least a segment of the existing prospects. This was the situation
in my last company. We faced a well entrenched competitor who was harvesting the majority of
existing demand and spending millions every month creating new demand. Rather than simply trying
to out-execute them (they were extremely efficient), we decided to counter with a free-to-premium
offer.

This gave us a high response rate among existing main category searchers but also played into a
new trend that had been developing over the last few years. In discovering a new expensive
software solution, many prospective customers now check for free alternatives. For this new
segment of demand, we quickly became the dominant market player. Once we had these users
engaged on the free product, we could patiently upsell various complementary premium services.

184 
 
Whether competing for existing demand or creating a brand new product category, you’ll eventually
have to begin creating demand. This is a much more difficult and unpredictable art that I’ll cover in a
future post.

Measuring user engagement ‐ Andrew Chen 
http://andrewchenblog.com/2008/09/08/how‐to‐measure‐if‐users‐love‐your‐product‐using‐cohorts‐and‐
revisit‐rates/ 

How to measure if users love your product using cohorts and revisit rates

Do users really love your product?

If they did, how would you be able to tell?

I would argue that the single most telling metric for a great product is how many of them
become dedicated, repeat users. This angle of thinking naturally leads to a number of metrics
around user retention, which we’ll examine in this blog post.

User retention is especially important for social web products. Failure to consider the backend
retention of a userbase can lead to catastrophic results – in particular, without the proper mechanics
in place, it’s easy to hit the “shark fin” user curve, as well as the death spiral caused by reverse
Metcalfe’s Law. In both cases, once the core audience of a site starts to erode, then the erosion can
cause a negative feedback loop that causes the entire audience to fall away.

This raises a series of questions:

What are the right metrics to track for user retention?

(And as a corollary, what are the wrong ones?)

What is a “good” retention number? What are bad retention numbers?

185 
 
How do you optimize and improve retention rates?

Let’s tackle these below.

Retention versus Engagement

First off, there’s an important distinction between engagement versus retention, which some folks
often track in one bucket. I generally define retention is simply the act of getting users BACK to revisit,
regardless of their actual activity on the site. Contrast this with engagement, which measures how
much time they spend with the product, how many features they interact with, etc.

An implication of this is that the right metric to follow is visits rather than something like pageviews or
time-on-site.

Here are a couple examples of the separation of engagement versus retention:

Google is a high retention, low engagement site

MySpace is a high retention, high engagement site

News sites are often medium/high retention, low engagement sites (like checking a headline)

etc.

Note the important point that engagement doesn’t necessarily correlate with monetization. Because
many retail sites and reference properties are transactional in nature, oftentimes this implies that the
closer you are to the money, the lower the engagement is.

Keep this in mind for people who espouse “addictiveness” and “engagement” as virtues for social
media sites.

Retention versus Acquisition

Secondly, there’s the important issue of how to disambiguate newly acquired users from retained
users. The problem with a traffic graph that’s going up-and-to-the-right is that it’s not clear what’s
really happening – is the site bringing in lots of new users? Or is there a bunch of dedicated users that
are extended their engagement? You need to figure out which of 4 scenarios are actually happening,
which I’ve blogged previously about:

Pageviews are coming ONLY from new users

Pageviews are coming ONLY from one generation of users (like early adopters)

Pageviews are coming ONLY from retained users

Pageviews are coming from new users and retained users

The proper way to disambiguate retention from acquisition is to precisely track the following stats:

How many new users are joining the site?

Of these new users, what are the different funnels they are joining from? (be it SEO, direct navigation,
etc.)

Then you separate out these users completely from the aggregate numbers, and the remaining folks
you have left are ones who are coming back to the site. You can then further segment this group by
cohort, which we’ll discuss below.

186 
 
Building your first retention table: User cohorts vs Revisit rates
Using the points from above, you can now build a retention table that compares how many users are
coming back. This table starts with three columns:

Time period the user joined

Number of users that joined that period

Revisit percentage rate

The reason why you separate it out into cohorts is that it gives the ability to compare performance of
the site over time. As new product features are added, ideally the revisit rates would also continue to
rise.

Let’s put this together in a table, imagining that we’re at Week 5:

Time period  User count Revisit rate

Week 1 
1000  28% 
(4 wks ago) 

Week 2 
1100  26% 
(3 wks ago) 

Week 3 
1210  23% 
(2 wks ago) 

Week 4 
1331  15% 
(1 wk ago) 

Week 5 
1464  0% 
(now) 

A couple points on the above table:

Looking back as Week 5, you can see that Week 1 is now the “oldest” cohort, and those users have
had many weeks to revisit the site

The overall userbase is growing 10% per week, starting with an initial userbase of 1000

The revisit rate is naturally <100% since whatever initial cohort you start out with, it can only decrease
but not increase

Note that the retention rate of the site seems to be around 30%, although you’d want to let the Week
1 cohort run for a while and see if it eventually stabilizes

Week 5 is currently at 0% since in this example the week just started and no users have revisited yet

The actual number of visits on any given day is weird to calculate using this table, since the view is
not based on aggregate numbers

187 
 
The key metric is really the number that the revisit rate converges to. You can use this number in your
traffic models to understand whether you should be focused on acquiring new users, or if you can
simply focus on extending the engagement levels of your site.

What’s your revisit rate? (Using Google Analytics to approximate it)

Google Analytics gives you an overall number for free, with some caveats. You can access this
feature on the lefthand nav through “Visitors”, then “New vs. Returning.” Basically this is an OK
approximation of the revisit rate, as long as you:

Maximize the window in which you are doing the analysis (ideally starting the analytics window when
the site was first made public), otherwise the numbers will skew high since you’ll be counting too
many dedicated users

Ideally, the site would isn’t adding exponentially more users every day, since it would skew lower
because newer users are less likely to have returned

Essentially there’s some skew that comes into play since Google Analytics doesn’t let you segment
your users based on when they first joined the site.

Willing to share?
For readers who are willing to share the numbers on their site, please comment below and if I get
enough responses I’ll do a followup blog post on the subject.

Building networks – Chris Dixon 
http://cdixon.org/2010/08/21/the‐bowling‐pin‐strategy/ 

August 21, 2010

The bowling pin strategy

A huge challenge for user-generated websites is overcoming the chicken-and-egg problem:

attracting users and contributors when you are starting with zero content. One way to approach this
challenge is to use what Geoffrey Moore calls the bowling pinstrategy: find a niche where the
chicken-and-egg problem is more easily overcome and then find ways to hop from that niche to other
niches and eventually to the broader market.

Facebook executed the bowling pin strategy brilliantly by starting at Harvard and then spreading out
to other colleges and eventually the general public. If Facebook started out with, say, 1000 users
spread randomly across the world, it wouldn’t have been very useful to anyone. But having the first
1000 users at Harvard made it extremely useful to Harvard students. Those students in turn had
friends at other colleges, allowing Facebook to hop from one school to another.

Yelp also used a bowling pin strategy by focusing first on getting critical mass in one location – San
Francisco – and then expanding out from there. They also focused on activities that (at the time)
social networking users favored: dining out, clubbing and shopping. Contrast this to their direct
competitors that were started around the same time, were equally well funded, yet have been far
less successful.

How do you identify a good initial niche? First, it has to be a true community – people who have
shared interests and frequently interact with one another. They should also have a particularly strong
need for your product to be willing to put up with an initial lack of content. Stack Overflow chose

188 
 
programmers as their first niche, presumably because that’s a community where the Stack Overflow
founders were influential and where the competing websites weren’t satisfying demand. Quora chose
technology investors and entrepreneurs, presumably also because that’s where the founders were
influential and well connected. Both of these niches tend to be very active online and are likely to
have have many other interests, hence the spillover potential into other niches is high. (Stack
Overflow’s cooking site is growing nicely – many of the initial users are programmers who crossed
over).

Location based services like Foursquare started out focused primarily on dense cities like New York
City where users are more likely to serendipitously bump into friends or use tips to discover new
things. Facebook has such massive scale that it is able to roll out its LBS product (Places) to 500M
users at once and not bother with a niche strategy. Presumably certain groups are more likely to use
Facebook check-ins than others, but with Facebook’s scale they can let the users figure this out
instead of having to plan it deliberately. That said, history suggests that big companies who rely on
this “carpet bombing strategy” are often upended by focused startups who take over one niche at a
time.

The cardinal sin of community management – Eric Ries 
http://www.startuplessonslearned.com/2009/09/cardinal‐sin‐of‐community‐management.html 

Friday, September 11, 2009

The cardinal sin of community management

Once you have a product launched, you will the face the joys – and the despair – of a community that grows up 
around it. I won’t sugar‐coat this: it is one of the most difficult and frustrating aspects of building a company 
online.

There are many articles by many experts (myself included) extolling the virtues of listening to customers. In 
fact, there are so many of these propaganda pieces that this question might naturally cross your mind: if 
listening to customers is so great, why do we need so much propaganda? I’ll tell you the honest truth: listening 
to customers is gruesome, uncomfortable, and painful work. Sure it has its moments, but then so does getting 
stranded on a desert island. 

Yet few products these days can succeed without their online community, and the insight you can gain from 
interacting with that community is unparalleled, despite the pain. But to take advantage of that learning, you 
have to avoid the absolutely one and only cardinal sin of community management: not listening. 

This probably sounds illogical. Communities care about lots of things, like how good your product is, how much 
information you give them, how you defend them from trolls, right? And when you’re being pilloried by 
community members over the latest mistake your company made, it can doubly confusing. After all, people 
rarely say they are mad because they are not being heard. But just because they don’t say it doesn’t mean that 
it’s not true. 

Let me give an especially painful example. At a certain point in IMVU’s development, we faced a difficult 
choice. Some of our most passionate early adopters were using IMVU’s user‐generated content capabilities to 
create illicit content. As you can imagine, this was a lucrative customer segment. But it became clear that if 
IMVU was ever going to become a mainstream business, we had to effectively fire these early customers. The 
reasons were many and complex, so I won’t rehash them all here. Suffice to say that our partners, vendors, and 
most importantly regular mainstream customers all found the idea disturbing. So we had to start enforcing 
new content policies that restricted what kinds of virtual goods could be bought and sold on IMVU. 

189 
 
We did not take this step lightly. We did a lot of analysis to make sure that we were minimizing the number of 
customers affected. For example, we spent some time researching the usage of virtual goods that would be 
disallowed under the new policy and were relieved to discover that they accounted for less than 0.1% of all 
usage. So we felt confident that removing them wouldn’t have too big an impact. We couldn’t have been more 
wrong. 

This single decision wound up costing the company significant revenue and over the course of several months 
sent its customer growth into decline. We were totally unprepared for the magnitude of what happened. In the 
end, we managed to repair the damage, but only after losing a lot of time and at significant opportunity cost. 
This was one of those catastrophes that shouldn’t have happened. We carefully rolled out the change in stages. 
We did our best to actively communicate why we were making the change, and we tried to put in place policies 
that treated affected customers fairly. 

Yet none of that mattered, because we violated the cardinal rule. We didn’t listen. More accurately, we made 
our customers feel like we weren’t listening. And until we could make that right, we kept on hemorrhaging 
business. 

The problem was that although very few customers were affected by the changes in policy, many more were 
anxious about those changes. We tried to be low‐key about the roll‐out of these changes, so as not to call 
attention to it, but our silence on the subject simply served to make room for conspiracy theories about what 
was really going on. And, because the people complaining were yelling and screaming, we thought the right 
response was to ignore them and wait for them to leave. After all, someone who is writing ten‐page posts 
about how they are going to abandon your product is presumably going to go away, right? That’s why one of 
the most important maxims in online communities is “don’t feed the trolls.” People who thrive on creating 
controversy through volume, repetition and hyperbole don’t really want to be heard. They just want attention, 
and giving it to them just encourages more reckless behavior. 

But silence was the worst possible strategy. For months, we made constant product and policy changes, trying 
to end the controversy without simply undoing our original decision and abandoning the mainstream market. 
Nothing worked, until we finally had one of our community managers start talking to real customers on the 
phone. Then the reality of our problem hit us. 

Most normal customers – even among early adopters ‐ do not pay attention to the trolls. They don’t participate 
heavily in the forums, and they don’t send email when they are dissatisfied. They are largely invisible in the 
normal channels where customer service and community management pays attention. But that doesn’t mean 
they are not aware of what’s going on, or that they don’t care deeply about it. It turned out that our customers 
had gotten a clear message, one that we had never intended to send: that IMVU was becoming a teen‐only 
site. We were totally shocked. Adults, even those that aren’t at all interested in racy content, were our best 
customers. We had built numerous features specifically for them, and often had to contend with charges from 
teenagers that we were too adult‐friendly (these two segments don’t really like hanging out with each other as 
a rule). 

When we actually started listening, things changed fast. First of all, we discovered what wasreally upsetting 
our customers. They had come to rely on the fact that IMVU was one of the very few online communications 
platforms where verified adults could meet one another. This was an unintended side‐effect of our earlier 
content policies, that required age verification before you could buy unrated content from our catalog. It turns 
out many of our best customers were becoming age verified and then not buying any “adult” content. They 
enjoyed being treated like adults and having a way to chat online with other adults. Again, this was not about 
prurient content. Avatars make it possible to meet other people as they would like to be perceived. Mostly, 

190 
 
that’s a good thing – many people believe their avatar is a more authentic representation of their true self than 
their physical appearance. But it also has some drawbacks. In the middle of a serious conversation on the joys 
of motherhood or the stress of a career you might realize that the person you’re talking to is only 15. That can 
be a jarring juxtaposition of physical reality that breaks the suspension of disbelief. 

It took me a long time to understand that benefit of our product. Most customers couldn’t articulate it; they 
just knew they were angry that we had ruined it. Except that, from a literal point of view, we hadn’t ruined it. 
All of the features that enabled that experience were still there. What we had done to ruin it was make our 
customers feel like they were not welcome anymore. We kept denying that we had done anything wrong, that 
the features still worked as advertised, and justifying our decisions instead of apologizing. When we finally 
understood the problem, fixing it was relatively easy. We made a series of very public declarations that IMVU 
would always support adults, that we appreciated their unique contribution, and that we would always protect 
the key features that meant the most to them. The fact that pornography was not one of these key features 
was besides the point. We had summarily turned off one of their features without consulting them and without 
remorse. Who knew what feature might be next? 

So real listening can head off a crisis in progress. But it also has other powers. For example, consider a common 
case of a minimum viable product. Since this product is necessarily missing a lot of features, those of us who 
ship them often want to duck the feedback. After all, it’s likely to be something we already know. In fact, I used 
to have the urge to argue with customers who gave feedback like “hey, idiot, you’re missing feature X.” I used 
to respond with something like, “I know, but it’s on our road map and we’re already working on it and we don’t 
really want feedback about that right now and so please get off my back.” You can imagine the field day the 
trolls had with that. 

Eventually, we learned a better way. Feedback that tells you something you already know is still quite valuable. 
It gives you a hint that you are on the right track, but it also tells you quite a lot about the person giving you the 
feedback – that they believe in the path that you are on. For an early adopter, having this insight acknowledged 
and validated is a powerful experience. So we learned to take the time to say “thank you for your suggestion. 
Thanks to you, we’re going to prioritize feature X.” Then, when feature X finally did come out, every early 
adopter who suggested it feels an earned sense of ownership over it. Here’s the best part. They will also defend 
you against future attackers and trolls. 

Collectively, an online community has an unlimited amount of time to spend. Even if you and your community 
managers are a hundred times smarter and more productive than the members of your community, there is 
absolutely no way that you can keep up with its sheer volume of energy. So you can’t fight an online 
community and hope to win the argument. The only way to have your point of view prevail is to have members 
of the community invest their unlimited time and energy in evangelizing it. And that’s what really, truly, 
actively listening does. It sends a signal to passionate customers that you care, that you want them on your 
side, and that they are part owners of your vision. In fact, I am convinced that if you could find some of IMVU’s 
earliest adopters, they would say something like this: “sure, those guys at IMVU HQ were helpful in writing 
code and stuff, but in the end they were just the hired help. It was really the community who built that 
product.” Imagine what happens when a troll shows up and starts bad‐mouthing you. Those earlyvangelists (to 
borrow Steve Blank’s phrase) will defend you. 

I have seen this dynamic time and again. As a creator of products (and now an author, too), it’s one of the 
things that keeps me going. When your customers become your allies, there’s almost nothing you can’t 
accomplish together. 

191 
 
There’s only one catch. You can’t stop listening. If you do, as IMVU found out to our peril, you break the implicit 
bargain that made you allies in the first place. And when your defenders join forces with your trolls, there’s no 
way to have your message heard. 

That’s why not listening is the cardinal sin of community management. Any other mistake can be overcome: 
shipping bad product, removing key features, erroneously banning community members, even kicking out a 
whole segment of customers. And when those allies feel unheard, you simply can’t do anything right. Every 
little thing becomes a crisis. Choose wisely. 

   

192 
 
 Consumer psychology 
Consumer psychology 

The psychology of fear (and conflict) – Peter Thiel (Blake Masters) 
http://blakemasters.tumblr.com/post/23250566538/peter‐thiels‐cs183‐startup‐class‐12‐notes‐essay Peter
Thiel’s CS183: Startup - Class 12 Notes Essay

Here is an essay version of my class notes from Class 10 of CS183: Startup. Errors and omissions
are mine.

Reid Hoffman, co-founder of LinkedIn and Partner at Greylock Partners, joined this class as a guest
speaker. Credit for good stuff goes to him and Peter. I have tried to be accurate. But note that this is
not a transcript of the conversation.

Class 12 Notes Essay—War and Peace

I. War Without

For better or for worse, we are all very well acquainted with war. The U.S. has been fighting the War
on Terror for over a decade. We’ve had less literal wars on cancer, poverty and drugs.

But most of us don’t spend much time thinking about why war happens. When is it justified? When is
it not? It’s important to get a handle on these questions in various contexts because the answers often
map over to the startup context as well. The underlying question is a constant: how can we tilt away
from destructive activity and towards things that are beneficial and productive?

A. Theater

It often starts as theater. People threaten each other. Governments point missiles at each other.
Nations become obsessed with copying one another. We end up with things like the space race.
There was underlying geopolitical tension when Fischer faced off with Spassky in the Match of the
Century in 1972. Then there was the Miracle on Ice where the U.S. hockey team defeated the Soviets
in 1980. These were thrilling and intense events. But they were theater. Theater never seems all that
dangerous at first. It seems cool. In a sense, the entire Cold War was essentially theater—instead of
fighting and battles, there was just an incredible state of tension, rivalry, and competition.

There are ways in which competition and war are powerfully motivational. The space race was
incredibly intense. People worked extremely hard because they were competing against Russians on
other side. Things get so intense that it becomes quite awkward when the rivalry ends. The space
race ended in 1975 with the Apollo-Soyuz Test Project, where the U.S. and Soviet Union ran a joint
space flight. No one was quite sure how it would play out. Was everyone just going to become friends
all of a sudden?

So war can be a very powerful, motivational force. It pushes people to try and improve themselves.
It’s like wimpy kid who orders a Charles Atlas strength-training book, bulks up, and pummels the bully
that’s been tormenting him.

B. Psychology

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But the Charles Atlas example illustrates more than just the motivational aspect of war. When people
are myopically focused on fighting, they lose sight of everything else. They begin to look very much
like their enemy. The skinny kid bulks up. He becomes the bully, which of course is exactly what he
had always hated. A working theory is thus that you must choose your enemies well, since you’ll soon
become just like them.

This is the psychological counterpoint to the economic discussion we had in classes three and four. In
world of perfect competition, no one makes any profit. Economic profits are competed away. But the
economic version is just a snapshot. It illustrates the problem, but doesn’t explain why people still
want to compete. The Kissinger line on this was that “the battles are so fierce because the stakes are
so small.” People in fierce battles are fighting over scraps. But why? To understand the static
snapshot, you have to look to the underlying psychology and development. It unfolds like this: conflict
breaks out. People become obsessed with the people they’re fighting. As things escalate, the fighters
become more and more alike. In many cases it moves beyond motivational theater and leads to all
out destruction. The losers lose everything. And even the winners can lose big. It happens all the
time. So we have to ask: how often is all this justified? Does it ever make sense? Can you avoid it
altogether?

C. Philosophies of Conflict

There are two competing paradigms one might use to think about conflict. The first is the Karl Marx
version. Conflict exists because people disagree about things. The greater the differences, the greater
the conflict. The bourgeoisie fights the proletariat because they have completely different ideas and
goals. This is the internal perspective on fighting; there is an absolute, categorical difference between
you and your enemy. This internal narrative is always a useful propaganda tool. Good vs. evil is
powerfully motivational.

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The other version is Shakespeare. This could be called the external perspective on fighting; from the
outside, all combatants sort of look alike. It’s clear why they’re fighting each other. Consider the
opening line from Romeo and Juliet:

Two households, both alike in dignity,

Two houses. Alike. Yet they seem to hate each other. In a very dynamic process, they grow ever
more similar as they fight. They lose sight of why they’re fighting to begin with. Consider Hamlet:

Exposing what is mortal and unsure

To all that fortune, death, and danger dare, 

Even for an eggshell. Rightly to be great 

Is not to stir without great argument, 

But greatly to find quarrel in a straw 

When honor’s at the stake. 

To be truly great, you have to be willing to fight for reasons as thin as an eggshell. Anyone can fight
for things that matter. True heroes fight for what doesn’t matter. Hamlet doesn’t quite achieve
greatness; he’s too focused on the external narrative of how meaningless everything is. He never can
bring himself to fight.

II. War Within

A. What’s Past is Prologue

So which perspective is right in the tech world? How much is Marx? How much is Shakespeare?

In the great majority of cases, it’s straight Shakespeare. People become obsessed with their
competitors. Companies converge on similarity. They grind each other down through increased
competition. And everyone loses sight of the bigger picture.

Look at the computer industry in the 1970s. It was dominated by IBM. But there were a bunch of other
players, like NCR, Control Data, and Honeywell. Note that those are longer common names in
computer technology. At the time, all these companies were trying to build mini computers that were
competitive with IBM’s. Each offering was slightly different. But conceptually they were quite similar.
As a result of their myopia, these companies completely missed the microcomputer. IBM managed to
develop the microprocessor and eclipsed all its competitors in value.

The crazy ‘90s version of this was the fierce battle for the online pet store market. It was Pets.com vs.
PetStore.com vs. Petopia.com vs. about 100 others. The internal narrative focused on an absolute
fight to dominate online pet supplies. How could the enemy be defeated? Who could afford the best
Super Bowl ads? And so on. The players totally lost sight of the external question of whether the
online pet supply market was really the right space to be in. The same was true of Kozmo, Webvan,
and Urban Fetch. All that mattered was winning. External questions that actually mattered—Is this
war even worth fighting?—were ignored.

You can find this pattern everywhere. A particularly comic example is Oracle vs. Siebel. Oracle was a
big database software company. Siebel was started by a top salesman form Oracle—so there was a
dangerously imitative and competitive dynamic from the outset. Siebel tried to copy Oracle almost

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exactly, right down to similar office design. It sort of started as theater. But, as is often the case, it
escalated. Things that start with theater quite often end pretty badly.

At one point, Oracle hatched an interesting plan of attack. Siebel had no billboard space in front of its
office. So Oracle rented a huge truck and parked it in front of Siebel HQ. They put up all sorts of ads
on it that made fun of Siebel in attempt lure Siebel employees away. But then Oracle acquired Siebel
in 2005. Presumably they got rid of the truck at that point.

The ad wars aren’t just throwaway anecdotes. They tell us a lot about how companies were thinking
about themselves and the future. In the ‘90s, a company called Informix started a Billboard war with
Oracle. It put up a sign near Oracle HQ off the 101 that said: “You just passed Redwood Shores. So
did we.” Another billboard featured a “Dinosaur Crossing” sign superimposed in front of the Oracle

Towers.

Oracle shot back. It created a prominent ad campaign that used snails to show the TPC benchmark
results of Informix’s products. Of course, ads weren’t anything new. But what was strange was that
they weren’t really aimed at customers; they were aimed at each other, and each other’s employees.
It was all intended to be motivational theater. Ellison’s theory was that one must always have an
enemy. That enemy, of course, should not be big enough to have a chance at beating you. But it
should be big enough to motivate the people who fail to realize that. The formula was theater +
motivation = productivity. The flaw was that creating fake enemies for motivation often leads to real
enemies that bring destruction. Informix self-destructed in 1997.

B. The End of This Day’s Business Ere It Come

The Shakespearean model holds true today. Consider the Square card reader. Square was the first
company to do mobile handset credit card processing right. It did the software piece and the hardware
piece, and built a brand with the iconic white square device.

Then there was a proliferation of copycat readers. PayPal launched one. They shaped it like a
triangle. They basically copied the idea of a simple geometric-shaped reader. But they tried to one-up
Square; 3 sides, after all, was simpler than 4.

Before PayPal’s PR people could celebrate their victory, Intuit came out with a competing card reader.
It was shaped like a cylinder. Then Kudos came out with its version, which it shaped like a semicircle.

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Maybe someone will release a trapezoid version soon. Maybe then they’ll run out of shapes.

How will this all end? Do you really want to get involved in making a new card reader at this point?
One gets a distinct sense that the companies focused on copycat readers are in a great deal of
trouble. Much better to be the original card reader and stay focused on original problems, or an
original company in another space entirely.

C. Even the Big Guys Do It

It’s not just startups that engage in imitative competition. The Microsoft-Google rivalry, while not
completely destructive, has a lot of this Shakespearean dynamic behind it. In a way, they were
destined to war with each other from day one because they are so alike. Both companies were started
by nerds. The top people are obsessed with being the smartest. Bill Gates had an obsession with IQ
testing. Larry and Sergey sort of took that to the next level. But Microsoft and Google also started off
very differently. Originally they did very different things and had very different products. Microsoft had
Office, Explorer, and the Windows operating system. Google had its search engine. What was there
to fight about?

Fast-forward 12 years. It’s Microsoft’s Bing vs. Google, and Google’s Chrome vs. Internet Explorer.
Microsoft Office now has Google Docs to contend with. Microsoft and Google are now direct
competitors across a number of very key products. We can surmise why: each company focused on
the internal narrative in which they simply had to take on the other because they couldn’t afford to
cede any ground. Microsoft absolutely had to do search. Google simply had to do Docs and Chrome.

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But is that right? Or did they just fall prey to the imitative dynamic and become obsessed with each

other?

The irony is that Apple just came along and overtook them all. Today Apple has a market cap of $531
billion. Google and Microsoft combined are worth $456 billion. But just 3 years ago, Microsoft and
Google were each individually bigger than Apple. It was an incredible shift. In 2007, it was Microsoft
vs. Google. But fighting is costly. And those who avoid it can often swoop in and capitalize on the
peace.

D. If You Can’t Beat Them, Merge

PayPal had similar experience. Confinity released the PayPal product in late 1999. Its early
competitor was Elon Musk’s X.com. The parallelism between Confinity/PayPal and X.com in late ’99
was uncanny. They were headquartered 4 blocks apart on University Avenue in Palo Alto. X.com
launched a feature-for-feature matching product, right down to the identical cash bonus and referral
structure. December 1999 and January 2000 were incredibly competitive, motivational months.
People at PayPal were putting in 90-100 hours per week. Granted, it wasn’t clear that what they were
working on actually made sense. But the focus wasn’t on objective productivity or usefulness; the
focus was on beating X.com. During one of the daily updates on how to win the war, one of the
engineers presented a schematic of an actual bomb that he had designed. That plan was quickly
axed and the proposal attributed to extreme sleep deprivation.

Each company’s top brass was scared. In February 2000 we met on neutral ground at a restaurant on
University Avenue located equidistant from their respective offices. We agreed to a 50-50 merger in

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early March. We combined, raised a bunch of money before the crash, and had years to build the
business.

E. If You Can, Run Away. If Not, Fight and Win.

If you do have to fight a war, you must use overwhelming force and end it quickly. If you take
seriously the idea that you must choose your enemies well since fighting them will make you like
them, you want wars to be short. Let that process go on too long and you’ll lose yourself in it. So your
strategy must be shock and awe—real shock and awe, not the fake kind that gets you a 10-year war.
You have to win very quickly. But since very often it’s not possible to ensure a quick victory, your
primary job is to figure out ways not to have war happen at all.

Let’s return to the 2 x 2 matrix from class five. On one axis you have athletes and nerds. Athletes are
zero sum competitors, and nerds are non zero sum collaborators. On the other axis you have
war/competition and peace/monopoly capitalism. We said that a company should optimize for peace
and have some combination of both nerds and athletes—nerds to build the business, and athletes to
fight (and win) if and when you’re unfortunate enough to have to compete.

The nerds-athletes hybrid model allows you to handle external competition. But it also creates an
internal problem; if you have to have at least a few very competitive people on your team, how do you
avoid conflicts within the company? Very often these conflicts are the most disastrous. Most
companies are killed by internal infighting, even though it may not seem like it. It’s like an autoimmune
disease. The proximate cause may be something external. But the ultimate cause of destruction is
internal.

When we overlay the noting of intracompany fighting on the Marx vs. Shakespeare framework, we get
two theories as to why colleagues fight. Marx would say people fight internally because they wildly
disagree about what the company should do, or what direction it should take. The Shakespeare
version is precisely the opposite; people fight because they both want to do the same thing.

The Shakespearean dynamic is almost invariably correct. The standard version is that two or more
people each want the same role in a company. People who want very different things don’t fight in
well-functioning companies; they just go and own those different things. It’s people who want to do the
same things who actually have something to fight about.

At PayPal, the center of conflicts tended to be the product team. David Sacks wanted the product to
be a single seamless whole. That was a good approach, but a less good byproduct was that it was a
recipe for product people overlapping with everyone else in the company. Product couldn’t do
anything without infringing on someone else’s turf. A big part of the CEO job is stopping these kind
conflicts from happening in first place. You must keep prospective combatants apart. The best way to
do this is by making clear definitions and precise roles. Startups, of course, are necessarily flexible
and dynamic. Roles change. You can’t just avoid internal war by siloing people away like you can in
big companies. In that sense, startups are more dangerous.

PayPal solved this problem by completely redrawing the org chart every three months. By
repositioning people as appropriate, conflicts could be avoided before they ever really started. The
craziest specific policy that was enacted was that people were evaluated on just one single criterion.
Each person had just one thing that he or she was supposed to do. And every person’s thing was
different from everyone else’s. This wasn’t very popular, at least initially. People were more ambitious.
They wanted to do three or four things. But instead they got to do one thing only. It proved to be a
very good way to focus people on getting stuff done instead of focusing on one another. Focusing on
your enemy is almost always the wrong thing to do.

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III. Conversation with Reid Hoffman

Peter Thiel: How can people fall into the trap of fighting wars? Is there a strategy to avoid fighting
altogether?

Reid Hoffman: To not get mired down is key. You must think very deliberately about your strategy
and competition to do that. One element that I’d add to your comments is the very basic idea that part
of reason we have competition is that people want resources. People need things, and very often
they’re willing to fight to get them. Competition for resources can be natural, and not just a
psychological construction.

Peter Thiel: The counter to that is that something like prestige, for example, isn’t any kind of scarce
natural resource.

Reid Hoffman: But people value it a lot—so much so that they fight over it. As CEO, people routinely
come and pitch you for new titles, with no substantive change in their responsibilities.

Peter Thiel: That’s true—there was a relentless escalating title phenomenon at PayPal. We had lots
of VPs. Then lots of Senior VPs. In hindsight it probably wasn’t that stable. But we were acquired
before anything really blew up.

Reid Hoffman: Back to your question—it’s so important for early stage companies to avoid
competition because you can’t isolate it to one front. Competition affects you on the customer front,
hiring front, and financing and BD fronts—on all of them. When you’re 1 of n, your job becomes much
harder, and it’s hard enough already. A great founding strategy is thus contrarian and right. That
ensures that, at least for an important initial time, no one is coming after you. Eventually
peoplewill come after you, if you’re onto something good. That might explain the Microsoft-Google
competition you highlighted as sort of bizarre. Each has its great revenue model—its gold mine. At the
start they were quite distinct. These respective gold mines allowed them to finance attacks on the
other guy’s gold mine. If you can disrupt the other’s mine, you can take it over in the long run.

Peter Thiel: The criticism of that justification for competition is that the long run never really arrives
as planned. Microsoft is losing a billion dollars per year on Bing.

Reid Hoffman: It’s possible that this playbook doesn’t work as well for tech companies as it used to.
Search is an ongoing battle. But there are other successes. Look at Xbox. Microsoft’s decision to
compete worked there. When Sony stumbled a bit, Xbox became a really viable franchise. Microsoft’s
strategy is to own all of the valuable software on desks and other rooms, not just isolated products.
So, with the Xbox, it’s made some headway in the living room. It’s complicated. But what drives the
competition is the sense that there’s a lot of gold over there. So if you’re a startup and you find some
gold, you can count on competition from all directions, including previously unlikely places.

Some competition is easier and that gives you more leeway. Banks, for instance, are very bad
innovators, which turned out great for PayPal. In more difficult competitive scenarios, you really have
to have an edge to win. Difficult competition with no edge makes for a war of attrition. People may get
sucked in to ruthlessly competitive situations by the allure of the pot of gold to be had. It’s like rushing
the Cornucopia in the Hunger Games instead of running away into the forest. Sometimes people
justify this by rationalizing that “if we don’t fight it here, we’d just have to fight somewhere else.”
Sometimes that’s a good argument, sometimes it’s not. But usually there’s a pot of gold that’s being
chased.

Peter Thiel: But people are very bad at assessing probability. It’s irrational spend all your gold trying
to get the other guys’ gold if you probably won’t succeed. I maintain that there is a crazy psychological

200 
 
aspect to it. It isn’t just rational calculation because tremendous effort is spent on things that,
probabilistically, aren’t lucrative at all.

Reid Hoffman: It’s true that mimesis is a lot easier than invention. Most people are pretty bad at
inventing new things. iPhones with a blue cover. Triangular card readers instead of square ones.
That’s not invention. If you can actually invent good things, that’s the viable strategy. But most people
can’t. So we see a lot of competition.

A side note on invention and innovation: when you have an idea for a startup„ consult your network.
Ask people what they think. Don’t look for flattery. If most people get it right away and call you a
genius, you’re probably screwed; it likely means your idea is obvious and won’t work. What you’re
looking for is a genuinely thoughtful response. Fully two thirds of people in my network thought
LinkedIn was stupid idea. These are very smart people. They understood that there is zero value in a
social network until you have a million users on it. But they didn’t know the secret plans that led us to
believe we could pull it off. And getting to the first million users took us about 460 days. Now we grow
at over 2 users per second.

Peter Thiel: The very strategic focus on something no one was thinking of—business social
networking—is one of the most impressive things about the LinkedIn. 460 days is moderately fast but
not insanely fast. PayPal got to a million users in 4 to 5 months… [pause, laughter]. But while you
always want to grow fast, you want to be able to grow more slowly. If you focus and target a non-
competitive space, 460 days is plenty of time. You get more time to establish a great lead and then
execute and maintain it.

Reid Hoffman: It’s obviously important to target an area that no one’s playing in. The interesting
question is what do you do once you’re on everyone’s radar. You have to have some sort of
competitive edge. Is it speed? Momentum? Network effects? It could be a lot of things. But you must
think through it, because people will come after you as soon as you uncover value. You’ve found your
gold mine; now you must defend it. It’s always easier for people to come take your gold than to find
gold anew. You have to have a plan to dominate your market in the long run.

Social was big well before LinkedIn. It was something of a dogpile of competition for Linkedin in the
early days. But the other companies who were focused on business social wanted to sell to
enterprises. Enterprises, they thought, would build the networks. LinkedIn, of course, wanted to focus
on individuals and stayed true to the vision. It’s scarily easy to lose sight of the big vision. People are
always tracking down the CEO and telling doomsday stories about how we’re all dead if we don’t
change something to address competitor x. If you start to focus on doing everything, you’re just going
to war without any clear vision, and you’ll fail.

There’s also a version of this that applies to individuals. People look for individual gold—things like
good career moves, prestige, status. Having multiple people competing for those things, is, as you
said, a recipe for internal challenges.

At LinkedIn we addressed this by structuring precise roles, much like PayPal did. But unlike PayPal,
we did this for teams, not individuals. Teams get mandates. A team is responsible for growth, mobile,
or certain parts of platform. Sometimes the mandates overlap. Occasional conflict seems inevitable.
But it’s kept manageable. The benefit is each team functions like a startup itself. There are clear goals
and metrics. Every so often, you have to fix things and refactor things. That’s ok. Groups drift and
different prioritizations can conflict. It’s worth it. In fact it’s probably a very bad sign if you don’t have to
frequently refactor how stuff works to make it effective.

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What’s key, as PayPal discovered, is that you give your people a path to success. Maybe they won’t
fully agree with it. They don’t have to. There just has to be some reasonable buy-in. That is the best
way to avoid internal conflict. The other route—just going full throttle on the us-vs-them dynamic—is
very motivational too. But it has all the costs of war that theater that may not stay theater forever. It
may defocus your long-term efforts, and, as Peter described, you get engineers designing bombs.

Peter Thiel: External war is a very effective way to forge internal peace. In early March of 2000,
PayPal had $15M in bank. It was on track to run of money in 6 weeks. CFO Roelef Botha thought that
this was quite alarming. He—quite sanely—shared his deep concern with everybody. But the
engineering team wasn’t interested. The only thing that mattered was beating X.com. It didn’t matter if
you went broke in the process.

Reid Hoffman: So you can’t just go into full war mode. You have to strategize as to how to avoid
competition and external competition. That will take you far. But competition is inevitable. Even if you
build good thing with network effects, people aren’t always smart. They’ll try to compete with you
anyways, even if that’s a bad idea. So you have to strategize about how to deal with the forces of
competition, too, both internally within the company and externally with other companies.

In the tech space, the landscape changes based on what technologies become available. Oracle and
Siebel dominated enterprise software because they dominated the sales relationships. And then
along comes the cloud. Now you have entirely new kind of products available for the same kind of
functions. We’ve seen really massive companies being built in the last decade. SalesForce is the
archetypical one that’s succeeded and gone public.

Peter Thiel: And SalesForce was funded by Larry Ellison to compete with Siebel on CRM. Then it
succeeded and grew and now, of course, Oracle hates SalesForce.

Reid Hoffman: This plays into how the inevitability of competition. In tech, if you’re not continually
thinking about catching the next curve, one of the next curves will get you. Yahoo owned the front end
of the Internet in 2000. It had the perfect strategy. But it did not adapt; it failed at social and other
trends; that didn’t go so perfectly. Just over a decade later, having missed some very key tech curves,
it’s in a very different position.

Peter Thiel: Last class we talked about secrets. You want to have a secret plan. Probably not
enough companies have a plan, let alone a secret plan. This gets complicated, because people’s
secrets are secretive and so we might not know about them. But, with that caveat, what companies do
you think have the best secret plans?

Reid Hoffman: Mozilla seems to have good plans. They understand the move from desktop to
mobile. Different from classic companies, they’re not trying to build a closed franchise, but rather
trying to keep open ecosystem for innovation. Quora has interesting plans about connecting people to
knowledge. Dropbox is interesting, and probably has big plans that take it far beyond just being a hard
drive in the cloud. The bottom line is if you don’t have a very distinctive, big idea—a prospective gold
mine—you have nothing. Not all ideas work. But you have to have one.

Peter Thiel: A good intermediate lesson in chess is that even a bad plan is better than no plan at all.
Having no plan is chaotic. And yet people default to no plan. When I taught at the law school last
year, I’d ask law students what they wanted to do with their life. Most had no idea. Few wanted to
become law firm partners. Even fewer thought that they would actually become partner if they tried.
Most were going to go work at law firms for a few years and “figure it out.”

That’s basically chaos. You should either like what you’re doing, believe it’s a direct plan to something
else, or believe it’s an indirect plan to something else. Just adding a resume lines every two years

202 
 
thinking it will buy you options is bad. If you’re climbing a hill, you should take a step back and look at
the hill every once in awhile. If you just keep marching and never evaluating, you may get old and
finally realize that it was a really low hill.

One reason people may default to not thinking about the future is that they’re uncomfortable being
different. It is unfashionable to plan things out and to believe that you have an edge you can use to
make things happen.

Reid Hoffman: People also underestimate how much of an edge you need. It really should be a
compounding competitive edge. If your technology is a little better or you execute a little better, you’re
screwed. Marginal improvements are rarely decisive. You should plan to be 10x better.

Peter Thiel: I recall being pitched on some anti-spam technology. It was billed as being better than
all other anti-spam tech out there, which is good since there are probably 100 companies in that
space. The problem was that it took a half hour to explain why it was allegedly better. It wasn’t as
concise as: “We are 10x better/cheaper/faster/more effective.” Any improvement was probably quite
marginal. Customers won’t give you a half hour to convince them your spam software is better. A half
hour pitch on anti-spam is just more spam.

Shifting gears a bit: is there way to stay head of curve before it eats you?

Reid Hoffman: We ask prospective hires at Greylock how they would invest $100k between iOS and
android, if they had to make bets about the future. The only wrong answer is 50-50. That is the only
answer that’s basically equivalent to “I don’t know.” Think through it and take a position. You’ll
develop insight. That insight—or more specifically the ability to acquire it—is what will keep you ahead
of the curve.

Another huge thing to emphasize is the importance of your network. Get to know smart people. Talk
to them. Stay current on what’s happening. People see things that other people don’t. If you try to
analyze it all yourself, you miss things. Talk with people about what’s going on. Theoretically, startups
should be distributed evenly throughout all countries and all states. They’re not. Silicon Valley is the
heart of it all. Why? The network. People are talking to teach other.

Peter Thiel: It’s a trade-off. You can’t just go and tell everybody your secret plan. You have to guard
your information, and other people guard theirs. At the same time, you need to talk and be somewhat
open to get all the benefits you mentioned from the network. It can be a very fine line.

Question: Do people overestimate competition? What about the argument that you shouldn’t
do x because Google could just do it?

Reid Hoffman: When I evaluate startups, that “Google can do it” isn’t really a valid criticism unless
the startup is a search engine.

Google has tons of smart people. They can, in all likelihood, do exactly what you’re doing. But so
what? That doesn’t mean you can’t do it. Google probably isn’t interested. They are focused on just a
few things, really. Ask yourself: what’s more likely: nuclear war, or this company focused on
competing with me as one if its top 3 objectives? If the answer is nuclear war, then that particular
potential competitor is irrelevant.

Peter Thiel: Everyone develops an internal story about how their product is different. From outside
perspective they often look pretty similar. So how can you tell whether what you’re doing is the same
or whether it’s importantly different?

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Reid Hoffman: You can’t systematize this. It’s a problem that requires human intelligence and
judgment. You consider the important factors. You make a bet. Sometimes you’re right, sometimes
you’re wrong. If you think your strategy will always be right, you’ve got it wrong.

Question from audience: Can you give some examples on how one can successfully get away from
competition?

Peter Thiel: PayPal had a feature for feature competition with X.com that lasted intense 8 weeks.
The best way to stop or avoid the war was to merge. The hard part was deescalating things post-
merger. It was hard to immediately shift to being great friends afterwards. There is always a way in
which things get remembered much more positively when everything works out in long run.
Conversely, rivalries tend to get exaggerated ex-post when things don’t go so well.

Reid Hoffman: There was some pretty intense infighting at PayPal. One of the things that Peter has
said is key: either don’t fight, or fight and win. But you should be skeptical that you will definitely win if
you end up fighting.

PayPal’s biggest traction was with eBay. But eBay had an internal product called BillPoint. PayPal, as
the sort of 3rd party disrupter, was at a serious disadvantage there. eBay was the only gold mine that
existed. We had to win. It was time to leverage the athletes’ competitive talent. One decisive move in
the war was focusing on e-mail. The real platform for auctions wasn’t the eBay website, as most
people assumed. It was e-mail. People would receive emails when they won auctions. eBay knew this
but didn’t understand its importance. PayPal, on the other hand, got it and optimized accordingly.
Very often PayPal would notify people that they won the auction before eBay did! People would then
use PayPal to pay, which of course was the goal.

It was much harder to compete against the Buy It Now feature. There, eBay had greater success
roping people into paying with BillPoint. It was harder to get in front of people if they were just buying
and paying for something right away on the website.

The takeaway advice is to always keep questioning the battle. Never get complacent. When you’re in
battle, only the paranoid survive.

Question from audience: What do you think about the competition between Silicon Valley and New
York? Reid, Mayor Bloomberg has argued that New York will become the dominant tech scene
because the best people want to live there. He quoted you as saying “I don’t like all that culture stuff”
and suggested that that view is “narrow.”

Reid Hoffman: I’m friends with Mayor Bloomberg, but I’ll return fire.

So Bloomberg is trying to make a tech-friendly New York that will compete and beat Silicon Valley.
That’s great. We wish him the best of luck. More great technology innovation hubs within the US are
great for us.

But, to compete, they’ll certainly need the luck. Silicon Valley has an enormous network effect. Tech
is what we do. This is the game we play. If there’s anywhere in the world to go for tech, it’s here.
People move here just to be a part of the tech scene.

The New York tech world has to compete for its technical people. Many of the best tech people go to
hedge funds or move to Silicon Valley.

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One of ways to understand effect of competition is companies that emerge here are competitive
globally because crucible is so high. The best people go into tech here. And they have a single-
minded focus about their work.

All the culture of NYC doesn’t matter positively or negatively, relative to succeeding at the technology
innovation game. So it’s a wonderful place to live. Fine. Mayor Bloomberg, you’re very welcome to the
people who want to live in New York for its culture and theater and operas. Personally, I love to visit.
The people that we want are the ones who want to win this game first and foremost, and who don’t
care terribly much about missing Broadway shows.

Question from audience: Isn’t culture important in a sense, though? Silicon Valley engineers aren’t
social. So how can they make social games?

Reid Hoffman: It’s not that all great companies come from Silicon Valley. I was simply saying that it
is extremely difficult to unseat Silicon Valley as the best place for tech companies. But certainly not
every great tech company needs to be a product of the Valley. Indeed, that’s impossible. Groupon, for
instance, couldn’t be created here. They need 3,000 salespeople. That is not the game that Silicon
Valley specializes in. It worked very well in Chicago. So Silicon Valley learns from Groupon here; as
did I. There are certainly other playbooks.

But the Silicon Valley playbook is a great, and perhaps the best. If you have to make a portfolio bet on
technology or a portfolio bet on sales processes, you should take the tech portfolio every time. New
York is the 2nd most interesting place for consumer internet. It’s just very unlikely to displace Silicon
Valley as #1.

Peter Thiel: My take is that New York is a pretty distant second. There are some very cool
companies coming out of New York. But one anti-New York perspective is that the media industry
plays much bigger role there than it does here. That induces a lot of competition because people
focus on each other, and not on creating things. New York is structurally more competitive in all sorts
of ways. People literally live on top of each other. They’re trained to fight and enjoy fighting. Some of
this is motivational. Maybe some of it is good for ideation. But it directs people into fighting the wrong
battles. We will continue to see the more original, great companies coming out of Silicon Valley.

Reid, final question. What advice would you give young entrepreneurs?

Reid Hoffman: You can learn a lot from companies that succeed. Companies have benefited greatly
from Facebook’s Open Graph. Ignoring that instead of learning it, for instance, could be catastrophic
for you, depending on what you’re trying to do. But of course learning everything before you do
anything is bad too.

The network is key. This is a large part of how you learn new things. Connect with smart people. Talk.
What have you seen in last couple of months? What do you know? It’s not a go-and-read-everything
strategy. You’d die before you could pull that off. Just exchange ideas with the smart people in your
network. Not constantly, of course—you need to do work too—but in a focused way. Take what you
learn and update your strategy if it’s warranted. And then keep executing on it.

   

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 People always stay the same ‐ Andrew Chen 
http://andrewchenblog.com/2007/10/31/technology‐always‐changes‐but‐people‐always‐stay‐the‐same/ 

Technology always changes, but people always stay the same

A couple friends were in town recently, and I went with them to the Mechanical Museum at
Fisherman’s Wharf, where they have lots of different old mechanical arcade machines. The oldest
one was from the 1920s, and the average period looked to be 1950s or so.

It reminded me that while technology advances, human nature stays the same.

Love calculators
First up, we have a bunch of machines that are sort of like the "How good of a lover are you?" quizzes
in trashy women’s magazines. In general, you stick in a quarter, put your hand on the pad (or some
other interactive action), and then it gives you a score.

Here are pictures of the machines I took on my iPhone – click to see a bigger version:

The main emotions that are being elicited in these cases are some combination of:

narcissism

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curiosity

competition

Extra points to the first (left-most) machine for the tagline:

"What do your friends call you behind your back?"

Is this really so different than the various quiz, comparison, and other applications on Facebook? And
take a look at a site like this: Best Love Calculator. It even evokes the look and feel of these
machines.

Telling the future

Also, we have machines like the ones below, which are focused on telling the future. The first
machine is the most fun – you put your hand into the machines mouth! The second and third ones are
both palm reading.

Here are the pictures:

Of course, horoscopes are still big these days, and people still inexplicably talk about their "signs" – I
would ask "who knows why" but the answer to that is simply "because people are people." I’d boil the
emotions down to:

narcissism

curiosity

insecurity?

In the modern world, the entire clairvoyance thing is still around, via numerous websites that you find
when you google for "psychic". Here’s a good example of what you get when you click on one of
those ads. And don’t even get me started about John Edward’s Crossing Over and psychic shows like
that.

Jackass and YouTube, oldschool style

These next machines are probably the most dated (and hilarious) – basically when you put in a
quarter, you’re then able to watch some "kinky" (defined by the 50s). The first machine was the
"French Execution," which played some music and you got to watch a guillotine chop off a miniature
doll’s head. The second machine had you grabbing a hand-crank to operate a flip book with pretty
boring material in it.

Here are the images:

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This is obviously Jackass and the YouTube of the 1950s.

Emotionally, this is catering towards:

novelty

scarcity

curiosity

Of course, the problem with these machines (unlike the other ones) is that after you’ve seen it, it
doesn’t seem so special anymore, and you’re unlikely to watch it again. And of course, in a modern
society where this type of stuff is available at a much more, ahem, liberal standard, it’s really boring.
These were fun mainly because they show how dated the place is.

Simulation games
While Will Wright is often heralded for creating the Sim games for the PC, you can look further back
than that to see simulation games. In these machines, we see one which is a helicopter machine and
then a crane, both of which are operated using a set of simplistic controls.

Here are the images:

Interestingly enough, both simulation games were "directed" rather than undirected. They weren’t
pure sandbox games (like SecondLife) but rather had a goal structure for the user. This is something
that Erik Bethke (of GoPets) and I have talked about in the past.

Rather than just letting the user fly the helicopter, instead there were lights around the area where you
were supposed to hover the chopper. The longer you hover, the more points you score. The lights
rotate around the area, and you have to move the chopper there accordingly. The construction crane
does the same thing, where you are supposed to grab as much dirt as you can in as little time as
possible.

The emotions here are quite different than the other ones:

aspiration

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fantasy

competition

And of course, it’s obvious that the modern versions of this range from things like The
Sims toMMOs to any other game that is about role-playing.

Differences with regular websites and Facebook apps

Interestingly enough, the machines above are actually quite different than what you would want to
build for a modern consumer product.

The reason is that these machines are incented to:

Have a great hook to draw a user in

Make them give you a quarter

Provide some value, but focused less on retention and more on pumping in more quarters

This is misaligned from websites, which share the attribute of drawing users in, but are focused
around retention and constant usage, because that’s what drives advertising revenue.

Similarly, Facebook apps have a different incentive structure:

Have a great hook to draw a user in

ALSO, have a great hook to get the user to pass it along to their friends

Provide some value, but mostly focused around virality

Make the structure around frequent usage with continuing value

That’s why things like Magic 8 Balls and Fortune cookies and such are gimmicky products that might
drive acquisition, but have problems with overall retention and active usage.

Conclusion
I often find that studying older historical products like this to be really fascinating. I think you can learn
a lot about human psychology by looking at things like:

card games

physical architecture

con artists

old advertisements

public speaking

magic and psychics

etc.

While many things are not directly applicable to the world, many of these have underlying themes and
emotions that might be useful for modern entrepreneurs.

   

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 25 reasons users STOP using your product – Andrew Chen 
http://andrewchenblog.com/2008/06/29/25‐reasons‐users‐stop‐using‐your‐product‐an‐analysis‐of‐customer‐
lifecycle/ 

25 reasons users STOP using your product: An analysis of customer lifecycle

Churn from a customer lifecycle perspective

As much as I blog about viral marketing, it can’t be avoided that having healthy product retention is an
equally (and incredibly) important part about having a successful product. Thus, in addition to talking
about the issues around user acquisition, a similar discussion must be had around user churn.

In the customer lifecycle perspective, you look at the product from the perspective of a user that has a
series of experiences starting from newbie and going into an advanced role. In addition to looking at
the success cases, looking at the failure cases is informative too – you want to analyze your product
for potential exit points and relate them to both quantitative and qualitative measures. More on the
customer lifecycle concept here, by Josh Kopelman at First Round Capital.

Anyway, here’s a good example of this from the games industry: At the Austin Game Developers
conference last year, there was a great presentation on why players leave their MMOGs from Damion
Schubert (who also writes a mean blog here). There’s a very convenient writeup of his talk at
Massively, which includes the following list:

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I’d encourage reading it in full. Obviously, the challenges that face more web-like products are very
different, yet the same approach can be used.

Customer lifecycle within a social product

I imagine that many in the readership are working on social products – for any product in this space,
you often have a number of fuzzy stages that a user can move through during their lifecycle. This may
include stages like:

First experience

Soloing and single user value

Encountering some friends(?)

Hitting critical mass for social

Becoming a site elder

Obviously every product is different, but the rough idea should hold for every social product out there.
Early on, the initial experience is all about whether or not the user sees value in the product, and
whether or not it “looks okay.” Then, oftentimes the users won’t have enough friends to make the site
useful, in which case they fall back on a solo experience. Once they start hitting some other folks on
the site, and making friends, then if done correctly, the site will hit critical mass and things will be
sticky. And finally, in some products, some % of these users will turn into mods or admins or
otherwise be elders within the product.

25 exit points
Now let’s look at all the different reasons why people might leave at any point – and obviously, the
retention gets stickier and stickier in each stage, so perhaps reasons like “the site is too addictive!”
become less effective

Anyway, there they are:

First experience

“I don’t get what this site is about”

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“This site is not for people like me”

“The colors/design/icons look weird”

“I already use X for that”

“I don’t want to register”

Soloing and single user value

“I don’t have time to get involved in a site like this”

“I’m lonely, not enough happens”

“I forgot my password”

“I don’t know how to talk or meet people”

“I’ll just check on this account every couple months in case something happens”

Encountering some friends(?)

“People on this site are mean”

“People I don’t know keep messaging me, WTF?”

“I want my friends to use this, but none of them are sticking”

“I’m getting too much mail from this site”

“I only have 3 friends, this site is still boring”

Hitting critical mass for social

“This site takes up too much of my time”

“Too many people are friending me that I only sorta know”

“People are stalking me based on my pics and events!”

“This Top Friends thing causes too much drama”

“I’m getting flooded by e-mails for everything that anybody does”

Becoming a site elder

“The guys who run this site aren’t building feature X that we really need!”

“The guys who run this site build feature Y that’s going to destroy this site!”

“I’m doing a lot of work but I’m not getting anything for it”

“I’m bored because there’s nothing left to do”

“Newbies are fun to pick on ” (wait, maybe that’s a benefit!)

Obviously, this is just a quick brainstorm of a list, but the point is, the reasons why people churn is
often very different depending on their lifecycle. And some of the best things you can do for your

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product, in terms of retention, are things that are very positive for newbies, but might have side-effects
elsewhere. You always want to balance each of these things off, depending on your product and
business goals.

Am I missing anything else obvious? Comments and suggestions are always welcome!

10 things about people – Cindy Alvarez 
http://www.cindyalvarez.com/roundups/10‐things‐ive‐learned 

10 Things I’ve Learned

September 8th, 2011

Whatever people say they will pay for it is wrong.

If someone says, “I wouldn’t personally use it, but I bet other people would”, no one will use it.

The answer to any question that starts with “do you want” or “are you concerned about” will always
be “yes” .

If someone says “maybe it’s just me, but…” — it’s not. Especially if it pertains to your product being
hard to use or your marketing being unclear.

If you want to charge money for your product, don’t talk to people who try to get everything for free.
(They might eventually be customers, but not until your product goes more mainstream or becomes a
defacto standard.)

What features your customers ask for is never as interesting as why they want them.

Almost anyone will do almost anything for you as long as: the request is short, you are enthusiastic,
they don’t have to make any decisions that require more than 1 minute of thought.

The two driving forces of purchase and usage behavior are apathy and the desire to avoid
looking/feeling stupid.

You can’t build a good product if you don’t genuinely like the people who’ll be using it. You don’t have
to be like them, but you have to like them.

Whenever you start thinking “this is a lot more complicated than I originally thought”, you should
immediately stop and find a sounding board. You are probably either wrong or overthinking things,
and an external brain will see it much faster than you.

Why fear is a marketers best friend – KISSmetrics 
http://blog.kissmetrics.com/fear‐marketing/ 

Ambulances, Car Crashes, and Why Fear Will Always Be a Marketer’s Best Weapon 

Ever notice how everyone turns to look when an ambulance goes by?

Or how traffic seems to stop whenever there’s a crash on the side of the road?

Something scary is happening, and people can’t help wanting to see what’s going on. It’s a basic
aspect of human nature, and marketers use it to get you to pay attention.

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Just look at the news. It seems like every night the TV news features a story about a new product that
could kill you, a pending storm, a crime wave, or yet another political demagogue.

Why?

Because fear sells.

If they promise to reveal information about the newest product recalls or health scare, more viewers
will tune in. People want to know what this new threat is and will go out of their way to make sure
they’re informed.

More fear equals more viewers, and more viewers equals more advertising dollars. The equation is as
simple as that.

Lots of people hate the constant fear mongering, sure, but there’s no denying that it works. And smart
marketers in all areas of business look for ways to include it in their marketing.

Here’s why:

Fear Influences Every Purchase Decision

It doesn’t matter what product you’re selling. At least part of every purchase decision consumers
make is based on fear.

For some products, it’s obvious. People buy smoke detectors because they’re afraid of fire. They buy
burglar alarms because they’re afraid of being robbed. They buy cars with air bags and high safety
ratings because they’re afraid of being injured in a car accident.

But what about buying something like… oh… children’s toys?

Well, let’s picture the typical scenario.

It’s three weeks before Christmas, and your six-year-old gives you his Christmas list to send to Santa
Claus. At the top of the list is a Nintendo Wii. He wants one more than anything else in the world, and
he begs Santa to give him one.

At first, you’re resistant to the idea. You’re thinking about buying him a new set of encyclopedias, a
NetBook, or karate lessons — you know, something he can use.

But then you imagine Christmas morning. His face filled with joy, he races down the stairs and goes
straight to the box that looks like a Nintendo Wii. He tears the wrapping paper off, his eyes glowing
with anticipation, and finds… a brand-new set of encyclopedias.

The anticipation turns to horror. His eyes fill with tears. He won’t come out of his bedroom for the rest
of the day, and that night, he asks you if Santa Claus is real. You tell him no, and his disappointment
turns to anger as he realizes you’re the one who let him down. Putting him to bed, you realize nothing
will ever be the same between you again, and you hate yourself for not having bought that Nintendo
Wii.

Or so you imagine, and it terrifies you so deeply that you rush to the mall and stand in line with 500
other people to buy one.

The truth: fear can sell anything. You just have to know how to use it.

A Simple but Powerful Question

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To figure out what the fear motivation is for virtually any product, look at what consumers want when
they purchase it, and then ask a simple but powerful question:

What’s the worst that could happen?

For example, when a woman buys designer clothes, she wants to look good, she wants quality, and
she likely wants to impress people. Probably no big deal if she doesn’t buy it, right? But what’s the
worst that could happen?

Well, she could miss out on a promotion at work because her boss doesn’t think she looks like a
leader. She could meet the love of her life wearing jeans and a sweatshirt, and he could get
sidetracked by the model wearing designer clothes, forgetting about her forever. Or, it could even be
something simple like her friends would talk behind her back, wondering why she can’t find the money
to find better clothes, and she could overhear them and feel embarrassed.

All very strong, fear-based motivations.

And here’s the question: what’s more likely to get her to take the clothes off the rack: the desire to
look nice or the fear of getting passed over at work, forgotten by her true love, and embarrassed by
her friends?

Yeah. Not even close.

Consumers Want to Purchase Reassurance

When a consumer buys something, they want reassurance that the thing they’re buying is going to
address the fears they have.

They want to know that buying the automatic backup program for their computer means they don’t
have to worry about losing their files.

They want to know that buying that new book that "everyone is talking about" will mean they’re not
going to be left out of the conversation at the next cocktail party.

They want to know that buying a AAA membership will mean they’ll never be stranded, that there will
be a pickup truck and a friendly repair man to ready to help them, whenever and wherever they break
down.

It’s all about reassurance. When devising your marketing message, figure out what your consumers
are afraid of, and then address how your product can fix that problem.

Reassure them that, with your product, they have nothing to be afraid of.

Can’t You Take It Too Far?

Sure, just look at political campaign ads. Coming to a town near you this fall, opponents will be
beating each other into oblivion, all in a cutthroat game to win (or protect) a congressional seat.

And it’ll work.

Politicians have long known that scaring voters is an almost sure-fire way of getting votes. Usually,
whoever paints the nastiest, most horrifying picture of the other guy wins. It doesn’t even matter if it’s
true. People pick the lesser of two evils, and the winner gets a cushy job in Washington.

But there’s a problem: we end up hating both of them.

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You don’t have to be a political buff to know pretty much everyone is dissatisfied with all politicians.
According to a poll by Gallup last year, Senators ranked just under car salesmen in terms of how
trustworthy they are. There are a lot of reasons why, but one of them is we’re sick and tired of all the
fear mongering.

So how do you avoid crossing over the line?

I know of only one way:

Tell the Truth

If you tell people the truth, and it’s scary, that’s fine. They’ll respect you for it.

Take FedEx advertising campaigns, for instance. With slogans like, "Absolutely, Positively Overnight,"
"Be Absolutely Sure," and "Relax, it’s FedEx," they’re playing on your fear of your package not
arriving on time or at all.

And it works because it’s true: delayed and lost shipments really are a problem. No, not nearly as
much as they were 30 years ago, but sometimes you want to "be absolutely sure," and in those
cases, it’s worth paying FedEx or one of its competitors.

Other campaigns though are offensive, or worse, laughable. Instead of frightening teenagers from
taking drugs, the infamous "This Is Your Brain on Drugs" was just a big joke. Everyone knew it was an
exaggeration, and so it lost credibility.

The lesson?

Tell the truth.

Don’t distort or invent facts, simply to frighten your customers. Fear-based marketing is at its most
powerful when it is most real. Find a threat your customers are genuinely afraid of, and then use it to
motivate them to act.

It’s a thin line, yes, but it’s the game we play.

You don’t want to end up on the wrong side, now do you?

What jobs are users hiring your product to perform – Chris Dixon 
http://cdixon.org/2011/12/21/whats‐the‐job‐users‐hire‐your‐product‐to‐do/ 

December 21, 2011

What jobs are users hiring your product to perform?

One of Clay Christensen’s favorite concepts is that instead of dividing your customers into segments
and asking which features each segment would like, you should think about what “job” the customers
are “hiring” you product to perform. Here is an example:

A fast-food restaurant chain wanted to improve its milkshake sales. The company started by
segmenting its market both by product (milkshakes) and by demographics (a marketer’s profile of a
typical milkshake drinker). Next, the marketing department asked people who fit the demographic to
list the characteristics of an ideal milkshake (thick, thin, chunky, smooth, fruity, chocolaty, etc.). The

216 
 
would-be customers answered as honestly as they could, and the company responded to the
feedback. But alas, milkshake sales did not improve.

The company then enlisted the help of one of Christensen’s fellow researchers, who approached the
situation by trying to deduce the “job” that customers were “hiring” a milkshake to do. First, he spent a
full day in one of the chain’s restaurants, carefully documenting who was buying milkshakes, when
they bought them, and whether they drank them on the premises. He discovered that 40 percent of
the milkshakes were purchased first thing in the morning, by commuters who ordered them to go.

The next morning, he returned to the restaurant and interviewed customers who left with milkshake in
hand, asking them what job they had hired the milkshake to do. “Most of them, it turned out, bought
[the milkshake] to do a similar job,” he writes. “They faced a long, boring commute and needed
something to keep that extra hand busy and to make the commute more interesting. They weren’t yet
hungry, but knew that they’d be hungry by 10 a.m.; they wanted to consume something now that
would stave off hunger until noon. And they faced constraints: They were in a hurry, they were
wearing work clothes, and they had (at most) one free hand.”

The milkshake was hired in lieu of a bagel or doughnut because it was relatively tidy and appetite-
quenching, and because trying to suck a thick liquid through a thin straw gave customers something
to do with their boring commute. Understanding the job to be done, the company could then respond
by creating a morning milkshake that was even thicker (to last through a long commute) and more
interesting (with chunks of fruit) than its predecessor. The chain could also respond to a separate job
that customers needed milkshakes to do: serve as a special treat for young children—without making
the parents wait a half hour as the children tried to work the milkshake through a straw. In that case, a
different, thinner milkshake was in order.

There are at least three obvious ways to apply this concept: 1) when searching for startup ideas, think
about jobs people want done that they can’t currently get done, 2) when thinking about how to fix or
improve your product, understand why existing users are hiring your product (or should be hiring your
product) and try to improve those experiences, 3) when analyzing markets, segment companies by
the jobs they are hired for. Sometimes products that might appear similar (e.g. two photo sharing
apps) are actually hired for very different purposes, and are therefore misclassified as competitors.

   

217 
 
 Viral growth 
Viral growth 

Viral branding versus viral action ‐ Andrew Chen 
http://andrewchenblog.com/2007/06/07/is‐your‐site‐really‐viral‐viral‐branding‐versus‐viral‐action/
Is your site really viral? Viral Branding versus Viral Action 

The PayPal alumi’s viral successes

Just came on this article in the YC News front page, called A Gold-Plated VC’s Billion-Dollar Secrets.
I’d encourage you to read it, even though the title is completely at odds with the guy who they’re
covering. (Think humble, not gold-plated!)

Anyway, there’s a great analysis about viral marketing and the fact there’s actually several variations
of it these days. Broadly speaking, you have two categories:

Viral branding

Viral action

Let me explain the two categories below.

Viral branding
Most people, when they talk about viral marketing, are in fact talking about viral branding. That’s the
philosophy of:

Do something REALLY cool and people will tell all their friends.

In the article, they explain it like this:

"Many people think the word "viral" is interchangeable with "word of

mouth"–implying that the product or service is so good that people are
compelled to talk it up with their friends."

Here are some examples:

Subservient chicken

Virtual bartender

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Sith Sense

etc.

Another variation of this is the types of things people do on their blogs, where they try to write
something genuine or interesting, or attention-whoring or controversial, and people pass it around to
all their friends.

This is really great, and has its place. In fact, whole books have been written about it, likePurple Cow.
In fact, books like Tipping Point are also really about it. So if you find yourself reading books about
"breaking through the noise" and "identifying influencers" and other soft-skill marketing strategies,
then you are reading about the viral branding industry. Another good way to benchmark this is how
many of the examples are based on off-line word-of-mouth examples versus interactive media.

Viral action
There’s another segment of viral marketing that is really about direct response marketing. That is, the
entire focus of the PRODUCT (not marketing, but deep down into the product) is getting more people
to use it. That means you are ultimately focused on one issue only:

Do something that’s REALLY easy to spread to other people

In this case, you are focused more on the mechanism of viral transmission than you are the content of
what you are transmitting. For many products, this means you are making it highly efficient to take
over their communications media to spread your message.

This is the quote from the article:

"Word of mouth is when I tell you to shop on Zappos because I think the
service is great," explains Botha. "It becomes viral when you have to
be ‘in the system’ to use it. For example I can post a video on YouTube
but then you would need to go to the site in order to see it."

What are examples of this?

Plaxo taking over your Outlook and making it easy to spam 50 people at once

YouTube giving you the code to easily copy-and-paste videos to other sites

Slide asking for your social network credentials to make it easy to embed slideshows

In these cases, they are not simply depending on making something really cool to have you spread it.
They are making it automatic, something built into the product rather than as a marketing
afterthought.

Furthemore, you end up focusing more on metrics than in the branding case. You end up measuring
and optimizing things like:

Sources of traffic

Landing page views

% of users that register

% of users that send out invites

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# of invites sent out, per user on average

% of invites delivered successfully

% of invites read by users

# of virally added users, per user on average

And of course, you’d want to A/B test the hell out of each step of the way.

The viral equation?

Obviously, one cannot live without the other. It makes me think that there’s a very short checklist of
things you need to do in order to make your site viral:

Make it EFFICIENT to spread your site

Give people an INCENTIVE to send it to their friends

Have a GREAT product that keeps people around spreading it through time

I think these are the 3 things you need to create an enduring viral site… just don’t get too sucked into
the branding / soft-side of it without addressing the stuff around your product.

Viral loops ‐ Andrew Chen 
http://andrewchenblog.com/2007/07/11/whats‐your‐viral‐loop‐understanding‐the‐engine‐of‐adoption/ 

What’s your viral loop? Understanding the engine of adoption

What’s a "viral loop?"

A term I’ve heard tossed around frequently in real life, but not in the blogosphere is the term "viral
loop." In fact, when googling it, I only saw one mention from Jia Shen, a very smart guy:

“The viral loop of people inviting each other to most social

networks revolves around a user posting a widget to their page and
having friends see their page.

220 
 
The viral loops for Facebook (there are multiple)
revolve around the news feed, the mini-feed and the invite request. Not
around people coming to your page and interacting with it”

Anyone who cares about this topic should read the entire VentureBeat article Q & A with RockYou —
three hit apps on Facebook, and counting. And of course Jia is speaking at the upcoming Viral
Marketing conference put on by Noah Kagan of CommunityNext.

To define the viral loop, you can think of it as:

The steps a user goes through between entering the site to inviting the next set of new users

Simple enough? Well, because this core loop is repeated so many times over generations and
generations of users, getting it right is incredibly important.

What are some examples?

Let’s look at some great examples of viral loops done right.

Slide.com

First off, the user will likely hit a MySpace page with the widget in place

If they like it, they will click and hit a landing page on Slide.com

The next step is to suck down the pics from their accounts, arrange/decorate them

Now when you hit "Save", it takes you to a page where you can upload your widget simply by putting
in a MySpace username and profile (without leaving the site)

Then it immediately shows up, but not before the "Post a bulletin for all my friends" checkbox, which is
defaulted to checked, fires off a bulletin to all your friends

In the scheme of things, Slide is great because the total number of pages you spend between clicking
onto Slide and telling your friends is 3 pages at most. That’s fantastic. And note the great use of AJAX
which reduces the number of context-jarring pageview changes, but instead feels like a natural
interaction. Honestly, I’m surprised that the entire set of pages isn’t AJAX to make the experience that
much smoother.

Now let’s look at the viral classic, YouTube.

YouTube.com

Again, the first encounter will probably be a video embedded in a page

If they like it, at the end of the video there’s an embed code that can be directly copied

Or, if they don’t want to embed or e-mail that video, other videos are recommended at the end of the
process so that people can try those, and potentially embed a different one

… and so on.

221 
 
Building your own viral loop
Ultimately, viral loops are like induction proofs in that you are jumping to a steady state situation in
which your viral widgets/emails/messages are already out there, and you are optimizing some set of
steps that users have to jump through. Then, once you get this right, then you are figuring out how to
build "on-ramps" into your viral loop so that you bootstrap the entire process.

1. What’s your viral media?

The first (and last) choice you have to make is where people are going to receive an entryway into
your viral loop. That might be e-mail, Facebook newsfeed, or blogs. The main factors to evaluate here
are how difficult it is to integrate your entryway into their surface, and the response rate. The first
factor, integration, is obviously important because a difficult integration means that perhaps fewer
people will see your messages, or your messages will be filtered out altogether. The second factor,
response rate, depends on how in-your-face your messages are (think Facebook invites versus e-mail
spam), and how competitive the medium is. Obviously, viral marketing is about a compounding viral
growth rate, and if your response rates are low, that will mean a huge difference in outcomes.

2. What’s your funnel design?

The next choice to make is the design of your viral "funnel." First off, you want it to be short and as
accessible as possible, since each page is a barrier you’re asking your users to leap over. Assume up
to 80% to 90% attrition if you are asking them to register for a username/password, for example. So if
you can make it very short – 2-3 pages at most – with progressive commitment of personal
information, you’ll get further along in your design. And obviously, you’d ideally want to test for drop-
off at each point, and optimize each step as if it were a landing page.

As stated above, viral growth rate is a compounding process, so the difference between a 80%
dropoff and a 50% dropoff is huge spread over 1000s of viral loops.

3. What’s the viral hook in your product?

Another important choice is product, of course. At the end of the day, a bad product can adversely
affect your viral experience, because a poor slideshow (or a widget that no one wants) will lead to
very few embeds. So picking something that is either a deep personal expression (music, avatars,
slideshows, celebrity posters, etc) or a communication mechanism (voice messages, text, etc) are all
great for getting people to WANT to put the apps on their homepages.

4. What are the onramps to your viral loops?

Once you’re done with a very tight viral loop, then it’s time to create the on ramps. In this case, you
are looking at places like your website homepage, paid advertising, traditional marketing campaigns,
SEO, etc, to create places where users can discover your viral loop and begin the process

That’s it!
Those are the basics of thinking through a viral loop. The best way to understand them is to browse
MySpace or get spammed by invites to social networks, and then break down exactly the "funnel"
they are trying to put you through.

IMHO, Tagged.com has a fascinating one to analyze, since they won’t even let you use the website
without entering in your e-mail addressbook information. Definitely check out that one. They definitely
short circuit the entire viral process by turning it from:

Register -> Use Product -> Evaluate Product -> Tell friends

to:

222 
 
Register -> Tell friends -> Use Product -> Evaluate Product

In their case, it’s really irrelevant how good the product is – instead, the focus is just on getting that
viral loop to be fewer than 2 pages, and increasing your "branching factor" by using addressbooks
rather than asking users to recall their friends’ emails. Anyway, check that out and also try out some
of the other very successful social networks.

See you at the conference!

Engagement loops – beyond viral – Eric Ries 
http://www.startuplessonslearned.com/2008/12/engagement‐loops‐beyond‐viral.html 

Tuesday, December 16, 2008

Engagement loops: beyond viral

There's a great and growing corpus of writing about viral loops, the step-by-step optimizations you
can use to encourage maximum growth of online products by having customers invite each other to
join. Today, I was comparing notes with Ed Baker (one of the gurus of viral growth). We were trying
to broaden the conversation beyond just viral customer acquisition. Many viral products have flamed
out over the years, able to capture large numbers of users, but proving transient in their value
because they failed to engage customers for the long-term. Our goal is to understand the metrics,
mechanics, and levers of engagement.

Levers of engagement
Let's start with the levers of engagement. What can you do to your product and marketing message
to increase engagement?

Synthetic notifications. The most blunt instrument is to simply reach out and contact your
customers on a regular basis. This is such an obvious tactic that a surprising number of companies
overlook it. For example, IMVU runs frequent promotional campaigns that offer discounts, special
events, and other goodies to its customers. From a strictly "promotional marketing" point of view,
they probably run those campaigns more than is optimal (there's always fatigue that diminishes the
ROI on promotions the more you use them). But there is a secondary benefit from these activities: to
remind customers that IMVU exists, and encourage them to come back to the site. The true ROI of a
synthetic notification has to balance ROI, customer fatigue, and the engagement effects of the
campaign itself.

When you live with your own product every day, it's easy to lose sight of just how busy your
customers are, and just how many things they are juggling in their own lives. A lot of engagement
problems are caused by the customer completely forgetting about the provider of the service. Direct
notifications can help ameliorate that problem.

Organic notifications. Facebook, LinkedIn, and other successful social networks have elevated this
technique to a high art. They do everything in their power to encourage customers to take actions
that have a side-effect of causing other customers to re-engage. For example, from an engagement
standpoint, it's a pretty good thing to automatically notify a person's friends whenever they upload
pictures. But it's exponentially more engaging to have each person tag their friends in each picture,
because the notification is so much more interesting: "you've been tagged in a photo, click to find out

223 
 
which one!" Similarly, the mechanics of sending users notifications when new friends of theirs join the
site is a great organic re-engagement tactic. From the point of view of the existing customer, it goes
beyond reminding them that the site exists; it also provides social validation of their choice to become
a member in the first place.

As with synthetic notifications, organic notifications are subject to fatigue, if they are not used
judiciously. On Facebook, "poking" seems to have fairly high fatigue, whereas "photos" has low (close
to zero?) fatigue. Ed adds this account: "When I first joined Facebook, I used to poke my friends and
get poked back for the first few weeks, but now I rarely, if ever, poke people. Photos, on the other
hand, is probably the primary reason I go to Facebook every day. Because they are constantly new
and changing, I doubt I will ever get tired of looking at my friends photos, and I will probably always
get especially excited to see a new photo that I have been tagged in."

Positioning (the battle for your mind). The ultimate form of engagement is when the company
doesn't have to do anything explicit to make it happen. For example, World of Warcraft never needs
to send you an email reminding you to log in. And they don't need to prompt you to tell your guild-
mates about the new epic loot you just won. The underlying dynamics of the product, your guild, and
the fun you anticipate takes care of those impulses. This is true, to a greater or lesser extent, for
every product. After you've acquired a customer, why would they bother to come back to your
service? What do they get out of it? What is going on in their head when that happens?

I wrote about this challenge for iPhone developers, in an essay on retention competition: the battle
over what icon the user will click when they go to the home screen. At that point, there's no
opportunity for marketing or sales; the battle is already won or lost in the person's mind. It's
analogous to walking down the aisle in a supermarket. Just because you're already a Tide customer,
doesn't necessarily mean you'll always buy Tide again. However, if you've come to believe that Tide is
simply the only detergent in the world that can solve your cleaning problems, you're pretty unlikely to
even notice the other competitors sitting on the shelf. Great iPhone apps work the same way.

Marketing has a discipline about how to create those effects in the minds of customers; it's called
positioning. The best introduction to the topic is Positioning (I highly recommend it, it's a very
entertaining classic). But you don't have to be a marketing expert to use this tactic; you just need to
think clearly about the key use cases for your product. Who is using it? What were they doing right
before? And what causes them to choose one product over another? For example, a common use
case for teenagers is: "I just got home from school, I'm bored, and I want to kill some time." If your
product and its messaging is all about passing time while having fun, you might be able to get to the
point where that is an automatic association, and they stop seriously considering other alternatives.
That's exactly what the world's best video games do.

Seeing the engagement loop

We're just starting to weave these techniques into a broad-based theory of engagement, that would
complement the work that has been done to date on viral marketing and viral loops. Notice that all of
these techniques are attempting to affect one of a handful of specific behaviors that have to happen
for a product to have high engagement. Do these sound at all familiar?

A customer decides to return to your product, as a result of either natural interest, or a notification
(organic or synthetic).

224 
 
They decide to take some action, perhaps influenced by the way in which they came back.

This action may have side effects, such as sending out notifications or changing content on a website.

These side effects affect other customers, and some side effects are more effective than others.

Some of those affected customers decide to return to your product...

This is essentially a version of the viral loop. Let's look at a specific example, and start to think
through what the metrics might look like if we attempted to measure it:

Customer gets a synthetic message saying: "upload some photos!" Some percentage of customers
click through.

Some percentage of those actually upload.

Those customers get prompted to tag their friends in their photos. Some percentage of them do (A),
and these result in a certain number of emails sent (B).

Each friend that's tagged gets an email that lets them know they've been tagged. Some percentage
of them click through. (C)

Of those, some percentage are themselves convinced to upload and photos. (D)

Calculating the "engagement ratio"

If we combine the quantities A-D using the same kinds of formulas we use for viral loop optimization,
and the result is greater than one, we should see ever-increasing engagement notifications being
sent. This will lead to some reactivation of dormant customers as well as some fatigue, as existing
customers get many notification. Our theory is that the key to long-term retention is creating an
engagement loop where the reactivation rate exceeds the rate of fatigue. This will yield a true
"engagement ratio" that is akin to the viral ratio.

This makes intuitive sense, since the key to minimizing fatigue is to keep things new, exciting, and
relevant. For example, user-generated content that includes of friends, especially if it includes you
("Joe tagged you in a photo. Click here to find out which one!") is usually going to be newer, more
exciting, and more relevant than synthetic notifications ("Did you know you can know upload multiple
photos at a time with our new photo uploader?"), or even than more generic organic notifications
("You've been poked by Joe."). High "engagement growth" with low fatigue is how you get the
stickiness of a product to near 100%. You can try to churn out, but your friends keep pulling you
back in. That's an engagement loop at work.

Seeing the whole

Engagement loops are a powerful concept all by themselves, and they can help you to make
improvements to your product or service in order to optimize the drivers of growth for your business.
But I think the value in this framework is that it can help make overall business decisions that require
thinking about the whole rather than just one of the parts.

For example, let's say you have a viral ratio of 1.4. Your site is growing like wildfire, but your
engagement isn't too good. You decide to do some research into why customers don't stay involved.
When asked to describe your product, customers say something like "Product X is a place to connect
with my friends online." Turns out, when optimizing your viral loop, this was the winning overall

225 
 
marketing message. It's stamped on your emails, landing pages, UI elements - everywhere.
Removing a single instance of that message would make your viral ratio go down, and you know that
for a fact, because you've split-tested every single possible variation.

As you talk to customers, you notice the following dilemma. Customers have a lot of options of places
to connect with their friends online. And, compared to market leaders like Facebook and Myspace,
you discover that your product isn't really that much better. Consequently, you are losing the
positioning battle for your customers when they get home from school and ask themselves, "how can
I connect with my friends right now?" Worse, your product isn't really about connecting with friends;
that's just the messaging that worked best for the viral loop, where customers aren't that familiar
your product anyway.

To win the positioning battle, you could try and make your product better than the competition, or
find a different positioning that allows you to be the best at something else. Let's assume for the sake
of argument that your competitors offerings are "good enough" and that you cant' figure out how to
beat them at their own game. So you decide to try to reposition around a different value proposition,
one that more closely matches what your product is best at. You could try and drive home that
positioning with an expensive PR campaign, superbowl ads, and whatnot. But you don't have to - you
have a perfectly good viral loop that is slowly but surely exposing the entire world to your positioning
messages.

Here's what this long example is all about. When you go to change your messaging, imagine that
your viral ration drops from 1.4 to 1.2. Disaster, right? Not necessarily. Since your viral ratio is still
above one, it's still getting your message out, albeit a little slower. But if your new positioning
message improves your engagement loop by more than the cost to your viral loop, you have a net
win on your hands. Without measuring your engagement loop, can your business actually make
tradeoff decisions like this one?

Connecting engagement and viral loops

The two loops are intimately connected, in a figure-eight pattern. Customers exit the viral loop and
become part of the engagement loop. As your engagement improves, it becomes easier and easier to
get customers to reenter the viral loop process and bring even more friends in. And as in all dynamic
systems, there's no way to optimize a sub-part without sub-optimizing the whole. If you're focused on
viral loops without measuring the effect of your changes on other parts of your business (of which
engagement is just one), you're at risk of missing the truly big opportunities.

Hopefully, this theory will prompt some interesting responses. We'd love to hear your feedback and
hear your stories. Have you struggled with engagement and retention? What's worked (and not
worked) for you? Share your stories, and we'll incorporate them as we continue to flesh out this
theory. Thanks for being part of the conversation.

   

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Viral marketing is not a marketing strategy ‐ Andrew Chen 
http://andrewchenblog.com/2007/09/01/viral‐marketing‐is‐not‐a‐marketing‐strategy/
Viral marketing is not a marketing strategy

Viral marketing is not a marketing strategy

Many times, viral marketing is seen as a "marketing strategy" that is interchangeable with other
methods of acquiring users. That is, you go through three steps:

Develop your product

Think through a plan on how to make people use it

Declare viral marketing is one of N approaches (along with SEO, SEM, PR, etc.)

Or perhaps you already have an existing product, and you have gotten interested in using a Facebook
widget or something like that to make it "viral." If you are in this boat and think of viral marketing as a
compelling marketing strategy, you’re in trouble.

Successful viral products don’t have viral marketing bolted on once the product has been developed.
It’s not a marketing strategy. Instead, it’s designed into the product from the very beginning as part of
the fundamental architecture of the experience.

Roelof Botha, the venture capitalist that backed YouTube, says:

Forget about adding "viral" to your marketing to-do list after your
product is already on the market. You need to bake it into your
business model from the very beginning. "Viral isn’t something you can
just make happen," says Botha. "It has to be inherent in your product."

Viral marketing is not a product feature

Similarly, no single product feature determines the viral success of a business. I’ve seen several
product pitches where the business is described as "viral" on slide 10 of the presentation, because of
a particular feature, like:

227 
 
"Tell a friend"

Widget embeds

Addressbook importing

… or whatever.

No single feature determines the virality of the product – instead, it’s part of a viral loop that connects
a disparate set of functions into a cohesive motivation for the user to tell their friends. If the
fundamental product doesn’t drive a viral motivation from its users, then it’s very hard to force it.

Viral marketing is a fundamental product design discipline

So what happens when you try to start a new viral product from scratch? Ultimately, you ask the
reverse question of what most folks do. Instead of:

We have product X, how do we virally spread it?

… we ask:

We have viral loop X, what’s the right product to put into it?

Once you have that question in mind, it becomes a lot easier to start brainstorming compelling
experiences that might be inherently viral.

It might feel really weird to you to have this constraint. Why allow something like this to arbitrarily
affect your product experience? Well, it’s true that it’s yet another constraint, but you are dealing with
plenty of constraints already, like:

Keeping things free (or making premium subscriptions)

Making it web (versus hardware)

Having it support some browsers (versus better ones people should be using)

Keeping the site fast (rather than slow)

… and more. These are all things that motivate and constrain your product decisions, and adding (or
substituting viral marketing) can be a very very smart idea to have a successful business rather than a
successful product.

The skillset for effective viral marketing

Because of the above issues, "viral marketing" is not really something that ought to be in the domain
of soft-skill folks like PR, advertising, and marketing people. Nor is it in the world of hardcore technical
folks that can architect systems but not consumer interactions.

Instead, it’s something that needs to bridge both soft and hard skills. You need an interesting
combination of skills, including:

Understanding the motivations behind user behaviors

Understanding and exploiting the technical loopholes to create viral loops

I think that the fundamental compartmentalization of these two skillsets is what ultimately drives huge
companies being worse at viral products than startups.

228 
 
 

Ways to achieve viral growth – Vinicius Vacanti 
http://viniciusvacanti.com/2012/02/27/9‐ways‐to‐make‐your‐startup‐grow‐virally/ 

9 Ways To Make Your Startup Grow Virally

FEBRUARY 27, 2012 COMMENTS

If you want your start-up to become the next big thing, it’s not good enough to just
build a great product. Unless you can afford to buy users, you’ll have to grow
virally.

The difference between getting one of your new users to convince one friend to sign up
and that person getting two new friends, is huge. Assuming you start with 1,000 new
users, after 9 months, it’s the difference between having 9,000 users and
511,000 users!

Below are 9 ways your start-up can grow virally:

Get Your Users to Spread the Word

Get users to tell others about your app simply by

using it. This is probably the best on this list and one of the hardest to achieve. It’s
generally true of communication and content-creation apps.

Tumblr. People create their tumblrs and link to to it on their email signatures and
Facebook and Twitter profiles. When those visitors come, at the top of each tumblr page,
is a pitch for the visitor to “Join Tumblr”.

229 
 
About..Me. Users can create e beautiful llanding pag
ges for them
mselves. Lik
ike Tumblr, they
link to ttheir aboutt.me pages on their so
ocial media profiles. But,
B as you’’ll see below
w,
there’s a reason why
w Tumblrr has grownn much fastter than Abbout.Me.

Get userrs to push content th hey create e on your app to

Facebo ook, Twittter. This is a recent an
nd huge ph henomenon. However, users won n’t just
push an ny content they create hey are proud of or thiink their friiends
e, just conttent that th
will find
d interesting.

Instaggram. Prob bably the best examplle of a site taking advaantage of tthis trend by
b
enablin
ng their use
ers to take beautiful
b piictures which they the
en share on
n Facebook,,
Twitterr.

Foursq quare. Peo ople want to

t tell their friends where they arre, especiallly at high-p
profile
location s and musicc concerts.
ns like sporrting events

Tumblrr. When pe
eople create
e a new posst, they sha
are it on Fa
acebook/Tw
witter.

Get us sers to gen nerate conntent that you optim mize for se earch engin ines. While e this
isn’t tra
aditionally thought
t of as a viral g
growth strategy, it’s very importa ant. Millions of
potentiaial new users are searrching on GGoogle and, if your use ers create ccontent that
address ses these search
s needds, you’ll be
e able to piitch those searches
s to
o join your service.
s

Wikipe edia. Probaably the bes

st examplee of this. Wiikipedia use
ers create m
massive am
mounts
of really
y strong co
ontent that Google seaarchers acccess every day.
d

Yelp. D
Did an amaz zing job off turning loccal business
s reviews in
nto great b
business listting
pages tthat Google
e often placces at the ttop of their search results.

Quora and Stack kOverflow w. Users ansswer questiions that arre then pre
esented on Google
search results for the million
ns of people
e asking tho
ose same questions.
q

Make iit in your users’s

u beest interes
st to invitee their friends. If you
ur strategy is to
ask use
ers to invite
e their frien
nds just beccause, they
y won’t.

230 
 
Twitter. By giving every user a follower number, it encouraged people to tell others to
“follow them on Twitter” including many users that hadn’t yet signed-up for Twitter.
Twitter also became a way to retain fans so that they could push content to them at a
later date. The same dynamic applies to Facebook pages.

Kickstarter. When people create their Kickstarter project, they email all of their friends
and families to contribute to the project.

Groupon and Gilt. Since both services have a high-enough user value, they can afford
to give their users a referral credit for telling their friends.

Dropbox. Gives users extra memory for their dropboxes in exchange for inviting friends.

Get celebrities to use your app. Celebrities have huge followings. Early Facebook
didn’t take advantage of this as it was all about just your friends but, with fan pages,
they have tapped into this strategy.

Twitter. Twitter has done an amazing job of courting celebrities to use their service with
some of the most high profile celebrities having millions of followers.

MySpace. While they have done many things wrong since, they created THE page where
bands resided online and, with bands, came their legions of fans.

Get content created on your app to be newsworthy. If the content created on your
app becomes interesting for journalists to cover, you can tap into something more
valuable than traditional PR.

Twitter. Celebrities are constantly tweeting things they shouldn’t and journalists have a
field day every time it happens.

Kickstarter. Successful projects on Kickstarter like the Robocop statue in Detroit

transcend the service and are covered by journalists and bloggers.

Groupon/Living Social. Whether it’s Amazon, Whole Foods or GAP, these deals will get
covered by journalists.

Increasing Conversion

Adjust your product to become more mainstream. It won’t help much to have all
your users constantly telling everyone about your service but most people aren’t
interested. If you want to reach millions of users, millions of people have to potentially
want your product. For instance, About.Me has very strong viral potential (as described
above) but not everyone wants their own about.me page (at least not yet) and so their
conversion rate suffers.

Instagram. This could have a been a niche product but by making it so easy that even
an absolute beginner could take a beautiful picture, it went from a niche to a mainstream
product.

Tumblr. Blogging platforms have been around for a while but Tumblr makes it so easy
to blog that they’ve been able to convert many from non-bloggers to create a Tumblr.

231 
 
Get your users to use your app everyday. The more your users visit your app, the
more likely they are to invite their friends, create content, etc. A great example of this
struggle is Plancast which, while being a product that created content, it wasn’t
content that was created everyday.

Groupon and Gilt. Because there’s new content every day, they email their users
everyday.

Optimize your sign-up and referral funnels. If you are getting one extra user a
month and optimize your landing page and referral funnels, you’ll cross over into viral
territory. It’s not uncommon to see conversion rates double after a few optimization
experiments. (At Yipit, we use Google Website Optimizer).

Conclusion

Building a great product is only half the battle. Take the time to think through how you
can build in as many viral growth opportunities. It’s worth the effort to go from linear to
exponential growth.

Viral marketing – David Skok 
http://www.forentrepreneurs.com/lessons‐learnt‐viral‐marketing/ 

Lessons Learned – Viral Marketing

December 6, 2009 • David Skok

A short study of this web site reveals that a hugely important factor for success in startup companies
is finding ways to acquire customers at a low cost. In the Business Models section, we looked at the
perfect business model: Viral customer acquisition with good monetization. However viral growth
turns out to be an elusive goal, and only a very small number of companies actually achieve true viral
growth.

In 2005, I invested in a company called Tabblo (acquired by HP in 2007), and had the good fortune to
work with an outstanding entrepreneur, Antonio Rodriguez. Tabblo did manage to achieve good viral
growth, but around the same time YouTube was launched and managed to achieve explosive viral
growth. In the process of looking at these two companies, we learnt several important things about
virality. This post digs deeper into what it takes to achieve viral growth, and examines the key
variables that drive viral growth.

To give you a preview of this post, what you will learn is that there are two key parameters that drive
how viral growth happens, the Viral Coefficient, and the Viral Cycle Time. To fully illustrate the
arguments, I have included two spreadsheet models (embedded) that you can play with interactively
to see how viral growth works. There is a risk with this level of depth, that some readers will find this
too technical, and if you find yourself reacting that way, may I recommend that you jump straight to
the conclusion, which is under the heading Lessons Learnedtowards the bottom of the article.

What we want to understand in these two models, is how the population of Customers changes over
time. The first model that we will build looks in a very simple way at how viral growth works in the
marketing world.

The Viral Coefficient (K)

232 
 
Imagine you are starting a new company that plans to acquire customers through viral growth. You
have several friends that you use to become your first customers, and they in turn start inviting friends
to join, and those friends start inviting friends, etc.

The model at this stage has the following inputs:

Variable Name  Description  Example Value

Custs(0)  Initial set of Customers 10 

i  No of invites sent out be each new customer 10 

conv%  The percentage of invites that convert into customers 20% 

The first thing that we need to calculate is the number of new customers that each existing customer
is able to successfully convert. This turns out to be an extremely important variable, and is known as
the Viral Coefficient. The formula to calculate the viral coefficient is pretty simple: multiply the
number of invitations by the conversion rate.

K  Viral Coefficient  K = i * conv%

Now lets take a look at how K affects customer growth as we go through the first cycle of viral
“infection”. Our initial 10 customers will each send out 10 invitations, and successfully convert 20% of
those (i.e. 2 new customers each). So the total customers after the first cycle will be equal to the
starting 10, plus the new 20, which equals 30.

(In case the model above does not appear, click here to view the model full screen.)

To fully understand the model, it’s useful to look at the second, and subsequent, cycles of growth. In
the model above, only the new customers that were added in the prior cycle send out invitations. This
is because it is highly unlikely that the entire population will continue to send out invitations every
cycle. Every time I have looked at other blog articles or formula for Viral Growth, they appear to
have gotten this part of the calculation wrong.

Understanding the impact of the Viral Coefficient

Now that we have the model built, we can play with the variables to see what effect they have. In the
spreadsheet above, go to cell B6, and change the Conversion rate for invites (conv%) to 5%. This will
make the Viral Coefficient less than 1. Now look at what that did to your population growth. Instead of
continuing to grow, it grows to 20 people, and then stops.

What this tell us is very interesting:

The Viral Coefficient must be greater than 1 to have viral growth.

Further playing with the spreadsheet will show that increasing the viral coefficient by increasing the
number of invites sent out, or the conversion rate, has a nice impact on how the population grows. Try
this out by changing cells B5 and B6 in the model above. Later on we will talk about how to design
your application to maximize these values.

The Second Important Variable: Viral Cycle Time

233 
 
Antonio Rodriguez built Tabblo around the same time that YouTube was built. Both sites were viral,
but while Tabblo was reasonably successful, YouTube exploded and amassed users at a rate that
had not been seen before on the Internet. What was going on here?

To answer this question, we have to look at the Viral Cycle Time,(which we will refer to in formulas as
“ct”).

The full viral cycle involves several steps that work in a loop:

The Viral Cycle Time is the time that it takes for this cycle to complete.

In YouTube’s case the Viral Cycle Time was extremely short: a user would come to the site, see a
funny video, and immediately send the link on to their friends. Tabblo, on the other hand, had a much
longer cycle time. A customer would post some photos on the site and invite their friends. The friends
might see the photos on Tabblo, and like the experience and decide that they would use the site the
next time they took photos they wanted to share. However, that is where the problem came in: it could
take months before they next took photos, and decided to share them.

234 
 
Later on this post, we will talk about how to optimize Viral Cycle Time – (see Lessons Learnt).

How Viral Cycle Time affects growth

To model Viral Cycle Time’s effect on growth, I searched the web, high and low, looking for a pre-
defined formula. To my great surprise, there was no formula that I could find that correctly calculated
customer growth, and showed the impact of Viral Cycle Time. What was also surprising, was that I did
find several blogs showing formulae for viral growth, but in every case, they appeared to make the
same mistake, which was assuming that the entire customer base would continue sending out
invitations for every cycle. So I collaborated with my partner, Stan Reiss, who turns out to be a whole
lot smarter than I am, and he helped me develop the fomulae that are used in the more sophisticated
model for viral growth below:

(In case the model above does not appear, click here to view the model full screen.)

A quick look at the table that shows the effect of varying the Viral Cycle Time shows that customer
growth isdramatically affected by a shorter cycle time. For example, after 20 days with a cycle time
of two days, you will have 20,470 users, but if you halved that cycle time to one day, you would have
over 20 million users! It is logical that it would be better to have more cycles occur, but it is less
obvious just how much better. A quick look at the formula tells the whole story. The Viral Coefficient K
is raised to the power of t/ct, so reducing ct has a far more powerful effect than increasing K.

This explains why YouTube exploded at a faster rate than ever seen before.

Lessons Learned

There are a large number of interesting lessons to learn from the above models:

Unless you have a Viral Coefficient that is greater than 1, you will not have true viral growth.

The most important factor to increasing growth is not the Viral Coefficient, but the Viral Cycle Time (ct)
which should be made as short as possible. This will have a dramatic effect on growth.

The second most important area to focus is the Viral Coefficient (K). Anything that you can do to
increase the number of invitations sent out, and the conversion rate, will have a significant effect on
growth.

In addition to the above lessons that come from the model, there are some other important
observations:

Virality is not a marketing strategy that can be executed by the marketing department. It has to be
built into your product right from the beginning. This is a function that needs to be thought through by
the product designers and developed by the engineers.

The most viral products are those that only work if they are shared. For example, Skype only worked
in the early days if you got your friends on to Skype, otherwise you had no way to call them. If you
have an application today, think about how you can make it social, where it would work better by
sharing data with friends/co-workers. That provides a great incentive for customers to invite their
friends/colleagues to use the application.

To make the Viral Cycle Time as short as possible, we can apply the same thought process that we
use inBuilding a Sales and Marketing Machine, where we look at what are the customers motivations
and negative reactions as they flow through the viral cycle. For example, when I reach the stage
where I have to enter my friends addresses, I will not bother to do very many if I have to look them up

235 
 
in another program, and copy and paste them one-by-one into the browser. You can solve this
problem by providing me with Facebook Connect integration to invite my Facebook friends, and an
adapter to import my email contacts. (Check out the “Share This” button at the bottom of this post as
an example of how this can be done.) Getting at email contacts is easy with web mail clients like
GMail, etc. – but harder with Outlook. However viral products like LinkedIn have created Outlook
adapters that you can download. It is also feasible to get at that information via Outlook Web Access
(OWA) provided you can deal with the security concerns.You should also be looking for ways to
encourage customers to invite people at various junctures in their use of the application. And of
course, you should be asking yourself the question: is the value proposition of your product really that
compelling that your customers will want to share it with others?Another great way to increase virality
is to incent customers with a reward for every customer they successfully convert. Since this can
result in an individual feeling guilty that they are making money off their friends, the best way to do
this is to also provide the friend that is receiving the invitation with an equal incentive. Now your
customer will feel like they are doing their friends a favor.

Consider leveraging viral platforms such as Facebook, which have built in social features to let friends
know what apps you are using. The wall, and status updates provide a great way for their friends see
your app.

Use A/B testing to figure out which approaches and creative presentations are getting you the highest
conversion rates.

If you are successful in creating a viral model with very short cycle times, watch out for what can
happen. Several companies that have been lucky enough to achieve this have been shocked by the
enormous need to scale server capacity. Fortunately with cloud computing offerings such as Amazon
EC2 and S3, it is easier than in the past to scale on demand.

Hybrid Viral Models

Many entrepreneurs reading this post will realize that they may not have the means to achieve true
viral growth (where they have a Viral Coefficient of greater than 1). Rather than giving up, it is worth
considering a hybrid viral model. In the hybrid viral model, you make up for the shortfall in customers
by acquiring those through some other means such as paid search, or SEO.

Model Limitations

The model above is pretty simplistic and does not take into consideration several real world
phenomena:

What happens when you grow so fast that you start to saturate the population. This has happened to
several Facebook app developers. They experience very rapid growth, and then suddenly the growth
dies. Andrew Chen has written a great blog post about this: Facebook viral marketing: When and why
do apps “jump the shark?”. (Side note: I don’t believe that the equation that Andrew puts forward for
simple viral growth is correct, as it assumes that the entire population will continue sending out
invitations at each viral cycle. However his work on saturation of the population is very relevant for
highly successful viral apps.) In case you are interested in where the term “jump the shark” came from
check this out: Wikipedia: Jumping the shark.

What happens if you have attrition in your customer base over time. An easy way to extend the model
to take this into consideration would be to add a variable to model Attrition Rate as a percentage of
the entire installed base at each cycle, and simply subract this from the total population at each cycle.
This topic is nicely covered in this blog post by Andrew Chen: Is your website a leaky bucket? 4
scenarios for user retention.

236 
 
The customers that you have may send out more than one set of invitations beyond the initial set.

etc.

Further Resources

Since publishing this post, I created a SlideShare presentation that has a several additional ideas on
viral marketing: The Science behind Viral Marketing. Also check out Andrew Chen’s blog, as he has
written extensively on the subject of Viral Growth. For example, here is one great example: What’s
your viral loop? Understanding the engine of adoption.

Uzi Shmilovici has a nice list here of the Eight Ways To Go Viral.

Kevin Lawler very kindly created a post explaining how to derive the formula for viral growth used in
this post:Virality Formula.

Acknowledgements and Thanks

My thanks to Antonio Rodriguez, the founder of Tabblo, who got me started on thinking about this
topic several years ago. Also to Andrew Chen, whose writings on this topic are excellent. And to my
partner Stan Reiss, who took my simple logic and turned it into an elegant mathematical formula.

Making content go viral – Mark Suster 
http://www.bothsidesofthetable.com/2011/04/11/here‐are‐10‐tips‐from‐buzzfeed‐to‐make‐your‐content‐go‐
viral/ 

Here are 10 Tips from BuzzFeed to Make Your Content Go Viral

by MARK SUSTER on APRIL 11, 2011

I recently had the pleasure of spending an hour with Jon Steinberg, president of Buzzfeed, a
company who focuses on helping media companies make their content go viral.

237 
 
 His words,
“we find things on Sunday morning that will be on the Today show on Tuesday morning.” That’s
why people turn up to Buzzfeed.

We talked about a lot of great stuff in the video including how to do sales calls and a how a new
“culture of writing” is emerging as a critical skill set in business today. We also talked about why
Jon decided to leave Google to become an EIR at a VC firm (Polaris) – minute 33.

But of course we also focused on making content go viral. In working with brands, Jon says:

“ Vary creative, try lots of things, the costs are so low, why would we put up one piece of
branded content? It is absolutely MVP of advertising. Can we do 10 variants? Can we
take this video and put it in 10 different contests? One in a list, one with a quiz, one
with a cut-out tool – let’s see what takes off. There’s no cost!”

There’s tons of more great advice from real-world experience from Jon so please watch when you
have time. You can also get the video or audio on iTunes and save it for a commute. Right now we
have about 25,000 people who listen to it every week this way. Here’s a link for iTunes.

But if you’re short on time to watch it, I wanted to at least provide you with some of Jon’s insights on
what makes content go viral. [we started this convo at minute 47]

1. Keep it Short – “It’s gotta be short. 30 seconds is good, 60 seconds is worse, 90 seconds is worse,
people just do not want to watch long stuff.” Doh. I guess this video won’t go viral, then! Again,
Jon, “I’m not just talking about video. If you want something to be shared virally on the web it has to
be short.”

2. It needs to have an interpersonal, human angle – Examples he gives, “mothers &

daughters, traits in your boss you don’t like or the perfect drinks on your anniversary. Everybody
will send this to people and say, ‘isn’t this just like us?’ or ‘this is totally different than us’ – you need
to start the conversation” I have to admit I get this all the time. I’ll write a post on how to give
feedback to employees and then I’ll get emails from people telling me they forwarded it to their
whole team. When it’s personal, it gets shared a lot.

238 
 
3. People want rough content that feels genuine to them / authenticity – People don’t
want highly produced stuff, they want stuff that feels genuine to them. “How-to” guides work well.
Behind the scenes videos do great.

4. Create something people can engage with – Examples include videos you can put your
image into. Or creating quizzes or games with your content. People want to engage with content, not
just consume it. The more engaging, the more it gets shared.

5. Offer the ability to react / comment - In the blogging world it’s clear that having a good
comment system like Disqus is critical. And you need to work your comments section if you want
people to share your content and turn up again. Good comment community = viral blog. It’s called
showing good service to your most loyal customers.

6. People like lists / images – Everybody likes lists. Try making your blog posts as lists and have
it in your headline to drive clicks. How very meta of me, hey? If you want a great tool to create
lists check out Ranker (I’m not an investor). Also, images are way more viral than video. Many
people aren’t able to listen to videos in their office.

7. Give up page views – Many websites give you presentations or lists and make you scroll
through 10 pages to see the entire list. Jon says don’t do this. You get a few extra page views but less
people will consume the content and certainly less will share it and make it go viral.

8. Make sure you headline is compelling, a call-to-action or a list - We talked a bit about
the need to make your title catchy. In an era of RSS, Twitter, Facebook & new consumption tools like
FlipBoard – titles matter.

9. Make sure the content of your Tweet / FB Share isn’t something that is something
people would feel stupid sending around to their friends & colleagues – we didn’t
actually get to this in our interview, but I had seen Jonah Peretti (the founder of BuzzFeed & also of
The Huffington Post) talk about this in a previous interview. If the title of your post (or the content
itself) is something that is likely to make the sharer feel embarrassed for sharing it then it certainly
won’t go viral. Keep in mind that when somebody hits “share” they are putting their reputation on
the line by sharing it with friends.

10. Tweet appropriately – OK, I’m adding this one to the list (also not in interview) but it’s a
technique I have data on. First, make sure to leave 10-12 spaces in your Tweet rather than using all
140 characters. Sure, people can use new-style Retweets but many people prefer old-school ones. If
you don’t leave enough space then it’s harder to share and many people won’t bother.

And I tell people all the time, it’s OK to Tweet more than once (full advice in this link). In particular I
do an East Coast morning Tweet (5.40am PST) and a West Coast Tweet (8.40am). Each converts the
same (e.g. if I hand’t sent the second tweet I’d get a lot less clicks / shares). I use a tool to set it up in
advance so I don’t actually have to be ready to Tweet in real time.

If you keep a blog make sure you have ReTweet buttons prominently placed near your article. This
will also drive a lot of shares.

And finally, don’t be afraid to ask for a ReTweet. So if you liked this article, please find that nice little
Tweet button near the top and share the love or share your own viral tips in the comments section
below. I’ll see you there.

   

239 
 
 Facebo
ook viral ma
arketing ‐ And
drew Chen 
http://an
ndrewchenblo og.com/2008//03/05/faceboook‐viral‐markketing‐when‐a
and‐why‐do‐aapps‐jump‐the
e‐shark/
Facebookk viral marketing
ng: When and why
w do apps “ju
ump the shark?
?”

Excel sp preadsheet download

For thosse of you who
o are interes
sted in the go
ory details, pllease downlo
oad the follow
wing spreads
sheet
here:

Vira
al and Reten
ntion Excel Model
M (Click to download)

Math wa arning!
This blogg post will be
e a little more
e technical th
han usual, so
o I apologize
e to those of yyou who are
e bored
by this. A
Anyway, let’ss get startedd.

See thiss image beforre? Many wo

ould describe
e that as, EP
PIC FAIL

That’s w
what happenss when you “jump
“j the sha
ark” and you ur app goes from
f successsful to complletely not
successsful. Why doe
es this happe
ens? This blo
og post is to dissect that exact issue.

Modelin ng user acqu uisition

First off, let’s look att some ways to model use n. For those of you with tthe spreadsh
er acquisition heet, this
is the se
econd tab. Yo ou first start with a couple
e constants:

Invite co
onversion ratte % = 10%

Average
e invites per person
p = 8.0
00

Initial usser base = 10

0,000

g capacity = 100,000
Carrying

(note tha
at these are just
j example
e numbers)

240 
 
To understand how these constants work, you basically want to think about how viral marketing
works. What happens is that you start out with an initial userbase (=10k), and every time your
userbase grows, each user ends up sending out invites (=8.00), which then have a specific
conversion rate (=10%).

That means that in the first time period, you have 10k. In the second time period, you get 10k*8*10%
more users, which equals 8k more users, who are the next round of users who send invites. Then in
the third time period, it’s 8k*8*10%, and so on. Note that the new batch of users needs to exceed the
previous batch, in order to “go viral.” That ratio is often referred to as the viral coefficient. In fact,
here’s the equation for this unbounded viral equation:

u(t) = u(0) * (1 + i * conv)^t

where u(0) = 10k, i = 8.00, conv = 10%, and t is the # of time periods

However, note that this assumes that your “carrying capacity,” that is, how many users are in the total
network, is unlimited. However, on Facebook, that’s not true – once you burn through the 60 million
new users, then you don’t have any left. Similarly, it doesn’t reflect the reality that as you saturate the
network, your invites may end up going towards people who have already evaluated or installed your
app, and they are unlikely to install it again.

A simple model for network saturation

Thus, one simplifying assumption is that as you saturate the network, the conversion rate on your
invites goes down. In one possible model, you’d argue:

If you have installs on 0% of the network, then your natural conversion rate (10%) holds

If you have installs on 50%, then your natural conversion rate is discounted 50%, which equals 5%

If you have installs on 99%, then your natural conversion rate is discounted 99%, and etc.

Note that you might even argue that this is an optimistic view. You might argue, for example, that the
“discount” on your conversion rate should be related to the total % of the userbase that’s been invited,
not the total % that’s installed something.

In that version, if someone hates your app and doesn’t want to install it, it’s unlikely that they will ever
install it. In the version I’m describing, the only people who won’t install your app are the people who
have already done so.

To describe this mathematically, you might say that at each point, there’s an “adjusted conversion
rate” which looks like:

adjusted conversion rate

= natural conversion rate * saturation %
= natural conversion rate * (current installs / total Facebook population)

so if you agree that’s true, then you can combine the this last equation into the initial one:

u(t) can be defined as:

= u(0) * (1 + i * adjusted_conv)^t
= u(0) * (1 + i * conv * u(t-1) / carrying_capacity)^t

(This can then be simplified further, but I’ll leave the math to the reader – the spreadsheet reflects this
thinking already)

241 
 
As a ressult of this, yo
ou see that your
y cumulattive install ba
ase kinda loo
oks like a logiistic curve:

Now thaat you see tha at the cumullative users ffollows an intteresting tren
nd, where it sstarts to grow
w
exponenntially, but then starts to hit
h saturationn. Then it eveentually takes some time,, but it starts s to
plateau as you reach h the carrying
g capacity off the networkk.

Quick bbreak for Co ohort analysis re-introdu uction

Before rreading throu ugh this post,, you might w
want to glanc
ce over a pre
evious blog I wrote on cohort
analysiss and its relattionship to us
ser retention
n reports

You mayy want to rea

ad that before
re going furth
her…

Back to
o our story… …
Previoussly, I discusssed how you can mathem matically mod del the viral acquisition
a prrocess, partic
cularly
hit the network saturation
as you h n point. Howeever, while th
he model sho ows a growthh curve for
cumulatitive users, it doesn’t
d take into accountt how retentiion metrics fiit in.

In the sp
preadsheet liinked above,, you can flipp to the “Userr retention” ta
ab, which shhows a cohorrt
analysiss perspective
e of the hypotthetical site. Here’s how to read it:

On the YY-axis are “T

Time period cohorts”
c whicch are defineed by the group of users tthat joined in
na
particula
ar time period
d. So #1 mea
ans, the userrs that joined
d in period #1

On the X
X-axis are the “Time perio
od” which de
efines the tim
me period tha
at the specificc cohort is in
n

So for exxample, in 1×1, there are

e an initial 3, 000 active users on the site.
s

Howeve er, by the nexxt time period

d, the 3,000 a
active users have declineed to 1,500 uusers. However,
because e there are a bunch of virrally generate
ed users, theere’s a new cohort
c of 2,3228 users who
o have
joined ass cohort 2. The
T number of o “new” coho orts is define
ed by the row
ws in the otheer spreadsheeet tab,
“Viral accquisition.”

Then no otice that at th

he bottom off each time p
period, there’s a count forr how many uusers are ac
ctive in
total, in e
each specificc time period
d.

242 
 
Does thiis make sensse? If not, sh
hoot me an e email at vood
doo[at]gmail with what yoou’re confuse
ed by,
and I’ll u
update this blog with morre clarification
ns!

Introduc cing the rete ention coeffficient

So the kkey driver forr retention is the % of use ers that stay alive in a specific cohort,t, between on ne period
to the neext. If it’s 50%
%, then if you
u start out wi
with 3k users, in the next period
p you’ll bbe left with 1.5k
1
users. Iff it’s 100% re etention, then
n 3k users ennds up with 3k
3 users.

So let’s p
play around with the num
mbers.

At 99% rretention, wh hich means that

t periods you are losing ve
over 20 p ery few userss, you get a graph
g of
total actitive users tha
at looks like this:
t

This cha
art looks prettty good, of course.
c You sstart with exp
ponential groowth, then hiit a plateau, and
a you
have a vvery slow burrn on your us serbase. I su
uspect that th
he Facebook k site, amongg other highlyy
popular sites, essentially have >9 99.999% rete ention betweeen days. I sa ay that becaause people seem
s to
use the site for yearss at a time, and
a probablyy the early us sers of the sitte are probabbly mostly sttill on it.

Now forr the EPIC FAIL.

F
e’s the fun part, which is when you drrop the reten
OK, here ntion coefficie
ent down to 550%:

243 
 
Ouch. D
Doesn’t look good.
g If you’v
ve read all th f it’s pretty clear why thhis happens, but let’s
he way this, far
summarrize:

Key connclusion
The keyy in this calcu
ulation, if you
u look at the sstats, is that::

Early on
n, the growth of the curve
e is carried byy the invitatio
ons

Howeve
er, over time the invitation
ns start to slo
ow down as you
y hit netwo
ork saturationn

The rete
ention coefficcient affects your
y system by creating a “lagging indicator” on yyour acquisitiion – if
you have
ve good reten ntion, even as your invitess slow down
n, you won’t feel
f it as mucch

If your re
etention suckks, then look
k out: The ne
ew invites can
n’t sustain th
he growth, annd you end up
u with a
rather diire “shark fin
n.”

look great at first, but if yo

Things lo ou can’t reta in users long
g-term, then you don’t haave a busines
ss.

Improve ements to th
he model
I want to
o make a cou
uple commen nts on how th
he simplified
d model conta
ained within the spreadsh
heet
could bee improved dramatically:
d

Don’t jusst model inviites, model multiple

m viral channels

Include “usage loopss” not just the

e “invite loop
ps,” which are
re triggered by
b users tryinng out the pro
oduct

Try both
h a global carrrying capaciity, as well a s a “niche diiscount” for th
he number, iif your app is
s super-
niche an
nd focused on
o a particulaar demograph hic or user behavior

Be able to handle re
ealistic numbe
ers – perhap
ps even retro
ofit it onto Adonomics data
ta, for examp
ple

Factor in
n re-engagem
ment channe
els

etc.

Obvioussly if anyone would like to

o think aboutt this more, fe
eel free to an
nd shoot me an email.

244 
 
Questions and comments?
I built this model very quickly while on the plane ride back from Graphing Social Patterns, but if
anybody wants to discuss the model, make improvements, etc., please e-mail me:

voodoo[at]gmail

Thanks!

UPDATE: Dave Fry sent in a correction on the fact that only the new delta of users sends out new
invites, the old guys have already done so, and are unlikely to in the next period. Thanks Dave!

   

245 
 
 Pricing 
Pricing 

Pricing for startups – Rob Fitzpatrick 
http://thestartuptoolkit.com/blog/2011/11/youre‐a‐startup‐its‐okay‐to‐ask‐about‐money/ 

You’re a startup. It’s okay to ask about money. 

by robfitz ∙ November 4, 2011 

While I would admittedly be uncomfortable asking a colleague how much cash is sitting in their
bank account, directly re-applying personal etiquette to a business discussion is generally a mistake.

You’re a startup. It’s okay.

There exists some critical, make-or-break information that you’ll find impossible to tease out in any
other way. As long as you know what you’re looking for and how to ask, you’ll find those revelations
surprisingly easy to get at.

And it won’t even be an awkward conversation.

Quantifying “value”

Common wisdom is that you price your product in terms of value [to the customer] rather than cost
[to you]. That’s true. And you can’t quantify the value received without prodding their financial
worldview.

But just asking if they would pay ￡X for your product fails the Mom test.

Like all good questions-for-learning, you want to ask about what they currently do now, not
what they believe they might do in the future.

The 2 most important questions for sales-driven startups are both about money.

Ask about their current solution to find a price anchor

“What are you using now?” gives you a price anchor. If they are paying ￡100/month for a
duct-tape workaround, then you know which ballpark you’re playing in. On the other hand, they
may have spent ￡120,000 this year on agency fees to maintain a site you’re replacing. If that’s the
case, you don’t want to be having the ￡100 conversation.

Sometimes, both of the above will be happening simultaneously and you get to choose how you
present yourself.

Are you a replacement for the tool at a yearly value of ￡1.2k or a replacement for the agency at
100x that?

Ask about their budgets to unearth hidden decision makers

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“Where would the money come from?” leads to a conversation about whose budget the
purchase will come from and who else within their company holds the power to torpedo the deal.

The real goal here is to figure out whether you’re talking to the right person.

Often, you’ll find yourself talking to a user who is different than the budget owner. Your future
pitches will hit unseen snags unless you learn who else matters and what they care about. This
knowledge will eventually turn into a repeatable sales roadmap as you grow toward adding non-
founders to your sales & customer team.

Sales are a side-effect

As a bonus, these questions also tell you how likely a particular client is to convert into an early sale.

If you hear, while digging in, that he is the budget owner and just happens to have the funds already
allocated for a purchase of this ilk, then you might want to violate rule #1 of customer development
(“learn, don’t pitch”) and reach for your sales hat.

Determining optimal price – Sean Ellis 
http://startup‐marketing.com/category/pricing‐your‐product/ 

How to Determine the Optimal Price for Your Web Service

For the startups I help take to market, one of our most important projects is determining their optimal
price. Unlike companies in established categories with high unit costs, optimal pricing for a software
startup mostly relates to maximizing revenue. An optimal price allows the startup to grow at the
fastest possible rate by maximizing profitable investments in customer acquisition programs and/or
offering a free version to drive broad user adoption. Considering most software startups simply guess
a price, determining your optimal price can become an enormous competitive advantage.

The optimal pricing project is part of the overall “optimization phase” I describe in my metrics driven
go to market approach presentation.

There are three key factors to consider when determining your optimal pricing:

Price sensitivity– You want to find the price that generates the highest yield per 1000 trials (or visitors,
DLs, etc.). You can find this number by determining how many units you would sell at each
price. For example, if you have a 10% conversion rate at both $8/unit and $10/unit, then $10 is
obviously the better price for you. But let’s say at $20/unit demand drops to 8%. Despite lower
demand, yield is higher at $20 so it would be a better price than $10 ($1600 per 1000 users at
$20/unit compared to only $1000 per 1000 users at $10/unit). I estimate max yield pricing first
through surveys and then through experimentation at several price points. Around launch your
volume will be too low for a meaningful sample size, so be sure to launch with “introductory pricing”
which should be at the low end of your expectations. Adjust the price when volume allows you to
hone in on the optimal pricing.

Marginal cost– For web services it’s important to understand your cost per unit to avoid pricing at a
loss. This marginal cost is essentially a floor on your pricing. If you have bandwidth and storage
costs that are $5/user/year, then your business would not be sustainable if you priced your service at
$4/user/year. For most downloadable software, there is no marginal cost per user (beyond marketing
costs).

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Growth strategy– I generally prefer one of the following pricing strategies for innovative
products. One is a Market Builder pricing strategy where the majority of your users are coming
through your demand generation initiatives. Demand generation is expensive (unless driven through
viral tactics) and therefore requires premium pricing to create a high allowable user acquisition
cost. An example of a company that took a Market Builder approach to grow the personal remote PC
access category is GoToMyPC, which combined premium pricing with aggressive radio demand
generation. An alternative strategy is a Market Drafter pricing strategy. Freemium pricing is ideal for
a market drafter. Essentially as the Market Builder creates awareness for the category, the Market
Drafter swoops in and offers a much better deal (SEM is a good place to focus for a Market
Drafter). This strategy only works when a Market Builder is aggressively investing to grow the
category. I prefer the Market Drafter position when possible (see this post for more details on
why). In the long term, the Market Builder must focus on differentiation to justify its higher prices (or
reduce prices)

Once the optimal price has been established, there are many tactics that can used to boost response
rates. These include:

Setting the price a bit higher than the optimal level and then frequently discounting it.

Using a decoy super premium version to make the version with the “real price” seem cheaper.

My favorite pricing model for driving demand is Freemium, combined with carefully researched max
yield pricing on the premium version of the product – then applying the response boosting tactics
listed above. An insightful read on Freemium pricing is Josh Kopelman’s post “The Penny
Gap.” It is an exploration of the “power of free” in driving customer adoption and suggests that
elasticity of demand is not linear. At the price of zero, demand soars.

Dan Ariely also makes this point in his book Predictably Irrational . He concludes “Zero is not just
another discount. Zero is a different place. The difference between two cents and one cent is
small. But the difference between one cent and zero is huge.” He supports this point through the
following experiment: He first offered a Lindt Truffle for 15 cents and a Hershey Kiss for one
cent. Participants (who could only select one) purchased the Lindt Truffle 73% of the time and the
Hershey Kiss 27% of the time. When they were both discounted an additional penny (making the
Hershey Kiss free), demand for the Hershey Kiss shot up to 69% and demand for the Lindt Truffle
dropped to 31%.

There are several other great pricing psychology nuggets in Predictably Irrational; I highly recommend
reading it. It goes well beyond the three basic pricing factors presented above. Some useful points
include:

A higher price not only positions your product as superior, people may actually have a better
experience using the product. He presents a fascinating experiment that shows people got more
relief from a $2.50 pain killer than a 10 cent pain killer, even though they were both just vitamin C. He
concludes “the perception of value, in medicine, soft drinks, drugstore cosmetics or cars, can become
real value.”

When we encounter a new product, we accept the first price that comes before our eyes as the
anchor. This price has a long-term effect on our willingness to pay for the product from then on. He
uses the example of black pearls. Initially there was no demand for them, but when they were
anchored to the finest gems in the world with premium pricing, demand shot up.

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Differentiation gives more flexibility to increase price. His example here was that Starbucks
differentiated the coffee shop experience allowing them to more than double the price of a cup of
coffee compared to Dunkin Donuts.

Finally remember that technology prices tend to drop over time. Keep this in mind when determining
allowable acquisition cost based on a user’s lifetime value. Lifetime value will probably be lower when
considering future pricing pressure. It’s better to be ahead of the curve in driving prices lower, which
often requires innovation that allows you to profitably offer the service at a lower cost than competitors
(for web based services with marginal costs).

Posted in Freemium (Free-to-Premium), Pricing You

Great Guidance on Pricing – Sean Ellis 
http://startup‐marketing.com/great‐guidance‐on‐pricing‐from‐zoosk‐ceo/  

Dec 29th 11

Great Guidance on Pricing from Zoosk CEO

There is a way to think about that. The model that I have in mind is a graph where the X-axis is the
price and the Y-axis is the revenue. At a price point of zero, you make zero money. A ridiculous price
or a very high price point, again you make zero money because no one buys your product. This curve
starts from zero and then goes up and then comes down. There is a peak, the revenue maximizing
price point. Theoretically it is there whether you know it or not. It depends on your product and your
demographics, etc., but if everything else is fixed, there is a revenue-maximizing price point. If you
actually know the revenue-maximizing price point, you can do say, okay, that’s the top of the peak.
However, I prefer to make 10 percent less money but have 20 percent more customers. You want to
stay a little bit to the left side of the peak. It is around 90 percent of the revenue maximization point.
The way I think about it is a little bit different. I don’t look at it as a continuous thing. I would try to
pinpoint the revenue-maximizing price point and then find the nearest round number right before. If
my revenue maximizing price point is somewhere between $20 and $30, I would shoot for $19.95. I
can tell you that there is at least 20 to 30 percent additional profit you can get by optimizing your
product packaging and your product pricing. If you can figure it out, you can go from a company

Shah,Tarang; Shah,Sheetal (2011-11-16). Venture Capitalists at Work: How VCs Identify and Build
Billion-Dollar Successes (p. 64). Apress. Kindle Edition.

A lot of people have asked me about how to determine optimal pricing for a product or service. This
morning I read the following statement from Alex Mehr, the founder/CEO of Zoosk, and thought it was
the best explanation I’d ever seen. It’s a great articulation of the theory behind the process I’ve used
for years.

Alex Mehr, the founder/CEO of Zoosk on pricing: “There is a way to think about that. The
model that I have in mind is a graph where the X-axis is the price and the Y-axis is the
revenue. At a price point of zero, you make zero money. A ridiculous price or a very high
price point, again you make zero money because no one buys your product. This curve starts
from zero and then goes up and then comes down. There is a peak, the revenue maximizing
price point. Theoretically it is there whether you know it or not. It depends on your product

249 
 
and your demographics, etc., but if everything else is fixed, there is a revenue-maximizing
price point. If you actually know the revenue-maximizing price point, you can do say, okay,
that’s the top of the peak.

However, I prefer to make 10 percent less money but have 20 percent more customers. You
want to stay a little bit to the left side of the peak. It is around 90 percent of the revenue
maximization point. The way I think about it is a little bit different. I don’t look at it as a
continuous thing.

I would try to pinpoint the revenue-maximizing price point and then find the nearest round
number right before. If my revenue maximizing price point is somewhere between $20 and
$30, I would shoot for $19.95. I can tell you that there is at least 20 to 30 percent additional
profit you can get by optimizing your product packaging and your product pricing. If you can
figure it out, you can go from a company.”

Shah,Tarang; Shah,Sheetal (2011-11-16). Venture Capitalists at Work: How VCs Identify and
Build Billion-Dollar Successes (p. 64). Apress. Kindle Edition.

Is Your Pricing a Dot or a Triangle? – Cindy Alvarez 
http://www.cindyalvarez.com/profitability/is‐your‐pricing‐a‐dot‐or‐a‐triangle 

Is Your Pricing a Dot or a Triangle?

October 8th, 2009

Most product managers I know secretly (or not-so-secretly) dread pricing. Price too high, and you risk
alienating customers; price too low and you’re undervaluing yourself and making it harder to raise
prices later.

We stress so much about that number that we tend to forget that “price” isn’t a single number to our
customers. When customers consider “what something costs”, they’re actually measuring three main
drivers:

250 
 
 Money: The obvious one. What am I going to pay in
dollars and cents?

Mental energy: How much do I have to think about this?

Time: How long will it take to learn/deploy/configure?

As you can probably guess, these points aren’t independent. The reason “free” is so psychologically
powerful is that it entirely removes the “money” axis and strongly reduces the “mental energy” axis.

I don’t have to think about “free” at all. Paying even one cent – that requires some mental energy. I
need to enter a credit card number, or remember my PayPal password.

For someone who works in a large-ish company, a $500 purchase may be very low mental energy –
they can charge and reimburse it without additional work. A $501 purchase might mean writing up a
description, asking for pre-approval, getting a signature, having to write up a purchase order… a huge
increase in mental energy over an additional dollar.

Time and money are related when the product requires expensive consulting, or steals an expensive
internal resource from whatever they were working on previously. Also, long deployment cycles can
mean paying for a service for months before starting to see the benefits.

Which shape should your pricing triangle be?

Market maturity and customer priorities determine how high or skewed your triangle can be.

Commodity Product, Mature Market

For example, a product in a mature market that has seen commoditization can’t be very high on any
dimension. If I’m looking at, say, dryer sheets, I’m not going to choose an option with a higher price
tag, or a set of warning labels and detailed instructions, or one that increases drying time.

251 
 
I just don’t care enough. Some dryer sheet maker would have to come up with a truly disruptive
innovation before I’d even consider increasing my “cost” on any axis.

New Technology, Early Adopter

On the other hand, take the first-generation MP3 players. They were expensive. You had to find
software to rip your CDs, and then often another piece of software to load the music onto them. It
probably took 45 minutes to load up my Diamond Rio for the first time with a whopping 45 minutes’
worth of music.

The early adopter is okay with spending more money, expending mental energy, and spending time
futzing with this new product. Everyone else… is not. This has led many a product down a bad path.

Cash-Poor, Time-Rich

If your target customer is a high school or college student, this is what your triangle may look
like. Don’t incur costs trying to make the installation faster or the instructions easier – do whatever
you can to make it free or cheap.

252 
 
 Time-Poor, Cash-Rich (or adequate, anyways)

Why does Amazon OneBox exist when BitTorrent is out there?

Because to this audience, it’s not worth the time of searching for a specific episode among a bunch of
crap, waiting to download, dealing with corrupted files… when you could just pay a couple bucks and
get your missed TV show with One-Click.

For this market, don’t worry about your pricing being too high. (If it is, you won’t permanently scare
people off; they’ll come back when you adjust it.) Worry A LOT about how to make the purchase a
no-brainer. Write better documentation. Streamline your checkout process. Invest in making
deployment incredibly fast and easy.

Should You Charge More For Your Product? – Brad Feld 
http://www.feld.com/wp/archives/category/entrepreneurship/page/5 

Should You Charge More For Your Product?

My partner Seth Levine has an outstanding post up today about the freemium model. It’s titled Pricing models,
the freemium myth and why you may not be charging enough for your product and is worth going and reading
right now.

He covers a bunch of stuff, nicely divided into the following topics:

Beware of too many pricing tiers.

Have a clear delineation between product tiers.

How about overlay features that you charge by the drink for?

Be careful what you put a tariff on.

The freemium myth.

Don’t be afraid to charge for your product.

253 
 
Beware the long “trial period”.

Seth has become “the pricing model guy” at Foundry Group – we’ve been dragging him into every pricing
conversation whenever they come up.

I have one counterintuitive thing to add – it’s often easier to raise prices early on than lower them. While many
pricing curves assume a decay curve toward lower prices over time, early in the life of your business you should
consider gradually raising prices until you hit a natural price ceiling. Grandfather your early customers into
the old pricing for a period of time (three months to a year) – they’ll feel like they’ve gotten a great deal for
being an early adopter. Don’t forget to thank your early customers for their support.

Interestingly, this is the opposite of some very popular (and successful) pricing strategies, such as Apple’s for
the iPod and the iPhone. High early prices for premium demand followed by steady price reductions over time
as new products are introduced. If you are an established premium provider of a high demand product,
especially for a physical good (e.g. a phone) vs. a digital good (e.g. software), this approach makes sense, both
from a manufacturing supply perspective as well as a volume manufacturing perspective. But, if you are a
digital good, you have a lot more variable manufacturing capacity (as long as you know how to quickly scale)
and more margin to play with (ahem – usually 99.9%.)

Seth makes an important balancing point that you shouldn’t start out with too low a price point. This is
especially true if you aren’t willing to raise prices to their natural ceiling over time. But, if you have no idea
where to start, and have the courage to increase price quickly as you find early demand, consider a relatively
low price point “guess” and then move it up until you find a ceiling.

It’s easy to underprice your product – Nivi  
http://venturehacks.com/articles/pricing 

It's very easy to underprice your product

by Nivi on April 1st, 2009

What’s the right price for your product? According to Steve Blank, it’s apparently $0. And it’s also $1
million. What?

Listen to this wonderful story to learn how Steve uses these two prices to create a bounding box
around the highest price customers will pay for a product. And see why he thinks “It’s very easy to
underprice your product… particularly if you’re an engineer.”

Audio: It’s very easy to underprice your product (mp3)

Steve’s story is about enterprise software, but you can apply these same techniques and thoughtful
approach to almost any market — including the consumer Internet.

This is an excerpt from the fourth class of Steve’s customer development course. I’ve already taken
the class, but I still subscribe to the Venture Hacks podcast and listen to it on my iPhone while I’m
walking home from the gym.

Here’s a transcript of the story. Also see How to Determine the Optimal Price for Your Web
Service .

“And she realized… she left money on the table.”

254 
 
Steve Blank: Can I tell you a pricing story? When we starting Epiphany, I had no idea how to
price enterprise software. There was one small problem, I had started an enterprise software
company and never been in the business.

But, I had heard, and it actually was true, there was a woman named Sandy Kurtzig, who had
started ASK Softwark. She was one of the first woman entrepreneurs, woman CEOs of a large
corporation. And they were making software for IBM mainframes that was manufacturing
software. Something called Manman, which I used in the late ’70s, early ’80s.

Since it was the first non-IBM enterprise software on IBM mainframes, [when] she got her first
potential order, she didn’t know how to price it. It must have been back in the mid-’70s. She’s [with]
this buyer, has a P.O. on his desk, negotiating pricing with Sandy.

The way she tells the story is, she didn’t know what to ask for it. But, the head of manufacturing told
the buyer to go buy this damn thing. [He] didn’t care, [if] it was the world’s best piece of software.
So, Sandy said she goes into the buyer who says, “How much is it?”

And Sandy gulped and picked the biggest number she thought anybody would ever rationally pay.
And said, “$75,000″. And she said all the buyer did was write down $75,000.

And she realized, shit, she left money on the table. Sandy Kurtzig was awesome. And she said, “Per
year.”

And the buyer wrote down, “Per year.”

And she went, oh, crap what else? She said, “There’s maintenance.”

He said, “How much?”

“25 percent per year.”

And he said, “That’s too much.”

She said, “15 percent.”

And he said, “OK.”

[Ed: This is called "flinch pricing."]

So, enterprise software got priced at $75,000 per year, per module. Now, I have to tell you when I
started at Epiphany I heard this story and someone said, “Steve, how much is your software?”

I said, “$75,000 per year, per module.”

Now, fast forward to about four years later. I’m leaving Epiphany, we’re about to go public like the
next week. I did not want to be a Section 16B officer. I happened to be walking by a conference room.
It must have been conference room 702B then. I think we had 800 people.

I happened to be hearing a pricing discussion. So, I kind of stand outside. And they are arguing
about the pricing I had just made up as an entrepreneur, because I heard this war story. And
somebody was screaming, “You can’t change the pricing. It was calculated by…”

“I was about to let it go for $75,000… By the time we walked out, we got an enterprise software order
for about $1.2 million.”

255 
 
Steve Blank: But the best Epiphany story, which I actually learned from a world class saleswoman
named Gina Rulon-Miller. Her brother Todd was the first sales person at Netscape.

We went into Triple A, CSAA in San Francisco. It was going to be our first multi-million dollar
customer. I went in with Gina. They loved our stuff, it really was going to do them a world of good.
They said, how much is it?

And I was about to go, “$75,000…” And Gina goes, “Shut up I’m the salesperson.” She said, “A
million dollars.”

And I went “…” Gina’s going, “Shut up. I’m the salesperson.”

And the guy looks at Gina and said, “Gina you’re out of your mind. We don’t pay more than
$675,000.”

And Gina said, “All right. We’ll let you have it for $675,000.”

So, here was this software. I was about to let it go for $75,000, my first professional software
salesperson had just gotten $675,000 and she did the same thing. And she said, instead of per year,
she said, “But that’s for the base module. What other ones would you like?”

By the time we walked out, we got an enterprise software order for about $1.2 million. The point
about pricing is, particularly if you are an engineer, it’s very easy to under price your product.
Because you tend to value it on cost or need or competitive or whatever.

Bounding box pricing

Steve Blank: I, finally, in an almost every business I now work up what I call “bounding box”
estimate, which is:

“How much is your product?”

“It’s free.”

“Steve, you can’t mean it. This is our fourth meeting. You know I’m serious.”

“No, no, no. It’s free. Assume it was free, how many would you use?”

“No, Steve. How much?”

“No, assume it’s free. How many would you use?”

Now, for enterprise software does anybody know how you make money in enterprise software?

Yeah. Turns out for enterprise software it’s the number of seats you actually got deployed on. Yeah,
you made money on maintenance later, whatever. But, if you just got deployed on ten seats in one
department, it’s not really enterprise is it?

It’s like closet software, which I used to get stuck into. You actually want to come out of the closet
and be deployed broadly, as broadly as you can. And the test was if it didn’t cost anything, what
would it take to deploy it?

When I used to do that they said, “Well I didn’t really tell you, but the IT guy really needs to approve
this through the…”

“Well, why didn’t you tell me that before?”

256 
 
“Well, the product wasn’t free before. I thought we were just going to put it on ten seats.”

My point is going to zero flushes out a whole set of issues. Other times, I’ll go say to that same
question, “How much is the product?”

“It’s a million dollars.”

“Steve, we’ve been talking for three months now. You know I don’t have a budget for a million
bucks.”

And you get an answer sometimes like Gina did. “The most we pay for this type of software is
$500,000.” Seriously. In a startup, you will find out by asking these questions continually, what the
bounding box of your potential revenue is.

Do not be bound by what other people are charging. Anybody know where that science experiment
that is being run today on a much lower price? Anybody know?

Anybody have the device in their pocket? iPhone. What’s the price of an iPhone app? Anybody know?

I don’t know. There are a bunch of sites out there with some iPhone revenue charts. It’s interesting.
Go take a look at what the right pricing for iPhone apps are. My observation is people are running
bounding box experiments real time. Real time.

Are they free and they drive other upgrades later or they charge you $9.99 and get real value now?

Price: Why Lower Isn't Always Better – Fred Wilson 
http://mba‐mondays.pandamian.com/price‐why‐lower‐isnt‐always‐better/ 

Price: Why Lower Isn't Always Better

I want to tackle the issue of forecasting and projections next in the MBA Mondays series but I don't
yet have an outline in my head of how I am going to approach this critical subject. So I am taking a
breather this week and instead will tell a story I heard from a marketing professor in business
school.

This professor did a lot of consulting on the side. He was known as a highly analytic marketing
expert. He was asked to take on a french producer of champagne as a client. This champagne
producer was trying to enter the US market but was not selling very much of their product in the
US.

The professor did an analysis of the "five Ps"; product, price, people, promotion, and place. He
determined that the champagne was of very high quality, it was being distributed in the right places,
and that the marketing investment behind it was substantial. And yet it wasn't selling very well.

He did an analysis of comparable quality champagnes and determined that this particular producer
was pricing his product at the very low end of the range of comparable product.

257 
 
So the professor's recommendation was to increase the wholesale price such that the retail price
would double. The client was very nervous about the professor's recommendation but in the end did
it. And the champagne started selling like crazy. They couldn't keep it in stock.

The morale of this story is that price is often used as a proxy for quality by customers, particularly
when the product is a luxury item. By pricing the champagne at the very low end of the range of
comparable product, the producer was signaling that its product was of lower quality than the
competition. And by raising the price, they signaled it was of higher quality.

So when you are selling something, be it advertising, software, or something else, think carefully
about how you are signaling the market with your pricing. Having the lowest price among your
competition might be the right strategy but it might also be the wrong one.

   

258 
 
 Sales 
Sales 

Sales and scope creep – Michael Woloszynowicz 
http://www.w2lessons.com/2011/03/infinite‐scope‐creep‐sales‐development.html 

Infinite Scope Creep, The Sales-Development Disconnect

Let’s say you're a developer or product lead at a relatively young, bootstrapped startup.
You're not yet profitable and the company's cash flows are low as your still refining your
product, and have relatively few clients. To increase cash flow your sales team tries to
close every deal possible and are loath to turn down any clients, even if the product is
not a good fit for them. To further add fuel to the fire, nearly every deal is inked with
preconditions of adding missing features that the client “absolutely must have”. Many
reasons are given for closing such poor fitting deals - which I'll get into later - but
regardless of the reasons, they always lead to toxic results.

The Result
The resulting effect of this disconnect is manyfold. For starters, developers begin to get
frustrated as they are pulled away from the initially laid out stories in their backlog and
asked to work on features that deviate from the original plan. More problematic is the
fact they they begin getting confused about the direction of the product, the market it
serves, and the problem being solved. You enter a state of continual scope creep and the
original vision of the product deteriorates into a fragmented collection of features. The
initial problem of cash flows is further exacerbated in the long term as you find yourself
with a product that poorly solves a number of problems rather than effectively solving
one problem. The most detrimental sales actually result in a long-term increase in your
costs if the deal does not fit with your cost structure. The best example of this is
promising a highly customized solution when you have a mult-tenant application with
few customization options.

Under a lean startup approach these sales tactics either slow down, or completely
destroy the build-measure-learn feedback loop. Developers simply make the leap from
one build phase to the next, and never exit the loop, thus no learning takes place.

From a customer perspective it’s important to remember that with hosted SaaS style
solutions client satisfaction and problem-solution fit are paramount. If the promised
value is not delivered then users will simply stop paying. In addition to not paying, the
over-promise, under-perform result will lead to negative referrals which will hurt future
deals with clients that may actually be a good fit for the product.

Prevention
This sort of cycle is easier to prevent than it is to stop, therefore it is important to take
measures from the outset that will stop sales people from ever venturing down this path.
One of the most effective tools is the creation of a user persona and communicating to

259 
 
all teams who your client is and what problem you are trying to solve. Make the
completion of the minimum viable product your priority and only allow changes only
based on validated and significant feedback. Some good rules to follow are:

Any in progress stories should be completed before moving on to a newly proposed

feature. If you are using scrum and sprints, the new feature cannot be started until the
next sprint.

A feature should only become a candidate if several sales meetings have suggested a
need for it. At this point the feature should be tested with the existing client base
through discussion or MVP style tactics (e.g. dummy pages, beta signups, etc.). If the
feature is proven valuable and important to your current and potential users you can
start to prioritize it. The first step in prioritization is determining its ROI, or simply its
benefit to developer effort ratio. The benefit is particularly important to drill down on as
you’ll need to consider whether it will it result in higher conversions, higher upgrade
rates, or wider adoption. If wider adoption is the source of the benefit I recommend
holding off until the product serves its current target user base as well as it can. If the
ROI proves attractive add it as a story and let it marinate in your backlog for a little
while, never jump into the feature right away. If the feature is still relevant in a month
then fit it into your development schedule.

Feature additions or changes need to be decided on by a group of employees. This group

should contain developers, product managers, sales people, and user experience
designers. This way you can flush out all the implications of the proposed change, an
effective solution can be found, and cross-functional buy in can be had.

Features should generally only be added if you’ve exhausted the product’s current target
market

If you’re in the process of developing features for one target market, features for
another target market should only be added in the context of a pivot. Simply put, your
sales team has determined that you are pursuing the wrong market and are changing
the direction of the product to serve this new target market. If you’re not changing
direction then leave the feature somewhere and come back at a later time.

If the cycle has already begun, it’s critical to address the issue with the management
and sales teams and implement the above safeguards. Most importantly develop the
client persona and articulate the problem this user is having. This persona will serve as a
simple test for client leads and will aid in filtering out a great deal of incompatible deals.

Some Common Justifications

You’ll typically hear several justifications for closing an ill-fitting deal but rarely are they
valid.

“We can learn about how this type of customer works” This is never a good reason as
you should be learning how the customer works before starting development. Remember
that you need to learn how this customers broader market works, not just how they
work.

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“This deal is highly strategic and will provide lots of future [insert dubious benefit]” This
is one of the toughest calls to make as there is always the thought that a certain
partnership will lead to future success. Occasionally they are beneficial, but from my
experience these “strategic” partnerships rarely play out as expected and typically
underperform. What you are doing here is making an up-front investment in the hope
that it will result in long-term revenue generation. In effect this is the same as what you
are trying to do with your existing product vision so why not proceed with that? Just
remember that strategic partner ships vary greatly in their success, rewards are
sometimes one-sided, and that they can only be beneficial if you have a finished
product.

“Just this one time” It’s never one time, it’s merely the start of a vicious cycle.

What Your Sales Team Should Be

In the early stages of your business the focus should be on validation and learning. The
sales team should therefore work towards optimizing these two critical components with
an emphasis on long-term value rather than short-term cash flow. Your sales people will
need to be part salesman, and part product manager. They need to close the deal when
it’s a good deal, and listen when it’s not a good fit. While a client may not be a good fit
for the current version of the product, they may present insights on where the product
can go in the future, or perhaps that you’re targeting the wrong market and a pivot is
needed. To get these results from the sales teams the incentives have to be aligned
accordingly. Commissions have to be paid based on long-term user retention and the
profitability of closed deals. If a $100/month sale results in $5000 in up-front
development and acquisition costs it’s hardly a successful sale.

There is a great saying that “strategy is not about what you do, it’s about what you don’t
do”. Remember that in business it’s easy to “yes”, it’s saying “no” that’s hard, but it’s
the no’s that define the success of a product. Everyone is always hesitant to cut
features, refuse features, or turn down clients, but it’s a reality of software development.
Potential clients are never gone forever and if they’re not a good fit today, they may be
tomorrow. After all, if the client is even talking to you today then they are clearly willing
to change their current way of doing things. Always remember that in the early stages of
your business you need evangelists, not detractors (think net promoter score). Focus
your efforts of providing a best-of-breed solution to your target market and aim to
under-promise and over-deliver.

Enterprise customers don’t change – Ben Horowitz 
http://bhorowitz.com/2010/11/15/meet‐the‐new‐enterprise‐customer‐he%E2%80%99s‐a‐lot‐like‐the‐old‐
enterprise‐customer/ 

11.15.10 // Meet the New Enterprise Customer, He’s a Lot Like the Old Enterprise Customer 

Every day I hear from entrepreneurs, angel investors and venture capitalists about an exciting new
movement called “the consumerization of the enterprise.” They tell me how the old expensive Rolex
wearing sales forces are a thing of the past and, in the future, companies will “consume” enterprise

261 
 
products proactively like consumers pick up Twitter. But when I talk to the most successful new
enterprise companies like WorkDay, Apptio, Jive, Zuora, and Cloudera, they all employ serious and
large enterprise sales efforts that usually include expensive people some of who indeed wear Rolex
watches. In fact, companies like Yammer who originally started with new age models have
transitioned to more traditional enterprise sales approaches after experiencing the market without
them. So what gives? Are all these smart people out of their minds? Has nothing changed since the
early days of IBM? Some things have changed, but others are exactly as they were.

The Order of Adoption Has Changed

20 years ago, the technology adoption curve generally conformed to the following order:

Government—specifically Defense and Intelligence organizations

Businesses—with large businesses going first and smaller businesses adopting later

Consumers

Today things have completely reversed. The latest technology goes to consumers first, followed by
small enterprises that behave like consumers, then larger ones, then the military. The stunning
reversal is one of many profound side effects of broad scale Internet adoption.

In the old days (before the Internet), no technology products were free, because distribution costs
made it impossible to offer anything without some commitment from the end customer. As a result,
new technology adoption generally started with the deepest pockets (the military) and worked its way
down to the shallowest pockets (the consumer). Since the introduction of the Internet, many
technology products can be distributed for free, and therefore have some free or free trial version.
Interestingly, the order of adoption now follows decision-making speed rather than deep pockets. That
is, consumers who can decide very quickly adopt first and the military—which has a notoriously
complex decision making process—adopts last.

This reversal first initially stunned businesses. I remember dozens of CIOs at large companies being
shocked that it was easier to find things on the Internet via Google than it was to find things in their
own companies. We’ve seen the phenomenon repeat many times with the most recent being that it’s
far easier to get background information on complete strangers via LinkedIn than it is to know the skill
sets and backgrounds of your co-workers.

Encouraged by the new trend, innovative entrepreneurs imagine a world where consumers find great
solutions to help their employers in the same way that they find great products to help themselves. In
the imaginary enterprise, these individuals will then take the initiative to convince their collegues to
buy the solution. Through this method, if the product is truly great, there will be little or no need to
actuallysell it.

The actual enterprise works a bit differently. Meet the new enterprise customer. He’s a lot like the old
enterprise customer.

Meet The New Enterprise Customer

At the D8 technology conference, Steve Jobs made a statement about selling to enterprise customers
that many missed but was extremely insightful and revealing:

“We want to make better products than them. What I love about the marketplace is that we do our
products, we tell people about them, and if they like them, we get to come to work tomorrow. It’s not
like that in enterprise . . . the people who make those decisions are sometimes confused.”

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Why are the enterprise people so confused? Why don’t they just quickly adopt the best products
without requiring these complex sales processes?

Big Companies Don’t Have Credit Cards

Purchasing anything in a large organization requires a rigorous justification process that generally
culminates in a purchase order (PO). They do not allow their employees to use their credit cards to
buy technology off of the Internet. In fact, at many companies, doing so and attempting to expense it
after the fact is a fire-able offense.

If you work in a startup, you might wonder why large organizations don’t just trust their people to
make smart purchasing decisions. If an employee needs a new technology, why wouldn’t the
company just let him do the right thing? There are many reasons.

The employee may not know what’s appropriate in the context of the larger organization. The more
people in an organization, the more diverse the set of needs. If the organization purchases, for
example, social networking software it must attempt to take these needs into account.

The company may already own the technology or a similar technology. If you work with 100,000
people, how do you know what the other 99,999 have already purchased? When EDS was a
customer of ours, they had a $1B annual credit with Computer Associates. Computer Associates sells
hundreds of products and is constantly developing new products (many of which can only be learned
about via special meetings with the company). How would any employee at EDS possibly know about
potential conflicts without a formal process?

The employee may be corrupted by side incentives – If an employee of a large organization can make
significant purchases without review or proper process, it’s quite possible that he will be corrupted by
an agent of a vendor. For example, an enterprise sales rep might buy a network engineer a new
Porsche in exchange for a $10 million order.

Public companies must comply with Sarbanes-Oxley compliant expense controls. Generally, when a
company designs its expense controls, it must have in place a method for approving significant
expenses before they are made. If a company lets an employee make significant purchase or even a
small purchase that leads to a significant purchase on his credit card, that will violate the company’s
financial controls, because the purchase was not pre-approved.

As a result of these and other factors, large companies employ complex processes to ensure that
major purchases make sense. These processes generally span many different organizations and
stakeholders. It is not unusual for a purchasing decision to include people from many different IT
departments (e.g. development, security, operations) and business functions (e.g. Finance, IT, Legal).
The decision often involves technical decision makers, economic decision makers, and risk
management decision makers.

Often these processes are so complex that almost nobody inside the company knows how they work.
Excellent enterprise sales reps will guide a company through their own purchasing processes.
Without an enterprise sales rep, many companies literally do not know how to buy new technology
products. A top notch enterprise sales person not only knows her customer’s process better than the
customer, but will be skilled at characterizing the value of her product to each decision maker
independently. This will involve product demonstrations, proof of concepts, complete return on
investment analysis and even competitive positioning. The sales rep will work with the various
constituents to help characterize the value proposition their management teams.

Large Enterprises Like Their Old Products

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One thing that all large businesses have in common is that they have purchased a huge amount of
technology over time. In fact, many of these technologies enabled the companies to become big in
the first place. Naturally, the technology deployed in an enterprise varies widely in age. Some of the
systems are outdated, complex, and downright arcane. Nonetheless, once deployed, enterprises
develop great affection for the technology that runs their companies. They may complain about it, but
like an old woman speaking of her spouse, the underlying love is far stronger than the criticism. And
big companies expect you to love their old products too—by integrating with them.

But how do you figure out which old systems you need to integrate with and which ones you can
afford to ignore? Like most things in the enterprise, it’s complicated. Great enterprise sales forces sort
through the myriad of existing systems and help guide their companies to find the essential few.

People in Big Companies Work to Live

If you work in the technology industry and particularly in Silicon Valley, you become used to
employees who work tirelessly to improve their companies. It is not difficult to imagine one of these
employees independently finding a new technology then championing it inside of her company simply
because she wants her company to become great. Outside of technology and especially in very large
companies, people generally don’t do things like that. Most large company employees like to stay
within the scope of their defined job. If they must make a choice between potentially advancing the
efficiency of their employer via new technology or getting home to see their 8 year old’s pee wee
baseball game, it’s not a difficult decision. As a result, expecting them to adopt your product with no
help is probably not a good idea.

Final Thoughts

If you are selling to consumers or companies that behave like consumers, then moving away from the
old channel models may make perfect sense. However, if you plan to sell to a large enterprise, keep
in mind that the new boss is the same as the old boss.

Scaling sales (ABC) – Mark Suster 
http://www.bothsidesofthetable.com/2010/10/31/scaling‐sales‐arming‐aiming‐as‐bs‐cs/ 

Scaling Sales: Arming & Aiming – A’s, B’s & C’s

by MARK SUSTER on OCTOBER 31, 2010

This article was originally posted in a much more concise version over GigaOm if you prefer the
shorter version.

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This is part of my ongoing Sales & Marketing Series. In the first part of this post I talked about
how sales in a startup is often evangelical, requires as consultative sale and needs constant
adjustments based on customer feedback.

The next few posts are going to talk about scaling your sales operations as you move out of the
evangelical phase.

In the early days of selling it can sometimes be an advantage to not have rigid pricing schedules,
complex service level agreements (SLAs), hard-and-fast rate limits, etc. In each sales situation your
goal as the leadership of the company is listening to feedback, calculating the customer ROI, testing
what prices people are willing to pay, learning where budgets will come from, etc.

But what happened to me and what I think happens to others is that this tacit knowledge of how to
sell your company’s products is not as institutionalized as you think. The people that are in the same
office as the leadership team, many of whom have been there since the “early days” intuitively know
how to position the company and how to sell its products. In fact, many of these people can adjust
the company presentations on the fly as you roll out new product features or can reposition versus
the competition as they get feedback from customer losses.

As your company develops multiple offices, hires a larger number of sales people or increases
product complexity over time this kind of tacit knowledge doesn’t scale. The new hires that you pick
up will use your same sales decks created by marketing but will have less impact and you often don’t
realize it’s happening. Or the sales decks will all be customized by your “feet on the street” and won’t
resemble the way you THINK your company is being positioned.

I know all of this, like most everything I learned about startups, from making mistakes at my first
company. We had 4 or 5 sales reps that had been around since the early days. We then brought the
number up to 8-10 and even hired an SVP of global sales & marketing. Because he was a big
company sales exec he was very critical of some of the missing tools at my company. He pushed for
a lot more standardization of pricing, marketing collateral, sales process, etc.

He told me, “There’s no standardized way for me to onboard new people. There’s no way for us to
easily rollout changes to pricing, positioning relative to competitors or new sales tools. We need
more standardized tools if we’re going to “arm” our sales teams with the tools they need to
effectively do their jobs and we need to better “aim” them at the right opportunities.

265 
 
Ultimately he & I had a bad cultural fit. I was stuck in startup culture and he was stuck in big
company culture and their was a chasm between us that couldn’t be rectified. But the truth is that he
was right about the need to for us to change as we grew and I think this happens at a lot of
startups. Like I did, they get stuck in this middle ground where process & tools become more
important.

Be realistic about your skills. I’m not (and never will be) a good process manager because I’m not
process driven myself. I had to surround myself with trusted people who were great at process.

I’m going to take a few posts to talk about some of the scaling issues. In this post I’m going to talk
about “aiming,” or segmenting your deals into A’s, B’s & C’s.

A’s, B’s & C’s

As a very early-stage startup person you’re used to rigorous prioritization. You have no choice since
in the first few years everything you do is about showing results to justify financing to continue your
operations.

I would work through my sales deals pipelines by doing pipeline reviews. In order for a deal to be
forecast in the current quarter you had to have a champion, identified a budget holder with money
to spend, presented the customer with an ROI (return on investment) calculation of the benefit of
using our product and the customer had to be in an active review of choosing a supplier of document
& collaboration services (the product we offered).

You could often tell when a sales person couldn’t defend having the deal be listed as an A deal (and
thus have a high forecast percentage) by having them walk you through each deal. When I got busy
and only had time to review spreadsheets or output from Salesforce.com it was impossible to know
which deals were “real.” The reason, as I learned, is that many sales people like to take meetings
with customers who are willing to meet them and give all the right messages. But many of these
people they’re meeting with are NINAs (no influence, no authority) – and thus not qualified.

Inexperienced sales people will spend too much time with people that are nice to them and talk a
good game about being interested in your products but who don’t have the budgets. I learned this
the hard way. Either we’d have deals that seemed “stuck” (were in the “closing within 3 months”
pipeline for 9 months) or we’d have sales reps who constantly kept adding new deals and taking out
the old “sure deals” that didn’t close.

The most experienced sales reps were the ones who knew that the three most important things to do
with a sales lead were to qualify, qualify, qualify. Lead quality matters because the scarcest
resource of a sales rep is actually time. The reality is that no matter how much you want to sell your
products, you can’t push them on a customer who isn’t ready to buy. They might have other
initiatives, budget constraints or just need more time to evaluate your space. As the best sales
leaders will tell you, “you have to align a company’s sales cycle with a prospects buying cycle.”

This is where management has to step in and help with “aiming.” Ultimately as you grow this task
can be shared between a VP of Sales, VP Marketing and the CEO. I define “A deals” as those that
have a realistic shot of closing in the next 3 months, “B deals” as those that you forecast to close
within 3-12 months and “C deals” as those that are currently unlikely to close within the next 12
months.

“A deals” should get much of the sales person’s time (say 66-75% of time), “B deals” should get the
balance as each sales rep needs to build their pipeline and bigger deals take time. And the key to
scaling is that “C deals” should get no time from sales. They should be owned by marketing.

266 
 
The role of marketing in managing pipelines is to do two things 1) fill the top end of the funnel with
new “qualified” leads (e.g. converted from “suspects” to “prospects”) and 2) managing “C
deals.” Today’s C deals are obviously tomorrow’s A’s & B’s.

So the best run companies have marketing running activities to nurture their C deals. Examples
activities:

Newsletters – one of the goals of newsletters is to keep your company & its products on the
consciousness of your “suspects” or future buyers. C deals go in the newsletter bucket and should be
identified as C newsletter companies. The things you send them should be different than the
newsletters you send to existing customers, for example

Customer Events – It is far easier to get potential customers interested in your products when
they hear actual customers talking about your products and how they are using them. Suspects &
prospects are often in search of success stories from their peers to hear how they’re improving
internal operations. So one of the smartest things we did at Salesforce.com was run “city tours”
which were basically our existing customers standing up and talking about how they were using our
products plus our product management teams talking about future innovation /
development. Customer events are a great way to market to your C deals so that you keep them
informed and try to raise their interest levels

PR – Some companies are excellent at PR and others don’t put much effort into it at all. I think PR is
an incredibly important activity for technology companies and most companies aren’t very good at
it. I wrote a bit about how to better manage journalist relations in this post. The reason many
companies don’t put enough effort into PR is that PR doesn’t have an immediate translation into
sales because it’s most a “C deal” activity.

Analyst Relations – In many technology fields analysts are hugely influential in determining
enterprise budgets. I sometimes find it funny since 73.6% of all statistics are made up, but the truth
is that many analysts are great and help customers frame the decisions they need to
reach. Spending time with analysts getting into their “innovator quadrants” will help you manage
your C deals and pull them forward to B’s & A’s. This is obviously a marketing & CEO activity.

In the next Scaling Sales post I’m going to cover “objection handling.”

Scaling sales (objection handling) – Mark Suster 
http://www.bothsidesofthetable.com/2010/11/02/scaling‐sales‐arming‐aiming‐objection‐handling/ 

Scaling Sales: Arming & Aiming – Objection Handling

by MARK SUSTER on NOVEMBER 2, 2010

This is part of a series on sales & marketing. The original post of this article on appeared on
GigaOm in a more concise version here.

I previously covered how early phase sales teams should be “evangelical” and consultative in
nature. As a tech startup grows it needs to develop more process & management if it is to scale. I
call this “arming & aiming” your salesforce. The first post on scaling sales dealt with “aiming” your
sales teams – making sure they were focused on the right opportunities. This one deals with
“arming” your teams – preparing them for battle by giving them the right tools to increase their win
rates.

267 
 
One of the biggest areas I’ve noticed many sales teams don’t spend time on to train their staff is
“objection handling.” When I talk to people about sales I often describe the sales process as a series
of hurdles (objections) that are put up to avoid making a purchase and your responsibility is to work
through these common objections with your customer.

[update: as per Phil Sugar's excellent comments below - you need to first be sure that the customer
has a need that you can solve and is ready to buy. The first rule is sales is qualify, qualify, qualify so
you don't spend time overcoming hurdles only to find out there is no buyer.]

In the evangelical phase you’re working through these with customers on the fly. Some objections
are real and they end up becoming changes to your product, your service plan or your pricing /
bundling. Some objections are just excuses not to buy that can be overcome with enough time, effort
and evidence.

As a founder, when you’ve been dealing with these kinds of objections for a couple of years it
becomes natural and you easily handle objections on price, product & competition without much

268 
 
thought. It is tacit knowledge. But to effectively scale a sales team you need to codify it, train your
sales teams, monitor results, refine your messages and then refine the training / rollout to your
teams.

Some examples of common objections across many companies:

1. Prices are too high – Inexperienced sales reps will try to convince you they need to lower price
to win deals. More experienced sales leaders seldom compete on price. They’ll discount – sure. But
they want to establish a baseline in the customer’s mind of the value they will get by using your
product. And the only way to do that is to help them calculate the ROI (return on investment) of
using your product. As a company you need to invest in ROI calculators (spreadsheets) that are
easy for sales reps to plug in basic customer metrics and pop out with an expected benefit. It is even
better when the spreadsheets were established with your early customers and therefore the baseline
for the calculations are real. Even better if that customer is referenceable! Referenceable customers
are the holy grail of sales.

2. You’re more expensive than competitors – “Of course we are. We’re a premium
product. Let me walk you through the comparison set of our offering versus our competitors…” You
need to talk them through your advantages. For example, if you’ve raised 3x the funding of your
nearest competitor then you talk about the investment dollars you’re putting into your product
versus the competition. ”It’s not about buying the product only where it’s at today – even though
we’re advanced there – it’s about where the product is going. We’ve investing in R&D at a faster
rate than the competition which is why we raised $10 million to fund extra development.”

3. We’d rather buy the “all-in-one” solution - Let me show you our API’s and how we
integrate. You can have best of both worlds. All-in-one solutions may initially seem appealing but
you end up getting inferior innovation. Our big, integrated competitor is investing across 12
different product sets. We only do 2 and therefore those two are much deeper / better functionality /
more focused. Let me show you how you can use both of our products seamlessly.

Whatever.

These are made-up examples but they are typical of the kind of knowledge you gain over time for
how to win an increased percentage of competitive deals. You need to codify all of your knowledge,
put it into writing that can be disseminated to distributed sales reps and run training exercises
where you drill people on the most raised objections.

And importantly you also need to get feedback from your sales reps who are on the front line every
day what is working and what isn’t. Don’t think that you have all the answers in the ivory tower.

If you don’t arm sales people with the knowledge of how to overcome these obvious hurdles then
each one will be competing without the collective wisdom of your company’s years of experience.

The next post will talk about more of the munitions your sales reps need.

Understanding salespeople – Mark Suster 
http://www.bothsidesofthetable.com/2010/04/08/journeymen‐mavericks‐superstars‐understanding‐
salespeople‐at‐startups/ 

Journeymen, Mavericks & Superstars: Understanding Salespeople at Startups

by MARK SUSTER on APRIL 8, 2010

269 
 
Most tecchnology staartups seem to
t be founded d by three ty
ypes of peoplle: product m
managers, enngineers
or biz deev types (MB
BAs and the like).
l Very feew of them are started, inn my experieence, by saless people
and very y few early stage
s compa
anies really u understand sales.
s That’s why
w I starteed the Sales &
Marketiing Series annd at one poiint I will do a bunch of poosts on the sa
ales methodoology we dev veloped
at my firrst companyy called PUCCKA.

Today I want to talk k about saless executives aand a model for thinking g about them m. If you everr have to
intervieww, hire, judg
ge the performance of, deecide whetheer to promote e, assign clieents/regionss to them
or have to decide wh hether to firee sales peoplee, I think hav
ving a frame
ework for thiinking aboutt them is
helpful.

Here’s m
mine:

Let me sstart with a few

f biases. First,
F I think that most grreat sales peo
ople have an n innate skilll that
can’t be taught. That view from me isn’t surp prising sincee on the topic
c of Nature vvs. Nurture in n
entrepreeneursI’ve cllearly come down
d on the side of natu
ure more than n nurture (aagain, that do oesn’t
mean nu urture has NO
N influence, just less tha an nature). Second,
S I thin
nk that runniing great sales
program ms is mostly about runniing great salles processess. So as you grow your bbusiness and d if
you’re lo
ooking to hirre sales peopple, one of thee most imporrtant things to look for iss somebody who
understaands the salees process annd somebody y that you peerceive as “process oriennted.” More on
o that
later.

1. Journ neymen - Journeymen

J (Journeywoomen!) are, as
a the name implies, the p people who have
“learnedd a trade and d work for annother persoon usually by
y the day.” They
T are hugeely process driven.
d
These peeople take diirections welll from a salees manager on
o how to ap pproach salees campaigns. When
you hear them speak k in an interv
view about hhow they’ve run sales cam mpaigns in tthe past they
y
describee the method ds with precission. They arre masters at
a using Salessforce.com bbecause they love the
structurre that it provides. They’rre organizedd and method dical. They’lll have taken 10 sales courses and

270 
 
they’ll list them all on their resume (why??). They set up “tickler” lists to remind them of calls and
they always make the calls they say they are going to make. They’re always on time. They work
through ROI calculations with customers. They’re great at orchestrating your company to deliver
product demos. They know how to walk a deal from business owner, through IT, through
procurement and through legal to get a closed order. They are the LIFEBLOOD of sales
organizations because they’re plentiful and deliver great value relative to their costs. They’re also
usually very loyal to your organization. Almost by definition. They’re journeymen.

But doesn’t Journeyman almost imply something pejorative? Yeah, kind of. Even though they’re
great at process you can tell when you spend time with them that they miss some sort of “spark” that
you’re expecting in a sales person. Some sort of magic where you just finished the meeting and can’t
remember what they were selling but you know you needed three of them. It’s the “je ne sais quoi,”
the “X factor.” And in my experience Journeyman are not good in two scenarios. a) they don’t tend
to make great heads of sales departments and b) they aren’t the people you want early in your
company. The reason for “b” is that most early stage companies survive on “evangelical sales” as in
when you’re having to educate the customer on something new and different and get them to take a
leap of faith. Journeymen don’t do “leap of faith.” They sell more commoditized or well understood
products that can be sold via a well-defined process. That’s my view, anyhow. And my experience
has taught me that.

2. Mavericks – Mavericks are the opposite of Journeymen. Mavericks are by definition bad at
following rules and bad at process. I should know because I’m a maverick. (John McCain used to be
a Maverick but as Jon Stewart points out is no longer one – super funny 5 minute video – must
watch if you have time and if, like me, you used to love McCain before his lobotomy. If you still love
McCain, um … not so funny then). Mavericks are the people who innately know how to navigate a
sales campaign. They can get access to senior executives and champion a sales campaign from the
top. They still hit all of the highlights of the sales methodology (getting a champion, understanding
the pain, mapping your solution, proving the ROI, finding out the competitors and differentiating
and getting every department to “yes”) but they can’t follow the exact same process every time.
They’re unmanageable. I’m unmanageable. We’re chaotic by nature. But in the end they know how
to put the big wins on the board. They can smell the person who holds the purse strings in a
company and how to gain access to them. They inspire trust in the buyers and they build long-term
relationships. They’re not afraid to break a few eggs along the way – nothing ventured, nothing
gained. The buyer is more loyal to the maverick than to your company. That’s OK.

Every organization needs maverick sales people. They hit your home runs. But … they DO NOT
make good sales leaders. In fact, if they work in sales they shouldn’t have anybody reporting to
them. They should go for the big wins and get all the support they need. I think I made a pretty good
CEO but I know I would be lousy sales manager. Maybe like somebody who could run a restaurant
but wouldn’t make a great chef? To be a great sales manager you need to get a team of people to be
able to follow your sales process methodically. You need to do weekly sales team calls, regular
customer calls with your team, review their pipelines with them, find out when they’re BS’ing you,
produce weekly forecasts, etc. Don’t confuse your mavericks who have the innate ability to sell with
a potential VP of Sales that will need to run your team. The difference is PROCESS ORIENTATION.

Mavericks do work well in early-stage companies and are probably your best bet for you first hire
or two. You need somebody who can lead evangelic sales and get referenceable clients that can be
marketed later when you have your journeymen.

3. Superstars - These, as the name implies, are the rare breed of individuals who have the innate
ability to sell and are very structured and process oriented. You get all the benefits of a maverick but
with more reliability and predictability. You also get somebody who can work well with leverage.

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They’re able to manage and therefore harness the power of many journeymen to consistently deliver
your sales numbers. I generally think that superstars are not the first people to hire in a startup. The
best of them will require too much money and will be working for somebody else managing a team
AND carrying a bag. Superstars are best to hire once you’ve got your product/market fit, proven
your product will sell, hired a maverick and a few journeymen and now need to bring in leadership
and structure to enable you to scale more quickly and predictably. If you found the right person who
is a superstar and is ready to join your early-stage business I wouldn’t kick them to the curb. But … I
question if they’re really a superstar if they’re willing to work for you at a super early stage. Have to
ask yourself why. Or whether you have the wrong read on them.

4. Trouble – If you interview somebody who doesn’t seem like they’re religiously process-driven /
can take good direction and if you don’t have the feeling that they could sell ice to the Eskimos then
don’t hire them. They will not succeed at sales. Enough said.

In life I’ve found it useful to have little frameworks to try and interpret the world through. They
don’t always apply 100% of the time but they’re a useful way to shorthand. The Journeymen,
Mavericks and Superstars matrix has always suited me well and has stood the test of time.

Thank you to the lovely Jacqui for helping me with the Balsamiq mockup graphic. LOVING
Balsamiq!

Building a sales team – Dharmesh Shah 
http://onstartups.com/tabid/3339/bid/10155/Building‐Startup‐Sales‐Teams‐Tips‐For‐Founders.aspx 

Building Startup Sales Teams: Tips For Founders

First off, just to be clear, I’ve never been a sales person. I’ve never even played a sales
person on TV. All the points below have been pulled from startup sales teams that I
think work pretty well (including the team at
my marketing software startup).

Building Startup Sales Teams

1. Don’t hire sales people too early. In the early

days, the founders should be able to sell (and
should be selling).

2. You don’t need sales people, you

need sales. Don’t think VP of Sales — think
“Revenue Engineer”. (Not the greatest analogy,
but just like you won’t hire a development
“manager” as one of the first 5 people in a startup,
you shouldn’t hire a sales “manager” either). Don’t
get caught up in fancy titles — focus on dollars in
the door.

3. Don’t hire several sales people at once. Your goal is to figure out the “pattern” of
what kinds of people are best based on what you’re selling and who you’re selling it

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to. You need some feedback from the system so you can continue to iterate on your
hires.

4. If you’ve never hired or been around sales people before, be prepared for a bit of a
shock to the system. They’re not bad people, they’re just different. If you're an
introverted geek like me, it's helpful to remember that your startup needs to sell stuff.

5. Resist the temptation to create complicated compensation plans. If it requires a

spreadsheet to figure out the commission, it’s too hard. You’ll have plenty of time to
confuse sales people later — start simple.

6. Agile methodologies can work in sales as well. Iterate! Refine your demo script,
your slides, and any other collateral information. Capture the lessons learned by the
best-performing people and spread it to the rest.

7. Sales people will generall act in mostly rational (but often surprising) ways based on
incentives. The rules of the game defines the behavior of the players. You were
warned.

8. ALWAYS connect incentives somehow to ultimate customer happiness. If you reward

just “deals getting done”, you’ll get deals — but at too high a price. You might get push-
back that sales people don’t control/influence customer happiness, but they do. They
“pick” customers, they set expectations, they control the degree of “convincing” applied.

9. Make sure you understand the economics of your business. Figure out your total
COCA (Cost of Customer Acquisition). This includes sales people, marketing people and
marketing campaigns. Quick example: Lets say you paid a sales person $10k, a
marketing person $10k and you spent $5k on Google AdWords (for a total of $25k) last
month. If you sold 10 customers last month, your COCA is about $2,500. Different
businesses have different needs in terms of sales vs. marketing spend. Make sure
neither is too far out of whack.

10. Your life-time-value (how much revenue you expect to generate per customer)
should be higher than your COCA. No, I did not need a degree from MIT to figure that
out. Once your LTV is a multiple of your COCA, you’re ready to start turning the knob
and scaling the business a bit (hiring more sales people). But, if your LTV is way lower
than your COCA, proceed with caution. If there is no hope for LTV getting higher than
COCA, you’ve got a problem. Don’t try to hire additional sales people until the
economics sort of make sense. If the car is pointed towards a brick wall, hitting the
accelerator is not a good idea.

11. Track data maniacally (even if it’s just in a spreadsheet). Information you will want
includes: What was sold, who sold it, when, for how much, etc. This data will be
invaluable later as you start to scale. For example, you should be able to answer the
question: We had 14 customers cancel last month — who sold those customers? Is
there a pattern? In the early days, you likely won’t have the volume (or the time) to
analyze the data — but you should at least capture it for future use.

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12. Your pricing should be in line with your sales structure. For example, you can’t
expect to have an outside salesforce (that meets with customers in person) if your
average deal size is only $10,000. The math won’t work.

13. Once you get beyond three or so people, running your sales in a spreadsheet will
become painful. Start looking at CRM systems (like Salesforce.com).

14. Start watching the shape of your “funnel” as early as possible. How many leads are
you getting a month? How many turn into opportunities? How many of those convert
into paying customers? Once you understand your funnel, you can slowly start tweaking
your system to fix the “leaks”.

That’s all I’ve got for now. For those of you that have built early-stage sales teams,
what are your ideas and insights?

Love startups? Join the OnStartups community on Facebook.

Hiring sales – Furqan Nazeeri 
http://altgate.typepad.com/blog/2007/09/hiring‐your‐fir.html 

Hiring Your First Salesperson

I was recently asked about this topic by a talented first-time founder/CEO and decided to post this
excerpt from my response.

So you want to hire your first salesperson? As founder of your company, you have raised some initial
capital, recruited your initial development team and even gotten your product to a beta level. Now,
you're talking to customers and starting to sell in earnest. This is a pretty important milestone and
decision for you and the company. Here's a couple of tips based off my own experience.

If your background isn’t in sales, then you should find someone whose background is to help you hire
the right person. Salespeople interview well so if you don’t know how to cut through that you’re in for a
ride. But the key is to find someone who’s hired 100+ sales people and sales managers in their career
and leverage their experience. Put them on your advisory board and interact with them
frequently. You might even retain them as a "buyers agent" to help with recruiting. Ask them to do
actual interviews and help source candidates as well.

When in doubt, "hire junior." Except in rare cases, it is probably premature to hire a VP of Sales that
you’ll keep for 2+ years. You want someone who’ll be out in the field selling and bringing back
customer feedback (and sales!) probably more of the former in the first year. Terry Gold wrote a
good blog post on this some time back.

Depending upon how far along the product is, you may also want someone who doesn’t fit the classic
sales mold. Ideally, the person who you hire will come back and help translate why the “customer said
no/not now” (or "yes" for that matter) into new product features/pricing/packaging. Someone who has
product experience or maybe even someone who once worked on a help desk for a product selling
into similar firms could work.

Read and re-read the “Sales Learning Curve” by Mark Leslie. While it’s not directly relevant to every
company, the principals are the best I have seen on how to bring a new product to market and who to
recruit to do that.

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In terms of structuring compensation, be careful not to apply a classic sales compensation package. If
you hire someone with a comp package of $70K times two with commission on sales, you’ll end up
getting pulled in a direction you may not want to go. In my experience, the right compensation
package is a base plus discretionary bonus that gets them to an on-target earnings you both are
comfortable with. You’ll want to agree with them to review the metrics every 3-6 months. Put them in
writing. To pull this off will require establishing some trust between you and your new hire. Take the
time to develop it.

I would stay away from hiring through traditional job boards for this position. Assuming you don't know
someone already, I’d place an ad on LinkedIN jobs and also spend a bunch of time doing searches on
LinkedIN for people who might be a fit or who may know someone who would. You will want to
upgrade your LinkedIN account so you can do searches and send intro notes (costs a couple hundred
per year for a biz account, I think). Network with sales people you admire. Call some of your
customers/beta users and ask them who are the sales people or companies whom they admire. I
found this to be a great source of candidates early on.

Hiring sales people – Mark Suster 
http://www.bothsidesofthetable.com/2010/10/12/startup‐sales‐why‐hiring‐seasoned‐reps‐may‐not‐work/ 

Startup Sales – Why Hiring Seasoned Sales Reps May Not Work

by MARK SUSTER on OCTOBER 12, 2010

A while back I wrote a

bunch of posts on Sales & Marketing and have been meaning to get back to that theme for a while.
Even if you don’t have “direct” sales I would tell you that “everything is a sale” including fund
raising, hiring, getting press and doing business development. So I hope these posts will be useful to
all and not just those who need road warriors.

If you’re interested in recruiting sales people, I wrote on the topic of startup sales people: who to
hire & when – understanding the roles of Journeymen, Mavericks & Superstars.

Evangelical sales – Understanding startup sales people and process.

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One of the biggest mistakes I see early-stage startups making is hiring “seasoned” sales
professionals or hiring people too senior, too early. Here is my recommended approach.

1. Start by selling, yourself - OK not by “selling yourself” but but selling, yourself. Reminds me
ofEats, Shoots & Leaves. OK, I’m still self conscious about whether a comma goes there but you get
the point.

I see way too many startup founders who don’t have experience in selling and probably don’t feel
that comfortable going to customers and asking for orders. This is probably because many founders
are product or technology people. If this is you I think it’s really important to get over this
hurdle. Spending time selling to customers is the best way to find out what their problems are and
how good your solution currently is at mapping to their needs. This only works if you’re not
a crocodile sales person. You learn by asking.

The mistake many startup people make is they hire a “sales person” to go out and talk with
customers so they can do what they’re good at which is building product or “running the
company.” Sales people are a different breed, you say. The problem is that in an early stage
business there probably isn’t a perfect fit between your early product and a customer’s needs. You
learn that by showing them your product, watching their reactions, asking them questions about
what they’d like to see improved and then racing back to the office to talk with the team about what
you’ve learned and how you can incorporate it into your product plans. Repeat this process 50
times and trust me you’ll see patterns.

I was WAY off between my book research about what the engineering & construction market would
want (my first company) and what they actually wanted. I only found out through customer
meetings.

Also, this goes equally for business development. How can you send some young MBA “biz dev type”
out into battle to sign up partners when you’ve never met with your potential business development
collaborators and heard what their goals are and how you can meet them? If you send out the biz
dev guy I’m sure he/she will ink deals. That’s what they do. But you’re unlikely to yield results
unless there is a close alignment of benefits for them and for you.

2. Next you need to hire “evangelical” sales people - Once you’ve started to get alignment
between your product offering and what customers want you’ll need to hire a sales person or
two. You should already have a good feel for the customer pain, how you solve it, how your product
differs from competitors and what the acceptable price points for your product should be. If you
don’t have a “base camp” understanding of these issues you’re not ready to hire a sales person. If
you can’t figure all of this out then adding a non-founder sales person isn’t going to solve your
problems – it’s just going to add to your burn rate.

But assuming that you do have a good starting point for sales, you’ll need to hire somebody to
expand your pipeline of leads, help build customer relations and to allow you also to have some time
for the hundred other things you’re responsible for like fund raising, recruiting, products, customer
support, etc.

The next mistake people make is to hire people who have “done it before” in your field and from a
big-name innovator in your field. So if you’re enterprise sales that might mean hiring people from
Oracle, Microsoft, Salesforce or whatever who have never been at an “unbranded” startup. The
skills to be successful at a sales academy company like those listed are very different than those who
would work at a startup. If they left an “academy” and worked for a startup before coming to you
then they’re probably fine.

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The specific things you’re looking for are: intelligence, ability to think creatively, ability to work
with customers on vaguely defined problems, ability to assemble an ROI business case (with a
template already created by marketing) and above all else the ability to listen, summarize and
follow-through. Early stage selling is way more “evangelical” than process driven. That means
you’re more often than not trying to get customers to realize they actually have a problem versus
their already having budget assigned for a system in your category.

It is a consultative sale. Don’t confuse that with hiring “consultants” who make terrible sales
people. But a consultative sale means you need somebody comfortable working with a lack of
defined structure, process or product. If you hire that person straight from a sales academy they
will be hugely frustrated that you don’t have pricing sheets, high quality sales collateral, a well-oiled
sales process integrated into Salesforce.com and a clear sense of why customers should buy your
product.

Having somebody from an academy institution when you’re ready to scale is awesome. There are
no people like this who know how to crank the sales machine once the product / market fit are
aligned. But hire them too early at your peril. IMO at least.

3. Don’t bring in the big guns yet – The related mistake I see (and have made) is hiring people
who are too senior. I always tell people, “hire somebody who wants to punch above their weight
class” (i.e. the person who wants to next level up rather than the person who has already done
it). Most sales professionals start by carrying bags. As they become more senior they take on
management responsibilities such as planning, forecasting, pipeline reviews, coaching staff, etc. As
they get really senior they hire people to help them with sales ops, comp plans and creating
marketing collateral.

What you really want are guys like Derek Rey who is doing a tremendous job over at Ad.ly. I had
breakfast with the CEO, Arnie Gullov-Singh, yesterday. He was showing me their latest products,
positioning and collateral. It was awesome.

I said, “wow, I’m glad to hear that Krista is working out so well as our head of marketing.” Arnie,
“yeah, she is, but she didn’t do this deck. Derek did. He talks with customers, comes home, cranks
out a new deck and has it in new proposals within the week.” I was blown away by the quality. He’s
on the front line and hearing what customers really want. And he rapidly iterates that back into
product development to rapidly respond to customer requests and has the messages straight into
our sales campaigns.

Eventually you’ll need sales “management” and either your strong early sales leader can grow into
that or you eventually need to bring in somebody with professional sales management
experience. Each situations is different. Some people can scale into the roll and others can’t. And
some of the best sales people also don’t want to move into management in the same way that some
great technical architects don’t always like to move into managing GANTT Charts, work progress
and people.

4. Do many sales meetings together - Once you have your initial sales people in place you can’t
just sit back and review their weekly sales spreadsheets and push them for progress. You still need
to be out on the front lines together. They need to hear how you position your company and how
your products will help the customers. They need to watch and gauge customer reactions. They
need to learn from you and if they’re good (and if you’re open) they also need to give you feedback
on what doesn’t work.

And you need to watch them pitch. Avoid the temptation to always jump in and “save” them. Take
the opportunity to watch the sales process as an observer. You learn so much from being able to sit

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back and just watch the body language rather than having to “perform.” It’s also a vital part of
sales training.

5. Don’t confuse your early sales success with a scalable sales process – Finally, once
your evangelical team is firing on all cylinders and orders are starting to flow in the door, it’s easy
to confuse this with your ultimate success. I was there. Once I had 4 sales reps cranking so I took it
up to 10 and saw cracks in the system. What works early in a company – the evangelic sales – does
not scale well.

I often hear early stage founders telling me about their initial sales successes. I’ve even gone on
some sales calls with them to see customer reactions to their products. I find myself often saying to
these entrepreneurs, “having watched you I can see why customers are interested in buying. You’re
very personable, persuasive and you intuitively know their problems. Plus, they know they’re
dealing with the company owner. Please don’t confuse that with your ability to scale this business.
Once you’re no longer leading the sale it becomes much more difficult without a standardized
approach. I learned this the hard way.”

And I’ll save what I learned for my next post: “Arming & Aiming.”

Selling to enterprise – Chris Dixon 
http://cdixon.org/2010/02/06/selling‐to‐enterprises/ 

February 6, 2010

Selling to enterprises

For some reason when you are selling information technology, big companies are referred to as
“enterprises.” I’m guessing the word was invented by a software vendor who was trying to justify a
million-dollar price tag. As a rule of thumb, think of enterprise sales as products/services that cost
$100K/year or more.

I am by no means an expert in enterprise sales. Personally, I vastly prefer marketing (one-to-many)

versus sales (one-to-one), hence only start companies making consumer or small business products
(advertising based or sub-$5000 price tags). But I have been involved in a few enterprise companies
over the years. Here’s the main thing I’ve observed. Almost every enterprise startup I’ve seen has a
product that would solve a problem their prospective customers have. But that isn’t the key question.
The key question is whether it solves a problem that is one of the prospective customer’s top
immediate priorities. Getting an enterprise to cough up $100K+ requires the “buy in” of many people,
most of whom would prefer to maintain the status quo. Only if your product is a top priority can you
get powerful “champions” to cut through the red tape.

My rule of thumb is that every enterprise (or large business unit within an enterprise) will, at best, buy
1-3 new enterprise products per year. You can have the greatest hardware/software in the world, but
if you aren’t one of their top three priorities, you won’t be able to profitably sell to them.

One final note: enterprise-focused VC’s sometimes refer to products priced between (roughly) $5k
and $100K as falling in the “valley of death.” Above $100K, you might be able to make a profit given
the cost of sales. Below $5k you might be able to market your product, hence have a very low cost of
sales. In between, you need to do sales but it’s hard to do it profitably. Your best bet is a “channel”
strategy; however, for innovative new products that is often a lot like trying to push a string.

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 Create a burning platform – Mark Suster 
http://www.bothsidesofthetable.com/2009/10/04/3‐sales‐tips‐for‐startups‐creating‐a‐burning‐platform/ 

3 Sales Tips for Startups – Creating a Burning Platform

by MARK SUSTER on OCTOBER 4, 2009

This is part of my ongoing series Startup Advice. Many

entrepreneurs who start technology companies are product people, technologists or savvy business
people who worked previously for a larger company. Most start-up entrepreneurs have little or no
sales experience. I know I didn’t. But through nearly a decade of startups I learned that sales comes
down to three essential elements:

1. Why Buy Anything? This is the easiest one for most entrepreneurs. If you sell a product direct
to a customer – in person or on the phone – you need to understand what their pain points are and
position your product benefits against those pain points. I’ll do a full post on this another day. But
most good entrepreneurs do this naturally.

Even businesses that attempt to sign up customers directly on a website need to answer this question
for people albeit programmatically and through good website copy. Many, many tech companies I
meet start with a set of “awesome features” and present them to me (and I suspect also to
customers). They end up building what is called a FNAC (feature, not a company) as most people
won’t pay for them. I first heard this term from the guys at First Round Capital.

2. Why Buy Mine? This one is a little harder but still quite straightforward. Not only do I need to
understand a customer pain point that my solution solves but I also need to convince them that my
product does it better or most cost effectively than others on the market.

Many entrepreneurs think naively that it’s not good to have competitors. To the
contrary. Customers seldom like to buy unless they perceive they have options. They like to feel like
they compared your solution to something else on the market. If nobody else does what you do then
maybe it isn’t really such a big market after all. (Incidentally, VC’s hate when they hear companies
pitching who say, “I don’t have real competitors” as I outlined point three in the linked post).

I’ll cover “Why Buy Mine” in a later post, but my quick answer is that referenceability is the most
critical tool to solving this problem. By having reputable people from reputable businesses listed in

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case studies, on the website with quotes and/or willing to take phone calls makes all the difference in
the purchasing decision.

3. Why Buy Now? The real test of sales and the

topic of my post is “why buy now.” It’s what kills most sales cycles including raising venture capital.

Great sales leaders know that you can only sell effectively when your sales cycle matches the
customers buying cycle. That is why they qualify customers really hard and ask the sort of
questions that would make us non-sales-trained people squeamish. Asking customers directly
whether they have budget this quarter for a program like your company offers takes nerve. Great
sales people are also direct about asking whether the individual that they’re speaking with controls
the budget.

When you qualify a customer, if the customer has shown interest in your product but isn’t ready to
buy then they get sent over to marketing. Great sales companies manage this very effectively and
have sales prospects put into 3 buckets: those ready to buy this quarter (A), those ready to buy soon
(B) and those not likely to buy in the next 12 months but still interested (C).

Most companies are not good at managing integrated sales & marketing departments – particularly
startups. My old employer, Salesforce.com (they bought my company Koral), were masters at
this. They generated an enormous amount of inbound leads through PR, email blasts and heavy
efforts with analysts such as Gartner Group, IDC, Aberdeen Group, etc.

Initially the leads need to be qualified. If you’re not ready to buy then you go into an email
database. Their goal is to get you to appear in person at city roadshows that they run or to come to
their annual Dreamforce conference. Here they surround you with sales professionals, product
people and, of course, lots of referenceable customers! If you appear then they’ve increased the
probability that you’re closer to becoming an A or a B buyer.

In products designed to sell directly on the web the process is no different. Your goal as a website is
to elicit my email address out of me with as little else required as possible. With this email address
you can continue to market to me even if I don’t buy today. That’s why websites offer newsletters.

Websites are also getting much more sophisticated using techniques such as re-marketing to find a
way to drive you back to their website. If you spent time at a site you might not be aware but
they’ve possibly dropped a cookie on your computer and use pixel tracking to follow you around the
web. If you were at a ladies online retail store don’t be surprised if you start seeing advertisements
for that same store next time you’re reading the Washington Post or on Yahoo!. Companies such
as Undertone Networks or SeeWhy (run by my friend Charles Nicolls who’s a BI expert formerly
from Business Objects) offer these products to websites. If I didn’t get you to buy when you came to
my site I know you were at least interested. I just need to get your back and find a more compelling
reason for you to BUY NOW!

Note that the “why buy now” problem exists with VCs also even though nobody will ever tell you
this. If you meet a partner who really seems to like you buy he/she is in the process of closing
another deal it may be a good 2-3 months until he’s ready to look seriously at another deal. I like to
say that if a partner has recently done a deal he is often in the penalty box for a while. Not always,
but it’s your job to politely find out. You need to qualify VCs the same way you qualify sales leads.

280 
 
 So is there nothing you can do to
accelerate sales? Actually within a certain margin you can bring sales forward slightly. In sales
we do this by creating a “compelling event” or as some people call it “a burning platform” (in case
the reference isn’t obvious, when you’re on a oil platform that’s burning you have no choice but to
jump.

It’s the reason that vendors create limited time period sales or exclusive offers only available until
they run out.

If you work in enterprise sales you need to be able to not only identify the pain of “why buy
anything” but why buying now is going to be a significant economic benefit. As an example, if
you’re a network monitoring tool such as Gomez and you can demonstrate that your customers
performance is slow and for every second of latency they’re losing 8% of sales to abandonment
resulting in $20,000 / day – you’ve got a burning platform.

There are many techniques but all involve proving that the customer will have more benefit by
acting now (lose weight before Summer!), will have more pain if they don’t act (your customers are
abandoning your shopping cart) or that they’re behind the competitor.

Can you express your proposition to customers in terms of a compelling event? If so, I suspect your
sales will grow more quickly.

The one day sales cycle – David Skok 
http://www.forentrepreneurs.com/sales‐marketing‐machine/one‐day‐sales‐cycle/ 

Where it all started – The One Day Sales Cycle 

The concept of building a sales and marketing machine first came to me in 1983 in my first startup. I
found myself faced with a 9 month sales cycle, selling CAD systems to Architects. The whole process
of marketing and sales looked like a mysterious black box – it worked sometimes, but not often
enough, and it was hard to figure out what was working and what was broken, and most of all: how to
grow the business.

I had started this business right out of college, and had no sales, marketing or business training. But I
did have an engineering background, and I started to apply that disciplined thought process to the
problem. What I found was:

We were spending six months educating the customer on what CAD was, and how it could benefit
them.

We had to show them lots of drawings that other customers had produced

They needed to talk to many customer references

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They had to figure out their tax situation and choose between a lease or suspensive sale.

They had to get financing approval from a bank

There was also one sales blocker that had been a problem for a while: we had to show them how they
could network their workstations, and share drawings. If you are old enough to remember back to
1983, you will remember that the idea of a LAN did not exist in those days. However our workstation
vendor HP, had just come out with something called a Shared Resource Manager – the equivalent of
a modern day file and print server.

After mulling this over, I came up with the idea of holding an event where we would try to address all
of the sales cycle elements.

We held the event at a major resort location in a very high class hotel that created the impression of a
company that was far larger than the 35 people we were at that time. The first problem to solve was
figuring out what message would work to attract our audience. At first I was taken with the idea of
playing up the entertainment of the location, but fortunately I realized that this would send the wrong
tone. Since CAD was still a very new technology, we realized that the best draw card would be to
focus on the education. The second big draw card was the opportunity to come and meet with other
architects who had made the move to CAD and hear their experiences.

We were successful in attracting 600 architects to attend with their wives. They arrived in time for
dinner, and were taken through an entrance that resembled going through a time machine into a
dining room where we had carefully placed our best prospects next to our best customers.

Then came the next problem: this event was being held in South Africa, and unlike the US where I live
today, the average South African businessman is somewhat shy, and unlikely to actually talk to their
neighbor at a dinner table. To overcome this problem, we hired a well known stand –up comedian to
break the ice. This was a dangerous move, as the wrong comedian could doom the whole event, but
fortunately we had found exactly the right person, and his tone and jokes were right on the mark. The
atmosphere of the entire room was transformed. There are few things as powerful as laughter.

Towards the end of dinner the lights dim: on stage left, an actor playing the role of an architect
appears in a small pool of light. His phone is ringing. It’s his wife complaining that he is working
late again. The wives in the audience all nudge their husbands – this is a familiar scene to them.

On the other side of the stage Merlin appears, and with the aid of 36 slide projectors, three video
projectors, and the first computer contolled laser, takes the audience on a humorous tour through

282 
 
history, showing how the world would have been different if CAD had been around in days past. If you
think about the year this took place – 1983 – before Steve Jobs, before Bill Gates, it was the first time
this audience had had been exposed to technology like this for a product launch. This had the effect
of making our tiny 35 person company look like a global multi-national organization.

The next day we took the architects through a series of educational lectures, including looking at the
ROI. Then we had a tax consultant talk them through the tax implications of suspensive sale versus
lease. And we had pre-approved each firm with a bank that was on hand to discuss how the financing
could be made to work.

The final element that put the finishing touch on the event, was probably the most important. We had
taken a very large circular room, and covering every inch of wall space there were CAD drawings
from our customers. And finally we had brought in a Shared Resource Manager, HP’s first iteration of
a file server and local area networking.

But we made one mistake. By 2pm, the first architect walked up to me and asked to place an order.
We had no idea things would work that way, and we were completely unprepared. I asked my
assistant to quickly type up an order form and get this photocopied. By the end of the event, we had
taken $4m in orders. More than the entire revenue that the company had done in the past 12 months!
And bookings stayed at $3m a month thereafter.

I have never been quite so successful with applying the methodology, but it has helped to build some
very successful companies since then. I hope it is of help to you. Remember the art of this
methodology is to get inside of your customer’s mind, and learn to think they way they do. Then
shape your whole sales process around what you learn from that experience.

Posted by David Skok

   

283 
 
 PR 
PR 

Pitching a tech blogger – Mark Hendrickson 
http://markmhendrickson.com/how‐to‐pitch‐a‐tech‐blogger 

How to pitch a tech blogger. —

I've been asked privately quite a few times over the last couple of years how one should pitch their startup to a
tech blog likeTechCrunch, GigaOm, VentureBeat or ReadWriteWeb. So I've decided (quite selfishly) to write a
post about the subject instead of repeating myself or re-forwarding emails.

This comes from my experience as both a tech writer (for TechCrunch, ~1.5 years) and internet startup
entrepreneur (for Plancast, also ~1.5 years), so I've been able to see things from both sides of the table,
particularly when it comes to PR for newly founded startups. As such, these are principles that I primarily
recommend to unproven entrepreneurs with unknown companies who want to launch publicly for the first time.
Once an entrepreneur or their company gains visibility, their approach to PR will evolve and the press may end
up coming to them for news instead of the other way around.

The Story Is Key

When you pitch a blogger -- or any writer for that matter, whether they work for The New York Times or your
local paper -- it's crucial to recognize their desire to identify and then write a story. And by story, I mean
something that starts, continues, completes or encapsulates a narrative. Bloggers have no interest in merely
reporting facts detached from meaning. And they certainly don't want to report facts that actually have
insufficient significance to their readers. Bloggers dread the idea of someone coming along and justifiably
saying "so what?". Good narratives prevent that. Great narratives are thought-provoking and get further
developed in readers' minds.

Now, you obviously don't have the power to directly dictate which narrative a blogger will craft as the result of
your pitch (no matter how many pay-for-publish conspiracies you've heard). But it's important to think about a
narrative for your company or product, because you can and should steer the blogger towards it. Why? Because
bloggers are strapped for time and don't possess the same depth of domain expertise as you. Lay out a narrative
that jibes well with their preconceptions and they'll likely run with some form of it.

It helps to recognize some of the more common types of narratives. If you read through the headlines
on Techmeme, you'll find that most fit into at least one of the following:

Competitive or Political Drama - aka "company X releases product Y to kill company Z"

Gossip - "CEO of company X gets tangled up in Y"

Insight - "trend X will change the world because of A, B, and C"

Evolution & Confluence - "service Y is like X for Z, capitalizing on the recent developments of A and B"

Success - "company X has created super impressive technology Y, is growing fast, or has made lots of money"

Failure - "company X is dying or has messed something up"

284 
 
The idea is to figure out which type you want to adopt and then craft the facts of your announcement into a
compelling and succinct narrative that conforms to it. You'll likely opt for type #4 or #5, but don't hesitate to
spice it up with a bit of #1 or #3 (the story can have sub-narratives, but expect the blogger to lead with only
one). This isn't an exercise in stretching the truth or making stuff up; there's a reason why you've built what
you've built or done whatever you're announcing. Weave that reason into a bigger story while avoiding as many
buzzwords as possible.

When framing your narrative, you'll do well to remember that bloggers are creatures of comparison. They'll
immediately try to compare your product or announcement to another they've already seen, and if they find a
close match, they'll pass on it. You should get out in front of this reaction by emphasizing the characteristics of
your announcement that make it unique. But don't insist that it is incomparable; on the contrary, be forward
about drawing comparisons that will highlight the significance of its uniqueness. The writer should come away
from your pitch thinking "I've seen cows before, and this is indeed a cow, but it's purple! All of the other ones
I've seen are only black and white" not "This guy insists this purple thing is not a cow but it obviously is. It
might be worth writing about the fact that it's purple but I'm not sure; it feels as though I'm being pitched
another cow".

Relationships Matter

This may sound like psychological manipulation directed towards selfish ends (i.e. sales) but if that's how it
feels, you're doing it wrong. The goal here is to help the blogger, not exploit them. When you help them (with
well-articulated material for a story), they help you (with a story that will publicize your business). As with all
transactions, it relies on a relationship, however temporary. And the success of that relationship will depend on
how much trust and rapport you've established.

A lot of times when entrepreneurs are ready to pitch, they go looking for a friend who knows and can refer them
to a writer. The idea here is to leverage someone else's relationship to validate themselves transitively. This is
all fine and good, and it's certainly better than submitting a story to a writer cold. However, it's much better to
begin building a direct relationship with them well before the pitch.

One of the beautiful things about the internet is that you can develop relationships with people without ever
meeting them. Get on your favorite bloggers' radars by commenting thoughtfully on their posts, retweeting and
replying to them on Twitter, and submitting promising tips to them for stories that have nothing to do with your
company. If you blog, take the time to write pieces that link to their pieces; they'll most likely read them and take
note of your name. If you happen to live in their area, introduce yourself and chat with them casually at an
industry event without giving an elevator pitch unless they ask.

The point is to achieve some level of familiarity and validation before ever pitching them on a story, not to
become their best friend. In fact, you don't want to be too overeager or complimentary, otherwise they'll
perceive you (rightfully) as a suck-up.

When you're ready to pitch, make sure you're not wasting their time with material that can't be delivered as an
interesting story. A litmus test is whether you'd honestly be interested in reading about your announcement if
you weren't the one behind it. And when presenting the story, keep it real. Certainly don't embellish or lie about
anything. Build trust by throwing in a few facts that, if published, might not make you look so good. If you must,
just ask the blogger to please not publish them and they won't, but you'll gain credibility in their eyes.

A Straightforward Procedure

As far as the mechanics of delivering a pitch, it's best to ping a blogger about the announcement you'd like to
make about a week beforehand. Describe it in one paragraph (no more, no less), suggest the time you'd like
them to write about it, and ask them if they're interested and want to hear more. If they respond in the
affirmative, send them a few more paragraphs with details and some visuals (e.g. screenshots or demo video) or

285 
 
private access to an alpha product, if relevant. Do not send them a press release; it will only insult their
intelligence.

Try to be flexible on the timing if they're busy, and if you must pitch the same announcement to more than one
blogger (not advisable for unknown startups who should bolster the value of their story with exclusivity), be
completely forthright about it and your reasons for doing so. Resist the urge to propose an embargo; they only
cause frustration.

Once a blogger has written about you, don't embarrass them by being the first to comment with "thank you for
writing about us!". Do your part in promoting the piece by getting friends and family to retweet, post to
Facebook, etc. And space things out before pitching them again so they don't grow tired of you or the subject.

Your Company's Best Representative

If this procedure sounds simple enough, you can craft the most compelling story for your company or product,
and you have the time necessary to build these relationships, then you shouldn't hire anyone else to handle PR
for you. It'll only be a waste of money, and you'll get less than optimal results. In any case, bloggers much
prefer to work directly with executive-level representatives than PR firms, so you'll be doing them a favor.

As you scale your business, or if you find any of this particularly daunting, then perhaps you should seek
professional guidance. But otherwise take this as an opportunity to develop a new skill set and relationships
that'll serve you well even beyond your current startup.

Good luck!

Building relations with journalists – Mark Suster 
http://www.bothsidesofthetable.com/2010/03/22/6‐tips‐to‐building‐relationships‐with‐journalists/ 

6 Tips for Building Relationships with Journalists

by MARK SUSTER on MARCH 22, 2010

File this under both Startup Adivce and Sales &

Marketing Advice.

I was over at Robert Scoble’s blog Sunday night reading about the “Death of the Great Startup
Launch.” I’m not 100% sure that I understood his core thesis but I *think* it was that startup events
such as Demo force such a zone of secrecy about what you’re working on (with a threat of being
kicked out of the event for leaking your story) that they kill the ability for most companies to dazzle
people with a great company launch and doesn’t allow journalists to triangulate with others in the

286 
 
market before going to press. Oh, and Demo charges the startups $18,000. Robert’s article is worth
reading.

It got me thinking, which for me is always the sign of a good blog post. I think Robert’s right. Too
many startup execs place too much emphasis on the big stage launch. There are many problems
with this:

- Your chances of being selected aren’t great

- When you are selected you share the stage with 49 other companies (in the case of
TechCrunch50. It is a great show but would be 10x more valuable if it were TC20)

- Most people pay attention to the first 5 companies. Maybe 10. By company 22 it’s hard to
remember what any of them did.

- Journalists don’t know enough about your company before the show, don’t have time for proper
research, and you will be competing for their time afterward with 49+ other companies that want
them to write about you

- If you’re Yammer, Mint or RedBeacon (all winners) you’re knighted with wonderful
coverage. Many other great companies are not.

- So I’ve always advised people that if they do launch at a big show, the most important public
relations work they do is after the conference. Use the fact that you were on an anointed list to build
credibility when you eventually approach journalists (and VC’s, customers, employees)

But more broadly it got me thinking to one of the biggest mistakes tech executives get into in the first
place. They see journalists as a means to and end. They see them as a person who can influence the
outcome of their company at a single point in time – when they (the startup) have something
important to say. I’ve heard many startup CEO’s (and VCs!) lament the coverage they get from
journalists who reported the details unfairly. It’s no wonder many companies don’t get good
coverage. Here’s my thoughts on improving your relationships with journalists and as a by-product
improving the coverage that they afford you:

1. Have a great product – OK, I know I’m stating the obvious, but being friends with or helping
journalists will never get you great coverage (if you’re dealing with a high-quality news
organization or blogger) if you have a bad or mediocre product or service. At best you’ll get
coverage or avoid getting panned. Don’t put in the time to getting coverage until your product
rocks. Guy Kawasaki said it best (paraphrasing), “you can’t do great marketing with a bad
product.” Total waste.

2. Know that journalists are human – Again, sounds obvious. But you’d be surprised how
much tech folks either hold journalists too much on a pedestal or disdain them. They’re human. Get
to know them as human beings. The closest relationships I ever built with journalists were at
cocktail parties where we didn’t talk anything about my company. I became quite good friends with
a journalist at the Financial Times and eventually helped her as she wrote a book on the venture
capital industry. It started socially. The more she got to know more the more she called me for help
with stories. The more you connect with them the more you’ll get over the tendency to want to “spin”
and the more they’ll trust you when you give them facts. They get BS’d too so much that you
shouldn’t take their trust for granted.

3. Understand their needs - You need to understand a journalist’s needs. First, understand their
deadlines. Imagine if you had to release your software daily in order to keep your job or to have the
traffic numbers you need to earn your paycheck. They are often interested in knowing whether

287 
 
there is a story to be had from their discussion with you. I’ve gone on social lunches with journalists
where they’ve brought a small pad of paper and pen and left it on the table. Sort of makes me a bit
uncomfortable because I’m thinking, “sh*t, I hadn’t planned anything interesting to say. Are they
expecting an announcement out of me?” I don’t think they always are. But as journalists they’re
always prepared just in case.

When they are interviewing you for a story, don’t be afraid to ask what the “angle” of the story
they’re working on is and how you can best help them with the story. Every great article has an
“angle.” The angle of this article is that most people don’t build good relationships with journalists
and they should. If I needed third party quotes to support that story I’d be calling journalists to get
their opinion on my topic and calling CEO’s to get theirs. In my blog I just save that for the
comments where people can say what their perspectives are.

By knowing the angle you know how to better serve their needs when you speak. Make sure you
know before talking how much time they have – remember they have to publish frequently. To that
end, make sure you also know when they plan to publish your story.

Mostly, I believe that journalists want to be able to have “unfiltered” conversations with real
business leaders. Given a choice of your marketing person or talking to you (the founder) there’s no
competition. Make yourself available. It is an important part of your job. Not talking to the press is
a bit like a politician saying they don’t want to talk to the press because they’d rather save that time
for drafting legislation. Might be true, but not in your best interests.

4. Help them better do their job – I’ve always been a big believer that relationships with
journalists are a long-term investment. You need to deposit in their bank first. Get to know them
when you don’t have a story that is running. Offer to help them with stories they’re working on. Be
willing to go on the record with quotes / sound bites. If they want access to people in the industry
that you know make sure to help broker the intro – both sides will thank you for it. If you’ve got
good ideas for a story – shoot it over to them in an email. If they call you for an interview that has a
deadline – be responsive. You’ll be depositing all the way and earning trust.

On many occasions I’ve offered to give 30 minute industry overviews on a tech topic to journalists
when they’re not working on a deadline and want to better understand a topic like SaaS, Cloud, LBS,
etc. The bottom line – if you enjoy discussions with people, if you enjoy educating and sharing –
these conversations will not only form closer relationships but will be enjoyable for you as well.

Robert Scoble interviewed me in 2006 about my startup, Koral. This video will be too long for most
of you to want to watch (22 minutes) but provides a good example of how I think about this. We
had a far ranging discussion. I wasn’t trying to pitch a tightly controlled message about my
company. It was Robert’s show. I wanted to just let him take it where he wanted it to go (while
ensuring that I at least got in my points about what Koral did and why it was a benefit).

By the way, don’t forget that all those times you’re quoted in the blogs and press articles helping
other people’s stories you’re actually accruing benefit as well by having your name and company
listed.

5. When it is your turn you’ll get a fair shot – If you’re helpful to journalists they are far more
likely to want to cover you when you have news to share. It’s that simple. Do not equate that with
them giving you glowing reviews – you have to earn that. But you’ll likely at least get inches. And
remember when you do to understand the angle of their story, understand the key points you want
to communicate and make sure to balance those to make the article successful for both of you. Often
when the journalist is agreeing to consider writing about you they don’t yet know the “angle” so I
always recommend trying to define the angle. Don’t be afraid to be transparent. You can say

288 
 
something like, “I was thinking that you might cover a story like, ‘why today’s mobile ad networks
don’t benefit most application companies’ and then work me into that story line. Does that sound
right to you or do you want to come at it from a different angle.

6. If you’re unhappy fight back fairly – There is always going to be the time where you get
unfavorable press. If you don’t that’s a sure sign that you never really had any success so you’d
rather be the person who occasionally gets side swiped. Deal with it gracefully. Write the author
and let them know that you understand why they wrote their story they way that they did and your
OK with that. But that you’d like the opportunity to clarify a few points so that they can better
understand you for next time. If possible, use it as a way to get an in-person meeting to discuss
it. At a minimum maybe you’ll have a chance to strengthen your rapport for next time.

Also, remember that this is the era of the blog. Don’t be afraid to write a blog post with their
comments in it and point out why you think the actual case is a bit different than what they
wrote. Be respectful. If they wrote some good points obviously point those out, too.

Summary: Journalists are people. It turns out that they’re actually quite interesting people. And
they spend time with people far more interesting than you or me. So spending time with them can
be enjoyable. You can hear all sorts of wild stories and learn much. So any relationship you build
with them will be worth it purely at the friendship level. But one day you’re obviously going to want
coverage (after all, I don’t hang out much with journalists who cover the healthcare sector). Make
sure you deposit much in their bank in terms of assistance and trust before you ever luck for a
withdrawal.

If any journalists read this please feel free to add extra tips or disagree with anything I’ve said.

Noone cares about your startup – Matt Brezina 
http://www.mattbrezina.com/blog/2009/12/no‐one‐cares‐about‐your‐stupid‐little‐startup‐5‐tips‐to‐make‐
them‐care/ 

No one cares about your stupid little startup – 5 tips to make them care

Dec 3rd, 2009

by Matt.

This post is adapted from a talk I gave at Sutherland Gold’s PR Bootcampin October 2009.

The title of this post “No one cares about your stupid little startup” was a message I
learned in the earliest days of Xobni during a phone call with SiteAdvisor and Hunch
founder Chris Dixon. To this day, I still haven’t met Chris in person (Chris if you come
across this post, we’ve got to catch up next time I’m in NYC), but this one phrase has
guided every step of my thinking for Xobni’s PR strategy for the past 3 and a half years.

I’ve embeded my presentation below. The presentation will take you through our path
to 3 million downloads. The first half of the presentation isn’t PR specific but outlines our
stages of user development. I outline how we rolled our product out to the masses
through carefully planned stages: stealth, closed beta, nerd scarcity, invite beta, public
beta,official launch, and business model driven growth (the current stage).

289 
 
The seccond half off the presentation speecifically foc
cuses on fiv
ve tips and
d case studiies for
how to drive awarreness for your
y startup
p through PR.P I’ve broken out tthe latter half
h of
the pre
esentation below
b and included
i muuch more explanation
e than I wass able to pu
ut in
powerppoint.

Here is
s a link to the
t preso just incas
se the emb
bed above doesn’t w
work for you

1. Tie yourself to
t a bigger trend

This is the best wa

ay for a sta
artup to hacck the PR system.
s Th
here are thoousands of
startupps. Why should a jourrnalist write
e about youurs? Yet, th
hey all love
e to write ab
bout
Facebook, Informa ation Overlload, and GGoogle vs. Microsoft. So, tie youurself to on
ne of
these trrends.

For Xob
bni, we tied
d ourselves to the follo
owing trend
ds

The we
eb inside yo
our inbox

Facebook crossing
g into the business
b wo
orld

Email, tthe oldest social

s netw
work

Enterprrise softwarre is going grassroots

Email o
overload

But youu can’t justt say you arre part of a trend, you
u have to make
m some noise so pe
eople
pay atttention. Soo here is whhat we did.

Remem mber a coup ple years aggo how Faccebook wou

uld send you
u an email that said “you
“
have a message,”” but didn’t send you tthe contentt of the mes
ssage? I h
hated that. Turns
out, a llot of peoplle hated thiis.

So, onee night we made

m a Faccebook app
p that wouldd put a big button on your Faceb book
page thhat said “Sttop! Email Me Insteadd” and whe en a user clicked the b
button, it op
pened
an emaail addresseed to you. You could also one-c click reply to any Faceb
ebook mess sage
with thiis button annd kindly ask
a the send der “Please
e email me instead.”

10 tho
ousand peoople installe
ed our app iin less than
na
week. F
Fred Wilson,VentureBeatt, and othe
ers wrote ab
bout it. Wee hadn’t ev
ven announced
what Xo
Xobni’s real product wa
as and yet we were allready work
king on ourr PR.

290 
 
2. Take every opportunity to meet a journalist in person

I won’t say much, other than two quick corollaries. First, use a product feedback session
as a way to build a relationship before you are ever looking for a story. Tech journalists
like Arrington, Om, Rafe and others have seen a lot products come and go. They have a
good idea of what works. Have them look at your product way before you need that
press hit “ah.” (arm slap, arm slap – think trainspotting heroin injection) You’ll get
some good product feedback and you’ll build a relationship that is deeper than any press
release.

Second, this all become much easier if you are in a tech capital where tech journalists
and bloggers are living their lives. The ability to bump into a writer from the WSJ,
TechCrunch, or CNet on a street corner is an under appreciated benefit of basing your
company in the SFBay.

3. Heavily engage with users – WOM is better than PR

A few things we’ve done that seemed to work well:

Our 5th employee was a customer support guy

We have an elite alpha forum of 500 users that test and provide feedback way ahead of
the general public. And they worship Tyler our QA lead and his rare form of tough love.

Tough Love Tyler

We continue to stay focused on individual users. I try to do one phone call per week
with a user. It resulted in a good blog series.

We have a special twitter handle for customer support xobni_support

And we send out a lot of t-shirts

Zappos.com is one company that has made their blue ribbon customer support a PR
story in and of itself.

4. Journalists are people. People are lazy. Therefore, journalists are lazy.

Most startups are on to this trick. Just like you design your product for the expected
laziness of your users, build a press center for lazy journalists. They are people too.

291 
 
We havve a webpage dedicateed to everyything a jouurnalist cou
uld ever nee
ed (screens
shots,
videos, company history,
h inv
vestors) in oone spot. A product viideo on you
utube can do
d
miraclees. You can n help a blo
ogger underrstand yourr product without
w hav
ving to try it and
they’ll o
often put th
he youtubee video in th
heir blog.

5. Be a source of data

The pre
ess may noot care abou
ut your pro
oduct, but th
hey often will
w care ab out the datta your
companny has can provide. Do
D you remmember Janet Jackson’s “wardrob be malfuncttion”
during the Superb
bowl? It waas the mostt replayed piece
p of tellevision eve
er recorded
d. Tivo
had the
e data.

I know that was th

he first time I ever th ought, “Da
amn, I wish I had a Tiv
vo.”

d crisis mana
PR and agement – M
Mark Suster 
http://ww
ww.bothsidessofthetable.co
om/2011/08/114/teachable‐‐moments‐in‐p
pr‐crisis‐manaagement/ 

What Sttartups Can Learn

L Aboutt PR and Cris
isis Managem
ment

by MAR
RK SUSTER
R on AUGUS
ST 14, 2011

I was reecently appro

oached by Fa ast Company y to commen nt on “crisis managemen
m nt” at startup
ps in the
wake off the Airbnb “ranksackga
“ ate” story. I a
agreed to do the intervieww because thhe story was about
what oth her companiies can learn
n rather than n about airbn
nb in particuular.

292 
 
 What are the
teachable moments? The short article in Fast Company is here if you’d like to read it.

In a nutshell – I think airbnb eventually got to the right place and I was impressed with the letter
their founder Brian Chesky wrote and their new commitment to safety and damages. Obviously they
wish they would have figured this out a bit more quickly, but as a young team I personally cut them
a little bit more slack than I would if it were Oracle, for example.

And as long as people put things right and show contrition, situations like this eventually become a
“tempest in a teapot.” Today’s Internet titans are filled with such momentary lapses.

But I thought I’d use the situation to talk more broadly about some PR lessons you might learn for
your own business and also incorporate some situations I’ve faced recently with some portfolio
companies.

1. If You Don’t Shape Your Story, Somebody Else Will

My golden rule of public relations is that “if you don’t shape your story somebody else will.” We see
this in politics all the time. Think John Kerry and the “swift boat” scandal. Whatever your political
view we can all agree that John Kerry is a terrible communicator. He’s verbose, often off message
and wooden.

During the 2004 election he was accused of having made up material facts from his service in the
Vietnam War in an election against somebody who didn’t serve in a war. How do you lose that
debate?

Simple: he let other people tell the story. He didn’t respond quickly and forcefully. Journalists write
stories that have an appeal to readers whether the accusations have merit or not. Just look at the
silly Obama birther debate that we wasted so many news cycles on.

You know the saying, nature abhors a vacuum. The story will get written whether you want it to or
not.

Don’t be “swiftboated.” Shape your own story.

2. Understand the Gravity of the Situation for Your Customers

So how do you know when to publicly come forward with information and when to not do so? Is it

293 
 
ever appropriate to just let a news cycle pass assuming the story will move on and die down? The
obvious starting points to think to yourself are:

Has something happened that fundamentally affects my customers or partners?

Is there a story that negatively affects how people perceive my brand?

Is there a reason I need to communicate to my constituents?

Is there a need to change my policies, announce a mea culpa or get a topic focused on the right
points?

If you’ve done something that is wrong you should put it right immediately. Do not expect it to blow
over. The perception of your brand by not responding will not recover. You cannot seem overly
defensive. If you believe that journalists or competitors are telling a story that isn’t right you need to
put that straight. Do so by winning the hearts and minds on substantive talking points rather than
attacking others. Attacking always comes across as petty.

3. Don’t Bury Bad News

If you have information about a situation that has gone terribly wrong don’t cover it up. Remember
that the cover up always ends up worse that the actual infraction. We learned that from the original
“gate.” If you were hacked and customer passwords were stolen, get the story to your customers
ASAP. Yes, it will be bad. But imagine how much worse the story will be in 30 days when people find
out you knew their information was stolen and they didn’t have a chance to reset passwords, cancel
credit cards or whatever other remedies they would have preferred to make.

Consider the flawless response from Brian Norgard at Chill. His product auto-posted a testimonial
from Dave Morin into Facebook and Mark Zuckerberg called the tactic “lame.” Pretty tough when
you’re called out by Zuck himself. Yet a quick response clearly made this Chill moment into
lemonade.

If you want to see flawless in action, read Chill’s post. They shaped the story. They reacted quickly.
They didn’t try to bury the news of what they’d done. They turned off the feature (took the high
ground) while defending the practice in their post. Moreover, they drove a lot of attention to social
TV viewing and Chill through their response. 10/10.

4. Never Blame the Press

The most tempting thing for inexperienced entrepreneurs to do is to attack the press. It’s easy to say
somebody hates you, got the story wrong, is lying, has biases, etc. In fact, some of these things may
even be true in some circumstances. Your job is to change the situation, not shoot the messenger.
Build deeper relationships. Have private conversations to change opinions. Find other media outlets
to tell your story. Know your positive talking points. But don’t pick a fight with the press. That’s a
war you’re not going to win.

We live in a free society. It’s the job of the press to hold us all to account and question our conduct,
our performance, our accuracy our businesses. Sometimes the story will be dead-on and will benefit
us all by protecting consumers, sometimes I won’t agree with the story and think it will be proven
largely wrong. In any event, I’ll take a free press any day. Journalists are doing their jobs. When
many do it simultaneously – even when some stories aren’t 100% accurate – we have way more
transparency in our system.

The positives far outweigh any possible negatives.

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5. Know Your Key Messages
I was recently talking with an entrepreneur who had just gotten a ton of press around his company
for an interview he gave to a journalist. The story was controversial enough that it created follow-
on articles. He seemed proud, “all press is good press, right?” Wrong. I told him,

“Look, all of the press you got was totally ‘off message.’ You’re being talked about for
the wrong thing. I don’t mind controversy. But if you’re going to say something
controversial make it about the market you serve. Make it about the point-of-view
you’re trying to change.

Make the story be about your market. Journalists aren’t going to write about you all
the time unless you’re Facebook. You just burned a story. You wasted that opportunity
with that journalist and that journal. What a shame.”

Know your talking points at all times. Know what you want the market to talk about. Stick to your
script. All press isn’t good press. Off message press is a wasted opportunity.

6. Don’t Take the Bait

Another entrepreneur contacted me recently because a competitor had attacked his company in the
press. I’ve written about this topic before – you should make your competitors frenemies, even when
the do stupid things like attack you. Sure, if it’s a major attack that you believe will hurt your
business you need to respond. But my view is that you take the high ground. Attacking back makes
you both look petty. Two wrongs don’t make a right. Lead in the press with your positive attributes.
Use it as an excuse to get a journalist to write about you.

The story of X company attacks Y, how does Y respond is an angle journalists can sink their teeth
into. Of course they want you to attack back hard – that makes a great story for them. It doesn’t help
you. Stay focused on your message.

And privately reach out to your competitor. Go meet them in person. Explain that your biggest
competitor is inertia as it almost always is for startups. That, or incumbents. But tit-for-tat between
small companies NEVER makes sense. Don’t do it.

See here how much perfect bait was tee’d up for MG at TechCrunch in this public fight between
Google & Microsoft and again and again. Public fights are the gifts that keep giving for journalists
and those fighting never come off looking good – they just convince themselves they do.

7. Develop Trusted Advisors

Like in every part of your business you need advisors. Startups often have advisors that help on
recruiting, fund raising, biz dev, sales, etc. You need friends who have lots of experience in dealing
with the press and hopefully relationships with journalists themselves. Trust me, these advisors will
prove invaluable if you don’t have a lot of media experience. It isn’t something that comes naturally
to most.

I’m always surprised how friends ask me for media help after they fawked up a story and never in
advance when they’re planning. With portfolio companies I’m always involved in the planning
phase. I want to know our media roadmap.

8. Get to Know the Press Now

Most startups talk to the press when they have a big event they want to talk about. That’s too late. I

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know it’s counter-intuitive because it seems like you shouldn’t talk with the press until you’re ready
with something to say.

The reality is you want to have journalist relationships well before you have a story. Help them with
other stories. Get to know what areas they’re knowledgeable and passionate about. Become
interested in their profession and in them as people. Just like I advise people to get to know VCs
early, so too with journalists. Here is a quick action plan for you in how to build journalist relations.

9. Get Media Training

I do a lot of public speaking and that includes speaking on television. Very few people are good at TV
and many are sh*t scared of it. Yet with some simple media training you can be an effective
communicator.

The same goes for press interviews. Knowing how to stay on message, knowing what your talking
points are, knowing what the journalist’s angle in the story is, etc. are all parts of effective media
training.

And any great PR firm will have a media training department. It’s how I learned the golden rule of
TV interviews – ABC. Answer, bridge, communicate. Answer the question your asked briefly, use a
bridge sentence to change to what you want to talk about and then communicate your key messages.
It works every time. No media training for me = no ABC. It was worth every penny.

10. Have a PR Strategy

You probably also want to have PR people with whom you work. Sometimes they will work inside
your company, sometimes they will be external. Here’s a 10-point guide on how to work with PR
firms.

PR doesn’t happen by accident. It’s a business function and a very important one at that. Good PR
will help you punch above your weigh class. Bad PR will bury you and make everything harder:
funding, recruiting, biz dev, sales.

Draw yourself a chart as a CEO of all the activities for which you must dedicate time. Make sure at
least 5-10% of your time allocation is in this bucket. Year round. PR is a continual process, not an
event.

Hiring PR agencies – Brant Cooper 
http://market‐by‐numbers.com/2010/05/startups‐dont‐hire‐a‐pr‐agency/ 

Startups: Don’t Hire a PR Agency

By brantcooper, May 12, 2010 6:46 pm

I hope my PR friends won’t hate me after this post, but the point needs to be
repeated: Startups should not hire PR agencies. It seems not a week goes by without
hearing about young companies blowing huge wads of cash on “marketing” they’re not
ready for. Some entrepreneurs get in this fix because they fail to distinguish between
PR and other marketing tactics. They know intuitively or are told they ‘need marketing,’
but the first thing they think of is PR. As I’ve mentioned before, PR <> Advertising <>
Word of Mouth <> Social Media, etc.

Before you hire a PR agency or even consider PR, the first thing you need to understand
is what you are trying to accomplish, what is your objective. Second, you should
consider whether that objective is right for the stage of your business. If you are an

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early startup, pre Product-Market fit, or even pre “Sales and Marketing Roadmap,” you
should not hire a PR firm.

Hiring an agency is wrong, because, generally:

You do not need press releases

You do not need a campaign blitz of articles and press mentions

Your PR firm does not know how to do your customer messaging or positioning for you

Your PR firm should be no where near your social media

Most PR firms will tell you need all of the above, that they are the experts and you
aren’t, and will try to charge you a retainer of at least 5K/month

You do not need press releases.

Do your customers read press releases? Does anyone? Press releases were originally
intended to notify media of a newsworthy story. In the high-tech world, releases have
been so abused by businesses blasting trivial events on the one side and by media
outlets writing “stories” that repeat the content without critique or judgment that the
credibility of releases has diminished significantly. And it’s getting worse. Online
releases are used not to provide notice to interested parties, but rather to generate
external links in order to boost PageRank. If your objective is the latter, there are
several online PR services that will accomplish your goal for a lot less money.

You do not need a campaign blitz of articles and press mentions.

An agency orchestrated analyst and media tour and blogger outreach program is called
“awareness” marketing, is intended to create “buzz” about your product and company,
and can indirectly lead to increased visits to your web site by prospective
customers. Hiring an agency to lead this effort is still the best way to go, because a
good firm not only has a great rolodex of media contacts, but the principals
have relationships with the media that mean increased credibility and better
press. The problem is that startups are not ready for the buzz. You can only launch
once and if you blow it, it’s blown. If your selling process isn’t tuned to your customer’s
buying process, if your target market segment isn’t finely tuned, if you product doesn’t
provide enough value to retain users and you need to pivot, you’ve likely wasted your
one chance at not blowing the Techcrunch bump.

Further, as you grow and learn more about the market, you want to cultivate your own
relationships with key figures in your industry. Since reporters and analysts participate
in social media, access to them through your network without the assistance of a PR
agency is pretty easy.

PR firms do not know how to do your customer messaging or positioning

I find this one particularly irksome, because PR firms often tout their ability to develop
messaging and positioning. And they can do a good job when targeting the media
and analysts. PR firms do not know your products, customers, or competitors. You

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do, so it’s your responsibility to learn what messaging and positioning works in your
market. The key verb here is learning. You should be testing your positioning through
Customer Development interviews and A/B testing. There’s a large pool of talented and
creative people (including PR professionals) who can help you brainstorm concepts and
wordsmith phrases, but outsourcing the effort to an agency is a recipe for bland,
undifferentiated marketing-speak. Further, wrong positioning, like placing you in the
wrong market, could ultimately lead to your startup’s demise.

PR firms do not belong any where near your social media

Big companies hire PR agencies to manager their social media streams, because they
don’t want to screw up their brand. It’s spin, baby, spin. It’s used as a continuation of
traditional one-way communication from company to consumer or as a
new (mostly) one-way communication from consumer to company black hole. This is
likely not your social media strategy. Your strategy likely is to belong to a community
through active participation (in ways that don’t directly benefit you), and to provide
value unique to you and your business. You might retweet interesting articles that relate
to your industry, answer questions unrelated to your business, or even give props to
competitors who have done something positive. Such activity requires intimate
knowledge of your products, customers and community and you cannot expect a PR
agency to have that level of knowledge.

Most PR firms will tell you need all of the above, that they are the experts and
you aren’t, and will try to charge you a retainer of at least 5K/month

PR agencies are in a tough place. Online PR resources; reporters, analysts and

influential bloggers easily accessible to businesses; decreased use of traditional (e.g.,
print) media; and a legacy of a high-priced retainer fee structure portents poorly for
traditional agencies. Hence the move to make their case as the natural purveyors of
social media marketing. For the reasons given above, however, I beg to differ.

Which isn’t to say, you should never do PR.

At Eric Ries’ Startup Lessons Learned conference last month, I participated on the
Customer Development panel and we were asked if PR was ever justified. While
moderator Sean Ellis and fellow-panelist David Binetti rightly pointed you shouldn’t do PR
campaigns, as I discuss above, I mentioned that there are ways to use PR activities in
“small” ways to help you achieve discrete objectives. Low-level PR can help build an
“expertise reputation” for a Founder without compromising the company. Low-level PR
might help you access specific industry contacts who you feel may be early adopters.
The distinction here is that you’re not trying to build “buzz,” but rather are taking
discrete steps to achieve a defined objective within the context of the stage of your
business. For these tasks, you can do them yourself or you might hire a PR consultant
and pay them by task or by hour.

Finally, some believe that buzz is required to raise capital. I don’t know, but I have a
hard time believing that’s true. I do know that I’m not sure I would want money from
someone who could not see through the ruse of manufactured buzz.

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Comments welcome!

PR for startups ‐ Erica Swallow 
http://mashable.com/2011/10/10/pr‐startups/ 

10 Essential PR Tips for Startups 

October 11, 2011 by Erica Swallow33 

Erica Swallow is a technology and lifestyle writer.

Sign up for her course on “PR for Startups” to learn more about getting media coverage for
your fledgling business.

It can be challenging for unknown startups to garner press attention — budgets are tight, relationships
with journalists may not be that strong and explaining a new concept is difficult. Not to mention, early-
stage startups usually only employ a few people focused on product and development. Therefore,
marketing and public relations are often tackled piecemeal by whomever has time.

Good press, though, can be one of the biggest drivers for startups looking to grow their user bases,
and as a result, a pretty important component for success.

As a tech journalist, I’ve been pitched by hundreds of companies and have developed a taste for what
works and what doesn’t. Read on for my startup tips.

1. Know What’s Newsworthy

Before you begin pitching your startup, stop to think about what is truly newsworthy, especially to the
publications you’re targeting.

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Sadly, many startups simply aren’t newsworthy, because they aren’t unique or don’t offer any added
value beyond their existing competitors. If your startup is in that boat, it’s really not a matter of figuring
out how to pitch your company — instead, you may want to consider improving your product before
hitting the pavement.

That being said, if you feel your startup is unique and worthy of coverage, figure out the right angle
with which to approach a journalist. A few common ideas include:

The startup’s launch

The launch of a new product, feature or offering

The release of a compelling study or interesting data

The company’s response to a current event

News of a high profile partnership

Once you figure out what qualifies as newsworthy, begin crafting your message by first understanding
all of the details about what you’re pitching.

2. Have a Concise, Value-Driven Message

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Before sending out any pitches, take time to craft your company’s message. Be able to explain your
startup in one sentence so that anyone — techie or not — can understand its purpose. For example,
here is how a few of my favorite startups describe themselves:

“Airbnb is a trusted community marketplace for people to list, discover and book unique spaces
around the world online or from an iPhone.”

“Skillshare is a community marketplace to learn anything from anyone.”

“Lot18 is a membership by invitation website for wine and epicurean products from coveted producers
at attractive discounts.”

Cut down on industry jargon so that any average Joe can understand your pitch with one read.

After you’ve crafted your company pitch, stick to it for everything you pitch — unless, of course, you
find ways to improve it over time.

Besides your company’s description, you’ll also need to create a message for the news event you’re
hoping to get covered. Figure out how to explain your story pitch in only a few sentences. Journalists
get tons of pitches every day — it’s very likely that the journalist you’re pitching will only read the first
few sentences of your email.

When finding your voice for the pitch, try not to force a hook. For example, a lot of press releases and
pitches that I receive around key holidays try to make the enclosed news sound more relevant due to
the upcoming holiday. If the hook is unrelated, though, it just bogs down the message and makes it
difficult to understand.

Once you’ve crafted your message, making sure that it is clear and concise, be certain that it answers
these questions for the journalist: “Why is this newsworthy? Why should my audience care?”

3. Understand a Journalist’s Coverage Area & Audience

Determine which demographic — and therefore, which publication — would be interested in your
startup. Then research which journalists at that publication cover the vertical in which your startup or
its news would fall.

Consider making a list of the top 5-10 journalists in your industry that you’d like to build relationships
with and then move forward, focusing on those journalists every time you have a story to convey.
Read up on the journalists’ articles and get a clear understanding of what each of them covers. When
you pitch them, showcase that you follow their work and feel that your startup fits in with their
coverage.

You don’t have to come right out and say that you’ve read all of a journalist’s articles to convey that
information, though. For the sake of originality, try to stay away from the cliche first sentence of, “I
read your recent post called ‘XYZ,’ and I think you’d be interested in my startup.” If you can’t think of a
compelling format, go with something like, “I noticed you’ve covered location-based networks quite a
bit at Publication X, and I think you’d be interested in learning about how my startup is changing that
space by [fill in blank].” Be sure to differentiate your company from ones that the journalist has already
covered, however.

301 
 
While pitching individual writers sounds more promising to many PR folk, you should always
determine the official pitching method for your preferred publication. For example, stories for
Mashable should be pitched to news@mashable.com. That inbox is monitored at all hours of the day
and relevant pitches are forwarded to the correct editors and writers. Contrary to popular belief, news
inboxes aren’t always bottomless pits.

4. Customize Your Pitches

People generally don’t like to be part of blast emails, and journalists are no exception. When you want
a particular person to cover your story, customize your pitch to be relevant to his coverage area and
audience.

Take the extra time to craft custom emails for a small list of journalists that you really want to cover
your story. They will most likely notice that you’ve taken the time to write a thoughtful email and be
more likely to respond.

5. Avoid Press Releases & Simple Mistakes

I’ve rarely encountered press releases that were helpful. Generally, they are lengthy, full of empty
quotes from company reps and tainted with marketing jargon. Just stay away from them. Period.
Instead, stick with custom emails.

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Now, I know you’ll be tempted to copy and paste information from one email to another — and you
should. After all, your company’s description and the news pitch won’t change much. Be careful,
though, of copying incorrect information, such as “I love your work on TechCrunch,” when the writer
actually works forVentureBeat.

Another common mistake is to misunderstand a writer’s coverage area. Just because a reporter has
written about the top startups in Canada doesn’t mean he wants to know about your Canadian
printing company.

6. Have Useful Assets Available

As you get down to pitching time, make sure you have all assets ready that a journalist might request,
such as:

A company or product description

Photos relevant to the story

Screenshots of the product

In some cases it may make sense to include a screenshot or photo in the initial pitch, but most of the
time just mention that you can send over photos, screenshots and more details if the writer is
interested in learning more.

7. Consider Timing with Exclusives and Embargoes

Timing is essential when pitching news. You want to give the writer enough time to report, but you
don’t want to pitch the idea too soon that the writer forgets about it by the time your company
launches or announces the news officially. I personally prefer to receive news one week in advance of
the official announcement. And when possible, I love to have the option of covering the news as an
exclusive, when a publication is given the right to be the first publication to report on a given story.

Another key term to know is “embargo.” An embargo is “a request by a source that the information or
news provided by that source not be published until a certain date or certain conditions have been
met,” as stated on Wikipedia.

An embargo is useful if you anticipate that reporters will need extra time to accurately report the news.
This gives them time to interview sources at your company, for example, while still getting the story
out right when everyone else does.

8. Offer Up Unique Data

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When pitching, include data and numbers that support your ideas when possible. In fact, an
interesting study, infographic or other data sometimes warrants its own pitch. If your company has
gathered proprietary information that tells a compelling story, pitch it.

9. Follow Reporters on Twitter

Make it your goal to build relationships with the group of journalists that cover your industry.

Meeting up for lunch or drinks isn’t always the best option when it comes to keeping the conversation
alive, though — oftentimes, a journalist may only want to meet up when you have a story to pitch.
After all, he or she is probably busy doing other things.

A great way to stay in touch is to follow your key reporters on Twitter. Writers often tweet when they’re
looking for sources, and they share articles and other news that they’re interested in. Use these
pieces of information to learn more about each journalist and tailor your communications accordingly.

Furthermore, there’s nothing wrong with a little interaction. When you find something you think a
journalist may enjoy, tweet it over. And when he or she shares an interesting article or tweets
something entertaining, feel free to interact.

If you’re unsure of who to follow, check out Muck Rack, a list of journalists on Twitter.

10. Reverse Pitch Using HARO & NewsBasis

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It’s much easier to pitch a reporter when you already know what he or she is writing. Use tools
like HARO andNewsBasis to find and respond to reporter requests for sources.

If your company or someone within your company matches a journalist request, respond by clearly
explaining how you could add value to the story. Oftentimes, this type of coverage helps position
individuals at your startup as subject matter experts.

Spin and PR – Mark Suster 
http://www.bothsidesofthetable.com/2009/11/29/save‐your‐spin‐for‐someone‐who‐cares/ 

Save Your Spin for Someone Who Cares

by MARK SUSTER on NOVEMBER 29, 2009

Handling PR with VCs

This is part of my series on How to Raise VC but could equally be filed under Startup Advice more
generally.

I recently got a phone call from an entrepreneur whom I respect and who runs a company that I
hope will do great things one day. He had pitched me in the past and I told him that for a variety of
reasons his company was too early stage for me but that I would happily keep track of their
progress.

He started the call by telling me he had exciting news. He was about to be featured in a major US
news magazine as one of their “hot” picks. I think my response surprised him, “Really? Is that why
you called? To update me on your PR? That’s what you’ve got? PR? Save it for someone who
cares! What progress have you made in your business?”

I don’t think that’s what he was expecting. Entrepreneurs get so used to friends and family
congratulating them on their press coverage that they forget sometimes that this isn’t real. A
positive news story means NOTHING about the core performance of your business. A good friend of
mine was features on the front cover of the LA Times business section with a glowing article. He had
2 weeks’ cash left in the bank and was facing massive layoffs or potentially bankruptcy.

Press doesn’t mean anything other than free advertising. Don’t get me wrong, I’m very pro PR but
please see it for what it is and don’t think that smart or experienced people are going to see it as any
more than it is either.

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Our call recovered and we spent the rest of the time talking about the development of their
management team and their product. But it got me thinking about how often entrepreneurs
overplay their PR so I thought I’d try to offer some advice and how to play PR with VCs (or more
broadly with customers or business development partners)

1. Press coverage really matters – The good news – your press coverage really does matter. I
know that most people will tell you that they aren’t influenced by what they read on TechCrunch but
the reality is that people are way more influenced by what they read in the press than they even
admit to themselves. Just notice how many VC emails you get after your TechCrunch article or after
you were on stage at TC50. Please don’t take my post as meaning you shouldn’t have PR as an
important part of your company’s strategy.

In another post I’ll talk about how PR has changed dramatically in the past 10 years or you can
justread Brian Solis’s blog or buy his book on the subject. Most notably you need to
understand Earned Media and how blogging, public speaking and social media play an important
role in the new PR landscape.

2. In your VC pitch your PR page should take no

longer than 30 seconds – Wait. If press coverage matters so much then why shouldn’t I talk it up
more in my VC pitch?

Many entrepreneurs have a PR page in the PowerPoint deck. It has logos of the 5-6 most prominent
places they’ve been covered with a paragraph from each article. They proceed to read these
paragraphs out loud to the VCs in the meeting.

PR is subtle. When I read an article about you I’m influenced. When you sit and walk me through it
for 4 minutes on a page I’m reminded of what it is – press coverage. It shows nothing more than
you have the ability to get coverage for yourself. Again, I reiterate, it IS important. Press coverage
helps you to recruit team members, it helps add legitimacy to your customers who often do Google
searches on you before buying and it helps influence biz dev (partners), corp dev (acquirers) and
investors.

So what is the right way to pitch your PR page – either in a VC meeting or in a biz dev meeting? Put
up your slide with the 5-6 logos of journals that have covered you. Reduce any quotes to a few key
words and make them large.

When the page comes up say,

“I guess every entrepreneur needs to put in the obligatory PR page. We feel honored that we’ve
gotten such good press coverage. Most notably we loved that ReadWriteWeb referred to us as ‘a
next generation TripAdvisor” because that’s exactly how we want to be positioned. PR has helped us
to drive our numbers faster than we had planned and has gotten us to our 300,000 registered
users. We plan to continue to use PR as an ongoing part of our customer acquisition strategy.”

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End. Next page. And only go back if you’re asked to. Leave them wanting more. You’ve
accomplished two things. One – you’ve shown that you understand how PR plays an important role
in customer acquisition and more broadly in your company’s success strategy. Two – you’ve been
subtle about your PR achievements so the VC is left with a positive impression of your press
coverage rather than becoming cynical.

3. In an email you can have curated links - So at the risk of sounding contradictory, I still
think press coverage is important to VCs. The best way to handle your press coverage is to send a
series of links in an email to the VC you’re getting back in touch with. It can be a simple email on
any topic and toward the end say, “I’ve included some links to the most important (or most recent)
articles covering us in case it helps with your research.”

I’ll close this story down with the one I started – the entrepreneur who called me to tell me he was
about to be profiled in a major news magazine. How could he have turned this into a positive? After
the article was written he could have sent me a short email with a one paragraph intro saying, “Just
wanted to let you know we got this great coverage in ABC magazine: (link to article). We’ve been
making progress in bringing together our management team and our next release is about to
ship. I’d love to do a 30 minute call just to update you on our exciting news.”

9 times out of 10 I’ll click on the link and peruse the article. If it’s positive it will probably have some
minor impact on my perception of you – whether I acknowledge it to myself or not. Strike one up
for subtlety.

How to pitch tech journalists – Ciara Byrne 
http://venturebeat.com/2011/01/24/pitch‐to‐tech‐bloggers/ 

How to pitch to tech journalists 

January 24, 2011 9:56 AM  
Ciara Byrne 

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Here at VentureBeat we receive a considerable number of bad pitches, both from PR firms and from
entrepreneurs themselves. To make life more tolerable for everyone, we have decided to provide
some tips on how to ensure that your pitch is not one of them. Let’s start with some typical examples
of the bad pitch.

The boring pitch

In most cases nobody cares that your company has a new CFO or has signed a partnership with
another company nobody has heard of. At a minimum, you need to tell us why this news is
significant. Better still consider more carefully what you decide to publicize and if it’s really of
interest to anyone outside your company. An interesting piece of news may get lost in your deluge of
press releases.

The rocket scientist pitch

Tech journalists are rarely experts in all areas of technology (or sometimes in any areas). If you
send a pitch full of technical language about ultracapacitors, sodium silicide, or hybrid TDM we
may simply have no idea what you are talking about. Assume that we know nothing and first
explain the basics of the technology and why it’s important in order to set the context for your news.

The never-ending pitch

Entrepreneurs promoting their own companies are particularly prone to this one. Starting a
company is a difficult and all-consuming business so it’s not surprising that you want to tell us, in
excruciating detail, how wonderful your product is and how much effort went into building it. The
problem is if we if we are not immediately hooked after the first sentence, we will already have hit
delete.

The buzzword bingo pitch

PRs are more likely than entrepreneurs to indulge in the buzzword bingo pitch. If your pitch
contains the words “game-changing”, “disruptive”, “paradigm-shift” or “innovative” you are guilty
as charged. Assume that all pitches contain these words so if you want to stand out try to avoid
them.

The world of the tech journalist must seem like a mysterious one to the outsider. How to attract the
attention of these fickle creatures? Having catalogued the many ways of doing a bad pitch, here are
some pointers on how the tech journalist’s mind works and how to pitch accordingly.

Know your journalist(s)

One of the easiest ways for your pitch to get attention is if you know the journalist personally or
have dealt with him before. That’s just human nature. We are always more likely to pay attention to
pitches from people we know over those we don’t. Mark Hendrickson’s post on how to pitch to a tech
blogger makes the excellent suggestion of building up a relationship with your target journalist well
before you pitch to him, e.g. by commenting on or linking to his posts.

Assuming that you are cold pitching, do some research. Don’t pitch a story on games to a journalist
who doesn’t cover games. Familiarize yourself with your target journalist’s work. “I enjoyed your
article on x.. so thought you might be interested in y” is always a good tactic. People enjoy flattery
even when they don’t believe it.

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Be clear about the priorities of your target publication. Some sites prioritize being first to break a
story above all else. Others are more interested in deep technical detail or analysis in addition to
raw news.

Individual journalists or publications will often have a preferred contact method. For VentureBeat,
mail pitches to tips@venturebeat.com.

Tell us what we want to know, quickly

There are a few basic things we need to know. Make your subject line clear and try to cover these
points in a paragraph or two.

Urgency: Why should we write about this topic now?

Significance: Why write about this company versus all the others out there? This doesn’t just mean
competitors, but the entire universe of companies we could choose to write about instead.

Numbers: What’s the concrete evidence of business traction?

Be honest

If you have already been covered in another publication, tell us, and then explain why we should still
cover you in spite of this. If your news is embargoed for a specific time, tell us. There’s no reason
why we should have to drag that information out of you. We will probably also want to know if you
are pitching to other publications at the same time. Deception may help get you coverage once but
you won’t get it a second time. Build a long-term relationship, not a one night stand.

Make it easy for us

We are lazy. Minimize our workload by supplying a press pack with some nice photos
or infographics. Write your press release or report so well that we can just cut and paste parts of it
(yes, we do this sometimes). Another good tactic is a video such as ZenRobotics hilariously off the
wall “movie trailer”.

Make your pitch more than an ad

Some of my favourite pitches tell a story that will interest an audience wider than the potential
customers of, or investors in, your company. Good examples are Saplo’s text analysis of
happiness or AVG’s study on kids and technology. A pitch which is playful and piquant will always
attract attention.

Tech journalists are like restaurant critics. We write about magical technology and fascinating
people every day. Our palates may become jaded. Surprise and delight us and you are half way
there.

Mail your pitches to tips@venturebeat.com (received by all VB writers).

How to pitch to the press – Nick Saint 
http://www.businessinsider.com/how‐to‐pitch‐your‐startup‐to‐the‐media‐2010‐11 

How To Pitch Your Startup To The Press

Nick Saint | Nov. 22, 2010, 6:36 AM | 3,447 | 4

309 
 
 Here's how most startups that never get
written about approach reporters:

Let's say you're working on a new payments system that is obviously better than PayPal in every way,
and is therefore a lock to become a multi-billion dollar business within a few years. So, you punch
'PayPal' into Google News, and just like that, you have a list of people who have written stories about
PayPal recently.

Then you type up an email that starts with "I read your article about PayPal the other day. Very
interesting! Since you're interested in PayPal, I thought you might like to know..." You paste in your
standard pitch, then you send this email to everyone on your list.

The appeal of this system is obvious -- it lets you reach a lot of reporters in a limited amount of time.
The trouble is that none of those reporters will read through this email. Don't waste your time trying to
disguise a mass email as a personal one. Instead, use that time to identify one person you think
should be interested, and actually write your pitch for that person.

Choosing a target

Avoid the temptation to pitch the person you'd most like to have write about you. Since the time you
have to spend on this is so limited, you should instead focus on the person who is most likely to
write about you. The way to figure that out is simply to read about your industry -- something you
should probably be doing anyway.

Pay attention to who writes interesting things in your industry. If someone is regularly writing about
your competitors, that person is presumably interested in what you do. When you are familiar with
what someone is writing in general , you're much better equipped to pitch them then when you're
referencing a single article.

Pitch a story, not your company

That your company exists is not, in itself, an interesting story. Your job here is to get your company
into the news. But the reporter's job is to write things their audience wants to read. You know what
sorts of stories this reporter writes. Think of a what a good story written by that person and involving
your company might look like, and pitch that . (For more on that, this article by former TechCrunch
writer Mark Hendrickson is well worth a read.)

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The easiest way to do this is to set yourself up as an expert in your field. If you write interesting things
about your industry, or provide interesting data, or are just available to say interesting things about it,
reporters will want to talk to you and feature you in other things they write. That isn't as good as
having a story written all about you, perhaps, but it gets your name out there, and makes your
company and everything it does seem more newsworthy as a result.

For much more on all of this from reporters, widely-covered entrepreneurs, and a PR professional,
check out this video of the recent Demystifying PR event:

Creating a good blogger pitch – STEPHANIE SCHWAB  
http://www.socialmediaexplorer.com/online‐public‐relations/how‐to‐create‐a‐good‐blogger‐
pitch/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+SocialMediaExplorer+(Social+Medi
a+Explorer) 

HOW TO CREATE A [GOOD] BLOGGER PITCH

by STEPHANIE SCHWAB · January 27, 2011

Because I work with a number of PR firms, and have worked for a PR agency in the past, I’m well
aware of the difference in pitching bloggers vs. journalists. The problem is, most PR people
aren’t. My blogger friends bitch and moan to me constantly about the bad pitches they get from PR
people, and how many mass emails they receive. But c’mon folks, it’s been years since this problem
was identified and there have been lots of attempts to help PR people understand the difference. Yet
blogger outreach still seems to be a problem for most PR practitioners.

I’m going to give it a shot and tell you my process for blogger outreach. This is not the only way, it’s
just how I do it, and it’s been pretty helpful to me for a number of years. Hopefully it will help you too.

img credit: music2work2 (flickr)

IDENTIFY THE BLOGGERS

Create a list of blogs you think might make sense for your brand. Yes, your intern can do this. But it’s
got to be more than a “list of mommyblogs.” (More than once I’ve been handed a list with a bunch of
URLs. Not so helpful.) Create an Excel spreadsheet and put in all of the information you can’t find in
Vocus or Cision. For example, if you’re going after mom or dad bloggers, here are some of the things
you might research and put into your list:

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ages of the blogger’s children

parenting topics (kids with special needs, blended families, working parents, etc.)

physical location (you might need them for something local down the road)

whether they write about products or services at all (indeed, some blogs are still personal blogs with
no PR/brand involvement – imagine that!)

whether they’ve worked with competitor brands

whether or not they host giveaways or contests

And so on. Tailor this list to your industry or pitch needs.

Note that in order to create this kind of a list you (or that intern) will have to read the blogs. More than
one post. Plus the About Me/About Us page. This is not a task which can be finished in ten minutes.
Take pity on your poor intern and realize that this is a lot of work. If the pitch is important enough, it’s
worth at least a day or two (or more) of their time (or yours).

DEVELOP RELATIONSHIPS

This is the part which is most often ignored. You will have much more success if you have a
relationship with the blogger before you pitch them. This means you’ve subscribed to their blog (in
your RSS reader or via email), you’ve left a comment or two (relevant, not throwaway) on their blog,
and you feel like you “know” them as you know any you do other blog you read regularly (like your
favorite sports blog or celebrity gossip blog). You can also develop relationships by meeting bloggers
at events, conferences and meetups. Add a column to your spreadsheet which indicates whether you
really “follow” the blogger or “know” the blogger in real life, so that you can use those bloggers for
your most important pitches.

If you absolutely don’t have the time to do this for your pitch, just be sure that you’ve done the best
identification possible and have the greatest amount of information on every blogger before you select
who you’re going to pitch.

CHOOSE THE BLOGGER AND CRAFT THE PITCH

Once you’ve got a reasonable list of bloggers to choose from, select a few blogs which seem to be
the most relevant to your pitch and/or those with whom you feel you’ve got the best relationship. For
each blog that you’re pitching, determine a connection between the blog and your brand, product or
pitch. For example, if the blogger has recently gone to CES and written about gadgets, and you’ve
got a gadget to pitch, mention that you read their gadget posts (which you have, right?) and that you
agree or disagree with one of their reviews. (Or whatever.) Just be authentic, honest, and as specific
as you can. Every blogger gets pitches which say “I read your posts and just love them! You’re so
funny!” It’s not enough.

Next, determine whether what you want the blogger to do relates to brand-related work they may
have done in the past. Such as, “you’ve recently hosted a giveaway for Brand X, so I’m wondering if
you’re willing to work with me to create a giveaway for My Brand which would make sense for your
readers.” But never fear, even if you don’t see that they’re already doing something similar, you can
pitch them on what you want them to do. Just be polite and make your ask as clear as possible.

An even better way to gain traction with a blogger is to take a slightly longer route, and to tell them
that you want to work with them to create a realtionship to the brand which makes sense for

312 
 
them. Instead of assuming that they will give something away or write a review or write a guest post
for you, first ask them if they are interested in the brand, then have a phone call (gasp! an actual
conversation) with them to brainstorm about ways in which you can work together authentically for
both parties.

MAKE IT A WIN-WIN

Above all, make it clear that you want this to be a win-win for the blogger and for your brand. And I
hope I’m not the first person to break it to you, folks, when I say that for most bloggers this means
they expect to be compensated in some way (and no, “traffic to your site” is not
compensation). After all, you are asking them to be your marketing arm and to help you promote your
product or service to their readers. And they are not getting paid by their publication to do this work –
they are the publication.

If you take the time to craft a a handful of well-researched, informed, and well-matched pitches, you
will likely get a much, much higher return than if you sent out a boilerplate “Dear Blogger” pitch to a
list of 100 blogs. In the end, the time you spend upfront could very well justify itself vs. the time you
have to take to follow-up incessantly with the hundreds of bloggers who are ignoring your bad pitch.

Do you agree? Disagree? Have other ways to improve blogger pitches? Please give us your thoughts
in the comments below.

   

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 Blogging 
Blogging 

Starting a blog ‐ Andrew Chen 

http://andrewchenblog.com/2008/08/11/how‐to‐start‐a‐professional‐blog‐10‐tips‐for‐new‐bloggers/
How to start a professional blog: 10 tips for new bloggers

Starting from scratch

I started my professional blog in late 2006 as I was packing my bags and moving from Seattle to San
Francisco. In the first month, I was pleasantly surprised to see a couple ex-coworkers subscribe via e-
mail, and didn't think it would ever lead to more readership than that. Two years later, I have a nice
community of a couple thousand subscribers, and I occasionally get the question of "how would you
start a blog, if you were to do it over again?" I thought I'd share my thoughts on that.

Here's the quick summary, for those who want a quick skim:

Carpet bomb a key area and stake out mindshare

Take time to find your voice

Stay consistent on your blog format and topic

Just show up

Go deep on your topic of expertise

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Meatspace and the blogosphere are tightly connected

Embrace the universal reader acquisition strategies for blogs

Come up with new topics with brainstorms, news headlines, and notes-to-self

Look at your analytics every day

Don't overdo it

Extended discussion below…

Carpet bomb a key area and stake out mindshare

Like all products and markets, the blogosphere has its own set of existing products and channels. For
example, if someone asks me about a "VC blog" I might refer them to Fred Wilson, Mike
Speiser, Venture Hacks, and others. If someone asks me for a "games blog," I typically recommend
folks like Raph Koster, Nabeel Hyatt, Daniel Cook at Lost Garden, and others. The point is, just like
companies, blogs tend to achieve 30-second elevator pitch status, and it makes sense to figure out a
theme for whatever you're going to be writing. IMHO, as long as the space you're writing about is
growing, you can never be "too vertical" since you'll easily attract a couple thousand supersmart
people who care passionately about your particular sub-vertical.

In general, I find people describing this particular blog as "the viral marketing blog" more than
anything else. I write about a bunch of other stuff other than that, but people seem very interested in
the topic so I'll take what I can get

Take time to find your voice

As I said before, it's good to find a key area. That said, it takes some time to get there, and I spent
the first couple months switching between a couple topics – be it personal stories, product design,
and advertising. It wasn't until almost a year in that I started writing about viral marketing, which this
blog is probably most widely read for.

I found that as I wrote more consistently, and learned from other bloggers, I began to change the tone
and voice of my articles. While some of the key elements were always there – essays rather than
links, certain topical themes, etc. – I added much better formatting within the blog posts, photos,
linking to other blogs, etc.

Stay consistent on your blog format and topic

Related to finding your voice, it turns out that blog format really matters. To completely oversimplify,
there seem to be two very different kinds of blogs that are successful. Either you're a "curator" of
news, or you're a primary content source.

The curator is someone who blogs often and throughout the day with links and snippets, and I would
consider someone like Robert Scoble (or iJustine!) to be the Michael Jordan of this approach. The
style is often more conversational and casual, and includes lots of little updates on what they are
doing or reading or trying out. These guys can really "cover news" and are widely read because they
can provide the first opinion on new stuff coming out.

The bad news is that the curator model requires you to stay on top of things For a guy like me, with
a full-time job and blogging as a dirty habit, being a pure content creator is much more appealing. I
will never get the traffic of the news curators, but I can go deep on a specific topic and get a laser-
focused audience that just cares about the topics I write about.

315 
 
It's obviously good to experiment and leave the door open for any and
all topics that interest you, but obviously once you begin to settle
and find your voice, it's good to focus since then your readers will
know what to expect from you. There's nothing worse than that guy that
writes one really good essay about the industry and then spends the
rest of the time writing about his dog!

Just show up
Hands down, the hardest thing about writing a blog is doing it regularly. I often just don't have the
energy to write, and have to consider it as a core part of my job in order to get it done. It's especially
true once you get past the first couple months and you've hit the top 90% of topics you wanted to get
off your chest. Then coming up with new ideas is much harder.

In general, it seems like you have to maintain a tempo of at least 1 essay a week to be relevant. Any
less than that, and people stop reading (or at least you'll have all subscriber traffic and no one will just
check your site). This blog is averaging about 1.5 posts a week, which I should probably work on, but
it seems enough for at least some group of people to follow it. If I weren't so lazy, I'd try to get at least
3-4 posts up per week, and possibly make them a little shorter. (Or one long one, and 2-3 news-
related items)

Go deep on your topic of expertise

In general, I've found that you can never go "too deep" when covering a vertical. Some of the things I
would have thought were the most esoteric – like viral loops and sharkfin graphs – have become the
most widely read and widely linked posts. I originally hesitated to even post those since I thought they
would be too obscure, but instead I found that people either appreciated it more. My guess is that it
has to do with the fact that either they're learning something completely brand new that they think is
interesting, or at the very least you're build "street cred" by not being the typical super-high-level
analyst.

Meatspace and the blogosphere are tightly connected

Surprisingly (or unsurprisingly?) the world of San Francisco conferences, events, hanging-out, etc.
are very much correlated with the blogosphere. A lot of readers of my blog either know me personally
or know of me through a mutual friend – I get this sense since many of the inbound emails I get start
with, "hi I read your blog and am friends with X" or I have lots of friends introducing me to FOAFs who
want to talk about a topic from my blog. I think the point of this is just to say that you can grow your
readership by being part of the conference circuit – either organizing or speaking or otherwise – and
also your blog readership will lead to opportunities to get more visibility in meatspace. It's all useful, so
embrace it. And move to SF if you haven't already

Embrace the universal reader acquisition strategies for blogs

When it comes to blogs, the user acquisition is pretty boring. You basically have the following sources
of traffic, by importance:

SEO, specifically Google

Blog aggregators (like delicious, digg, etc.)

Social platforms (like twitter, friendfeed, etc.)

Individual blog links

316 
 
Given that a lot of your blog traffic will come from SEO, it's a good idea to try to own some keywords
for a topic if you can. I get a ton of searches on viral loops and other viral marketing terms. It's a good
idea to add whatever your main keywords are to your blog title, blog topics, etc. I sometimes use blog
titles like: "Facebook marketing: X" to get people to link back to me using those terms.

Similarly, whatever your expertise is, you might find vertical aggregators that drive a lot of traffic. For
me, it's Hacker News, Techmeme, and others. Identifying those key aggregators and submitting your
articles is key.

Come up with new topics with brainstorms, news headlines, and notes-to-self
As mentioned above, it's very very easy to run out of new topics to write about. Writer's block seems
to afflict me almost every week This is especially true once you hit the 2-3 month mark, since many
of the topics that you might want to write about have already been covered in one angle or another.

My usual remedy to this is to employ a set of tactics that generate a healthy list of blog topics in my
inbox, to be written one day or another. The first tactic is that when I'm in a good creative mood, I'll
often do a quick brainstorm of many potential topics and ideas. Some can be simple and explanatory,
like "how to do X" or specific companies, or recollections of specific conversations that are worth
blogging about. Similarly, I'll also peruse sites like Techmeme and look for headlines that catch my
attention. In particular, I often look for things that I think are either wrong, need clarification, or
otherwise would compel me to rambling if someone told me about it in person. All of these ideas I will
write up in very short outlines and e-mail to myself. Having a short outlin or starting a paragraph or
two of the post helps me sketch out the idea in enough form to easily execute it at a later date.
Otherwise, if you just have a fun headline but no body, going from 0 to 60 can be quite rough.

Look at your analytics every day

I look at the small amount of analytics on my blog on a frequent basis to understand what's going on.
It's really nothing fancy, and certainly pales to the kind of instrumentation I'd do on an actual web
project, but it's good enough. More importantly, it helps you get some interaction with your passive
users that aren't leaving comments, and helps you figure out how to serve them better.

In general, I start by looking at my referrers every day, along with daily visitors/pageviews. I have
sitemeter bookmarked on my phone so that I can glance at this all the time. I'll look at what searches
people are making via Lijit, and what searches are drawing people to this site. Another thing is to look
at my Feedburner numbers and subscribers to see who is subscribing and how things are trending. I
also get my top referrers and top content e-mailed to me on a weekly basis by Google Analytics, so I
have an understanding of what people are looking at.

In general, in looking at this information I'm trying to assess a couple things:

Are there specific topic areas people are coming to the site for, that I should write more about?

Are there certain traffic sources that I should try to "develop" more? (Twitter is one good example of
this)

What are the e-mail domains and companies that are visiting this blog, and how would I better serve
those readers?

What are the searches people are making on the site, and are there any that aren't returning any
results?

The point of all of this is looking at your blog not as a "diary" as many people do it – instead of being
fuly focused on yourself and what you want to write, you can think of your readers as your customer-

317 
 
base, and you're trying to collect whatever knowledge you can to cater to their needs. Obviously, for
part-time bloggers like myself, it's important to balance your interests with the interests of your
audience, but in general I think the philosophy holds.

Don't overdo it
Finally, have fun After all, you can always quit! I often find myself not blogging for a week or two
just because I don't feel like it. I think that's OK, since this isn't my full-time job and I'm just doing it for
fun. I think if I felt a lot more pressure to do this consistently, regardless of my enjoyment, I'd probably
stop since it wouldn't be fun anymore.

No time to blog? – Charlie O’Donnell 
http://www.thisisgoingtobebig.com/blog/2011/9/6/entrepreneur‐social‐media‐fail‐i‐dont‐have‐time‐to‐blog‐
beca.html 

Entrepreneur Social Media FAIL: I don't have time to blog because I need to hire, get customers, get
PR and raise money

TUESDAY, SEPTEMBER 6, 2011 AT 04:41PM BY CHARLIE O'DONNELL

Let's be clear‐‐you can absolutely build an incredible company without participating in social media.  There is 
certainly success without blogging, and blogging definitely isn't a guarantee of success by any means. 
 
So why bother? 
 
You have tons of things to do as a founder.  You have hiring to do, money to raise and you've got to get your 
company's story out there.  Blogging takes up time that you don't have. 
 
Most entrepreneurs don't recognize the value of personal use of social media as an important‐‐maybe the most 
important‐‐channel for accomplishing these milestones. 
 
Two things are true for every startup:  1) Founders and CEOs are key to driving success and 2) these companies 
need awareness for their unique message to accomplish all sorts of goals.  Yes, the entire team does the work, 
for sure, but founders and CEOs set the tone with their first hires.  The initial team and the level of work they 
are challenged and motivated to do is a direct result if the environment created by the people at the 
top.  That's why startups are uniquely personal.  The DNA of the founders makes its way into the product, sales 
strategy, recruiting efforts, etc.  If you are going to accompany these efforts with a public message, you're 
going to want to choose an equally personal channel.  

Unfortunately, using other people's channels and audience, which is essentially what PR is, won't be as 
effective‐‐simply because no one can tell your story as well as you can.  PR can magnify, distribute, etc., but it's 
your own story that is the fuel for a well executed PR campaign these days‐‐and I think it starts best on your 
own site in your own voice.  Your blogging or participation on Twitter won't suffice alone, but it's a key 
ingredient to a comprehensive PR strategy these days. 

On top of that, no one really gets paid to tell *your* story‐‐but that's what people want to hear.  When people 
consider working for you, they want to hear who you are and where you're taking this company.  You can tell 
them on the interview, but how many people aren't even coming for an interview because they haven't heard 
about you and your story? 

318 
 
 
That's part of what blogs, Twitter and other forms of social media do‐‐they make you discoverable.  They also 
make you more easily followable.  I can watch your napkin develop into a company from afar without further 
cluttering my inbox‐‐not that email lists are easily discoverable anyway.  
 
These channels also allow you more at‐bats with your message.  You don't want to spend your whole NY Times 
interview telling the whole story about how your grandfather's shoe store inspired you to be an entrepreneur, 
but you can tell that story on your blog‐‐as well as any other lessons he taught you.  That story might surface a 
VP of Marketing with an interest in startups who has a similar story of family inspiration.  That person may 
have been following you based off of someone else's retweet of that post you wrote on why good marketing 
talent is so hard to find.  A coffee and a handshake later and you just added a key member of your team who 
was enthusiastic enough to take a huge pay cut in exchange for more equity, without paying a recruiter 
fee.  What was that you were saying about what your time its worth?  

Blogs and social media can be as equally serendipitous in surfacing early customers, speaking opportunities or 
potential investors.  Yes, it is absolutely entirely possible to do this on your own, but why not use a cheap 
channel that works effectively if it is available to you.  

Time, that's why‐‐but there are ways to solve for that.  If I was a busy entrepreneur with a commute, for 
example, I might record my thoughts over audio and get a ghost writer to summerize them into a set of 
discrete posts.  In fact, getting interviewed for an hour by someone could result in enough content for 3 or 4 
blog posts‐‐since you can speak faster than you can type.  Is this inauthentic?  Not if you're conveying your 
unique perspective, experience and message‐‐it's no different than having an editor.  How about having 
everyone in your company contribute suggestions for things they'd like to hear you talk about‐‐take requests if 
you can't think of what to write about.  Anything, really, that is you being the face of your vision and your 
company, telling your story is a potentially valuable asset‐‐one that I don't see nearly enough entrepreneurs 
taking advantage of.  Instead, they spend way too much time trying to convince others to tell their story for 
them. 

How to start blogging – Mark Suster 
http://www.bothsidesofthetable.com/2010/03/08/should‐you‐blog‐yes‐and‐heres‐how/ 

Should You Blog? (yes, and here’s how …)

by MARK SUSTER on MARCH 8, 2010

This is filed under sales & marketing advice.

Summary notes and then I’ll extend:

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Should you blog? Yes. As Brian Solis is fond of saying, “PR stands for public relations, not press
release.” That’s right. In the era of two-way communications people expect an authentic voice and
not the Wizard of Oz pulling levels behind the curtains. Blogging is an important way to build an
audience and also drive SEO traffic. It’s also a great way to build relationships with people
interested in your topic area.

What should you blog about? Define your customers, partners and other relevant people to
your organization (e.g. analysts, journalists, potential employees) and blog about what you want to
communication with them. Don’t blog about what you think would be “cool.” I don’t think that most
startup blogs should be about how to build a startup. That’s blogging to the echo chamber unless
they’re your target customers. And if they are I suggest your revenue stream is likely to look a bit
skinny. If you’re a financial services firm blog about personal finance.

How to find your “voice”? Be authentic. Don’t try to sound too smart or too funny. Just be
yourself. People will see who you are in your words. If you try to make everything too perfect you’ll
never hit publish. If you try to sound too intelligent you’ll likely be boring as shite. Most blogs
are. Be open and transparent. Get inside your reader’s minds. Try to think about what they would
want to know from you. In fact, ask them! Don’t be offensive – it’s never worth it to offend great
masses of people. But that doesn’t mean sitting on the fence. I have a point of view and I’m sure
sometimes it rankles. But I try to be respectful about it. Sitting on the fence on all issues is also
pretty boring. But unless you’re a political or religious blog stay out of all the stuff that you were
taught not to talk about at cocktail parties. And don’t blog drunk. Mostly, have fun. If you can’t do
that you won’t last very long.

OK, that’s my summary and I don’t want to violate my terms with the people at Mashable who were
very generous with me so I’m now into new territory. But if you like this topic please consider
reading the Mashable article. I put much time into it.

The new stuff:

How do I get started? First, you’ll need a platform. I use WordPress and am very happy. In this
genre there is also Typepad although I find less people using it these days. Blogger kinda sucks
IMHO. There are the new tools like Tumblr and Posterous. I’ve played with both and they’re pretty
cool. They’re more light weight, easier to use and more social. But for my “professional” blog I’m
quite happy with WordPress for now. Then you need to decide whether to use the “hosted” version
or the “installed” version. At least that’s true in WordPress. The advantage of the hosted version is
that it’s easier to get started. The disadvantage is that you can’t install a lot of additional tools that
use Javascript. Actually, that’s kind of lame. I started with the hosted version and then migrated to
an installed version so I could use Google Analytics and some other products.

You then need a URL. It’s true you can be msuster.typepad.com or similar ut that’s kind of lame so I
wouldn’t recommend it. Just get a real URL. I think it’s important to think about what image you
want to portray when you pick your URL name. It doesn’t need to be short. You’re not trying to
build a consumer website like Mint.com. My website is a pretty long URL but people manage to find
it. Much of my traffic is through referring websites and/or social media. Some search. But I chose
the URL of the brand that I want to portray. Both Sides of the Table. I was an entrepreneur. Now
I’m a VC. Not rocket science. What are you trying to convey? What will be your unique
positioning? Don’t just write a carbon copy of what somebody else is doing. That’s boring.

So I wrote a post, now what? OK, well, actually the first thing I did is come up with a list of 50
posts that I wanted to write. I planned it out a bit. I didn’t want to run out of things to write about

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in the first 6 months. So I created a “series” that I could talk about in a theme. My first series was
theslides that go into a PowerPoint presentation. Since there are 10-12 slides this gave me my first
few weeks. Don’t blow your load on your first post. Slice it up enough to do many posts. I think
most blogs are between 600-1000 words / post. I’m long winded – usually 2,000 words. I know. I
know. Once you’re written a few posts don’t try to make the flood gates open at once. Slowly build
your audience. Make it organic. If you write good content and consistently you’ll build an audience
over time. I’m now at about 70k monthly uniques put the growth has been gradual over the past 9
months – not one great spurt.

How do I build an audience? So you have a few posts live and want some readers. The obvious
starting point is to email a few friends and let them know you have a new blog. Don’t be
overbearing – just an email saying, wanted to let you know about my new blog. I also recommend
you put it under your email signature in a color other than black. You also should have it be what
your Twitter page links to.

Every time I write a post I send it out on Twitter. I try to send out the Twitter link when more
people are online. I currently do this using CoTweet, which allows me to schedule when the Tweet
goes out. I’ll frequently send two Tweets – one in the morning and one in the evening. Not
everybody sees the first one. I try to vary the copy sometimes so that it isn’t boring if somebody sees
it twice. Make sure your blog has Tweetmeme or similar. This means if somebody likes your post
and wants to Retweet it they can by simply clicking a button. To add a post to Facebook button I use
a tool called fbShare.me. You can also sign up for Tweetpost to have your Twitter account
automatically update Twitter. Also, make sure to sign up with Feedburner. That way people who
want to get your blog by RSS and/or email can do so. Make sure your blog also has a Follow Me on
Twitter button so people who find you can easily follow you.

The great thing is that the more compelling content you write the more people Retweet you, which
drive more traffic to your blog. Twitter is, after all, about link sharing. The more they go to your
blog and like it, the more will follow you on Twitter. As you build up that following you have more
people to drive to your blog going forward. Virtuous circle. That’s the basics. I’ll write about some
more advanced “hacks” at the end of the post.

How much time will it take? If you plan out what you want to write about in advance then it’s
really about writing. I tend to write an outline before I write the actual post so that my writing will
have some structure. I write for about 45 minutes to an hour in the first pass. I usually then re-
read, edit, spell check and add links. This usually takes another 20-30 minutes. I then always add
an image. I think this is a nice touch. Just staring at text is a bit boring and I find that the image
can add humor and/or drive people in. I used to add 2-3 images but that proved too time
consuming.

I get most of my images from iStockPhoto. There are placed to get free images but I don’t like to deal
with the creative commons wording and linking and potential that I got it wrong. I’m fine paying
$1-2 / picture. I know the free option would work well so if you’re on a budget go down that
road. I’ve often thought about trying to crowd-source a copy editor. I think I would improve my
posts if somebody could edit them and make them shorter. For now, I hope it’s good enough.

Then there’s comments. You HAVE TO respond to comments. First, it’s the most fun part of
blogging. It’s addicting like Twitter. It’s where you exchange ideas with other people. It’s where
your community gets to know you. It’s where you build loyalty and relationships. I have met many
people in person who were first commenters on my blog. I find it frustrating if I leave comments on
somebody’s blog and they never respond. I don’t expect responses to each and every comment but
there should be some interaction. Unless, of course, I’m posting comments on a blog like TechCrunch

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or the Washington Post. But I remember in the early days Michael Arrington used to respond to
comments on his blog a lot.

I’m very particular to Disqus as my commenting platform. I like the interactivity and ability to have
nested responses. I like being able to have authenticated responders and images. It helps to get to
know people better. Native commenting systems mostly suck. Use Disqus.

How frequently should I write? Tough question. I’m going to assume that like me you
have a day job. If you’re a full time blogger and reading this then you need to go get a
real book on how to blog. This is directed at part time people who are building a blog
to support their real business. I think you should commit to one post per week. I
recommend writing 8-10 before you get started so that you have a backlog in case you
get busy. Sometimes I write 4 or 5 on a weekend when I get time so that I have them
for weeks where I’m busy. One time I set my alarm for 5am and blasted through 12
posts in two mornings and I had fodder for weeks. That was my “Entrepreneurial DNA”
series. I wrote it on two mornings during Thanksgiving holiday. Then later I just
added images and edited. Right now I’m writing about 3-4 times / week. I can’t
commit to every day like some bloggers. And I reserve the right to drop back to 1-2
posts some weeks if I feel busy or burned out. But my personal SLA right now is once /
week minimum.

FWIW, It’s 11:41PM right now. I wrote this post at about 6:30PM. I’m editing in
bed. Probably shouldn’t be. I’m sure if I bought my WakeMate already they’d be telling
me not to!

How can I track my performance? First, most blogging tools have analytics built
in. Wordpress does. Then you can install Google Analytics to your website. This will give you more
realistic stats. When you Tweet you should use a URL shortener tied to an analytics platform. The
most common isBit.ly. I use awe.sm. Awe.sm allows me to track more granular details about my
campaigns than I can currently on Bit.ly and it’s where I got my custom URL’s grp.vc and
bothsid.es. You can also track how many people sign up on Feedburner. I try not to obsess too much
about the ins-and-outs of daily or weekly performance. I just want to know that I’m building up a
slow and steady audience. It’s a marathon and not a sprint.

Appendix: Traffic Hacks:

Commenting on other blogs – you need to comment on other people’s blogs. First, it is a place where
your comment will often link back to your blog (such as on TechCrunch) where it can drive
traffic. Occasionally, and not overtly, and only if relevant you can provide a comment with a link
back to an article in your blog. Don’t do this often, don’t be blatant and make sure it’s relevant.

Linking to other blogs – For example, many people know that I love VentureHacks because it’s a
great resource for entrepreneurs and I finally met Babak Nivi (aka Nivi). Notice I’ve linked to his
website. If he tracks his blog (which I’m sure he does) he’ll see this link. If he has a Google Alert on
his name (everyone does) then he’ll also get that. Don’t stalk people and link all the time. If you do
link make it relevant. Don’t be over the top gushing and creepy. Be subtle. Link to different
blogs. Don’t overtly tell everyone you link to, “I linked to you, check out my article!” Assume that
over time if you write compelling content they’ll eventually check you out. I do notice when people
link to me or write about stuff I’ve written about. I try to check out most of them. Sometimes I get
busy. Every few I try to stop by and leave a comment so that they’ll know I’ve been there and I
appreciate the coverage. Sometimes I just read the blog and file it away in memory to check out
another time.

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Covering relevant people in your blog in an authentic way – If your blog covers topics in your
industry it’s likely that you’ll be able to write about some people and companies that you want to be
aware of your blog. Yesterday I wrote about Plancast. I love their product. I don’t have any reason
to drive Mark Hendrickson to my blog but using him as an example, writing a story about Plancast
would make it more likely that the founder would find his way to my blog. I chose not to write about
companies for a long time on my blog. My strategy was to keep it advice based for the first 6
months so I never really employed this as a strategy to drive traffic. But I know it works.

Tweet support - What I DID do in the early days is enlist Tweet support. I would occasionally ask
people that I was close with to retweet my posts. I tried to mix it up in order to not ask the same
people often. I would send out emails with the Tweet text already written so that they just had to
cut-and-paste. As my blog started getting authentic traffic I stopped asking for this help.

Guest authoring – Once you have a bit of credibility as a writer a great strategy to drive traffic is to
write guest posts for relevant bloggers in your sphere of influence. If you run BakeSpace and blog
about food why not contact some of the local food blogs and see whether you could submit guest
articles. Most people are delighted to have the free content. In return all you ask for are links back
to your blog and to your Twitter account. Slowly and surely these will add users, of which some will
come back on a regular basis.

Becoming a better blogger – Neil Patel 

How to Become a Blogging Superstar

May 1st, 2012 - Posted by neilpatel to Content & Blogging

This post was originally in YouMoz, and was promoted to the main blog because it provides great
value and interest to our community. The author’s views are entirely his or her own and may not
reflect the views of SEOmoz, Inc.

Do you have what it takes to become a superstar blogger?

While anybody can set up a blog…not everyone can take that blog and turn it into a world-renowned blog that
ends up on Time Magazine’s best blog list or Ad Age’s Power 150.

The bad news is that you need some pretty unique qualities to make it to the top. The good news is that just
about everybody can learn those qualities.

Let’s take a look at them…

Superstar bloggers are insane

Most superstar bloggers have one thing in common: they take risks. They take risks with their blogs and they
take risks with their content.

Your goal as a writer for your blog is to stop someone dead in their tracks nearly to the point that they can’t
believe you just wrote what you just wrote...

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And they have to keep reading.

This means you have to write headlines like How to Rank on the First Page of Google through Videos and 8
Simple SEO Tricks That Will Help You Rank Above the Fold and Increase Your CTR.

But on a higher level, you keep on pushing the boundaries of what your blog can do. You wonder about
thedesign of your blog…and can you make it work harder?

You wonder about conversion and how you can triple it. You think about crazy ideas…

Sure, not every idea will work.

But that’s what separates a superstar blogger from your average blogger…they never give up. They keep
trying and pushing and making everything they touch better.

Superstar bloggers write and write and write

You’ll never get away from this one because you have to write a lot to get better at what you do. What I mean by
this is you need to write at least 1,000 words a day…

Seven days a week.

Some of that content won’t be that great. Some of it will be awesome and drive you a ton of traffic. Your
quantity can suffer some time as long as your quality doesn’t.

And another lesson about writing so much is that you will cast a wider net when you have more and more blog
posts online for the search engines to index.

There are currently about 3 billion searches a day on Google…

This will ultimately lead to more visitors and subscribers.

Superstar bloggers stick to their master plan

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Do you have a master plan?

In Daniel Pink’s book Drive, he talks about the single sentence that defines you. He uses as an example where
Carol Boothe Luce once said to John F. Kennedy, "A great man is one sentence. Abraham Lincoln's was 'He
preserved the Union and freed the slaves.' What's yours?"

What about you? What one sentence defines you? Here are some examples to get you motivated:

A world traveler who speaks about entrepreneurship to foreign governments.

North America’s greatest digital media strategist.

A well-rounded political writer with a blog read by 25,000 people.

Those may sound like pretty grand ideas…but remember…superstar bloggers are insane.

They go big.

But once that master plan is in place, you need to stick to it. You need to create the plan and then start working
the plan. You won’t go anywhere if you don’t work the plan

You have to ship.

And don’t worry about perfection. Sure, you’ll want to make adjustments when you get feedback…but make
those changes and keep pushing forward.

Becoming a blogging superstar is a journey…not a finished goal.

Superstar bloggers are creative

If you want to become a superstar blogger, then you need to come up with a way that you generate idea after
crazy idea.

That’s going to be hard because you will have to churn out a lot of content.

What do superstar bloggers do to keep those ideas and creativity constantly coming? Here are six tips
forbreaking writer’s block from Darren Rowse:

Change your environment – If you are struggling to be creative in your office, jump up and work from the
kitchen. Or move outside. Spend a couple days a week working from a café or restaurant that doesn’t mind you
being there for a while. Or work with a friend.

Keep an idea journal – Whether you use a notebook and pencil or a free tool like Evernote, jot down ideas for
content when ever inspiration hits you.

Just write – Sometimes to jolt your creative system you need to simply write without an agenda. This is a great
way to empty your mind of thoughts and ideas that have been percolating for quite some time.

Read other bloggers – Become a master at reading a ton of other blogs. If you can manage hundreds a day, you
will never be short of ideas. And remember to copy ideas down as you get them.

Figure out needs – Use your readers’ needs as the starting point for your blog posts. What problems are they
facing? What questions are they asking?

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Combine two unrelated ideas – A great exercise for generating ideas is to take two completely unrelated ideas
and then combine them. For example, what kind of ideas can you create when you match blogging with Mt.
Everest? Or what about digital marketing and The Simpsons? See how that works?

Superstar bloggers are passionate

If you look at bloggers like Seth Godin, Rand Fishkin or Ramit Sethi you’ll see that they love what they do. You
can also see that they are also totally immersed in what they do.

Are you totally immersed in what you do?

It’s okay to start a blog and then learn 30 days down the road that you really don’t love the subject you are
trying to write on. Maybe it was just a passing phase.

What you need to do, however, is drop it fast and pick up something that you do love…because readers will be
able to tell if you are not enthusiastic about your blog. They’ll sniff you out and you will struggle to grow it.

The godfather of passion, however, has to be Gary Vaynerchuk. His passion is obvious whatever he touches or
speaks…it could be on his Wine Library TV or on stage or on one of the many videos that he shares through his
marketing blog.

He’s on fire and you can’t help watch him and get on fire, too. And this is why he is a superstar blogger.

Superstar bloggers interact with their readers

You can not shy away from those who comment on your site. You need to jump in and thank every single person
who comments. You need to engage them with questions and pick their brains for ideas on new topics.

Run surveys on your site using KISSinsights or simply publish a post asking for new content suggestions.

You should also run contests that reward your readers with gifts… letting them know how much you appreciate
their support.

When you create content that your readers really love and can relate to then you are on your way to creating a
vibrant community who will support you for a very long time…both as readers and buyers.

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Besides, you want this community engaged so they share your content on the social web.

Superstar bloggers are insanely focused

You’ll kick butt in the blogging world if you can stay focused and organized. The very best of bloggers have a
razor-sharp focus…

They see the big picture and then use their self-discipline to stick to it.

But they also don’t do it alone. They use productivity tools to help them stay focused and efficient. Here are 8 I
recommend every blogger use:

Zaarly – You can hire just about anybody in your area to do just about anything you need done. Want somebody
to research for you? What about put a desk together?

Batchbook – As your contact list grows, you’ll want a great system to manage it. Batchbook is a cloud-based
contact management tool that can even handle your social media contacts.

MailChimp – I’ll mention this in a later section, but you’ll want to create an email newsletter that looks
professional and doesn’t cost a fortune. MailChimp can help you.

DropBox – With this app you can access any document or file anywhere you want. Store a document on your
laptop and it’s on your iPhone, too.

Jing – This free tool allows you to capture images from the web, create arrows and boxes on those images and
then post to your blog. You can also create videos and narrate on the fly…

Rescue Time – This thing will easily save you 4 to 5 hours every week because it tracks what you do and helps
you avoid distractions.

Evernote – Clip a URL, selection of a page or the entire page into Evernote and then save for later. Great for
recording ideas for future blog posts.

FreshBooks – Once you start earning a living off of your blogging, you will definitely keep track of your income
and expenses. This tool will help you do that without wasting your time.

Superstar bloggers understand their strengths and weaknesses

Great bloggers know what they are really good at…and they know what they are really bad at. This helps them
to see what they need to work on…or delegate to someone else…to help conquer their goals.

This can include things like design, code or proofing.

But you also need to learn how to give away those tasks that you don’t enjoy at all. Those are the tasks that rob
you of productivity because you tend to procrastinate. And like I mentioned above, use a tool like Zaarly to
delegate.

Superstar bloggers use a variety of media

In today’s world, copy is not enough. Google is learning how to index video and audio and giving you a wider
net to cast for possible search terms.

What you have to do is learn when to use each of these tools. For example, you need to ask yourself:

When should you use text? As long as search is dominated by keywords, then this will make up the chunk of
content you produce. But as you will see, you will also be combining medias.

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When should you use video? I’m a fan of creating short…anywhere from 2 minutes to 11 eleven
minute…videos for tutorial type content. SEOmoz does this with their Whiteboard Fridays andKhan
Academy has become famous though his use of video. This also works well with video, especially
with Google+’s hangout feature. Keep in mind that you should create a transcript to put on YouTube and your
website for the skim readers and search engine spiders.

When should you use audio? Audio works great for tutorials, but I’ve found that the best podcasts are those
that feature two people talking make it way more interesting. Check out theManager Tools podcast to see what I
mean.

Superstar bloggers diversify their income

Superstar bloggers don’t rely on their blog to bring in all their income. In other words, you don’t rely on just
one income stream.

This means that you need to use your blog as a stepping stone to other ventures. This could be to books you sell
and create like Darren Rowse does…

or information products to sell like Timothy Sykes does.

Maybe it’s to promote yourself as a speaker or the platform you use to promote your own conference.

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In addition, your blog will also become a magnet for joint ventures with other bloggers…something
you mustengage in if you want to expand your audience.

Superstar bloggers are thorough and original

While in the early days of blogging…before there was so much competition…being brief was very important.

Not so anymore.

These days people want more than just a quick answer. They want a detailed, highly-researched post that will
answer their questions completely.

The worst thing you can do as a blogger is to provide a pat answer to a real problem.

When it comes to creating content for your blog, the superstar method is to study your analytics to see who is
coming to your site, when, from what source, where are they going, why they are there…and how to get them
converted into subscribers.

There is a huge audience online. This Edison report shows that more than half of Americans who are +12 or
older are using social media…

How do you tap into those people?

You analyze the search terms…you study your Twitter analytics to see what gets shared the most...you look into
why some posts get more comments than others…and then you create content that produces those kinds of
results.

Superstar bloggers are curious

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You’re probably thinking that superstar bloggers reach a certain point and then they stop learning.

That couldn’t be farther from the truth.

The bloggers that I’ve met who I consider superstars…people like Ben Huh and John Chow…are constantly
reading, studying and looking for ways to implement and test their ideas.

These are people who will try anything once. Your weirdoes…

These are your 0.1%. And that’s going to be you.

The thing about these guys and girls is that they are curious, restless and eager to know more.

They are also some of the most humble people I’ve met, too, which is important. They never come off as
arrogant or prideful. They want to learn from you no matter who you are…and they want to help you learn, too.

Superstar bloggers are relentless

From reading to writing and testing to tweaking…superstar bloggers never stop. Sure, they may take a short
break just to get their bearings again…but they won’t be away from it too long.

And when it comes to writing great content…each and every day they are creating posts that stick to the subject
matter they are experts on.

They don’t stray…and when it seems like they do they are always really good about tying the post back into
their cornerstone content.

And when it comes to their schedule…superstars are also very consistent here, too. You need to decide when
you are going to post…and then stick to it!

One more thing…if you want to become a superstar blogger you have to understand that success takes along
time.

Trust me…I’ve been at this for over ten years…and one of the things that has kept me at it even when things get
really difficult…is that I’m relentless and I stick to the master plan.

Superstar bloggers are humble

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You can’t really be a life-long learner if you think you know it all. That’s why you need to remain humble and
understand that you have so much to learn…

It will take time and you will master certain aspects of blogging. You may become one of the best headline
writers like Matt Drudge is…but you know you can always get better.

That’s humility.

Superstar bloggers are self-starters

If you ever plan on working for yourself, then you better know that you will need to be able to manage yourself.

What do I mean exactly?

You’ll need to be able to kick yourself out of bed and get to writing when you would much rather sleep in on the
rainy day.

The thing about working for yourself is that you only make as much money as you work. If you’re not writing,
then you are losing money.

Being a self-starter is all about having ideas…and then putting them to work. If you can’t do that, then you
will not become a superstar blogger.

Superstar bloggers watch for trends

If you really want to catch some traction with your blog…watch what is trending on Twitter and Google and
then jump on that traffic.

This is why blog posts that tie into current trends always get a lot of traction. For example, when Steve Jobs
pasted away I wrote a post on the 11 Business Lessons Steve Jobs Taught Me. And I didn’t just do it for the
traffic, but instead it allowed me to look back at all of the great things he helped me accomplish in life.

That post got a lot of traction.

Here’s another example. This is what is hot on searches as of this writing:

You could write an article titled “How Amanda Bynes Getting Arrested Can Make You Filthy Rich.” You could
do that with all of those searches.

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Keep in mind that trendy posts must relate to your readers self interest…in other words, you just can’t write a
trendy post for the sake of writing a trendy post…

You have to write about something your readers care about.

Superstar bloggers find a common enemy

This a great copywriter tactic that says you will engage readers if you choose an enemy that both of you hate.
For example, very successful financial newsletters will play on fears that the government is out to get the money
of the rich…and make the government the enemy.

In SEO, Google or Microsoft is often played as the enemy…the big bad guys who wants to spy on everyone, play
to their favorites and never give SEOs a break:

Now I don’t suggest that your cornerstone content is all about you attacking this common enemy. That will get
old quick.

Superstar bloggers are not afraid to outdo another blogger

For the most part the blogging community is made up of people who get along pretty well. So I’m not talking
about doing something rude to someone else…

I’m simply talking about taking their idea and making it better.

Here’s what I mean. If I write a blog post called 10 SEO Trends You Can’t Ignore…then you can come along
and write one called “10 SEO Trends That Will Drive Massive Traffic to Your Site in 45 Minutes”.

When it comes to gaining attention, that strategy really works.

Don’t be afraid to use it.

Superstar bloggers twist social media to their advantage

Back in the day when blogging was the only game in town the way to get people talking about and sharing your
content was through commenting on other blogs.

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This is what Pete Cashmore did with Mashable. He literally commented on hundreds of blogs a day.

With the rise of social media tools like Twitter, LinkedIn, Google+ and Facebook, commenting is still a
successful strategy...but using these social media sites have become a major part of a successful bloggers
arsenal.

It all starts with creating great content that people love to share. And it continues with you sharing other
people’s content, building a list of influencers you follow and interacting on a daily basis with your followers.

Social media will help spread your brand across the web.

Superstar bloggers build a list

The real magic of the blog comes in with the list that you build from your growing audience. The more you blog
the more traffic you will get…

But that traffic is worthless if you don’t do anything with it.

See, the email inbox is still a very private thing…and it’s a place that almost everyone still communicates.

Friendstar came and went. MySpace has come and gone. And maybe Twitter, Facebook and eventually
Google+ will go away when something new and better comes along.

But through all of this email still remains.

So if you want a way to communicate with your audience…then start building an email newsletter list.

This gives those who sign up an exclusive relationship with you. And your conversion rates will be much higher
when you market to the email list.

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Superstar bloggers target their traffic

One big mistake that a lot of beginning bloggers make is they try for the biggest audience. They may end up
getting 1,000 hits a day to their blog…but not get more single subscriber or one single person to buy from them.

How can that be? If the traffic is so high…they should be able to make at least one sale, right?

Sadly it’s wrong.

The problem with this approach is that quantity never outranks quality. If you have only 50 highly-qualified hits
to your site you will more than likely have higher conversion rates than if you had 1,000.

So know who your audience is and what they want…and then give it to them.

Superstar bloggers are very personal

You likely have one or two bloggers who you think are the greatest. And I’ll bet that one of the reasons that you
like these bloggers so much is how personal they are.

They blog every day about business and the world of content marketing, but it’s always in there…those life
experiences that are very close to them…and how these experiences can turn into lessons to help you the reader.

Chris Brogan is a master of this skill. If you look at his “Best Of” page you’ll see that a lot of that content is
written from a personal perspective:

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It’s like he was writing just to you because he is writing like he is talking. He is very conversational. It is coming
out so easy because he is passionate and informed about what he is talking about…but it’s in such a personal
context that you can totally relate.

Superstar bloggers stick to their brand

While lots of superstar bloggers started off without really knowing their brand…they knew what they were
really good at it…but they didn’t have a really good idea of their essence.

But blogging eventually helped flesh that out.

Johnny B Truant has created a brand of blogger misfit. His name alone tells you a lot…but then his avatar
that’s branded on Twitter, Facebook and his blog tells you even more. He’s biting into an apple, which reminds
you of Adam and Eve and the first sin.

His brand is very distinct.

But this doesn’t mean that you can’t create another blog and create another brand. Lots of superstar bloggers
run two or more blogs…but each blog is branded very uniquely.

Conclusion

In a world where so many blogs are being published you need to know what qualities are necessary to rise
above the crowd and stand out like a superstar. Fortunately you can look at current blogging superstars and
follow what they did.

What other qualities do blogging superstars have?

Blogging for business – Rob Fitzpatrick 
http://thestartuptoolkit.com/blog/2011/12/blogging‐for‐your‐business‐is‐worth‐it‐even‐if‐you‐get‐no‐traffic/ 

Blogging for your business is worth it even if you get no traffic 

by robfitz ∙ December 14, 2011 

I used to blog out of guilt. Every now and then, my investors would sternly suggest I blog more. I’d
grumpily obey and then point to the flat traffic graph as clear evidence of blogging’s fruitlessness.

It was a self-fulfilling prophecy of fail.

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I’ve written previously about my first month of serious blogging in terms of performance & initial
thoughts. A couple months on, I now see a clear ROI — even if you have no traffic.

My process

Posting used to take me 4 hours. Now it takes about 20 minutes. You’ll get faster. My process is:

Capture every idea

Don’t wait for good ideas – shipping regularly creates quality

Don’t obsess — publish posts on the 2nd draft

Watch realtime analytics and heavily polish only the posts which start to take off

Blogging makes money, sort of, eventually

The advertising value of blogging is essentially nil. I put an ad on my site and it just about covers my
coffee budget[1].

If you have a product, blogging is an awesome source of leads — but that depends on traffic. Some
niches are able to tap into sites like reddit or hacker news to get a nice initial traffic bump, while
others just need to slog through it for a couple years, building an audience the slow way.

Leads are going to be the winner in terms of financial ROI eventually, but it can take so long to get
to a reasonable quantity that it’s easy to get discouraged.

That’s why I want to draw some attention to the two other big perks which are traffic-independent.

Blogging makes you better at your job

I’m a better writer now than I was three months ago. Turns out, a lot of business is writing.

I’m also a much better marketer. And I don’t mean that in the sleazy sense. Marketing comes in
many forms, and if you aren’t doing direct sales, then you’re relying on marketing. It covers
everything from crafting & distributing a message to understanding analytics, setting up good
funnels, running tests, and doing optimisations.

I’ve learned where the stuff I care about overlaps with the stuff other people care about. Every blog
post is a chance to test the appeal of a worldview or a value proposition.

Blogs are a better learning environment than a real business because you aren’t constrained by the
product roadmap — you just write something and have a whole new batch of visitors and data to
play with.

Blogging closes deals

Blogging is planting a flag. You’re saying you exist, and you care enough to form and share your
thoughts, even if nobody is listening. Soon, the right people start noticing and coming to you — no
hustle required. Your traffic graph isn’t going to spike or hockey-stick, and that doesn’t matter one
bit if you’re talking to the right people.

I get occasional emails from founders, which is fun and has led to some cool collaboration
opportunities.

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Plus, quality people will often check your email domain before meeting with you. If they see an
active blog with good content, they’re going to go into the meeting considerably more eager to work
with you.

I had a watershed moment when I was about to begin pitching someone on how great I was only to
be cut off with something like, “No no, it’s cool, I read your blog.”

$500 an hour

I once overheard someone say that blogging is so important, you should value it at $500/hour (as
in, if someone paid you $450 to skip your blogpost for the day, you would politely decline and get to
writing).

I’m not sure I would quantify it quite like that, but I definitely consider it a crucial part of my day
and think it’s worth the time investment for just about every new business.

I can’t think of a quicker way to bootstrap your credibility and make opportunities appear.

[1] The guys who are making a living directly from blogging have 50k+ subscribers and
give advice which involves buying lots of things via affiliate links. They also tend to talk
about how to make money through blogging, which I realise is a line I’m dangerously
close to walking here

Becoming a conversion machine – Glen Allsopp 
http://www.viperchill.com/blogging‐conversions/ 

June was the first time in the history of this site where the blog gained over
1,000 subscribers in a month. To be specific, the final increase count was just over 1,300. Even
though I’m posting as infrequently as I ever have, traffic levels are at their highest, and the
blog is converting visitors into subscribers better than ever before.

I’m not saying this to brag, but to show that the changes I’ve slowly been implementing are having a
big effect here, and I want to share them with you all today. If you haven’t been getting the results
from blogging that you were hoping for, or you just want to fine-tune things a little, then this post is for
you.

Very recently I talked about a huge flaw in blogging, which I’ll get to in a minute. Even though I self-
referenced this, a few people emailed me to say it’s strange that I am promoting a blogging product
and then talk about the downsides of the platform. I wasn’t sure about whether or not I should start

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this post off with a snippet of the things I love about blogging, so let those emails be a nudge to do
exactly that.

Because, let’s be clear, I do love it. I owe so much of where I am and what I have done to this mode
of publishing that I don’t even know where to start. I will say that two highlights of my blogging
“career” include getting to work in South Africa with huge brands for 18 months and having my Dad
phone me in Paris to say that he just heard someone talking about me on the radio when driving to
work.

I could go on, but I’ll just add that blogging has changed my life in a vast number of ways, and I still
love writing in public now as much as I did when I clicked ‘Publish’ on my first ever post in 2006. Did
WordPress look ugly back then or what?

I will reiterate what I’ve said before which is that I don’t think blogging is the thing to focus on if you
want to make money online quickly. Blogs take a long time to build, since they’re very much
relationship focused, and just relying on RSS – like most bloggers do – sets you on a horrible path
when it comes to converting readers into buyers.

I offered the alternative CloudBlueprint strategy, which has proven popular, and two women making
$5K per month proved that you can implement it into a blog as well. I want to take my
recommendations for this further than ever before, and focus on both plugging the “flaws” that your
blog has as best as you can and making sure it’s converting for you better than ever before.

Though I’m sure you take this as a given for ViperChill content by now, the article below is very long
and contains a lot of different recommendations. Since my aim with this post is to help you, the last
thing I want to do is overwhelm you with too many ideas and things you have to implement.

If you’re one of these people who are new to this whole blogging thing, then just take my top three
recommendations and put them into action, and come back to this post another day for the rest.

Over the last year I’ve experimented with the “Popular posts” section of this website quite a lot. In the
old ViperChill design I had a gradient-yellow column showing my top 10 posts. But, it was static and I
had to make the headline text really small for it to look good in the design.

When I updated to my new theme, the popular posts were now automated, and I could easily set how
many I wanted to show. These headlines were originally accompanied by images, but now you will
just see them as the blue links in the right sidebar here. I removed the images recently and found that
doing so not only speeded up the site but also improved it aesthetically, in my opinion.

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I’ve now put less focus on that element of the sidebar, and put a few hours into a page you’ll find in
the navigation bar here under the guise of ‘Viral’. The resulting page reveals a list of the most popular
ViperChill posts I’ve written in terms of the number of comments that they’ve received. Since it’s
highlighting the posts that have already proven popular with readers, it’s likely that at least one of the
headlines will entice visitors to click on them, as they have done for so many others before.

I added a visual element to the page for people who are more stimulated by graphics. Not everyone
likes to read text on a page, with many opting to look at a cover of something out of habit. I turned my
top three posts into small magazine style graphics for this very reason, as you can see above.

I’ve noticed a clear increase on the number of comments this page has generated on older posts, so
already know it’s working well in terms of directing visitors around the site. Though I haven’t done this
at the time of writing, I’m going to be adding a link to the bottom of all ViperChill posts that takes
people to this page.

This will be useful for people who have already opted-in to my ViperChill offerings and just want to
read more of my free content. There are 19 posts listed (odd number, I know) so far, but I’ll probably
extend the list to the top 30 posts in total.

I’ll continue by looking at what is probably the most prominent change I’ve made to the site recently:
The creation of a ‘Start Here’ page. I have Pat Flynn to thank for the inspiration, and his video
critique with Derek also gave me the push I needed to finish some other changes I had planned to
make for far too long.

Pat found that creating the page meant that people stayed on his site much longer (a 90%
increase!), and his overall bounce rate was much lower. This makes sense, since people leaving
the site quickly are usually first-time visitors. If they see a page that appeals to them “New Here?”
then there’s a good chance you can get them to stick around.

There are some great tips in the video, so definitely check it out. I do want to say however that there
are a couple of things that I disagree with. The first being on the way Pat should act on his About
page. Derek suggests that Pat should change his wording to focus more on what he can offer the site
visitor in terms of benefits, which I think is good advice in most cases.

However, I’ve personally found – especially in the niche that myself and Pat are in – that people are
far more interested in hearing about the person behind the site, so they can quickly decide if that
person is worth listening to or not. There are so many shady characters in this industry that will more
than happily say what they can do for you, so I think his current page is perfect.

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I also disagree with constant focus on getting an email address on a lot of pages. Sure it’s highly
effective, but if you haven’t converted someone the first few times they see an opt-in box, then you’re
missing some other key element. Perhaps what you’re giving away just isn’t enticing enough.

Pat’s “Getting Started” page was created in addition to his About page, where as I have replaced my
About page with more information about me and the site. My reason is that I simply like to get to the
point when I’m talking about myself, and the ‘philosophy’ of the site is very focused around me, so it
made sense to combine them on one page.

The aim of my New? Start Here page is to really take new visitors to ViperChill by the hand, explain
more about me and the site, and then offer more content. I am personal (read: cat pics) on the page
as I always want my writing to feel as if I’m talking to you one-on-one. Note that I will be updating that
video that’s on the page, but it’s a decent placeholder for now.

It was important for me to try and make the page appeal to a wide variety of audience types. For
people who are really interested in ViperChill, they can watch a five minute video, find out about some
of my top content, and even watch a 24 minute blogging video on that page if they want to. Other
people might be enticed by the email subscription box, while some people mentally answer which
“level” they are and click links to Beginner, Intermediate and more Advanced content.

I’m sure there are tweaks I’ll make to the page as time goes on so keep checking back, but even if
there are possible improvements to be made, what I have now gives me a far more stable and
efficient funnel than I had before.

One of my favourite books on business and marketing, Rework, also happens to come from one of
my favourite companies to follow online, 37Signals. They’re the guys behind Basecamp and some
other popular online tools. I’m going to use their book cover as an example of how powerful one
testimonial from an outside source can be.

Though I’m a big fan of 37Signals originally and would have purchased their book anyway, seeing the
one line quote from Seth Godin at the top of Rework has a huge effect on how people, who stumble
across the book randomly, perceive it.

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Testimonials work because anyone can hype up themselves, so having other people say nice things
about you instantly makes you more credible. And, if you can get someone like Seth Godin to hold
you in such high regard, then you’re going to get the attention of his fans and more.

Since testimonials work so well on sales page and squeeze pages, it only makes sense to put them
on areas of my blog near where people have the option to subscribe to something. I’m fortunate to
have had some well-known publications say some nice things about me, and that’s powerful. If you
share too many then you definitely run the risk of showing off or alienating current readers, so sprinkle
them in your current design if you have some to share.

A few people on Twitter noticed my sidebar testimonials / quotes have been up for a few weeks now
and asked me how they were converting. It’s hard to tell since I’ve added more opt-in boxes to the
ViperChill and don’t have split-testing in place for my sidebar yet but I can see a clear difference when
I look at my ‘Daily New Subscribers’ chart in Aweber. I went from getting 30 opt-ins per day on
average to over 60 on weekdays now and hundreds on post days.

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What, those three weren’t enough for you? It’s a good thing I have a lot more to share…

If you do have a lead magnet in place, which links to something like Aweber, then it’s very easy to see
which emails you’re sending out result in people unsubscribing from your updates. If you know you’re
sending something that people don’t like, then you can tweak that message in order to keep more
subscribers on your list in future.

I have 28 unsubscribed people on my list at the moment. By going to Subscribers then selecting the
Unsubscribed drop-down in Aweber, I can see exactly which emails people read before
unsubscribing. You can see this data for various emails below…

Email One: 14

Email Two: 3

Email Three: 1

Email Four: 1

Email Five: 1

Email Six: 3

Email Ten: 5

Nobody unsubscribed from emails 7,8 and 9, so obviously people enjoy the content found inside
them. Email one gets a lot of unsubscribes as people often just sign-up for a freebie (such as my 10K
eBook) and cancel their subscription straight away.

When I looked at email six, I actually think the content is excellent, so that wasn’t a concern. The only
difference between email six and my other emails is that it is set to send out 7 days after the previous
one, instead of every 3 days like my other emails.

I did this to give people a little break from all of the information they were getting, but instead I think
people are confused by the delay, and unsubscribe. I put this back to being the same delay as other
emails, and there has only been one unsubscribe from this message since.

Email 10 is actually the last email in my queue, and I haven’t followed up to it for at least two weeks.
My thinking is that people still see the email in their inbox, with no follow-ups, and then unsubscribe.
Any other theories on this are welcome in the comments below.

Since I’m getting dozen of opt-ins per day on this list, and sometimes over 100, my email unsubcribe
rate is pleasantly low. That being said, any little tweaks – like I made to email six – can still have a
positive long-term effect for me, and hopefully for you as well.

I’ve recently taken advantage of the ability to have multiple sidebars throughout your WordPress
website, and I really think that the result is optimal for my current situation. When people are reading

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your blog posts, they’re getting value, so you want to take that opportunity to either get them to buy
something, opt-in to something or read more of your content.

When people are on my About page, they want to know more about me. This shows me that the
visitor is engaged. Because of this, I don’t want to still be in their face with an opt-in form which
they’ve already seen on my blog posts. So, the sidebar used for posts and static (contact, about, etc)
is now totally different. It also has an interactive element where I ask what level the visitor thinks they
are in terms of marketing skill.

Each link then takes them to a section of links that are most useful for their level. Finally, I also have a
separate sidebar for people following CloudBlueprint as I need to be able to show different information
to those people. Ideally I want “CloudBlueprinters” to either share the course around, download the
videos, or opt-in to get more information from me.

I put a lot of hard work into CloudBlueprint so it’s important to be clear about what I want people to do
after they’ve watched it (if they enjoyed it, of course).

For those of you who don’t have multiple sidebars built into your theme, I have sadly failed to find a
good updated guide online that shows you how to do this. However, thanks to the ViperChill forums, I
recently learned of ‘Widget Context‘, a plugin that lets you specify which sidebar widgets show on

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which types of pages on your blog. You can specify them by a number of factors, which should help
some of you easily replicate the type of thing I’m doing here if you see value in it.

I can’t say that this has had a huge effect on my conversions, since I’m not yet tracking it perfectly (it
gets quite complex since I’m working on yet more sidebar pages). Logic and first impressions tell me
that it’s going to have a far better impact than having the same sidebar all over my site, but I’ll let the
results tell you all in a few weeks.

A big problem I’ve spoken about when it comes to blogging is that when a new visitor lands on your
site, you’re often sending them away in order to monetise them. If someone comes to your site for the
first time and clicks on an affiliate link or goes to your product page, and doesn’t buy anything, then
there’s a chance you’ve lost them for good.

This is why I spoke about squeeze pages being such a huge benefit over regular blogs for collecting
subscribers in CloudBlueprint. The $5K Case Study I also shared looked at taking this approach and
applying it to blogs by adopting a “squeeze header”.

One way to fix this is to put more emphasis on creating a lead magnet. A lead magnet is something
you use to entice people to give you their email address. I’ve talked time and time again about how
email subscribers (in my experience and for thousands of other marketers) tend to buy more products
and stay more engaged than any other type of audience.

I tend to go above and beyond for email subscribers, since I love the closed off yet personal nature of
the whole system. The three most common types of lead magnet, which I unconvered in my pro
blogging video tend to be:

Podcasts

eBooks

Videos

If you don’t know how to create any of these then definitely go and check out the video above. You
can create them all for free and they’re all effective freebies to giveaway online. I’ve recently heard of
people having success with more obscure items, such as a “million dollar business card” with an idea
on it, and having those work well.

If you have the time, then definitely be creative.

In my own split-testing I’ve found that adding a graphical element to your giveaway can give you a
huge boost in conversions. Not only does it work on squeeze pages, but it works on sales pages as
well. You can see I’ve already started adding graphics for the first few modules on the CloudBlogging
sales page.

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Not only do I have a lead magnet in the sidebar for all blog and post pages, but there’s an eBook
graphic in the site footer here which takes you to my 10K subscribers page. My lead magnet is a 30+
page eBook on how I grew VieprChill to over 10,000 subscribers. Since this is a real case-study it’s
quite rare to see, and I’ve been told by hundreds of people that they were blown away by how much
work I put into it.

As I revealed on this post, I have tested a ton of titles on the page, and found the current header to be
the best wording for conversions. Since the page is static (also talked about on that linked to post) I
can easily tweak certain design aspects to help conversions even further. You’ll see that page has a
very minimalist header and footer, as my main aim is to get people to fill in the opt-in box to receive
the eBook.

Even if they just download it and unsubscribe straight away, there’s a chance they will come back to
ViperChill in the future if they just open the PDF I sent them as it contains so much value-giving
information.

As I stated earlier, not everybody is attracted to text and would be happy to read your content. New
visitors are especially likely to skim your page and look for anything that catches their eye. Using a
graphic next to an opt-in form or other call to action gives that CTA more chance of being seen.

What I like to do when I think I have my whole lead generation funnel in place is to test my site in full,
as if I’m a brand new visitor. I like to turn off any toolbars (even the address bar) in my browser, so
you really just get to see your site and nothing else on the screen. The funnel that visitors typically go
through is as follows:

Step One: A new visitor lands on your site and notices your opt-in form

Step Two: They enter their email address. As soon as they click the submit button, you should be taking them to
a page that at least reminds them to check their email address. I say “at least” because visitors are usually in a
very engaged state at this point, so may be happy to do more things. One option is to then offer a free eBook,
and use a service like Cloudflood to make them tweet or Facebook share it (which gets you more traffic) in
order to get the download link. I’ve used this to good effect.

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Step Three: They then visit their inbox and must click on a confirm subscription link. Make sure your text here
has been customised in Aweber. Make the confirmation redirect go to a page on your where you give them what
they opted in for. By default I had set this to go straight to my About page, but received a few emails from
confused readers asking where their eBook was. Finally, remind visitors to once again check their email and to
expect another one from you in a few days (if that is the case).

Step Four: You continue to follow up with relevant and valuable content.

If you don’t have pages on your site for steps two and three then set them up right now. Just a few
minutes work can ensure that you don’t lose subscribers unnecessarily.

One benefit of blogging over a strategy like email marketing is that you constantly receive a trickle, if
not a flood of visitors still looking at your old content. There are dozen of posts on this site which get
50+ views every single day because of links pointed here from other sites, search traffic, and people
exploring ViperChill.

It’s important to focus on the fact that people coming from search and referring sites are highly likely
to be brand new visitors to your website. This means that your blog post is possibly your only chance
to give a good first impression and capture their attention. Below I’ll highlight a few common ways to
tweak your old posts to get the most out of them…

Get Their Email & More with Shortcodes

With the help of my friend Joost, I recently created a simple WordPress plugin so that I could easily
show certain style elements in any blog posts of my choice. I can do this by utilising shortcodes – little
codes you use to call the contents of a file – so that if I want the same message on a lot of posts, all I
have to do is type a short code, such as [SEOeBook] and an SEO eBook opt-in form would display. If
I ever want to tweak this opt-in form in the future, then I just edit the plugin, and don’t have to tweak
every individual post.

The great thing about shortcodes is that they can be used for tons of things. For example, they have
the ability to easily show an RSS box or a category specific opt-in form which can convert readers
much better. You could even create a list of links to your top posts in each category that shows on
relevant posts.

At the moment all my plugin does by it output a date. It’s currently being used on my Viral pagein order
to show how frequently the comment counts on that page are updating. They aren’t automated yet,
but I’m working with a programmer on it, so they should be very shortly. Hence the timestamp.

You can download my plugin here, and install it like any other WordPress plugin. At the moment all
you have to do is type Friday, 1st of June on any post or page text, and it will always show yesterday’s
date on that post. I won’t go into detail about programming or editing pages, but those of you with a
little tech skill should be able to see how you can duplicate the plugin and create different shortcodes
e.g. [SEOeBook] to show opt-in forms and more.

Change Your Ending Paragraph

When you first launch a post, your aims with it are usually different to its purpose a few months down
the line. For example, you may be advertising a product you no longer have for sale, or asking for
comments when you’re not actually looking for them anymore. Since people will still be reading your
old posts, tweak your ending paragraph and ask them to do something else next.

Your best option is to send them to a page that is as relevant as possible to the topic they’re currently
reading about and offers an enticing freebie.

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Show Related Articles

Though I don’t do this personally, it’s a popular choice around the blogosphere so that’s why I’m
covering it. Various plugins allow you to easily show articles that are related to the one you’ve just
written. These plugins are considered good for SEO and they can help you to generate more
pageviews.

The reason I don’t do this is because I ultimately want to take visitors through a different funnel. I
would rather send them to a page which offers a ton of value (like a video course or free 30+ page
eBook) and then entice them to subscribe or just send them to a page which highlights my best
content in all categories.

Interlink

If you don’t want to use a related posts plugin, then another way to improve your internal SEO and
keep people on your website longer is to interlink your articles. If you’re anything like me then every
post you’ve published in the past can probably be tweaked to include more links to your other blog
posts on the same topic.

This task is a little time consuming but if you’re willing to put the effort in then it can definitely be worth
it. At least do this for your highest trafficked pages to start with. A few people out there use plugins for
this kind of thing but the result isn’t always great. Tweaking things manually would be easier for me
since I write less, so do try out the plugins out there and see if any are for you if post by post editing
seems too much.

Link to a Product

If you’re not as focused on collecting emails as me and just want to go for the sale, then that’s
definitely an option as well. When people take the time to read about a topic online, they’re in an
engaged state where they’re happy to read more information on that subject. This is especially true if
your blog post didn’t quite cover everything that they wanted to know.

Putting your own products on these posts can result in more sales for you, or you can even promote
affiliate products here from the likes of Clickbank as well. If you are going to do this then I recommend
that the product offering is highly relevant to the post, and not something you should add to all posts
en masse.

You’re going to reach a stage in your marketing career where there is very little for blogs to teach you.
The best course of action you can take at this point is simply any form of action. There are a lot more
people who know how to make money online (at least in theory) than people who actually do anything
with their knowledge. Since you’re a ViperChill reader, and I’m here to help you, then I don’t want you
to become one of those people.

Mostly out of personal curiosity, I decided to record myself writing during a Pomodoro. A pomodoro is
simply 25-minute time slot where you take productive action. In this case, I wrote an article. I speeded
up the typing and you can see how I wrote over 1,000 words very easily in the video below…

My apologies in advance for the cheesy editing. I needed something to make all of that writing a little
more watchable ;]. The point I want to make is that you can get a lot done in a short period of time. All
that’s needed is for you to just…start (!).

I very rarely (if ever these days) find myself subscribing to new blogs, so I always take note when I
stumble across a new site and end up adding it to my feed reader. In most cases I’ll enjoy that sites

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latest posts, but often also see that thousands of other people are regular readers, which shows me
there must be more good stuff to come.

If I removed any evidence of social proof from ViperChill – such as my feed subscriber and comment
count – then I would still have the exact same content on the website, but people would be less
inclined to subscribe.

I believe that your content is everything, first and foremost, and you all seem to do a pretty good job
on that front, but if you have social proof that you can show off, then do so. My own WordPress
plugin ViperProof (demo in the bottom right corner of ViperChill) is free and allows you to do this with
ease.

It’s not so easy to show social proof when you start your blog, but if you’ve been running it for at least
a few months then there should be some things that you can share with the world.

I’ve talked about Heatmap tools on this blog a few times. Right now I have heatmap tools built in to
other services I use like Google Analytics and Visual Website Optimizer. Even so, I still opt to pay
$9/m for Crazy Egg (no affiliate link) as it’s interface and analytics data is far more advanced than the
‘add ons’ mentioned for two prior services.

An example of something I changed after using CrazyEgg is the word ‘Glen’ in my site footer.
According to my heatmap tracking results, that word would get clicked on more than most other links
on my page. Yet, it wasn’t a link. Just some bold text.

So, I changed that word to a link (even though it looks the same) and now people can learn more
about me when they do so. Though this was a little change, it can have a big difference when
thousands of people are visiting my site, so it’s always worth trying to improve usability.

Something a lot of bloggers could benefit from – but don’t implement – is a feed footer. A feed footer
basically allows you to add HTML to the end of your blog posts that people receive via RSS. This may
be in the likes of Google Reader, or in their inbox for people who subscribe that way.

I tweak my feed footer fairly often, and even created a plugin for free to help you tweak your own. I
prefer to direct people to areas of my site whether they can either get something for free, or get more
content from me.

I’ve noticed other bloggers pitching products at the bottom of their feed – which is fine – but it’s not
something I have any plans (or need) to do personally.

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One thing I know a number of bloggers get caught up in when they first start out is in trying to be
everywhere, as often as they can. I’m personally a much bigger fan of narrowing where your spend
your time and focusing on creating stronger connections. If you’re someone who really has given
everything a try, look at your top referring traffic sources for the last year, to see which actions were
the most helpful.

Commit to spending more time on the things that actually worked well for you. It may be that Tweeting
is a good use of your time, commenting on a certain blog sends you a lot of visitors, or that you have
a few keywords which are bringing in a good amount of search traffic and they could use a search
boost.

You will get to a stage where you need to stop looking to others to see what to work on and start
using your own real-world results to give you an indication of what is working in your niche. No
marketer has operated in every industry out there, so there’s a good chance you’ll discover secrets
about your industry we just couldn’t have told you about yet.

I’ve spent quite a bit of time over the last few weeks ensuring that my blog is as fast as it can be.
There is still a lot of work to be done but I managed to take the load time on a slow conection from
12.5 seconds to just over 5. The two biggest changes involved me first of all cleaning up my code,
removing CSS files I don’t need, and removing any Javascript calls that aren’t being used.

A good tool to give you an indication of which files are taking the longest to load on your site isthis one,
from Pingdom. My theme by default (before I massively tweaked it) had no less than 7 CSS files and
about 12 Javscript files, which were massively slowing down my pageloads.

A few months ago I also started using Amazon’s CloudFront service. They basically host a few files
for me (such as my CSS and javascript) and I handle the rest of the blog loads with my usual hosting.
Amazon’s has CloudFront “clusters” in various locations around the world, so when you’re loading
files from this site you’re actually pulling them from servers which are closest to you.

You are charged based on how much bandwidth you use, and my biggest bill so far has been just
$2.17 for one month.

I wanted to leave you all with the final recommendation on what I’m going to next, and if you like the
idea, then it may be something you want to do as well. I already my homepage optimised for a
keyphrase I want search traffic for – viral marketing – so now it’s time to start branching out on the
phrases that I want to try and rank for.

I’m going to replace the ‘Topics’ in the sidebar with links to flagship content, rather than category
pages. I’ll create a great guide on various subjects, and then do some smart interlinking from relevant
post pages. Since I’ll be sending traffic to these pages, they’ll also be optimised to convert new
visitors into subscribers.

For people who are already subscribers and want more content, I’ll still be pulling in each category’s
RSS feed so the pages are constantly updated with relevant links to my latest posts. This is
something I’ve only ever seen done on a couple of websites and definitely has the potential to be
another powerful page idea, just like the “Getting Started” page recommendation.

If you have any questions, leave them in the comments below as always. Are you going to be
making any changes to your site now? I would love to hear what you have to say…

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Just start blogging – Jason Cohen 
http://blog.asmartbear.com/start‐blogging.html 

Attacking your sucky excuses for not blogging

APRIL 11, 2011 60 COMMENTS

You already know that nowadays you’re invisible without some sort of social media presence. You
already know the (alleged) benefits of having a personal orbusiness blog.

But you still don’t blog, and for good reason, right? Blogging is work, and ten other things
are more important. Writing is hard and takes longer than you think it ought.

And even if the blog works, the experts say you won’t be able to measure its effect, and it will
probably take years to come to fruition. Years? Fooey. You need a sale today. You need a job by
next Thursday. Who has time for “years?”

…but that’s like saying you’re not going learn to play an instrument because it takes practice.

…but that’s like saying you’re not going to start a company because at first it’s difficult and the
payout — if there is one — is too far away to be tangible.

Not much in life that’s worthwhile is easy, especially at the beginning. That’s not an
excuse to not do it.

Here’s a bunch of other excuses you’re probably using to avoid becoming a good communicator with
influence in the world. Maybe by showing you ways around them you’ll take the plunge.

I don’t know what to write about.

Kathy over at Virtual Impax has a great way to remedy that:

If you’re in business, you’re either helping customers/clients to:

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1. achieve a goal,
2. satisfy a desire, and/or
3. solve a problem.

Decide which of those things you do, and write down exactly what that thing is. You’re not
identifying what you do but rather the end result that your customers are using you for.

Now write about that.

For example, email newsletter systems like Constant Contact or MailChimp let you collect names
and send email. That’s what they do. But their customer’sgoals are to stay in their clients’ minds, to
get them to click on links, and probably ultimately to sell them something.

So MailChimp doesn’t need to blog about their software (except maybe to explain a tip or announce
a new feature), and certainly doesn’t need to talk about Barak Obama or Miley Cyrus. They should
talk about how to write an effective newsletter, how to track key metrics on newsletter campaigns,
what kinds of things you should expect to achieve from a newsletter, ideas for content for your
newsletter, ways to look informative instead of spammy, ways to get two-way promotion with other
bloggers via your newsletter, and so on.

These are all things which are equally applicable to their competitors products, but that’s
OK! Providing a software tool is just one way in which they’re going to help their customers
succeed — this training, knowledge-transfer, best-practices, and tips are also necessary to make
their customers truly successful.

As Kathy says in that article:

If you don’t KNOW what goals you’re helping people achieve, if you don’t know what desires are
being quenched, if you don’t know what problems need to be solved, then OF COURSE you aren’t
going to know what to blog about.

Yeah, and you have a deeper problem then blogging: You don’t know why you’re in business!

I’m not good at writing.

So how are you going to fix that?

And yes, you do have to fix that. However you feel about the way the Internet is going, you
have to admit that writing skills are getting more important, not less. Whether it’s blog posts,
Twitters, Facebook updates, discussion forums, or that arcane so-last-millenium technology known
as “email,” we’re writing more now than ever.

There’s no better way to improve than to write short essays and put them on the Internet for all to
see. Why?

Short, so completion is realistic. Public, to elicit your best performance. Essays — not memos, not
inconsequential updates — because it forces you to consider a topic, decide what you think, and
convey that to others,which is the basis of making an impact on another human being.

Writing is like any other skill — you have to practice to improve. Duh. You certainly won’t get better
at it by summarizing meeting notes or Twittering what you ate for lunch.

Don’t worry about other people seeing your crappy writing; at first no one’s looking except friends
and family, and they understand what you’re trying to do. Later when you’re better at this, you can
delete those posts or, if you’re like me, you’ll leave them because it’s fun to see how far you’ve come.

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All the good ideas have already been written about.

No, it’s worse than that. Good ideas have been written about by famous bloggers with flair and
panache, and it’s been read by their tens of thousands of readers.

So what?

When you see a great article that really resonates with you, that you wish you had written yourself,
here’s the post you write next:

[OTHER BLOGGER] wrote a great piece yesterday about how [SUMMARY OF ARGUMENT]. What
stood out was [MORE DETAIL, WITH PITHY QUOTE].

Then the body of the post can go in all sorts of directions:

Pile on three more arguments for this point.

Tell a story about an example of this point.

Tell a story about a counter-example which went terribly wrong.

Say essentially the same thing but elaborate where the original poster made assumptions or skipped
a step.

Say essentially the same thing but condense the original poster’s lengthy missive (who, me?) into a
punchy summary.

Find related articles which agree and create a narrative where you weave their arguments together
to drive the point home.

Find counter-point articles and explain why those are wrong.

For the conclusion, challenge the reader to use this in her life. Ask a poingant question or suggest
actions they could take today.

You can follow this format forever. As you practice, you’ll discover more and more of your own
ideas, your own language, and your own flow will naturally take over.

Finally, you can use this same technique for posts you vehemently disagreewith!

Just make sure you’re riffing off something you feel strongly about; then finding more to
say will be easy.

I’m not creative.

People say this all the time; I don’t think they know what they mean.

Do you mean you’re not a music composer or you don’t get post-modern art or you’re not the
next Hemingway? No kidding, me neither. That’s not what this is about.

The goal isn’t to generate art or invent new philosophies; the goal is to improve your ability to
communicate and increase your sphere of influence. You don’t have to be an artiste to do that!

The preceeding sections should make it clear that invention is unnecessary and uniqueness is
irrelevant. Clarifying your impressions about something you just read is enough; converting your

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feelings into words is enough; presenting your existing, unoriginal opinion as a three-part
argument with a link or two is enough.

Those things aren’t easy, I’ll give you that! But they don’t require creativity.

There’s lots of everyday things you already talk about; now it’s just time to organize and present
your thoughts.

I’m not good with software / I don’t know about “the world of” blogging software.

Fair enough, let me help:

Sign up for a free account at WordPress.com or join me at my companyWPEngine. Either way

you’re up in minutes.

Start with a few test articles to get the feel of things.

Look through the site design templates they have and pick something you like. This is supposed to be
enjoyable!

Don’t worry (right now) about widgets and RSS and fancy formatting and clever pictures. You can
do that later.

Write!

There’s more things you should do eventually, like putting your blog behind your own domain name
so you can switch blogging platforms later and usingFeedburner to track how many people have
subscribed to your blog. But if you create too much work for yourself ahead of time you’ll never
begin.

Once you get 10-20 posts under your belt, check out the ways this blog got popular.

But that’s later. You can fix everything later. Right now no one’s looking anyway.

Remember, this is for you.

Just start.

Continuing…

Do you have more advice, or do you argue that blogging isn’t useful enough to justify the effort?
Let’s continue the discussion in the comments.

The Ultimate Guide to Guest Blogging – Kristi Hines  
http://blog.kissmetrics.com/guide‐to‐guest‐blogging/ 

The Ultimate Guide to Guest Blogging 

Here at KISSmetrics, we’ve discussed how you can build authority in your industry through blogging.
If you’re a fan of Social Media Examiner, you might have read about major brands that have benefited
from guest blogging. So today, we are going to look at exactly how you can get guest blogging
opportunities and make the most out of them.

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Determine Your Guest Blogging Goals

Before we begin, your first task is to decide what your goal for guest blogging is. Knowing this goal
ahead of time is key in determining the right kind of blogs to submit guest posts to. Typically there are
three main goals for guest blogging.

Positioning yourself as an authority and well-known name in the industry.

Getting exposure (traffic) back to your website.

Building backlinks to your website.

With the right kind of content on the top blogs, you can do all three of these things. If you are trying to
accomplish either #1 or #2, then you will want to find blogs that have a good sized and engaged
audience. If you are just trying to accomplish #3, then you need to pinpoint blogs with strong root
domain authority. You can check this for free using the SEOmoz toolbar. Knowing your goals in
advance will help you in determining which blogs will be the best for you to submit guest posts to.

How to Find Guest Blogging Opportunities

The first thing you will want to do is find guest post opportunities. When looking for places to guest
post, your main goal is to find sites relevant to your niche or industry. You are looking for blogs that fit
the following criteria:

The content is focused on your niche / industry.

The audience of the blog will be interested in your industry.

The blog has engaged readership (posts have been shared socially and commented upon).

The blog owner is active on social media (so you know that they will be promoting your work on their
site).

So if you are selling seeds, you will want to find gardening blogs with an engaged audience of
gardeners. The following should help you find the right kind of guest post opportunities.

Google Searches

Google is a great place to start in the search for guest posting opportunities. You can use any of the
following keyword searches to find blogs that accept guest posts. Just replace keyword with
keywords from your industry.

keyword “submit a guest post”

keyword “guest post”

keyword “guest post by”

keyword “accepting guest posts”

keyword “guest post guidelines”

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These searches should lead you to a blog’s guest post guidelines page, guest post submission page,
or actual guest posts by other writers.

Prolific Guest Bloggers

Know of any prolific guest bloggers in your industry? If you read enough blogs in your industry (which
you should), these will be the names you see over and over writing content for others. For online
marketers, that list includes Gregory Ciotti, Danny Iny, Leo Widrich, Neil Patel, Marcus Sheridan, and
many others. Using Google search, search for the name of prolific guest bloggers in your industry
plus the phrase “guest post by”. This will reveal all of the sites that these guest bloggers have posted
upon. They should be good places for you to guest post upon as well. A bonus would be if you
actually know a guest blogger in your industry that can make an introduction for you to the owners of
blogs they have guest posted upon.

Competitor Backlinks

If you (or your online marketing agency) has ever pulled up a backlink analysis of a competitor while
working on your SEO campaign, chances are one or more of your competitors have backlinks from
guest posts they have done. If you have access to tools like Open Site Explorer, you can look at the
backlinks of your competitors and spot any blogs they have written for. If you don’t, you can do a
Google search for link:domain.com -domain.com “guest post” (replacing domain.com with your
competitor’s domain) which should reveal sites that a competitor has written for.

Social Searches

A lot of bloggers and guest posters will share their latest guest posts on social networks. Since the
easiest one to search is Twitter, you should try running a Twitter search for keyword “guest post” to
get the latest tweets about guest posts in your industry. Just follow the links to see which blogs are
accepting the guest posts.

600+ Guest Blogging Opportunities

Need more keyword search ideas or a just a list with lots of different guest posting opportunities?
Check out this post on Buzz Blogger with 500 places to syndicate content and this one by Brian Keith
May with100 sites to submit guest posts.

MyBlogGuest

Last, but definitely not least, is My Blog Guest, a community of guest bloggers. Sign up for free and
search for blogs which are accepting guest posts. Better yet, post your own information to say that
you are looking to write guest posts on a particular topic so blog owners can find you!

Preparing to Pitch a Guest Post

Notice that we don’t just jump from finding guest blogging opportunities to contacting the blogs. That’s
because there are a few things you need to do before you propose a guest post for a site you’ve just
found.

Get to Know the Blog’s Content

Getting to know your target blog’s content is key. Sure you know they have content about the keyword
you searched for while looking for guest post opportunities. But you need to know even more about
that content such as…

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What level of audience are they writing for (beginners, intermediate, advanced)?

What type of audience are they writing for? If your business is B2B, then you will want the blog
audience for your guest post to be businesses, not general consumers.

What type of content do they write? Is it mostly general concepts or specific, detailed tutorials? Do
they like lists?

See How Other Guest Posts Do

While a blog may have guest posts, the question is do the guest bloggers do well? Do guest blog
posts on the site get as much comments and social sharing as blog posts by the owner? Some sites
might accept guest posts, but if the audience is only tuning in for the blog owner, then you won’t do so
well if your goal is to build authority or get traffic back to your website.

See Who the Guest Bloggers Are

Some blog owners are more likely to accept guest posts by certain types of people over others.
Peruse a few guest blogger bios on the blog to see if they are fellow bloggers, freelancers,
consultants, business owners, and so forth. This will be important when you introduce yourself to the
blog owner for your pitch. You can read more about the success rates of guest posting outreach
in this study on SEOmoz.

Find Out What Posts Do the Best

To ensure that your guest post gets accepted, you will want to pitch the blog owner with topics that
will do well with their audience. To get some good ideas of topics that will work with the blog’s
audience, use the following sites to see what posts have been popular on social media. Just replace
domain.com with the blog’s domain.

http://topsy.com/s?q=domain.com – This will show you the number of times blog posts have been
tweeted. Click on the number if you want to see who has tweeted the post and learn more about the
blog’s audience.

http://plus.topsy.com/s/domain.com – This will show you the number of times blog posts have been
shared on Google+. Chances are, blog posts that have been shared on Google+ a lot will also have a
lot of +1′s which might mean better search visibility.

http://delicious.com/search?p=domain.com&jtf=E&partial_type=B – This will show you the number of

times blog posts have been saved on Delicious.

http://digg.com/search?q=site:domain.com – This will show you the posts on a blog that have
received the most amount of Digg votes.

Become a Familiar Face in the Blog Community

To increase your chances of getting accepted as a guest blogger, you will want to get some
recognition from the blog owner first. The best way to do this is to take a week or two and comment
on their latest posts. You’ll get bonus points for sharing those posts on Twitter too – just be sure to
include the blog owner’s @username on Twitter. This way, when you pitch your guest post, you won’t
be a complete stranger.

The Best Times to Pitch a Guest Post

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You won’t always have a golden opportunity to pitch a guest post, but there are certain things to take
advantage of when they arise. These include the following.

When blog mentions you in one of their posts or on social media (Twitter, Facebook, Google+, etc.).

When the blog lists you, your business, or your product in one of their posts.

When the blog specifically advertises they are looking for guest posts.

When the blog publishes another guest post.

Basic Pitch Best Practices

The following are absolute musts when pitching a guest blog post to another blog owner.

Read the Guidelines

The last thing you need to do before contacting the blog owner is read the guest posting guidelines, if
applicable, and follow them closely. Does the blog owner want you to pitch an idea or actually submit
a full post? What format do they want it in? Do they want you to create an account and enter it into
WordPress? These are all things to know ahead of time before you contact the blog owner.

Personalize Your Email

As a blogger who receives daily guest post pitches, nothing turns me off of an email more than ones
starting with Dear Sir or Madam , Dear Webmaster , To the owner of Kikolani.com , or
simply Hi . Somewhere on the blog you are about to contact will be the name of the blog owner. You
might have to ferret around for it on the about page or on one of the blog’s social media accounts, but
it is more than likely out there. Find it, and use it to start the email.

Who Are You

Remember the part about seeing who guest bloggers are on your target blog? Some blog owners are
particular about only allowing other bloggers to submit guest posts on their sites. If you noticed that
most guest bloggers are bloggers themselves, then you might want to introduce yourself as a blogger
at ( insert your personal or business blog here ). You can always be a business owner on the side
– just focus on your blogging skills first.

Why You Should Be a Guest Blogger

Be sure to include why you should be a guest blogger. Add a few links to posts you have published
elsewhere, including your own blog. Preferably go with posts that have a good bit of social
engagement so the blog owner will see your potential value with their audience.

How to Pitch a Guest Post Idea

If the guest post guidelines ask you to submit a topic idea, then (based on your research of previously
popular posts), pitch a few different ideas so the blog owner has some to choose from.

How to Submit a Great Guest Post

One of the common questions about guest blogging is whether you should be using your best content
for your own blog or for your guest posting. It really depends on the quality of the blog you are
submitting your content to. If the blog has nothing but 900+ word posts with lots of screenshots, then

357 
 
your post should be similar. If the blog has nothing but posts with 500 words or less with only one
image, then your posts (again) should be similar. The following are other good tips for making your
guest post as awesome as possible.

It’s Not About You

The first thing to remember about a great guest post is that it is not about your business, your
products, or your services. Guest posts should be valuable sources of information – not
advertisements! Any information about your business and related items should be reserved for the
author bio. Occasional mentions, stories, or examples are OK to illustrate a point, but the majority of
the post should be focused on something other than your business.

Format Posts Like the Ones on the Site

Take a look at posts on your target blog. Do they use lots of headers, bolded text, images, quotes, or
other special formatting? Make sure that your post has similar elements to match other posts on the
site.

Include Internal and Source Links

Show the blog owner that you know their content by including a few internal links back to some of
their posts. The easiest way to do this is to do a Google search for site:domain.com
intitle:keyword . This will get you their top posts on a particular keyword so you can link that post to
the keyword in your post. Also, if you mention any specific products, books, etc., be sure to link to
those too (assuming it’s not self-promotional).

Include a Call to Action for Comments

At the end of your amazing guest post, be sure to include a call to action for comments. The more
discussion your post generates, the better!

How to Craft a Great Guest Bio

The most important part of guest blogging (for you) will likely be your guest post bio. This is usually
the only place you should include self-promotion links back to your website, blog, product, service,
book, etc. What you write in this section will depend on your guest blogging goals.

If your goal is to get good backlinks, just make sure your bio includes a link back to your website with
your target anchor text and you are all set.

If your goal is to get traffic back to your website, then you might want to consider where you want that
traffic to go. Depending on the subject of your guest post and the audience of the blog you place it
upon, you might want to send traffic to a custom landing page or page about a specific product /
service.

If your goal is to increase followers to your social accounts, do this by adding a line to the end of your
bio that says “Follow me on (insert your top social network and link here).”

How to Be the Best Guest Blogger

If you’re aiming to become a regular contributor to a blog, or simply want the blog owner to brag about
what a great guest blogger you are, then be sure to do your best to promote your post to popularity
through your own audience. The blog owner will love it if you send new readers their way. Also, be

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359 
 
About the Author: Kristi Hines is a freelance writer, professional blogger, and social media
enthusiast. Her blog Kikolani focuses on blog marketing for personal, professional, and business
bloggers. You can follow her on Google+, Twitter, and Facebook.

   

360 
 
 Content marketing 
Content marketing 

Content marketing – Toby Murdock 
http://www.seomoz.org/blog/how‐to‐build‐and‐operate‐a‐content‐marketing‐machine 

How to Build and Operate a Content Marketing Machine

May 23rd, 2012 - Posted by Toby Murdock to Content & Blogging

This post was originally in YouMoz, and was promoted to the main blog because it provides great
value and interest to our community. The author’s views are entirely his or her own and may not
reflect the views of SEOmoz, Inc.

Content Marketing is hot. White hot. SEO and digital marketing thought leaders are declaring that Content
Marketing is the next big thing. Even Rand is touting its importance.

The strategy of Content Marketing makes sense: instead of pushing messages about your product at prospects,
pull prospects towards you by publishing content about your prospects’ interests. Search rank, traffic, leads and
all sort of goodness flow from this approach.

So the conversation is no longer about if or why an organization should practice Content Marketing. But the
still unanswered question is “How?” How does a brand actually become a publisher, produce great content,
and attract traffic and generate conversions?

So if you’re wondering “How?”, fear not. This post will provide a guide on how to build and operate a Content
Marketing Machine. But, to be clear, I’m not talking about dipping a toe in the water: doing some blog posts,
busting out an infographic. I’m talking about a sustained effort to generate content excellence in your category.
I’m talking about a machine that generates more traffic and leads at lower cost than all of your other channels
combined.

The Machine

First, let’s take a look at the machine, all of its pistons, cogs, smokestacks and miscellaneous parts. This will
give you an overview of what you’re building and what you’re going to operate:

361 
 
 362 
 
Now we’ll go over the machine, parrt by part.

Goals & Plan

Whaat is the goal, the end output for your Conntent Marketin ng
Machine? Content marrketing is utiliized for lots of objectives, in
ncluding custo
omer retentionn, upsell, suppport and
brand awwareness. But by far the majjor objective ffor most Conttent Marketerss is Lead Geneeration / Custtomer
Acquisitiion, which cann take the form
m of adding ann item to a sho
opping cart, filling
fi out a leaad-gen form, or
o
signing uup for a trial.

Your plann then becomees to create a content-poweered path that takes your prrospect from w where they aree today to
the end ggoal. This plann is best plotteed on a matrixx, called The Content
C Grid, where one axxis lists your customer
c
personass and the otherr axis lists you ur various stagges in the buyying cycle. Wee can do a closse-up on this part
p of
the machhine here:

Then for each cell in thhis grid, you have

h to ascerttain what conttent can attracct the personaa to that stage and help
move theem on to the neext stage. Specifically each cell should annswer the following questioons:

What queestions does thhe Persona wa

ant to answer at this stage in
i the processs?

What aree the topics annd categories that

t would proovide this con
ntent and answ
wer these quesstions?

363 
 
What are some sample headlines for content in each cell?

What formats (blog posts, videos, eBooks, etc.) would this content be delivered through?

Remember, at the top of your buying cycle, the prospect does not care at all about you and your brand. Your
content here should be at some intersection between your prospect’s interests and the expertise within your
organization. The content here at the top should never promote your own products and services. But as you
move down the Content Grid and the prospect has indicated interest in your products and services, your content
should provide more information about them.

Team

So you’ve got a plan. Now you have to

figure out who is going to execute it. Begin by looking at your grid. Who can produce these pieces of content? Is
it going to be internal contributors? External paid freelancers? Guest posters?

Naturally this depends a good amount on your budget. But for most organizations it is a mix of internal and
external contributors: you want to utilize your unique internal expertise, but you also use external talents to
share the burden, particularly on rich media content like video and infographics.

While there is a variance in the mix for the set of contributors, there is one consistent, crucial role: the
Managing Editor. Many stakeholders will submit ideas and content into the Content Marketing Machine, will
turn its Audience Development crank, and will pull leads and reports out of the Machine. But you need at least
one person whose primary responsibility is to man the controls of the machine: to plan the editorial calendar, to
supervise content production and distribution, to generate traffic and conversions, to monitor metrics and to be
accountable for results. Without such a person, you aren’t operating a Machine, but rather a small appliance
(perhaps a Content Marketing toaster).

364 
 
Ideally the Managing Editor should have content experience from a journalism, copy writing or PR
background. But the Managing Editor should also know the web and the ways of search, social, analytics and
link-building. Lastly the Managing Editor should be familiar with marketing and the end objectives of driving
traffic and conversions.

Ideas

365 
 
 The Ideas section of the Content Marketing Machine is where
marketers most often struggle. In the Content Marketing Institute’s 2012 Content Marketing Research Report,
over half cited consistently outputting content as their greatest challenge, which a particular struggle over
figuring out what to produce. To truly become a publisher requires consistently producing content 3, 4, 5 times
a week. What in the world, marketers lament, am I going to write about every day?

Remember: the bulk of the content that you are going to produce is about your customers’ interests, not about
your products. Thus the best way to generate content ideas is to understand what your customers are interested
in.

There are two best practices for idea generation. First is online social listening. Dive into the categories you
are covering on Twitter, Facebook, LinkedIn, etc. See what topics the communities are interested in. Q&A sites
like Quora and Yahoo Answers can identify the specific questions your prospects want answered.

The other best practice is to leverage the ears in your organization. Your colleagues in sales, services, support,
etc. are talking with customers every day. Encourage them to listen for nuggets of customer concern and then
submit those into the Content Marketing team. To give your colleagues incentive to participate, make sure that
their submissions don’t end up in a black box. Instead, if you reject them, let them know. If you accept them and
convert the idea into content, keep them informed of the content and how it performs. The best organizations at
this even keep a leaderboard to showcase which employees are making the best contribution to the Content
Marketing ideas effort.

Production

366 
 
 As you get your idea generation going,
you’ll then need to operate the heart of the Content Marketing Machine, the content production. The centerpiece
of production is an Editorial Calendar. The calendar should specify who is going to create what piece of
content, when they will have it submitted, when you plan on publishing it, and to where you plan on publishing
it (your site, YouTube, Slideshare, all of the above, etc.).

The Editorial Calendar should look something like this:

367 
 
In your Editorial Calendar you should also note the Customer Persona and Buying Stage that the content is
intended for. As you look over your Calendar, you should be able to visually see whether or not you producing
the right content mix to cover the various cells in your Content Grid.

Many organizations can get buried in the logistics of the Production stage. Many stakeholders can be involved,
including: the idea generator, the content creator, graphic designers, the Managing Editor, the SEO expert, the
social media team, Legal & PR (for approvals), etc. Often too much of the effort goes into coordinating these
players instead of creating great content.

If you’re in a moderately sized organization with decent complexity, make sure your map out the process
involved to get content out the door. Who will submit the content? Who needs to approve it and at what stage of
the process? Who is going to be posting messages to Twitter, Facebook and LinkedIn once the content has been
published? Identify the required workflows and have a plan to manage them so that your efforts don’t get
consumed by administrative tasks.

Audience Development

368 
 
So you’re publishing content now! Your machine is up and running! Congratulations!
However, creating the content is just half of your task. The other half needs to be around getting visitors to that
content, which is the Audience Development component of the Content Marketing Machine. Audience
Development breaks down into 4 major buckets:

Influencers

Search

Paid

Syndication

Influencers. Influencers are the most important component of Audience Development. Begin by identifying the
influencers in your space: the individuals and organizations in your topic that have lots of visitors to their sites,
followers to their Twitter accounts, etc. In other words, these are the places on the web where the prospects who
you want to read your content hang out.

Your objective is to win links from these Influencers to your content. Get started by building relationships with
these Influencers. Retweet their tweets. Comment on their blogs. Get into a dialog.

Once you’ve gotten on the influencer’s radar, craft content with the end objective--the Influencer link--in mind.
Ask yourself: What content would be of enough interest to this Influencer that they would want to share it with
their audience? Or try to bring the Influencer into the process from the start: tell them that you are working on
a piece of content and would appreciate their feedback or a quote.

Search. Winning these Influencer links is the key to getting referral traffic to your content. It is also the biggest
way that you can improve category two in Audience Development: search traffic. Win links from authoritative
influencers, and the Search Engines will improve your rank, driving more traffic. Of course you need to be
deliberate about this process: identify the search keywords that your personas will search for; target and
optimize your content for keyword; and track how your content efforts, keyword by keyword, are effecting your
search ranking.

Paid. Despite all of the inbound, organic goodness that Content Marketing centers on, Paid traffic does have a
place in the mix. Whether it is SEM, or Facebook ads, or sponsored Tweets, or paid Email newsletter
distribution, using paid tactics to drive content part of Content Marketing Machine mechanism. What’s
interesting to note, however, is how Content Marketers are using paid to drive traffic to their content pages (i.e.
about the prospect’s interests) instead of their product pages (about the marketer’s products). The process of
developing a relationship with a prospect built on informative content is so powerful that marketers are taking
the more patient but more effective approach of buying traffic to their content.

369 
 
Syndication. Finally, the content you produce need not be limited to your own properties, whether your site,
YouTube account, Slideshare account, etc. The most straightforward way to earn a link from a site where your
prospects frequent is to give that site quality content. Syndicating your content earns at least one link to your
site through your author bio, but also begins to develop a relationship between you and your prospects before
they have ever visited your site. Particularly at the beginning, others sites have a lot more traffic than yours
does, so syndicating content there is a great way to get your traffic off the ground.

Measurement & Conversion

OK, now the Machine is running full tilt! You have content being produced, and visitors coming for that content.
As the Machine runs, you need to keep an eye on a set of gauges for each part of the machine so that you can
learn how it’s running and continue to tune it and optimize performance.

Ideas & Production. Keep an eye on the mix of content you are pushing out the door. Do you have the right
distribution across the personas from your Content Grid? Are you hitting the relevant categories?

Audience Development. What Influencers are sending you the most traffic? You should be sure to express your
gratitude to these Influencers and link back to them. What types of content are succeeding in generating the
most valuable links? You need to double down on that content. What keywords have high search volumes but
fail to drive you much traffic? You need to improve your production of content around these keywords to
improve your rank. Which paid channels are proving the most cost effective traffic?

Traffic & Conversion. This is the major objective as it gets to our end goal of the conversion. All of your
content needs to be assessed for how it is performing in bringing first time visitors to your site, bringing back
returning visitors, and moving them down the buying cycle, particularly to the conversion event (e.g. form
submission; add to cart; start a trial) that you are looking to track. Score all of your content on these objectives,
and look for the trends: which authors are pulling in the most new visitors? which content types (e.g. blog post,
eBook, video) are keeping each of my personas coming back? which categories of content are leading to the
most conversion events.

Every initial content strategy is a best guess. Only by operating your Machine and monitoring your metrics can
you understand what’s working and what’s not working and improve your performance over time.

Building Your Own Machine (versus Renting Someone Else’s)

And indeed, you have to recognize that the results of Content Marketing accrue over time. Traditional
marketing tactics, i.e. advertising, involve the Marketer renting the attention of someone else’s audience: the

370 
 
marketerr pays the meddia to be able to put the marrketer’s messa age in front off the media’s aaudience. Desspite the
problemss of advertisinng, this renting
g has immediaate effects, beccause the med
dia already haas an audiencee.

Content M Marketing takkes longer, parrticularly becaause, when yo

ou start, you have
h no audiennce! But don’t be
deterred!! Just like the difference bettween buying and renting a house, with Content
C Marke
keting, you aree building
equity ass your build yoour audience. Over time, yoour audience becomes
b an in
ncredible asset
et: a perpetuall source
of leads / trials / new customers
c at extremely
e low cost relative to traditional marketing (i.ee. advertising)
g). There
are now m many brands who have succcessfully builtt and now opeerate such a Content
C Markeeting Machinee (here
are 50 exxamples).

This highhest state of Content

C Marketing nirvana iis for your Content Marketing Machine too become selff-
perpetuating. Typicallyy the machinee works with ccontent as the input and aud dience / leads as the output.. But once
you’ve beecome such thhe authority on n your topic, yyour output, th
he audience, will
w begin to ssupply the inpu uts, the
content (s
(see prior secttion on Syndiccation).

SEOmoz has, very deservedly, reach hed this higheest state of Conntent Marketin ng nirvana. I, in fact, am an
n
audiencee member provviding the inpuuts! I hope thaat these inputss, this content, have been heelpful to you as
a you
look to buuild and operaate your own Content Markketing Machin ne. I’m eager tot answer anyy questions. Pllease fire
away in tthe comments!

nt for both siides – Dougla
Conten as Melchior
http://lau
unchingtechventures.blogsspot.com.au/22011/05/five‐ttips‐to‐boost‐user‐conversio
ion.html 

Five Tips to Boost User

U Convers
sion Through
h Valuable Co
ontent

by Dougllas Melchior

 
 
What kinnd of content wwill drive clickks and convertt visitors into users or custo
omers?  I poseed this questio on to 
marketinng directors att five differentt consumer Intternet compa anies, including
g Brett Below 
w at Rent the 
Runway, Andrew Sinko ov of Evernote e,Liz Wald of EEtsy, and Shaw wna Strayhorn n of Refinery229.  I overlaid these 
practical findings with research from m Brian Halliggan at Hubspo ot. 

371 
 
Content can be anywhere on the website, and is viewed by search engines and humans alike.  Content on the 
homepage gets the most views, but it has to be useful to people and peak interest immediately.  Here are 5 
strategic tips to maximize the value of content on your site and outbound communication: 

1) Write Content for All Sides of the Platform.  At Etsy, the marketplace for handmade goods, the marketing 
team creates content for both buyers and sellers.  Use these two types of content to engage a small but active 
buyer community, and to attract sellers with the benefits and best practices of your platform.  Writing for 
sellers will help frame your business as an opportunity to the seller rather than a margin muncher or 
competitive threat. 

2) Integrate User‐Generated Content into Your Site.  The most effective Web 2.0 sites engage users in a 
framed environment.  Get users to write about their success stories or uses of your product and include that 
content on your site.  For Rent the Runway, that content might include wedding coverage detailing the 
bridesmaids’ dresses or crowdsourcing a look for this year’s prom. 

3) A Picture is Worth a Thousand Words.  Graphics‐heavy emails, websites, and conversion pages are 
substantially more likely to get user conversions.  If you’re website is about handmade crafts, for example, 
include plenty of pictures of those crafts to get higher conversion.  In the world of instant gratification and 
massive media consumption, pictures peak interest a lot more than craftily assembled words. 

4) Tell, Don’t Sell.  Endless selling of the website’s merchandise won’t drive traffic.  For email communication, 
focus on industry tips and picks rather than on individual merchandise.  Click‐through rates can double when 
the messaging is about advice rather than specific items.  For email communication, focus on items 
that everyonebuys often.  This will keep interest high and allow for future upselling. 

5) Find a Partner and Exchange Mailing Lists.  Partnerships with well‐known bloggers and industry experts are 
an excellent way to boost your credibility and mailing list.  Find an industry blogger, and pay him/her to write 
an article on your behalf and send to both of your mailing lists.  Ask for a reciprocal link, and chances are you 
will get a boost to your subscriber base, while mutually benefiting both parties’ brand images. 

   

372 
 
 Content creation – John Pring 
http://www.seomoz.org/blog/indepth‐guide‐to‐content‐creation‐with‐infographic 

In-depth Guide To Content Creation [With Infographic]

May 17th, 2012 - Posted by Designbysoap Ltd to Content & Blogging

This post was originally in YouMoz, and was promoted to the main blog because it provides great
value and interest to our community. The author’s views are entirely his or her own and may not
reflect the views of SEOmoz, Inc.

It doesn’t matter whether you’re an on-site SEO consultant, a link-building specialist or an all-round ‘internet
marketer’, content creation should be particularly high on your list of priorities. We’ve been hearing the phrase
‘content is king’ for years now, but given Google’s recent de-indexation of low-quality blog networks, the
Panda updates and the new algorithm burning across the horizon, it seems it’s never been more true than in
2012.

It’s not difficult to understand the importance of high quality, unique and relevant content in the modern SEO
industry; content of this type published on your own site can do wonders when it comes to link magnetism and
social media metrics and similarly, can help you obtain extremely powerful links from high authority domains
that might otherwise be out of your reach. But creating this content is easier said than done, particularly if
you’re trying to compete in a crowded industry. Sure, if you’re working on behalf of a client in a fairly dull field
it can be relatively easy to produce content that will attract attention, but competing in content-heavy industries
like SEO, gaming and entertainment (for example) can be very, very difficult.

So how can you make creating high quality, shareable content easier? What processes can you follow to
minimise the time you spend researching and thinking and maximise the time you spend creating and sharing
your content?

To try and answer these questions I’ve put together the following article and infographic (a large chunk of my
time working for Designbysoap is spent designing infographics) that aims to give you a structure for content
creation, as well as some useful tips and tools. I hope you enjoy it and, more importantly, I hope it helps when it
comes to creating high quality content for your own campaigns.

373 
 
 374 
 
Click for a full size version if you'd like to print it.

Research

Typically, this is often the most time-intensive element of content creation, whilst annoyingly yielding the fewest
results. I’ve spent numerous hours reading posts and analysing data that ultimately comes to nothing. Sure, it
can be enjoyable and often rewarding in terms of learning about an industry, but it’s not always permissible to
spend huge chunks of your time (or a clients’ for that matter) reading and searching only to end up with nothing
to show for it.

Having said that, the research portion of your content creation process can often be one of the most important –
delivering content based on flawed, incorrect, irrelevant or (perhaps worst of all) boring information will get
you nowhere and will essentially nullify all your efforts in the latter stages.

Ultimately, you need to find out what’s popular in the area you’re working in. Your research needs to be around
a topic that’s current, relevant to your industry, popular and, most importantly, likely to gain traction (whether
that be via social media platforms, inbound links or attention from high profile sites).

To help you identify this kind of content, there are several excellent tools at your disposal;

Google News – helps you highlight areas of interest and current news

Google Trends – helps you hone into specific topics in any given area of interest

Google Insights – helps you discover what people are searching for around an area of interest. Great if
you’re writing blog posts

Digg, Twitter, Reddit – helps you find out what’s popular with the readers, what kinds of topics are
receiving the highest level of sharing

These are the platforms I turn to first, but there are plenty of others (Cracked, AllThingsNow, Bing News, Fark,
etc.), all of which will add to your level of insight around any given topic. Now, these can certainly help you find
up to date, reliable and current information and can be invaluable when it comes to highlighting the most
popular topics, but they don’t solve the problem of minimising the time you’re spending on research.

This is where a phenomenal tool from SEOGadget comes in, that makes ingenious use of Excel and Google
Docs. I hugely recommend you follow the link and save a copy of the document to your own Google Docs (when
you’ve finished reading this post of course), as it will save you a massive amount of time and effort during the
research stage. The tool allows you to add a search query within the excel document, after which it will pull in
invaluable data from Google News, Google Insights, Twitter, Bing News, Digg and numerous other platforms.
You can not only quickly and easily find out what’s hot, but you can see the most popular topics on a range of
social media platforms and highlight the top and rising searches around any given topic. There’s a fair bit more
to it, but I’ll leave you to discover all it has to offer - suffice it to say it’s a perfect tool for the content creation
research stage.

375 
 
Ideas

Once youu’ve got a soliid set of data and

a a firm grip n likely to be sshared, you need to
ip on the type of information
start braiinstorming some ideas on how
h you’re gooing to presentt the information.

The first thing you neeed to decide is the angle from m which you’’re going to appproach the innformation. It’s no
good justt re-formattingg a post or pieece of contentt that already exists (you see this a huge aamount when it comes
to contennt creation, paarticularly in the
t SEO indusstry), you need d to add something new or iinteresting to what
you’ve allready got. Caan you come at a the informattion in a new way? Or add something neew to the storyy? Can
you prodduce somethingg unique to th he industry?

Essentiallly, you’re loooking at how you’re

y going too present the information you’ve gathereed (an in-depth blog
post, a viideo, a static infographic,
i a interactive infographic, etc),
an e how you’re going to appproach the subject
(informattive, analyticaal, satirical, ettc) and how yoou’re going too add something beneficial or attractive to the
target auudience (drawing new concllusions, bringging together lots l of pieces ofo informationn, attempting to
t shock,
informingg, entertainingg, etc).

An excelllent example isi SEOmoz's owno Google A lgorithm Change History; all a of this infoormation is avvailable
elsewherre on the internnet, but by pulling it all toggether and keeeping it up to date,
d they've pprovided a pieece of
content thhat makes lifee easier for rea
aders (bringinng all the information togetther in one plaace), keeps theem up to
date (by ddisplaying thee latest inform
mation) and prrovides new in nsight (by viewwing the compplete history off
algorithm
m updates, youu can see the progression
p G
Google has takken, which offfers far more iinsight and va alue than
a post disscussing just the
t most recen nt change).

376 
 
Sometimees, it’s enoughh to simply bee first – as longg as the conteent you’re producing is highh quality. A grreat
example ffrom a differeent industry is the Angry Birrds Space info ographic (secttion included bbelow). This was
w the
nt; a game thaat saw a huge amount
first quallity infographiic to be publisshed on the la test Angry Birrds installmen
of buzz across news pllatforms for reeaching 10 miillion downloa infographic is not only
ads in just threee days. The in
very niceely designed, but
b gained a decent
d O two days after being puublished, the
amountt of traction. Only
infographhic has seen over
o 1,000 Faccebook likes:

377 
 
 378 
 
Infographic section via PlayVille

You can also gain a decent amount of traction by focusing your content around an upcoming event - a great
example is the F1 2012 Season infographic (a section of which is included below). The infographic doesn't
necessarily offer anything new, but took advantage of the excitement surrounding the start of the new Formula 1
season, resulting in a very high placement for the infographic.

379 
 
 380 
 
Ladbrokes via Infographic section on Autoblog

Another excellent idea is to try your best to involve other people in the idea (or even the research) stage;
specifically, people you know have an influence in the industry you’re working in.

Let’s say you’re producing an infographic on console gaming – why not email some people from Destructoid,
G4TV, Gamespot, IGN, etc. and ask them what they’d like to see in an infographic. Or give them a collection of
your ideas and ask them which they think is the best – not only does this involve influencers in the early stages
of your content creation, but it can help massively when it comes to placement and promotion.

If these people give you valuable insights or information, then include them in your content (in the sources
section of an infographic, or via a credit link in a blog post) – you’d be amazed how much more willing people
are to share things when they’re credited with a hand in the research or production.

Placement

Once you’ve gathered your information and you have an idea of the type of content you’re going to produce,
you need to try and identify where the content is going to be placed.

Obviously if the content is going on your own website, then this is less of an issue, but if it’s a link-building
exercise then having an idea of the kind of site you’ll be aiming for can make a big difference to how you
approach the creation stage.

It can be a good idea to start your outreach before you approach the actual creation of your content, as
confirming a placement beforehand will make your life much easier in terms of considering the target audience.
If you know where the content is going to be placed, then you can tweak the language, style and tone you adopt
throughout the piece in order to maximise your chances of appealing to their readers.

Conversely, you don’t necessarily need to have confirmed the placement location before you start work on the
production stage. Often you may find it easier to convince sites to place your work once they’ve actually got
something to look at, rather than trying to tempt them with just the concept. If you’re planning on completing
your outreach once you’ve finished the content creation stage, then you should at least have an idea of the sort
of website you’re going to be targeting. Don’t specifically aim content at one website before you contact them,
as if they turn it down you may struggle to place it somewhere else.

When it comes to contacting specific websites, your best bet is to write a concise and polite email to the most
relevant person at the organisation, then follow this up with a call a day or two later. Don’t be disheartened if
you don’t hear back from your preferred placement, it’s still worth giving them a call just to check they’ve
received your email and even if they turn it down, you’ve got a contact you can use for future pieces.

Creation

So you’ve done your research, you’ve got your content and you’ve got an idea of where you’re going to place
the piece – now it’s time to actually create your content.

Giving you advice on the creation stage is a little tricky, as it will depend on what type of content you’re putting
together. To overcome this, I’ll quickly cover the two most popular content types; blog posts and infographics.

Infographics

Having produced around 100 infographics personally over the last 18 months (and overseen scores more), I
consider them to be one of my main areas of expertise. One of my major pet hates when it comes to infographics
is people telling me that there are ‘rules’ to infographic production – there aren’t. An infographic
doesn’t have to tell a story, it doesn’t have to avoid using text at all costs, in fact it doesn’t have to do anything

381 
 
other thaan display infoormation that is either compplimented by, or portrayed via graphics. So don’t get too
t
caught upp in the non-eexistent infogrraphic ‘rules’ and just focuss on producing
g something th
that is engagin
ng to your
target auudience.

Some toppics will require more text th han others, paarticularly if the
t data is qua alitative ratheer than quantitative. A
lot of peoople will use phrases
p like ‘d
don’t make mee read’ when they’re
t looking at infographhics, but you should
s
give yourr audience moore credit – peeople don’t miind reading, as a long as the information yyou’re includin ng is
concise aand adds someething to the visuals.
v If you can visualise it (i.e. statistiical informatioon), then do, if
i you
can’t thenn don’t worryy too much abo out it, people will forgive yoou.

Try and ccreate an imm mediate impactt with the visuuals and draw w readers into your
y infograpphic as early as a
possible, the most obviious place to do
d this is withh the title. It’s amazing how many people are happy to just type
the title iin a nice big font
fo and then move
m on to thee rest of the co
ontent. But if you
y look at soome of the bestt
infographhic designers (and the mostt popular infoggraphics onlin ne), you’ll seee that the title is a fantastic
opportunnity to grab thee reader with a strong, releevant visual. I’ve
I included a few examplees below to sho ow you
what I’m talking aboutt (please note these are justt a part of thee original grap phic -- there iss a lot more too see
when youu click on the link undernea ath each imagee!):

382 
 
Infograp
phic section via
v the Design
nbysoap blog

Infograp
phic section via
v Volvo

383 
 
Infograp
phic section via HotelshopU
UK

384 
 
Infograp
phic section via
v Geekosysteem

When it ccomes to visuaalising the datta you’ve got, try and keep a consistent th heme throughhout the infogrraphic,
whether tthat’s throughh your choice of visualisatioon methods, th he colours useed or the stylee of design. If you
y can
help it, trry and avoid using
u too manyy infographic ‘cliches’ – a good examplee of this is usinng a line of sixx person
icons to vvisualise a staatistic like ‘60% of people uuse people icons in their info
fographics’.

Just try aand be as creaative as you ca

an (which I reealise isn’t rea
ally all that heelpful, as it’s lilike saying ‘bee more
musicallyy gifted’), andd don’t take the lazy approaach just because you’d like to t get it finishhed.

My last ppoint is on orieentation – gen

nerally speakiing, if you’re going
g to be placing the infoographic onlin
ne then
you’re prrobably betterr off opting forr a portrait inf
nfographic, rather than a landscape one. This is because it’s far
easier to use online annd usually alloows you to usee a longer file (people will always
a prefer to scroll up and
a down
as opposed to left and right, if the web
w page even allows it).

Blog Possts

It seems llike an obviouus thing to sayy, but in-depthh blog posts arre far more likkely to encourrage sharing than
t a
quick posst that just skiims over a top
pic. Long blogg posts are greeat as long as they’re adding ng value to a to
opic –
you shouuld be informinng, educating or entertaininng your readeers as much ass you possiblyy can.

Include rrelevant, qualiity outbound links

l that are uuseful to yourr readers – if you
y find a goood tool during g your
research phase, link too it. If you find
d a post that of
offers an altern
native argumeent to what yoou’re saying, oro adds
additionaal informationn, link to it. To
oo many peoplle are hesitant to link out frrom their blogg posts, worrieed that it
will give readers a reaason to leave their
t page. Truust me, if you’re producing g high quality ccontent, they will
w come

385 
 
back (for example, when I’m reading blog posts and I come across a link I want to follow, I tend to open it in a
new tab and then continue reading).

Again, it seems obvious, but pay attention to grammar and punctuation – it’s hard to come across as
authoritative if your content is full of spelling mistakes, misplaced commas and missing capitalisations. It might
sound strange, but grammatical errors can also put off people from sharing your content and you want to do
everything possible to increase the likelihood of shares and links. If writing isn’t your strong point, then get
someone else to proof read your articles before publishing, particularly if you’re sending them out as guest
posts.

Another good tip is to try and engage your readers as early as possible in the post – the best places to do this
are the title, the sub-title and the opening paragraph. There are many different ways to do this; provocation,
humour, questioning, etc. just make sure you grab people as early as you can. Bear in mind it’s the title that will
encourage click-through rates when it comes to blog front pages and aggregation networks such
as Inbound.org. Having said this, don’t be deliberately misleading with your titles – sure it can increase click-
through rates and traffic to have a title that draws attention, but if it’s erroneous then you’re far more likely to
piss people off than you are to encourage sharing.

You should also try and help your readers as much as possible; something that often means not assuming
knowledge on their part. Unless you’re writing for particularly high level, technical websites, it’s best not to
over-use entropic language without clearly explaining yourself. If you’re writing a post full of tips, explain
things to your readers – rather than just saying do this, tell them how to do it.

Another valuable tip is to try and break up the copy in particularly long articles – use sub-headings and
paragraph breaks to make the article look less dense and more accessible to readers. You should also make
sure you’re using images in your posts, not only do they break up long sections of text nicely, but they can often
be extremely helpful, particularly in tutorials and ‘how-to’ articles (screenshots can be especially useful). When
it comes to sourcing images, you should either be creating them yourself or using an online platform such as
Shutterstock or Creative Commons, rather than just stealing them from other websites. Having said this, the
latter is permissible in some situations, just be sure to include credit links to avoid upsetting other webmasters,
and check the copyright laws in your country. Don’t forget to properly name and alt tag your images either –
it’s amazing how often you see people missing this potentially valuable ranking signal.

Publish

So you’ve spent hours putting together a high quality piece of content, now it’s time to get it live. Hopefully
you’ll have started your outreach before putting the content together, but if you didn’t, now’s the time to start
sending some emails.

I would always advocate aiming as high as you possibly can (as long as the quality of the content is good
enough), as it never hurts to try. When we’re advising our link-building engineers on gaining high profile
placements, we get them to put a list of five or six potential placements together, in order of domain authority,
traffic or level of engagement via social media (depending on the post content and what we’re trying to
achieve). From there you can start at the top and work your way down, until someone agrees to place your
content.

Once a placement has been confirmed, make sure you’ve got an idea of when it will be published, so you can
start sharing as soon as possible. You should also keep up a level of etiquette when you’ve posted on someone
else’s website – push the content as much as you can, link to it from other posts and send as much traffic and
social media engagement as humanly possible. This not only makes the link more valuable, but will encourage
the administrator to publish your posts in the future. You should also keep an eye on the comments and reply to
as many as you can; keep up the level of engagement and discussion and beinvolved.

386 
 
Promote

It’s amazing how many times we see people produce fantastic content, and then just leave it to either reach a
large audience or, more often, fall flat on its face. If you’ve gone through all the effort of researching and
producing a high quality piece of content, then you should continue that effort through to the post-publishing
stage.

It’s true that if your content is good enough and it’s published on a high profile platform, then it will likely
achieve a high level of social media traction and natural inbound links, but that doesn’t mean you shouldn’t do
your best to push it as best you can.

You should aim to utilise as many avenues as you can to promote your content, including social media, news
aggregators, infographic publication sites and inbound links from other domains (particularly applicable if you
or your team writes lots of related guest posts). I could include a massive list of sites you can use, but honestly it
depends on the vertical in which you’re working. Instead, check out this awesome link building strategies post,
this list of infographic distribution sites, this post on finding the perfect content promotion platform and this
handy list of social bookmarking websites.

You should also try to reach out to influencers in the industry you’re working in, whether that be via phone,
email or social media platforms. The success of this practise will depend on a variety of factors (including the
content itself, the domain it’s published on, the author, the way you choose to make contact and the area of
discussion), but it never hurts to try. If you made the effort of reaching out to people during your research and
ideas phase as suggested, then you may find you get some great traction via some very influential people.

So that’s about it for my guide to creating good content – did I miss anything? Disagree with anything I said?
Let me know in the comments below.

Post by John Pring from Designbysoap Ltd.

387 
 
 Copywriting 
Copywriting 

Long copy vs short copy – Jeff Sexton 
http://www.grokdotcom.com/2009/04/13/how‐to‐think‐about‐long‐vs‐short‐copy/ 

How to Think About Long vs. Short Copy

By Jeff Sexton

April 13th, 2009

Long and short are linear terms (they refer to length ,

right?). So they work fine to categorize or describe copy found in a sales letters or print
advertisements.

But (most) websites aren’t linear because hyperlinks break linearity (aka subvert hierarchy).

People don’t read (most) Websites one full page at a time in a numbered order; they
read/scan/move from one link that interests them to the next link that interests them, often entering or
starting on something other than page #1 (what bad web designers notionally understand as the
home page).

This means “Long copy” and “short copy” only apply to Websites metaphorically at best,
roughly translating to “content rich & substantiated” and “minimalist / pared down,” respectively.

The upside is that hyperlinks make it possible to get the best of both (offline) worlds. Visitors
who want more substantiation and richer content can drill down on the links that interest them, and
visitors who only want a quick, bottom-line summary and an express path to converting can get that
too – all on the same site.

That said, long copy equivalents still tend to out-convert “short copy” alternatives. Here’s why.

The crucial element: Are you answering their questions & concerns?

388 
 
Two recent studies, one involving complex B2B sales/Websites and one one-commerce sites,
show that well over 50% of potential leads/customers fail to convert because the Websites studied
failed to answer prospects’ questions and provide needed information.

I’ve experienced it myself: if I need to know a wireless card or piece of software will work on my Mac,
I’m simply not buying until I get that answered. Similar dynamics exists with concerns rather than
absolute requirements, and, yes, this is especially critical for services, complex sales, and lead
generation.

Content rich sites typically out-convert minimalist designs because they more completely
answer the prospects’ questions.

And as I’ve previously written, question-answering content isn’t just copy. High quality pictures
answer questions and concerns. User reviews answer questions and concerns. So do videos, blogs,
forums, etc. And, of course, there’s persuasive copy.

Modeling Customer Psychology and Persuasive Online Copywriting

Suppose you’re genuinely interested in buying something, talking to a salesman about it, and in the
process of asking how much it costs. How many times can that sales guy dodge or ignore your
question before he destroys your trust?

Once? Twice, maybe.

With online copy, visitors ask questions by scanning the page and clicking on links. If your web copy
doesn’t facilitate scanning and skimming, and if you don’t provide hyperlinks and content to
answer visitors’ questions, your Website will become that used car salesman who won’t give a
straight answer to a direct question.

At Future Now, we’re big on Personas simply because we’re big on making sure Websites answer the
questions and concerns of their visitors. We find it essential to model and facilitate the flow of visitor-
website sales conversations in order to avoid the “used car salesman” syndrome.

So rather than having any old interaction or conversation with visitors, personas allow one to reverse
engineer conversations that lead to conversions. To do this, simply:

Take a persona’s emotional state, concerns, and informational needs upon entering a Website

Compare that starting point with what the visitor will have to feel, know, and believe in order to
confidently take the action you want them to convert

And then plan out the conversation your site will need to have with that persona in order to make that
persuasive journey from starting point to sale.

Going through this process allows Website designers and copywriters to persona-lize the Website.
They can plan messaging and links custom tailored for each buying behavior/motivation. The visitor
can then self-determine just how many rabbit-holes of information/assurance/question-answering she
needs to in order to feel comfortable buying, thereby getting the exact “length” of copy that’s right for
her.

Fast decision makers and late stage buyers that just need a quick and easy way to buy, get it. And
those visitors needing a lot of information, insight, and assurance can get that too.

389 
 
 Think of
o it as an ad
dult and saless-oriented ch
hoose-your--own-adventture novel. Or just
think of iit as a really sincere sale
es conversatiion performe ed by your be
est salesmann who just ha
appens
to be avvailable to tallk to (and connvert) custom
mers 24 hourrs a day, 7 days a week.

What mo
ore could you ask from either
e long orr short copy?
?

P.S. Fo
or a differentt (but congrruent) take o
on the advan
ntages of Lo
ong Copy (aand it’s onlin
ne
equivallents), check out Sonia
a Simone’s e
excellent arrticle over att CopyBlogg
ger.

nversions orr thought lea
For con adership – Ste
teph Hay 
http://5000.co/2012/04
4/23/copywritting‐conversioons‐or‐though
ht‐leadership// 

COPYW
WRITING: CONVERSI
C IONS OR T
THOUGHT
T LEADERSH
SHIP?

on April 23
Posted o 3, 2012 by max
m | Leave
e a comme
ent

Mentor Steph
SuperMe h Hay (AKA Poison Ivy) is known at 500 Startups
s for her conttent expertis
se, UX
skills, an of FastCusttomer, Step
nd giant hair.. By day, as co-founder o ph works to rrid the world from
ever havving to wait on
o hold again
n. By night, sshe co-organ
nizes the DC Lean Startup
up Circle and
d learns
Ruby so e day finish CakeRock
o she can one C k.

A thread
d in my inboxx: “We have a lot of ideass on topics to
o write aboutt that are releevant to our industry.
i
But how
w should we
e go about prroducing con
ntent? Hire a copywriter?””

Two prim
mary follow-u
up questions
s I’d ask:

1. Do yo
ou want to fin
nd the messaages that connvert users to
o buyers?
2. Do yo
ou want to esstablish yours
rself as an au
uthority on ce
ertain topics?
?

To which
h you’d likelyy answer “Bo
oth.” But how
w to achieve
e each relies on different goals, people, tools,
and time
elines.

COPYW
WRITING FOR
R CONVERS
SIONS

390 
 
To directly convert users to buyers using words alone, I mentioned trying an adwords-based
test as a starting point. That 3-step process yields only one thing: a short-list of words or phrases
that make people click.

With that data, you now have a jumping-off point for producing more content like it on a landing page
that we can tweak to get conversions up.

But at least you’ll know that content-wise, you’re using the terminology users need to see to arrive on
the page in the first place.

This route is all about the sprint: finding the individual words that directly drive users to you,
then using analytics-based UX design to close the deal. Whee!

People involved:
-AdWords Expert (for placing/managing ads)
-Copywriter (for coming up with the language to test in ads, status messages, email; then for
optimizing the landing page once the most-clicked messages are nailed down)
-Social Media or Email Marketing Expert (for testing messages in the best way possible across social
media platforms or email)
-Visual Designer (for designing the landing page once you’re got the most-clicked messages nailed
down)
-UX Designer (for optimizing the landing page to test/iterate for maximum conversions)

Tools involved:

-Facebook, Google, LinkedIn ads (for testing clicks; limited by daily ad budgets)
-Twitter or Facebook updates (for testing clicks/shares; limited by network)
-Email (for testing subject lines to opens, and opens to clicks; limited by list size)
-WordPress (for landing pages if w/o a front-end developer)
-MixPanel and/or Google Analytics (to track click-to-conversions)
-Other tools you’d recommend? Tell me!

Summary:

It’s all about running fast — content can be up and iterated upon in a matter of days, discovering the
messaging that makes people click immediately thereafter, then building and refining landing pages
until the magic content-then-UX formula is discovered.

Then blow’d up.

COPYWRITING FOR THOUGHT LEADERSHIP

Startups-as-thought-leaders is a great way to:

-Get invited to conferences and speak on panels
-Create a repository of SEO-friendly landing pages
-Be the go-to expert for press
-Close deals with customers who need to see papers to say “yes”
-Create newsletter fodder (which make for nice investor updates, too)
-Direct inquiries to posts that answer common questions
-Keep super fans engaged over the long-haul

But if none of these are pressing goals, then your time and energy (and runway) might be better spent
on the first approach of finding conversions fast.

391 
 
This route is all about the marathon: STRATEGICALLY finding the topics people care about,
then using consistent production of content on these topics to establish credibility over time.

People involved:

-Content Strategist (who likely is also an excellent writer)

-Social Media Strategist (to be consistently researching topics)
-Product Manager or Business Analyst (to keep posts relevant to business efforts)

Tools involved:

-A CMS or blog platform on your domain that isn’t a complete bitch to use and also includes some
way for users to share posts easily via social media and email
-Email list (for distribution of said posts, either as published or on a specific timetable)
-Whatever text editor is preferred (I’d suggest a Google doc if doing collaborative writing) but IA Writer
is badass.

Summary:

Building thought leadership over time takes planning, regular research, a confidence in voice and
direction, consistent publishing, and — above all else — an audience of users who give a shit
about what you’re saying.

But if you (like 37signals or Woot.com) can achieve this goal, it’s gold.

How to be interesting – Jonathan Morrow 
http://www.copyblogger.com/how‐to‐be‐interesting/ 

How to Be Interesting

“Be interesting.”

392 
 
It’s good advice, but it’s nothing new. You’ve probably known from the beginning that being able to
interest readers is a crucial part of growing a popular blog. It’s pretty obvious that no one is going to
stick around unless they find your blog interesting.

But how are you supposed to do it exactly? How can you “be interesting?”

Far too much of what we write about attention and interest is abstract. We talk about differentiation,
value, and triggers — all useful concepts, but you can’t point to them. You can’t hold out your hand
and say, “Give me some differentiation.” As a result, it’s hard to wrap your mind around what those
things actually mean.

I’d like to change that. Over the past few weeks, I’ve paid attention to the things that command
attention, both of myself and others, and I’ve made a list of 21 techniques that work. It’s far from all of
them I’m sure, but it should be enough to get you started.

1. Be wrong: The world is full of people trying to do the right things. It’s become so common that
many of us are bored by it. We long for someone that is willing to do the wrong thing, say the wrong
thing, be the wrong thing. If you have the courage to be that person, you’ll find lots of people paying
attention to you.

2. Be right: You can also gain attention by being right… but only if you’re more right than everyone
else. Run a mile faster than anyone else, explain your topic more clearly than anyone else, be funnier
than everyone else. Embody perfection, and people will take notice.

3. Communicate what others can’t: As writers, we take ideas from our heads and put them on the
page. Sometimes we forget how difficult that is for some people and how valuable that makes us. Lots
of people would give anything to be able to say what they mean. But they can’t. So, they turn to
songs, books, and art that communicate for them. Be a producer of those things, and you’ll never lose
their attention.

4. Do something: Everybody online is trying to say something important, but very few are trying to do
something important. If you want attention, dare not to just give advice to others, but to live that
advice yourself. Then blog about it.

5. Surprise people: Chip and Dan Heath, authors of Made to Stick, say that one of the best ways to
set yourself apart is to break people’s “guessing machines.” Take a surprising position, making
outlandish analogy, or otherwise do the opposite of what you normally do. As long as it’s unexpected,
people will stop and pay attention.

6. Make people laugh: Bloggers are far too serious. We’re so busy trying to teach that we forget to
entertain. As a result, large portions of our readerships fall asleep. And what’s the best way to wake
people up? Humor. Public speakers have been using it for ages, and as long as it’s appropriate for
your audience, humor can wake your readers up and get them paying attention again.

7. Offer them an aspirin: Some of the best blog posts ever written are simple as an aspirin. Your
reader has a headache, you have a cure, so you offer them that cure in the form of a blog post. They
pay attention… not because of how pretty or well crafted your blog post is, but because it cures their
headache. Conclusion: try acting like a pharmacist, not a blogger, and you’ll never lack for attention.

8. Show a (half) naked woman: Ever noticed that a disproportionate number of advertisements
feature a scantily clad woman? That’s because it works. It draws the attention of not only men (as
you’d expect), but also women. For whatever reason, nearly everyone finds their attention drawn to
it. Here’s proof that it even works with blog posts.

393 
 
9. Tell them who they are: “Who am I?” is not just a question; it’s a universal quest that most of us
follow for our entire lives, continually defining and redefining ourselves, always insecure about
whether who we are being is really us. As a blogger, you can (and should) harness that insecurity.
Turn your blog into something that defines your readers, like this one, this one, and this one.

10. Predict the future: Every once in awhile, use your expertise to make a bizarre claim about the
future. If you have any authority at all, people will take notice. Imagine if Brian wrote a convincing, well
reasoned argument that online courses are the business model of the future. Oh wait… he did, and
some of the biggest names in Internet marketing continue to talk about it.

11. Unleash your inner dork: Many blog posts are like miniature textbooks; they’re instructive, well-
organized, and put you to sleep with their lack of enthusiasm. If you want to become famous on the
web, stop trying to sound like an all-knowing teacher and unleash the “inner dork” inside of you — the
part of you that’s so enamored with your topic that everyone else thinks it’s funny… but they pay
attention anyway. More on dorkyness here.

12. Be courageous: Most of the videos on YouTube are there to make you laugh, but amongst them,
you’ll find this rare gem that has attracted the attention of over 9 million people. The fact is, pretty
much everyone has felt the foot of adversity on their neck, but very few of us respond to it with
courage and grace. Be one of those people, and you’ll find the world watching.

13. Be startlingly honest: Every once in awhile, tell the truth. Be so honest that you’re scared to click
the “Post” button. Be so honest that no one knows what to say in the comments section. Be so honest
that your lawyer tells you to stop. You’ll feel better… and people will talk about you.

14. Be irreverent: Want to stir people up? Make fun of their god, their politics, their family — anything
they hold dear. Yes, they’ll be offended, but lots of other people will think it’s hilarious. If you can’t
stomach being hated by a portion of the world and loved by another, then you don’t deserve to have a
blog.

15. Tell a good story: This one has been drilled into us so many times that I almost didn’t include it…
except for one thing: people still don’t get it. Yes, stories support your points, make solid openers, and
teach people while entertaining them, but a good story can make you a legend. I’m not talking about
the little anecdotes that pepper the blogosphere. I’m talking about the story that haunts you on your
deathbed. Forget about all the others. Tell me that one.

16. Break an important piece of news: Every time Google does something new, thousands of
bloggers write about it. That’s great for Google, but where’s the real benefit for the bloggers? The first
one to break the story is the only one that matters. It gets all of the traffic, links, and authority.
Everyone else is just an echo.

17. Disprove the proven: For a long time, everyone thought you had to be the best to be successful.
Then Chris Anderson came along and turned the world upside down with The Long Tail. He disproved
what a lot of people held to be true, and it made him (even more) famous. Granted, it’s hard to
engineer a breakthrough, but if you run across one, people will talk about you for years.

18. Pick the perfect picture: Want to make a good post better? Pick a picture that expresses exactly
what you mean, and put it at the top of your post. Yes, it takes time, but the extra traffic is more than
worth it.

19. Master the metaphor: Metaphors are the paths we create to lead our readers to our ideas.
Create one strong enough, and it will become a highway of attention, leading readers to your blog
more quickly than any other technique here (except maybe the last one. More on metaphors here.

394 
 
20. Create a work of art: Many bloggers crank out posts the way slaughterhouses crank out
chickens. They’re ugly things, fit for nothing but consumption. If you want to surprise people, stop and
put some actual effort into your blog posts, creating a work of art. You’ll be surprised by how many
people remember it long after it’s been swept off your front page.

21. Put your readers first: Yes, you’re the blogger. Yes, you’re the one with talent. Yes, you’re the
one working your tail off. But it doesn’t matter. The one and only thing of consequence is your reader.
You can rail against this fact for as long as you like, but as long you do, you’ll never be interesting.

Persuasive writing techniques – Brian Clark 
http://www.copyblogger.com/persuasive‐writing/ 

Ten Timeless Persuasive Writing Techniques

Want to convince your readers to do something or agree with your point of view?

OK, that was a silly question. Of course you do.

Persuasion is generally an exercise in creating a win-win situation. You present a case that others
find beneficial to agree with. You make them an offer they can’t refuse, but not in the
manipulative Godfather sense.

It’s simply a good deal or a position that makes sense to that particular person.

But there are techniques that can make your job easier and your case more compelling. While this
list is in no way comprehensive, these 10 strategies are used quite a bit because they work.

Repetition

Talk to anyone well versed in learning psychology, and they’ll tell you repetition is crucial. It’s also
critical in persuasive writing, since a person can’t agree with you if they don’t truly get what you’re
saying.

Of course, there’s good repetition and bad. To stay on the good side, make your point in several
different ways, such as directly, using an example, in a story, via a quote from a famous person, and
once more in your summary.

Reasons Why

Remember the power of the word because. Psychological studies have shown that people are more
likely to comply with a request if you simply give them a reason why … even if that reason makes no
sense.

The strategy itself does make sense if you think about it. We don’t like to be told things or asked to
take action without a reasonable explanation. When you need people to be receptive to your line of
thinking, always give reasons why.

Consistency

It’s been called the “hobgoblin of little minds,” but consistency in our thoughts and actions is a valued
social trait. We don’t want to appear inconsistent, since, whether fair or not, that characteristic is

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associated with instability and flightiness, while consistency is associated with integrity and rational
behavior.

Use this in your writing by getting the reader to agree with something up front that most people would
have a hard time disagreeing with. Then rigorously make your case, with plenty of supporting
evidence, all while relating your ultimate point back to the opening scenario that’s already been
accepted.

Social Proof

Looking for guidance from others as to what to do and what to accept is one of the most powerful
psychological forces in our lives. It can determine whether we deliver aid to a person in need, and it
can determine whether we muster the courage to kill ourselves.

Obvious examples of social proof can be found in testimonials and outside referrals, and it’s the
driving force behind social media. But you can also casually integrate elements of social proof in your
writing, ranging from skillful alignment with outside authorities to blatant name dropping.

Comparisons

Metaphors, similes and analogies are the persuasive writer’s best friends. When you can relate your
scenario to something that the reader already accepts as true, you’re well on your way to convincing
someone to see things your way.

But comparisons work in other ways too. Sometimes you can be more persuasive by comparing
apples to oranges (to use a tired but effective metaphor). Don’t compare the price of your home study
course to the price of a similar course—compare it to the price of a live seminar or your hourly
consulting rate.

Agitate and Solve

This is a persuasion theme that works as an overall approach to making your case. First, you identify
the problem and qualify your audience. Then you agitate the reader’s pain before offering your
solution as the answer that will make it all better.

The agitation phase is not about being sadistic; it’s about empathy. You want the reader to know
unequivocally that you understand his problem because you’ve dealt with it and/or are experienced at
eliminating it. The credibility of your solution goes way up if you demonstrate that you truly feel the
prospect’s pain.

Prognosticate

Another persuasion theme involves providing your readers with a glimpse into the future. If you can
convincingly present an extrapolation of current events into likely future outcomes, you may as well
have a license to print money.

This entire strategy is built on credibility. If you have no idea what you’re talking about, you’ll end up
looking foolish. But if you can back up your claims with your credentials or your obvious grasp of the
subject matter, this is an extremely persuasive technique.

Go Tribal

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Despite our attempts to be sophisticated, evolved beings, we humans are exclusionary by nature.
Give someone a chance to be a part of a group that they want to be in—whether that be wealthy, or
hip, or green, or even contrarian—and they’ll hop on board whatever train you’re driving.

This is the technique used in the greatest sales letter ever written. Find out what group people want to
be in, and offer them an invitation to join while seemingly excluding others.

Address Objections

If you present your case and someone is left thinking “yeah, but…”, well, you’ve lost. This is why
direct marketers use long copy—it’s not that they want you to read it all, it’s that they want you to read
enough until you buy.

Addressing all the potential objections of at least the majority of your readers can be tough, but if you
really know your subject the arguments against you should be fairly obvious. If you think there are no
reasonable objections to your position, you’re in for a shock if you have comments enabled.

Storytelling

Storytelling is really a catch-all technique—you can and should use it in combination with any and all
of the previous nine strategies. But the reason why storytelling works so well lies at the heart of what
persuasion really is.

Stories allow people to persuade themselves, and that’s what it’s really all about. You might say that
we never convince anyone of anything—we simply help others independently decide that we’re right.
Do everything you can to tell better stories, and you’ll find that you are a terribly persuasive person.

As I mentioned, this is in no way a complete list. What other persuasive writing strategies work for
you?

   

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 Search engine optimisation and marketing 
Search engine optimisation and marketing 

Adwords is not enough for success on the consumer web ‐  Andrew Chen 
http://andrewchenblog.com/2007/05/12/adwords‐is‐not‐enough‐for‐success‐on‐the‐consumer‐web/ 
Adwords is not enough for success on the consumer web

Viral growth is a requirement for consumer web success

Every web entrepreneur should be a student of organic, viral growth. Even though I’ve worked in the
online advertising industry for the last few years, I’m humbled by the numbers that a well-designed
viral site like Tagged can put up. These stats are HUGE, and they are only getting bigger.

Google AdWords is not enough

It’s convenient to assume that you can outsource all of your marketing out to Google, and buy lots of
AdWords. Or let’s say you’re ambitious enough to want to buy from ad networks, or other ad sources.
This is a myth.

The largest sites ultimately cannot be bought through online ads. To achieve 50 million users via
Google Adwords, let’s work backwards:

50 million users

500 million uniques that land on your page (with 10% registering)

50 billion ads with a 1% clickthrough rate

Let’s pick a range of CPMs, from $0.50 to $2:

At the low end, $0.50 CPM means $25 million in ad spend

At the high end, $2 CPM means $100 million

These are obviously impossible numbers to achieve just using ad spend. The only way to solve this is
to make sure that every user you bring in brings their 10 friends. Then, when you spend a targeted
$10k at the beginning of your site’s existence, you can get the momentum going quickly.

Design viral into your product, not into your marketing strategy
A lot of people would claim that once you have a product, you can design a "viral" strategy around it.

398 
 
Do you really believe that designing a word-of-mouth strategy for a music CD is the same thing as a
product like Plaxo or LinkedIn? The answer’s no. The truth is, you have think about how viral fits into
your site at the beginning.

Let’s talk about how most people think of viral…

When users see the product, this is what seems to happen:

User sees the product

User tries the product

If user likes product, make it easy to tell their friends

Word of mouth spreads

New users try the product

… and so on

Let me say that this is a very old-fashioned way of looking at viral product use, because it’s inherently
tied to an assumption that people have to go through a full cycle of evaluation before they spread the
word. What’s another way?

How to SHORT-CIRCUIT the viral process

Instead of thinking that viral is something that’s tacked onto the end of your user experience, instead
think about how it could get integrated into your user process. In fact, the earlier, the better. You want
to make it so that in TRYING the product, they spread it to their friends.

Ideally, the funnel looks like:

User sees the product

User tells all their friends to use the product

User tries the product

[Site propagates regardless of whether or not the user likes it]

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Then regardless of whether or not the user tries the product, or if they like the product, or if they get
off their lazy asses to tell their friends, the deed of propagating the site is already complete.

How do you do this? Let’s take Tagged as an example – click here to try out the site. Or tryFlixster,
another site that’s gotten incredible traction lately. As soon as they sign in, they are trying to import
your Gmail/Hotmail/Y! contacts. They make it an integral part of the user experience.

Or take a look at something like Plaxo, whose entire existence is about asserting control over your
communications hub, thus making the viral effect even better.

By spreading the site at the earliest possible moment in the experience, you’re not at the whim of the
user to act outside of his/her normal processes.

Too annoying? Or too ruthless?

Some might say that they hate the fact that these processes exist, and that they might be too ruthless
or even immoral. These points are definitely worth debating. I certainly believe that if you’re able to
create a engaging user experience, adding these techniques to the front-end isn’t bad.

If you believe that:

Ruby on Rails makes development easier

Product creation is cheaper

Infrastructure is cheap

… then the corollary is that there’s more competition. Breaking out of the noise in any way possible,
even if ruthless, will be a key technique for success in the Web 2.0 world.

If you’re interested in a high-level listing of different user acquisition methods, check out an earlier
blog I wrote on the subject called 10 obvious ways to ruthlessly acquire users.

Some thoughts on SEO – Chris Dixon 
http://cdixon.org/2009/12/02/seo/ 

December 2, 2009

Some thoughts on SEO

“SEO” (==”Search Engine Optimization”) is a term widely used to mean “getting users to your site via
organic search traffic.” I don’t like the term at all. For one thing, it’s been frequently associated with
illicit techniques like link trading and search engine spamming. It is also associated with consultants
who don’t do much beyond very basic stuff your own developers should be able to do. But the most
pernicious aspect to the phrase is that the word “optimization” suggests that SEO is a finishing touch,
something you bolt on, instead of central to the design and development of your site. Unfortunately, I
think the term is so widespread that we are stuck with it.

SEO is extremely important because normal users – those who don’t live and breath technology –
only type a few of their favorite websites directly into the URL bar and for everything else go to search
engines, most likely Google*. In the 90s, people talked a lot about “home pages” and “site flow.” This
matters if you are getting most of your traffic from people typing in your URL directly. For most
startups, however, this isn’t the case, at least for the first few years. Instead, the flow you should be

400 
 
thinking about is users going to Google, typing in a keyphrase and landing on one of your internal
pages.

The biggest choice you have to make when approaching SEO is whether you want to be a Google
optimist or a Google pessimist**. Being an optimist means trusting that the smart people in the core
algorithm team in Mountain View are doing their job well – that, in general, good content rises to the
top.

The best way to be a Google optimist is to think of search engines as information marketplaces –
matchmakers between users “demanding” information and websites “supplying” it. This means
thinking hard about what users are looking for today, what they will be looking for in the future, how
they express those intentions through keyphrases, where there are gaps in the supply of that
information, and how you can create content and an experience to fill those gaps.

All this said, there does remain a technical, “optimization” side to SEO. Internal URL structure, text on
your landing pages, and all those other things discussed by SEO consultants do matter. Luckily, most
good SEO practices are also good UI/UX practices. Personally I like to do all of these things in house
by asking our programmers and designers to include search sites like SEOMoz, Search Engine
Land, and Matt Cutts in their daily reading list

* I’m just going to drop the illusion here that most people optimize for anything besides
Google. ComScore says Google has ~70% market share but everyone I know gets >90% of their
search traffic from Google. At any rate, in my experience, if you optimize for Google, Bing/Yahoo will
give you SEO love about a 1-6 months later.

** Even if you choose to be a pessimist, I strongly recommend you stay far away from so-called black
hat techniques, especially schemes like link trading and paid text ads that are meant to trick
crawlers. Among other things, this can get your site banned for life from Google.

SEO is no longer a viable marketing alternative – Chris Dixon 
http://cdixon.org/2011/03/05/seo‐is‐no‐longer‐a‐viable‐marketing‐strategy‐for‐startups/

SEO is no longer a viable marketing strategy for startups

Many of the today’s most successful informational sites such as Yelp, Wikipedia and TripAdvisor
relied heavily on SEO for their initial growth. Their marketing strategy (whether deliberate or not) was
roughly: 1) build a community of contributors that created high-quality content, 2) become the
definitive place to link to for the topics they covered, 3) rank highly in organic search results. This led
to a virtuous cycle where SEO drew more users, leading to more contributors and more inbound links,
leading to more SEO, and so on. From roughly 2001-2008, SEO was the most effective marketing
channel for high-quality informational sites.

I talk to lots of startups and almost none that I know of post-2008 have gained significant traction
through SEO (the rare exceptions tend to be focused on content areas that were previously un-
monetizable). Google keeps its ranking algorithms secret, but it is widely believed that inbound links
are the preeminent ranking factor. This ends up rewarding sites that are 1) older and have built up
years of inbound links 2) willing to engage in aggressive link building, or what is known as black-hat
SEO. (It is also very likely that Google rewards sites for the simple fact that they are older. For
educated guesses on which factors matter most for SEO, see SEOMoz’s excellent search engine
ranking factors survey).

401 
 
Conside
er, for examp
ple, the extremmely lucrativve category of
o hotel searcches. Searchh Google for “Four
Seasonss New York”” and this ad--riddled TripAAdvisor pagee ranks highly
y:

(TechCrrunch had a very good arrticle on the TripAdvisor’’s decline in quality).

q

In contra
ast, this cleaner and morre informative
e page from the relatively
y new websitte Oysterran
nks much
lower in Google resu ults:

As a ressult, web use

ers have a wo
orse experien nce and starrtups are ince
entivized to cclutter their pages
p
with adss and use aggressive tacttics to increa
ase their SEO
O when they should just bbe focused on o
creating
g great user experiences.
e

The webb economy (e ecommerce + advertising g) is a multi-h

hundred billio
on dollar marrket. Much ofo this
revenuee comes from m traffic that comes
c from S SEO. This ha as led to a multibillion-do
m ollar SEO ind
dustry.
Some off the SEO ind dustry is “wh
hite hat,” whicch generally means cons sultants givinng benign addvice for
making websites sea arch-engine friendly. But there is alsoo a huge indu ustry of blackk-hat SEO
consulta
ants who trad de and sell lin
nks, along w
with companie es like content farms thatt promote theeir own
low-quallity content th
hrough aggreressive SEO tactics.

Google sseems to be e doing everyything it can tto improve its

s algorithms so that the bbest content rises to
the top ((the recent “panda”
“p upd
date seems tto be a step forward).
f Butt there are m
many billions of
dollars a
and tens of thhousands of people workking to game SEO. And for fo now, at lea
east, high-qua
ality
content seems to be e losing. Untill that change
es, startups – who genera ally have smmall teams, sm
mall
budgetss, and the scrruples to avooid black-hat tactics – sho ould no longeer consider SSEO a viablee
marketinng strategy.

402 
 
 Strategic SEO for Startups – Patrick McKenzie 
http://www.kalzumeus.com/2010/01/24/startup‐seo/ 

Strategic SEO for Startups

Posted on January 24, 2010 by Patrick in SEO

One way I’ve found to cut down on support requests is to make sure I write publicly about any issue
that keeps coming up for my customers. Other small companies contact me for advice fairly
frequently, and that also tends to retread the same issues, so I’m going to blog it in depth once rather
than giving fifteen people 30% of my thoughts on the same issue. One common issue is “How do I
improve our SEO?”

Strategy as opposed to tactics: SEO has a lot of opportunities for micro-optimizations in it, from
rewriting title tags to dynamically interlinking content pages. They’re all interesting subjects and I’m
not going to talk about them. If you don’t feel comfortable in your meat & potatoes SEO yet, head on
over to SEOBook or SEOMoz. Both are excellent resources. I’m going to focus on core decisions
you make about your business and marketing approaches rather than page-level optimization.

Why Startup SEO Is Different

Essentially every business on the Internet from multi-billion dollar giants like Bank of America down to
a one-man software business is dependent on SEO, because Google has become the primary
navigation tool for the Internet. (I suppose I could write “search engines” but I feel no particular need
to maintain the polite fiction that there is more than one search engine in the United States.)

SEO for a small business is very different than it is for Bank of America.

Limited budgets: Startups cannot devote huge amounts to advertising, branding campaigns, or link
acquisition. (Paying for links will theoretically draw the wrath of Google to you. In practice, once
you’re above a certain size, you’re immune. If you’re reading this article, you do not have immunity.)

Low domain strength / trust: Google tends to trust older domains, domains with lots of links, and
domains with lots of older links. All of these are signals of what one might call trust: the longer you’ve
been on the Internet and the more people who asserted your quality by linking to you, the less likely
you are to be a useless spammer. However, if you just registered your domain last Tuesday, Google
has a priori no reason to trust you over the other billion pages on the Internet.

Cultural aversion to SEO: There is a pernicious myth among startups that SEO is a black art aimed
at perverting the purity of the search results. This is partially because search engine spam is indeed
a problem and partially because Google is very good at influencing the culture of technically adept
people, and it is in Google’s best interest to make people think that their algorithms are the
authoritative voice of God. (Google, for all its image as an open company with significant OSS
contributions yadda yadda yadda guards their index and algorithms with a ferocity that would do
Microsoft credit.)

Algorithms have no moral status. If your engineering team sorts records using an n^2 sorting
algorithm, then tells you that they did it because the sorting has always been n^2 and therefore this is
the Morally Correct Way To Sort, you need to whack your engineering team over the head and tell
them to do better. Similarly, your SEO strategy is simply the input you provide Google’s black-box
algorithm which sorts search results: just because it is ineffective does not mean it is the Morally
Correct Way To Sort.

403 
 
A related worry is that SEO hurts the user experience. It certainly doesn’t have to — a good deal of
SEO is about creating stuff your users want to use, surfacing content in a way that is understandable
to them, and not breaking your site’s usability when seen from the primary Internet navigation method
(Google). I wouldn’t advocate black hat methods: the black hatters are better than you are at them,
and if you use them you’re in a constant arms race with Google (who has billions of dollars,
thousands of sharp engineers, and the peaceful conflict resolution skills of Darth Vader) when as a
startup you’re already biting off more than you can chew.

Why Startup SEO Is Better

On the plus side, you do have some advantages as a startup:

Strong Technical Skills: I’m a moderator in charge of programming topics at SEOBook and we get
an awful lot of nuts and bolts questions like “How do I edit a title tag?” or “How do I do a 301 redirect
in Apache?” Thankfully, since you presumably have programmers who know what they’re doing,
you’ll never need to ask either of those. In addition, you can program tools and content to improve
your marketing, including SEO. We’ll discuss specifics in a moment.

Link Richness: SEO is, at competitive levels, mostly about link acquisition. It is very difficult to get a
link without paying for it in many sectors of the information economy. For example, while there is
probably a thriving micro-community of online taxidermists, they probably control relatively few links
compared to their numbers. However, if you’re a startup, you probably hang out on Hacker News or
similar where the blogs-to-person ratio is 6.3, a new useful bit of OSS can make news in four
continents on the first day, and online interaction forms a substantial portion of the personal and
professional identities of your peers.

There are pluses and minuses to this: a lot of people overadapt to the fickle preferences of
TechCrunch et al. That reminds me of dodgeball in fourth grade except there are 100,000 kids and it
is mathematically possible for all of them to be picked last. Appealing to your peers can’t be your only
marketing strategy. However, it is helpful for when you’re making a cold start, to help get the link to
rankings snowball running. One business which did this very well is Balsamiq, which sent letters to
blogs big and small to get coverage. Steal Peldi’s approach to writing them: it is aboveboard and
works.

Strategic SEO Objectives

Ideally speaking, well prior to launch you should figure out exactly what you hope to get for from
SEO. ”Rankings” is not an acceptable answer. Neither is “visitors”. I could get your startup ranked
for [fried squirrels with wasabi] by the end of the day, but unless you’re selling a book of very eclectic
recipes that probably won’t do you much good.

If you’re selling display advertising, coating every search result under the sun might actually work for
you. (Display advertising is, essentially, search advertising’s less talented brother: it is essentially a
second bite at the apple for advertisers to get a click when users avoided the AdWords ads on
Google. I have deep, deep doubts about the sustainability of display advertising as a business
model.)

If on the other hand you’re trying to get users or sales for your application, you have to balance the
needs of your SEO operation with the need to convert users. For example, your homepage will
almost invariably be the strongest page on your site. It probably has to be conversion-oriented rather
than conversation-oriented. However, outside of the home page, conversion-oriented pages don’t
attract links that frequently. Almost nobody blogs “Hey guys, I saw an awesome sales letter today,
check it out” and if they do you probably don’t want their attention anyhow.

404 
 
So your SEO strategy is likely going to involve a mix: non-commercial offerings designed purely to
solicit links/attention, semi-commercial scalable content generation which we’ll talk about in a minute,
and sales funnels supported by the rest of your website.

Aiming at a moving target: The first cut of your SEO strategy will be wrong, just like v1.0 of your
product will be non-responsive to the needs of your users. That is OK: after you start you’ll begin
collecting insights and data which let you refine it. You want to get something out the door as soon
as possible so that you can begin collecting links, other indicia of trust, and data on what is working
for you. Many startups wait until launch to put a significant amount of content on their websites. This
is almost always a mistake. If you can’t show the application yet, no problem, talk about the problem
domain. Talk about the needs of your customers. The “media launch” where Steve Jobs comes
down and presents the iCommandments works very well if you have a built-in base of millions of
radical fans and a PR budget which could buy Chile. If you’re reading this, that probably doesn’t
apply to you. Google is going to hate your bones when your website first debuts onto the world stage:
start that clock ticking as soon as possible.

There is no Google sandbox: If you’re well read about SEO you’ve probably heard about the
“Google sandbox”, where sites languish for months or years prior to ranking. There is no Google
sandbox per se: a site doesn’t magically jump from zero to hero because it is 180 days old. Google
can find sites within minutes of them appearing on the Internet and rank them inside of an hour if
Google has sufficient reason to. The sandbox is the perceived reality, though, because from a cold
start it takes a while to build up symbols of trust, such as links from trustworthy domains. All the more
reason to get started early.

SEO Is A Feedback Loop

Sites tend to built self-reinforcing authority: the site at the top of the rankings for teddy bears (almost
certainly Wikipedia, I can tell you without looking) is the first people go for teddy bears and the most
likely to collect another citation when someone is writing about teddy bears. That will help that site
rank for teddy bears and everything else in the future. In this sense, winners win in SEO.

What does that mean for you? Well, if your startup does designer teddy bears, Wikipedia has a built-
in advantage over you for ranking for [teddy bears] and that advantage gets stronger with each
passing day. However, all is not lost: by moving further down the long tail of search terms, you too
can benefit from self-reinforcing authority. If you’re the best place on the Internet to go for [kimono
teddy bears], your site will get stronger each passing day just by virtue of that.

If you’ve done much conversion optimization this should not be a big surprise to you, but things at the
top of a page get clicked much more than things lower on the page, all else being equal. This is
equally true of search results: when AOL released its data, the top result got over 40% of the clicks,
the second result 11.9%, etc. The entire second page, by comparison, got only 10%. SEO is
a winners take mostgame: for a given search term, the vast majority of the benefits flow to the
handful of sites at the top of the first page.

What does this mean to you? It means focus on search terms you can win. You will not prevail
against the likes of Microsoft, Google, et al for head keywords in most circumstances, unless your
product becomes synonymous with the niche. (A head search term is at the popular end of the
search frequency distribution, as opposed to on the long tail. This is completely relative: [money] is a
head term relative to [bingo cards], and [bingo cards] is a head term in the bingo niche relative to
[valentines day bingo].

405 
 
Incidentally, I can’t recommend The Long Tail enough for anyone interested in SEO. If you’ve been
on the Internet the last few years you’re probably sick to death of it and have read the (accurate)
criticisms of conclusions about books and music being overstated. However, no single book will
improve your thinking on SEO as much as The Long Tail will. (In particular, read up on tails within
tails.)

For the amount of effort it would take you to rank #12 for the head term of your choice, which will
result in marginal traffic even if the head is huge, you could rank in the top three for a huge basket of
tail terms. Additionally, one of the things you’ll notice is that conversion rates for head terms are
terrible. People searching for the terms on the head are either just beginning their research into a
topic or are less sophisticated. Generally, those are not the searchers you want. Longer, specific
queries are more common among people who have done the research and are nearing a purchasing
decision.

Here’s an example for you: for the last several years I’ve ranked on the first page for [bingo cards]
most of the time. At the moment I’m probably, oh, eightish or so. That was worth about 6,300 visits in
2009. That resulted in three purchases of my software, for a value per visitor of a bit more than a
penny. Wheeeee.

By comparison, [free bingo cards] gets less than a fifth as much traffic, according to Google’s keyword
tool. However, the 1,200 visitors there also bought 3 copies. (If that you didn’t expect people
explicitly looking for free things to convert at five times the rate of undifferentiated searchers,
welcome to the Internet. Nothing makes sense except the data you collect. Get something out there
so today so you can find which 90% of everything you know is wrong.)

Now if we go waaaay down the tail to [geography bingo], we find that despite it having fairly few
searchers (I only got about 300 hits visits year from it), it is quite lucrative ($70 CPM). I could spend
my entire life working in bingo and never be #1 for [bingo cards], but for a non-competitive tail term
like [geography bingo], I’m #1 by virtue of showing up.

Sadly, a lot of startups of my acquaintance are so focused on the product that they don’t bother
showing up for the topics that matter to their customers. I won’t pick on anybody in particular
(sidenote: write “Its OK to mention this conversation publicly” on an email to me and you might get a
backlink when I need an illustrative example, like here), but it is very common for startups to launch
with less than 1,000 words of text on their website and all the content behind the sign in screen. That
essentially cedes the long tail to your competitors.

Thus, my generic SEO strategy for a startup is a) be the best on the Internet for b) as many
topics as you possibly can be that c) matter to your paying customers.

Making SEO Scale

Everything about a startup has to scale ridiculously disproportionately to the time invested in it,
because you have too much to do and not enough people to do it with.

Some people say this is why you have to work 80 ~ 100 hour weeks. If I worked 100 hour weeks,
Scholastic Publishing would still be able to afford to devote a thousand man-hours for every one I can,
if they chose to. Your only hope for rising above the din on the Internet is to work smarter than your
competitors. Happily, your small size, technical skill, and agility let you run rings around the other
guys. One way is through scalable content generation.

Content in SEO is sort of a dirty word. It can mean anything your users can consume: text, video,
whatever. Sadly, when people talk about content they are mostly talking about commoditized

406 
 
garbage, because the quality levels of content produced at scale are generally terrible, as you’re
about to see.

There are about four approaches for creating content at Internet scale:

User-generated content. Strategies centering around user generated content really devolve into two
things: one, you hope people will steal hand-crafted content from elsewhere and put it on your site
while you look the other way long enough to build traction (hello, Youtube, Scribd, etc) and two, you
generate vast amounts of mostly excruciatingly worthless content which happens to match an equally
vast amount of search terms. Then, you sell display advertising against the visits for those
searches. This is essentially the business model for WordPress — give a blog to anybody who asks
for one, display AdSense ads to folks who arrive on old posts via Google. The ads give them the
answers the content could not.

I don’t mean to malign user-generated content too much. Sturgeon’s Law says that 90% of
everything is garbage, which implies that 10% is not. However, it is very difficult to use that 10% that
is not garbage to advance your business goals, because it is not conversion-oriented and your
advertisers don’t pay premium CPM rates just because the page the user landed on is
worthwhile. (Actually, in practice it tends to work out the other way around: if the page the user lands
on is worthwhile, it will likely satisfy their desire, and economic value from that searcher ends. That
means low CTRs to ads and, accordingly, low CPMs. If on the other hand the page is useless, then
they might click on an AdSense link to continue the search. This is the perverse incentive by which
advertisers pay to make the Internet a mass of garbage.)

Mass Semi-Amateur Content Creation: The Demand Media model is capturing quite a bit of
attentionthese days: take an authority domain like eHow, use sophisticated algorithms to generate
article ideas for it, pay an army of underemployed freelancers miniscule wages to write uninspired
content about the suggested titles, collect hundreds of millions in AdSense revenue.

The quality of Demand Media (et al) content is a cut above Youtube comments, but not by all that
much. I don’t really recommend implementing this model for startups. First of all, I think Google is
going to have to crush it like a bug in the next 12 months, because currently it is a license to print
money and is polluting far too much of the search space. Second, the amount of sophistication it
requires is considerable, and while I think that is probably duplicable for a startup (particularly if you
used something like TextBroker to automate dealing with the freelancer army) I think you’re better off
with your engineering investments in more defensible places.

That being said, study this model and study it well: they’ve got a tight analytics-to-pipeline loop,
they’ve got almost everything automated, and their margins are out of this world. There is no reason
you can’t do those things while producing great content by taking advantage of focus and engineering
ability that Demand Media cannot devote to every microniche they want to expand
into. DemandMedia can saturate the world in How To questions but will never be able to outpublish
me for bingo cards, because they will never detail someone to write a CMS to let their freelance army
make those easily.

Talented expert workers: You can have all of your website content created by talented artisans who
laboriously polish every bit to perfection. For example, you could write every page by hand yourself,
or hire a team of journalists to do it for you. Have you seen the financial results for the New York
Times recently? Still want to do this except without the 200 year old megabrand? Good, moving on.

Scalable Content Creation That Works

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So how are you going to create large amounts of content that satisfies needs for your users while still
advancing your business needs and not being garbage? You leverage the unfair advantages that you
have because you’re the smallest guy in the room.

Data You Can’t Get Anywhere Else: If you hang out around geeks who can’t get dates, you’ve seen
a series of posts by OKCupid on topics such as how your race affects responses in online
dating. This is brilliantly done linkbait: it takes a huge amount of proprietary data (OKCupid response
analytics) and exposes it in such a way that it is interesting (“Whoa, the very hottest women really do
get hit on less than than you would expect “) , easily consumable (“Whoa, this pretty picture
demonstrates that black guys have it hard when dating.”), and easily shareable (“Guys, I found
scientific proof of why we need to take our shirts off!”) If you’re J. Random Dating Affiliate, you can’t
possibly duplicate that linkbait. OKCupid can do it over and over and over again, though: they’ve
written the analytics tools, they’ve figured out how to do the research and visualizations, all they need
to do is come up with a new hook andbam they’re at the top of the social news sites collecting links
again.

If you don’t have interesting data, you should start collecting interesting data. However, in the
meanwhile you can start visualizing or crunching existing data. This is less defensible — anybody
can go to the Census and get a few gigs of various poorly conceived slices to fill their hard drive —
but you can add a whole lot of value in less time than you think with some SQL, your graph library of
choice, and a well-written executive summary.

One of the few bright points for the New York Times is that they’re capable of doing things like this, for
example. You could have done that. If you were in the job board industry, you could do something
like that every Friday afternoon, by using open source, agile development, and all that jazz. Pretty
soon you’ll be cited as an authority on the subject — because, ahem, someone who publishes
repeated analyses of raw data is an authority on the subject (or at least appears to be, which is 90%
of what matters on the Internet, for better or worse).

Focus on evergreen content: A lot of people like blogs as content generation engines, and indeed, I
think every startup should probably have a blog. Then people blog on current events. Bad call! You
see, today’s news is worth reading for about a day — less, in some sectors of the economy. You’re a
hamster on a wheel if you’re trying to keep up with the news — tomorrow, everything you write today
is worth markedly less, and a week from now it will be almost totally forgotten. Instead, pick the
concerns of your audience that are roughly static and that will be pretty much the same next week,
next month, next decade. Alternatively, create resources that don’t go stale.

For example, for a bit of extra work that NYT visualization above could use live data, and instead of
being a wonderful piece of technology becoming quickly irrelevant to a story from years ago, it could
be a hub for the enduring issue of Racial Difference In America. The NYT is interested in that issue
and still will be in 2012. They don’t have the strategic vision to make that graph with live data,
though. Luckily, yourbusiness is not a maladapted dinosaur reacting too little and too late to the
changing business landscape.

I like to call this “evergreen content.” For example, if you have a website selling a service teaching
people Japanese, a page on how to make requests in Japanese will be good for generations. It is
evergreen. Or エバーグリーン, I suppose.

Agile — Not Just For The Product: Because you have excellent internal analytics (you do, right?)
and you track what is working and what isn’t (you do, right?) and you can quickly bring resources to
“market” because you’re using highly productive programming environments (you are, right?), you can
try ten things, watch eight fail, and then try ten variations on the best two.

408 
 
For example, suppose you have a mailing list of customers or fans (you do, right?). Pitch
(comparatively) low cost explorations of ideas to them, like blog posts about topics
A/B/C/D/E. Observe which one gets the most play with your existing customers. Build (more
expensive) resources about that topic, like something which requires custom programming. (Bonus
points: credit your customers with the inspiration for building the new thing! You want a 95% certain
way to get a link from Bob Smith’s blog to your new article? Cite his contribution to it. Help them help
you get the ball rolling with their blogs, Twitter accounts, blah blah.)

Obviously, if one idea works out well for you, going in more depth or breadth on the same theme
allows you to possibly re-use code, link sources (“Hey Cindy, this is Patrick from Random Job
Startup. A few months ago you had some great comments about our unemployment
visualization. We’re putting together something similar and I wanted to ask if you had any more
insights…”), marketing tacks that worked, etc. (A great micro-idea I heard the other day: watch what
people tweet about your stuff, use that as the title next time. This may be the first time I’ve ever heard
of an idea to get actual value out of Twitter.)

Pillar Content vs. Bill ‘er Content

As mentioned, you’re going to have to strike a balance between creating content designed to spread
and gather links, attention, etc. and content designed to sell your stuff. They’re not totally disjoint
sets, but in practice non-commercial content will form the vast majority of your links.

If you don’t have any great ideas for non-commercial content (“How do we get people talking about
our new squeegee brush? It is a boring subject”), here’s a couple:

Open Source Software: You’re a programmer and you probably use vast amounts of OSS. It is
highly likely that in the process of creating your startup you will write some plumbing which is not your
source of competitive advantage, but would solve problems for other people. Since you already wrote
it, why not OSS it? Spend a few hundred on a nice logo (this is rounding error next to the
engineering time you have invested and will greatly increase spread, trust me), write up a decent
page on your website with examples and documentation, and send it to folks you think could use it.

I did this for my Rails A/B testing software, which at the time was a sorely underserved niche. That is
probably my best links-to-unit-effort idea ever, and it got links from authoritative sources like the Ruby
on Rails official site who may not have been interested to hear about my new and improved Jane
Austen bingo cards. (Some people have no appreciation for the finer things in life — at least
according to therabid Jane Austen fans on the Internet.)

I have one comment on OSS for SEO which may cost me geek cred: does Github pay your salary? I
love them. They’re wonderful people. They contribute a lot to OSS. They are also quite good at
marketing their business and do not require your help to do it. If you’re going to do OSS to get links,
get links to your own site.

Blog Your Email: Do you get pre-sales inquiries or support requests? Take careful note of how your
customers ask questions, because they speak a different language than you do. I describe bingo
cards as “unique”, my customers frequently describe them in email as “not the same” or “not alike”, as
it “How do I make bingo cards that are not the same?” Using the same language that your
customers use, answer their questions in public. This can be bill ‘er content, since somebody asking
this question likely has a need they’re interested in paying money in to solve (after all, a person just
like them has sent you an email about it, knowing that your answer is going to involve “Oh, you do
this on our product”). Thus, while you are answering the question, you can probably work in a plug for
your product.

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Good SEO Can Make Your Startup

Your startup can succeed at SEO via the sweat of your brow and a bit of focused creativity, without
having to spend hundreds of thousands to do so. In terms of cost efficiency, organic SEO is probably
the most efficient distribution method ever created. Even with very modest amounts of resources, you
can have get hundreds of thousands of visits and add thousands of users to your product. (I do, and
I’m certainly not a towering giant conquering the Internet from my local rice field. You can do better.)

If you take one thing from this article, please, take this: you cannot afford to not have an SEO
strategy. If the idea of being an SEO gets your dander up, get over it drop me a comment and I’ll
suggest something you can do that you won’t dislike but will still improve your SEO.

The usual disclaimers: I don’t get compensated for using people as examples. I do try to write most
people who ask for advice (odds are better if you ask good focused questions, let me get a blog post
out of it, etc) but I know a few have slipped through the cracks as of late. I’m by no means the world
expert at this — take everything I say with a grain of salt.

Followup Questions for "Strategic SEO for Startups"

Posted on January 25, 2010 by Patrick in Uncategorized

Peter Christensen had a few questions for me regarding my last blog post about SEO for startups. I
thought the questions were interesting enough to require a bit more than a comment on his post, so
I’m going to answer them in detail here. The details are very, very specific to my particular business
— if you want a high-level strategic overview, I suggest reading that post instead.

In the past you’ve talked about outsourcing your content creation to your “army of freelancers”. What
did that consist of on your end? My guess is you looked at terms and topics people were searching
for (you mentioned “baby shower bingo” once) and then sent a job to your freelancers to come up with
80 or so baby shower words that you feed into your card generator and sample bingo card landing
pages.

Periodically, when I have an idea for a new project, I put out a call for freelancers on my blog similar
to this (for blog writing on my “sprawling bingo empire”) or this (for creating bingo
cards). (Incidentally, “army” is an overstatement: I think in my business career I’ve used a bit less
than a dozen, but don’t have my expenses report in front of me. One woman in particular is easily
80%+ of that. Why mess with something that works?)

The work-flow for those two projects is a bit different, but in general I write up the general outline of
what I expect (you can see the most important bits in those posts) and then let my freelancers run
with them. For bingo cards I typically give them discretion to choose their own topics (although I let
them see my stats for what previous cards were popular — for example, sorted by genre or popular
this week). For the blog creation project I came up with a list of 14 mini-sites via a one-off SQL query.

The deliverable for bingo cards has changed over the years as I’ve upgraded my CMS. Currently,
there is a back-end one page web form on my site which asks for a title for the card, a subtitle, a brief
sentence of description, and then a word list. Anything submitted there goes into my database and
awaits my review, which given that my freelancer is very good at what she does is typically “Oh, good,
here’s 30 lists for this month. Approve All. Goes off to bank site to mail check.” Within a few
seconds of me hitting approve, the CMS backing my site turns the word list into a PDF file, grabs a
screenshot of it, and does a bit of content page generation.

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The deliverable for the mini-sites is just pages made in WordPress, extolling the virtues of Valentine’s
Day bingo or what have you.

How do you analyze and rank your SEO strategies? I see your sample card landing pages have an id
that they pass to the registration page so you know how the different landing pages are
converting. What other methods do you use to determine which SEO methods are most valuable to
you?

The flippant answer is that if I make more money than I expect to then I guess everything is
working. Seriously speaking, though, I do very little backwards facing analysis (“Did that work?”) and
concentrate mostly on forward facing analysis (“What opportunities can I exploit now?”), with the
exception of when I’m writing a blog post to comment on how something worked.

One of the reasons I’ve cooled on Google Analytics over the years is it doesn’t really lend itself to
providing data which lets you make actionable decisions in a reasonable amount of time. For
example, if I look at my stats, I can tell you with arbitrary precision how much more popular baby
shower bingo cards are than football bingo cards. Whee. That doesn’t tell me anything I can do to
improve my business today. Most of the things which can tell me stuff that will improve my business
are the domain-specific analytics functions I’ve created (like the above) or fun little one-off
explorations of my database that I do from the Rails console.

For example, I might play around one day and see what the most common 25 words are for
customers making bingo cards. (That was what clued me into baby shower bingo.) That usually
identifies a weak spot in my pre-made card lineup, which I can either tell a freelancer about or just fill
myself.

Incidentally, you mention that you think the ID I pass to the registration page is for tracking
conversions. Actually, not so much. I track conversions with Mixpanel. The reason that ID gets
passed is to provide continuity of experience for new trial users. I’m actually really proud of this hack:
if you show up on my landing page for, I don’t know, tea bingo, and you click “Create Your Own Bingo
Cards” and sign up for the free trial, your free trial account gets pre-initialized with my set of tea bingo
cards already in it and “personalized” instructions on the dashboard about how you can print bingo
cards like the tea bingo cards you were just interested in.

This greatly increases funnel success in A/B tests. (You are roughly 20% more likely to successfully
download a set of customized bingo cards if I give you the “personalized” treatment than you are if I
drop you at a blank dashboard and expect you to fight your way through.)

I also do this for my PPC (AdWords) campaigns: if you respond to an ad for Halloween Bingo Cards,
then by jove I’m going to everything short of dropping a pumpkin on your desktop.

Best idea here: I don’t think enough software companies unify the marketing and product sides,
incidentally. We tend to treat everybody coming in to the top of the funnel as absolutely the
same. Then we treat everybody who makes it through funnel step N exactly the same. But we’ve got
data that says they are different — why not use the data to enhance their experience and, not
incidentally, improve their propensity to buy the product?

For example, if I were in charge of World of Epic Dragonslaying, and I had a PPC

Your Bingo Card landing pages allow you to programatically generate tons of pages from content in
your product. What other tips do you have for getting lots of good SEO content for a low investment
of time/money?

411 
 
I suggest reading the parts of the article about scalable content generation. I don’t have another
magic secret that I use for my own business. OK, maybe half a secret: data begets data. For
example, I’ve got my 800 or whatever the number is bingo card activities that my freelancers and I
cooked up. I use that in several places: each bingo activity becomes

a content page

a PPC landing page

an activity in the downloadable version of the software

an activity in the online version of the software

This gives me usage/popularity data about the same subjects. I use that for:

automated interlinking of content pages (see left hand sidebar, “Related Activities”)

automated decisions of promoted content on the front page

my popular activities list

widgets across my “sprawling bingo empire” which list popular activities

semi-automated decisions on which content to promote to mini-sites

Anyhow, if I should come up with a good second idea to generate content for the website, you’ll likely
hear about it here roughly contemporaneously with me implementing it. Many of my friends have
suggested I might be at the point of diminishing returns for BCC. I think that is likely accurate, and so
my very best ideas this year are probably going to be in service of my next software
project. However, given that BCC has always been nights and weekends for me, that doesn’t
necessarily mean “maintenance mode” for it will be totally bereft of new ideas.

I hope that answers your questions, Peter. Thanks for asking.

Email marketing 
Email marketing 

It’s the CEO’s job to email the first 1000 signups – Rob Fitzpatrick 
http://thestartuptoolkit.com/blog/2011/10/its‐the‐ceos‐job‐to‐email‐the‐first‐1000‐signups/ 

It’s the CEO’s job to email the first 1000 signups 

by robfitz ∙ October 25, 2011 

Until you’ve passed a thousand signups, the CEO should be personally emailing every new user. I’m
going to cover:

Practicalities

412 
 
How to mess it up

Common objections

Goals, perks & benefits

The signup thank you note

It’s not a big message. Mine look like this:

Hey Jackie,

Thanks for taking the time to check out STK. Give me a shout if you have any questions or if there’s
anything else I can help with.

Stay well,
Rob
Founder | +44 7940435340 | @robfitz

The specifics (like the footer) are just my personal preference[1].

What I hope you’ll extract from the example is the casual tone and brevity.

How to mess this up

There are only two ways to mess this up and they’re both easy to avoid.

The first is to be demanding. I don’t even like to ask any questions at this point. Your users owe you
nothing.

You’re just politely putting your hand up and saying:

Hey, here I am. You aren’t alone.

The second way to mess up is by forgetting common courtesy. They took the time to sign up, you can
take the time to try to parse a first name out of their email address and send them a personal one
line email.

Also, make sure you do it every day. Set up your website to show you a list of new signups at the
beginning or end of each day.

I’ve seen some intros come through with a survey, which I [personally] find to be fairly disrespectful
toward your new users’ time (aka my time). If it’s mass-mailed and arriving a week later, then we’re
really not starting out on the right foot.

Common objections

This is an easy list to make because I rattled it off to my investors practically every Friday for a
year.

The number one objection and/or excuse is that you don’t want to annoy people. But there’s seriously
nothing to worry about if you aren’t being demanding, respect their time by keeping it brief, and
reach out both promptly and personally.

413 
 
Also, since you’re sending the emails personally and every day, the maximum number of people you
can offend is just a day’s worth of sign ups. It will only take a week or two to find a voice you’re
comfortable with.

How this will help you

First, it ferrets out earlyvangelists. They’ll respond to your one line email with a book of
suggestions and use cases. Treasure them.

Second, a non-negligible percent of your otherwise silent cancellations will get in touch with
dealbreaker feature requests and support crises.

Third, your users with sales-potential will identify themselves by reaching out. If you email
all your trial users, the ones who are seriously considering a purchase will jump at the chance to talk
directly to the CEO or founder.

More than once, I’ve said hello to a user with an email like “meredith@gmail.com” and received a
reply from “meredith@mtv.com” with a title like “VP of digital entertainment” in the footer.

Fourth, and arguably most importantly, it’s just polite. Someone took the time to read about and
try your startup: that’s awesome!

You would never think to host a dinner party and then refuse to say hello to anyone who walked
through the door. You’ve invited people into your website. Introduce yourself and make them feel
welcome.

[1] Very few people will actually make unannounced calls to phone numbers in a footer, but I happily
answer when they do: free customer development meeting. Also, relegating the title of “founder” or
“ceo” to the footer saves you from having to waste a sentence in the body on awkward self-
aggrandisement.

Email marketing – KISSmetrics 
http://blog.kissmetrics.com/beginners‐guide‐email‐marketing/ 

A Beginner’s Guide to Successful Email Marketing 

“You’ve got mail.”

Do you remember hearing that? It’s one of those legendary pieces of Internet history formed when the
road was still being paved and we were foraging our way through the wilderness of what was the
original World Wide Web.

Although times have changed and AOL no longer sends CD’s in the mail, we can still thank them for
introducing us to email and our addiction to it.

These days, we’ve replaced that message with Tweets, likes, and status updates, but that doesn’t
mean that our affinity for email is any less. In fact, because of the noise that is social media, one
could argue that the inbox has become our virtual dojo, our place of solitude amongst the chaos.

This is why, as an entrepreneur, I believe that building successful email marketing campaigns has
never been more important than it is now. But there’s a problem; most people don’t know how to do it

414 
 
right. So in the interest of furthering best practices and helping you succeed as a business owner,
let’s get back to the basics and talk about how a great email campaign is built, from the ground up.

You’re in their house

People are inundated with interruption, pitches, and advertisements everywhere they look, and
though you might think yours is special, there’s a high probability that to the reader, it looks the same
as the rest. This is why it’s important to remember where you are, and use your good manners as a
result.

Getting into someone’s inbox is like being invited to their home for dinner. If they ask you to take your
shoes off, you respectfully do so. It’s the same with email marketing, so before we begin I’d simply
like to remind you to be on your best behavior at all times and remember…you’re in their house.

Phase I: Getting Permission

Of course, no email campaign was ever built without getting permission to get started, so first we’ll
need to focus on building a sizable email list.

There are many ways you can do this of course. Some prefer to give something away for free while
others simply offer a newsletter or product updates.

I can’t tell you which is the right or wrong answer in this case, but I can tell you that it’s important to
have a clear purpose when asking for an address. This is where a strong call to action comes into
play, and copywriting is super important.

What do I get when I give you my email address?

Are you going to spam me?

How often will you email me?

Will I get discounts?

Will I get a first crack at your beta?

Will you send me relevant offers or more junk?

These are the kinds of things you’ll need to address if you want to be successful in phase 1. Simply
posting “enter your email for updates” isn’t going to get anyone excited to do so. Instead, consider
sharing specifics:

415 
 
Note the Clear and Concise Call to Action in the Examples Above

Take a look at the examples above and you’ll see that the first tells me I’m getting a free catalogue
and a series of reviews and special offers, while the 2nd tells me exactly when I’ll receive the
newsletter updates. This is a far more specific, and effective, way of doing business.

A quick look at my own practices tells me that the offers I subscribe to most often are for:

Email Series’ (i.e. 6 Ways to Change the World)

Free Downloads

Free White Papers or eBooks

Update Lists (New Issue Notifications, Product Updates, New Releases)

Lastly, and Amazon does this really well, your customers make great candidates, so don’t forget to
integrate some form of registration or email subscription as part of your purchasing process. Just
remember to treat these addresses with special regard, which we’ll talk about in phase 2.

Get Whitelisted

While almost all reputable email service providers work very hard to make sure that your emails are
not blocked by major ISP’s, they can’t control whether or not your emails hit the inbox or the spam
box. Although most will help you by providing a quality score to help you determine availability, getting
whitelisted is the most effective way to ensure that your emails get delivered properly.

Essentially, getting whitelisted is equivalent to being marked as a friend, and the best way to achieve
this is by being added to the recipient’s address book. The best way to do this is by providing
instructions to do so at the top of each email, especially on the initial thank you and first follow-up
email.

Furthermore, here are instructions from some of the more popular online providers:

AWeber

Mailchimp

Constant Contact

Campaign Monitor

416 
 
Blue Sky Factory

Emma

Phase II: Playing the Numbers Game

Manage Expectations with Follow-Up Efforts

Email marketing is all about expectations, and it’s up to you to set them. If your call to action is strong,
and your follow-up is consistent, then you can count on a positive campaign. However, if you promise
to send one email per week and instead send them daily, then you’re setting yourself up for failure.
On the contrary, if someone is expecting daily updates or critical product updates and you don’t’
deliver, then they are likely to be just as upset in that case too.

Because I asked, I expect Hugh MacLeod to email his cartoons daily.

This is why the first follow-up email is so crucial to the success of your email marketing efforts. Almost
all email service providers give you the option to create an autoresponder sequence, and it’s
imperative that you take advantage of it.

The initial follow-up email should be sent immediately as a way to introduce yourself and detail what
you plan on doing with your new subscriber’s email address. It’s better to be long-winded and detailed
than it is to be quick and unobtrusive, but if you can pull off quick and concise then more power to
you.

From here, it’s simply a matter of living up to their expectations.

When to Pitch

If you’re going to get in the habit of pitching often, try to put yourself in the reader’s shoes. Ask
yourself if your messaging is consistent with the expectations you’ve set. As I said before, Amazon
does this well because they send relevant offers based on my buying habits. Those that send blind
offers are far more likely to lose permission to keep doing so.

417 
 
Notice how Amazon recommends products based on my prior buying habits.

Another option to consider is the value you’re providing. While Amazon can provide value in an offer,
you might have to provide it with a newsletter or in linking to blog posts or other forms of media
content.

Again, each business has different needs, and there aren’t any hard and fast rules as to how often
you can pitch or provide content, but remember that an email list is a permission asset and it’s better
to err on the side of caution than to play it loose and reckless.

What’s in a Newsletter

The Sprouter Newsletter is a welcome addition to my inbox because they provide value
through insights, updates, and new content. Each email is prefaced with an introduction, and
includes a list of great posts, local events, and hot startups.

While we’re on the topic of content, let’s talk about the difference between a good newsletter and a
bad newsletter.

The first sign that you’ve received a bad newsletter is that you don’t recall ever asking to receive it.
Typically, this happens when a business either fails to maintain a regular email routine or uses poor
form and manually adds me to their list after receiving a business card or personal email.

I find that the most compelling newsletters are those that do a great job of mixing messaging and
updates. For example, while the email might contain a list of product updates and images, it’s
balanced by a personal message or friendly update.

418 
 
As a rule of thumb, try to use your newsletter as a way to further your relationship with the
reader/customer rather than to pitch them. Save the pitch for unique updates, offers, and
announcements.

Using the Autoresponder

As a marketer myself, one of the issues I run into most often is that I forget to talk to my list until I
have something to sell. Obviously, this is not ideal.

This is where an autoresponder can save you, and why I recommend scheduling content to be
delivered on a consistent basis over the course of several months.

For example, Copyblogger offers a newsletter titled “Internet Marketing for Smart People,” and it
contains a dozen plus great pieces on how to market better as an online entrepreneur. I can’t
remember when I signed up, but I do know that I’ve received an occasional email at least once per
month over the past 6 months.

The benefit of that is when you do need to announce a new product or sale, you can count on the fact
that you’ve already been in touch, having built a relationship over several weeks/months, and are
much less likely to annoy your readers. Of course, it’s important to schedule your autoresponder
sequence on specific days so that you know when you can afford to send an email. More than one
per day and you’re probably mailing too much.

If you find yourself asking “will this email be one too many?” then it’s probably one too many.

Phase III: Segmentation and Analytics

Analytics

Notice the detailed daily statistics for open rate on a recent AWeber campaign.

We’ve talked before about the importance of analytics in web copy, and email is no different. Every
service provider I’ve ever worked with provides complimentary analytics.

419 
 
Though they’re all important, the 3 most important to me are open rate, click through rate (CTR), and
unsubscribes.

Your open rate will tell you how well you’ve built your relationship; if the number is low, it means that
people have started to delete upon receipt, which means you need to work harder on providing value
and/or managing expectations.

If your CTR is low, it means that your message is either not targeted enough, or simply not getting
through. In this case, focus on improving your copy.

If your unsubscription rate is high in relation to your opt-in rate, then you’ve passed the point of
building value and writing good copy…you’ve got some serious work to do. If this is you, try to
examine when people are leaving and take action based on those leaks.

If they’re leaving after a certain autoresponder email, then re-work it. If they’re leaving after marketing
messages, then re-work the way you present offers. If they’re leaving early on in your funnel, then you
need to fix your original call to action so that it’s in harmony with what you’re sending.

Email analytics are critical in that if you’re paying attention, they’ll give you very specific clues as to
what you’re doing wrong. Of course the key variable here is “paying attention.”

Segmentation

If you’re unfamiliar with the term, segmentation is the practice of splitting up your email list into more
targeted groups.

For example, the following are ways to segment a larger, more unified list:

Customer List (in comparison to leads)

Product Updates (in comparison to a customer list)

Newsletter

Daily Email List (in comparison to weekly, bi-weekly, monthly, etc)

HTML (yes, some people prefer the option for text)

In dividing your list in this manner, you give yourself the ability to send more targeted communication.
Some customers want both product and sales updates, while others might only want to hear about
new versions. If you don’t give them the chance to choose, you risk losing them all-together. Since
customers make the best buyers, it’s fairly obvious why you want to keep them subscribed to your
customer email list.

With segmentation, you can send a broadcast only to those that didn’t open your last message (ask
them why), or to those that showed interest (a 2nd pitch). You can also split test messaging amongst
different groups in order to refine your best practices.

As you can see, segmentation isn’t rocket science, but it is work, which is why most don’t take the
time to do it right. If you do, you’ll immediately separate yourself from the pack.

The Value of Your List

420 
 
In the future, we’ll talk about more advanced techniques, such as measuring the cost of lead
acquisition, but for now know this: your email list is one of your most valuable resources, and if you
learn how to treat it right, the cost of doing so will pay for itself.

If you can imagine that each person on your list is worth a set value, say $5, then you can understand
immediately how losing several hundred could be dangerous to your bottom line.

What do you think? How has email marketing served you best? What practices help you to keep your
numbers growing and your readers engaged? Share in the comments.

   

421 
 
 Optimisation and landing pages 
Optimisation and landing pages 

Why your site will fail – Andrew Chen 
http://andrewchenblog.com/2007/06/06/your‐site‐will‐succeed‐or‐fail‐in‐the‐first‐10‐seconds/ 

Your site will succeed or fail in the first 10 seconds

Go check your analytics right now!

When’s the last time you checked your analytics? If you’re serious about getting a site up and going,
you should be glancing at it every day, and doing a deep dive every couple days. In fact, if you
haven’t do it right now. If you’re a Google user, go to Visitors (on the left side), Visitor Loyalty, and
then Length of Visit. You might see something similar to the diagram above – a bimodal distribution
split between newbies that mostly leave your site, and people that stay on to use it. Note that the
latter is often returning users, but also users that get hooked on the first try.

You have 10 seconds to catch someone’s attention

If you are driving a lot of new traffic to your site, you’ll often see a graph like the one above – in my
case, the vast majority of the traffic is coming through Google organic and paid clicks. People either
opt into your site or out of your site within the first 10 seconds. They’ll show up, glance at a couple
headlines and head out, or if they like you, they might continue on and you’ll keep them for upwards
of a couple minutes.

In fact, you could imagine that in 10 seconds, the user’s not doing much except for answering two
questions:

"What the heck is this?"

"Is this for me?"

So the better you are able to help them answer these two questions, the more likely you will be to
catch and keep them as a user.

5 ways to CONFUSE users and get them to LEAVE

Here are a couple great ways to do exactly what you don’t want:

Presenting a portal as your front page

Use lots of marketing speak

Write everything in long-form text

Make them register to do anything

Treat every user the same

Okay, don’t do any of those. What do you want to do instead?

So the opposite of this, of course would be to:

422 
 
Present a simple initial interface – just convey the idea as quickly as possible

Speak in their language, not your own

Using pictures, video, and flash can be great! Just don’t overdo it

Make it easy for them to get a taste without registering – give them progressive opportunities to trust
your brand

Target users differently depending on how they entered the site. If through search, then try to get
them to the right content. If through a friend, show a picture of their friend and other friends.

Remember: you have 10 seconds!

Vu-ja-de
IDEO has a great concept which they call the opposite of Deja-Vu. Deja-Vu is the process of seeing
something for the second time (or thinking you are). Vu-ja-de is seeing something again, for the first
time.

Check out your site, or your blog, or your Web 2.0 website, and guess what a user would do in the
first 10 seconds. Then improve it until you can convey the simple idea quickly.

AB test big changes (not just small) – Josh Porter 
http://blog.hubspot.com/blog/tabid/6307/bid/20569/Why‐A‐B‐Testing‐isn‐t‐just‐about‐Small‐Changes.aspx 

Why Marketers' A/B Testing Shouldn't Be Limited to Small Changes

Posted by Josh Porter

Most people who do A/B testing do it modestly, testing only one variable at a time. They test
headlines, images, button text, and other important page elements that are crucial to conversion. This
makes sense. These elements are simple to test, the results you get are clear, and the next step is
obvious: you permanently implement the text or image that converts best. By keeping the testing to
one isolated variable, you can be more confident in the results.

But there has also been a lot of discussion about the downsides of this incremental approach. The
argument is that if you continually test small items over time, you won’t be able to iterate your way to
a much better design. Instead, you’ll just improve in very small increments and get stuck in what has
come to be called the Local Maximum, meaning that you’ve hit a glass ceiling in your design. Without
a big shake-up, you won’t make any big gains.

423 
 
The classsic case stuudy for this ty
ype of testing
g is Google’s
s 41 Shades of Blue studyy, where Goo ogle
rigoroussly tested the
e color of the links on Gooogle Search and Gmail to o see which sshade of blu ue
converte ed best. Andd because Go oogle has a ttremendous amount of tra affic, they weere able to actually
see diffeerences betwween two sha ades of blue that a normaal person would be hard-p -pressed to
distinguiish. At huge scale, small differences are discernib ble, so it mak
kes sense foor Google to dod that
testing.

But for th
he vast majo ority of folks working with
h much smalller traffic, tha
at sort of incrremental testting isn’t
feasible.. Yet most pe eople still seem to test onne variable at
a a time. (Ass an aside, wwe’ve been gu uilty of
publishinng results likke this such asa the red/gre
reen button te
est results. The
T purpose of the test was w to
show tha at even something as inn nocuous as b button color can
c make a real r differencce…not that this is
the bestt type of test to run).

Don't Liimit Yoursellf to Small Changes

C

So the aanswer is sim mple: test thee entire pagge as a variaable. Instead of testing siningle design
elementts like headlin nes, images,, or call-to-acction buttons
s, simply design two comppletely differrent
pages and test them m against eac his way, the entire page becomes
ch other. In th b thee variable yo
ou’re
testing. It's still as va
alid a test as ever, but yo
ou’re just worrking on a hig
gher level.

An Exam
mple of a Pa
age-Level Design
D Test

Here is aan example of a test in which

w a page
e-level design
n had a large
e effect. Lukee Stevens tes
sted two
completetely different versions of a homepage for his upcooming Perform
mance Baseed Design book. The
results w
weren’t even close. One outperformed
o d the other by
b 131%.

424 
 
Running
g a Page-Le
evel Design Test

There arre some diffe erences betwween elemen nt-level desig

gn and page--level designn. The big one e is that
designinng another pa age takes a lot
l longer tha an just writing another he
eadline. So ccreating the
variation
ns and setting up the testt will take lon
nger. But oncce you start, the differencces between two
differenttly designed pages will shhow up much h faster than the differencces betweenn two headlin nes.
You’ll ge
et test resultss more quick
kly with a pagge-level test because thee variations wwill be so diffe
ferent.

Now, lett’s imagine one

o page worrked much be etter than an y wanted too know why. Well,
nother, and you
you migh ht be concerrned that sinc
ce the entire
e page was your
y variable, you cannot confidently pinpoint
p
the exacct reason. Was
W it the diffeerent layout, style, or cop
py? If you donn’t know whyy something is
working//not working,, you’ll proba
ably want to rroll some oth
her UX metho mix, such as
ods into the m s
interview
ws or user te mbining A/B testing with other methods, you’ll gett the complete
esting. By com
picture yyou’re after.

We’re se eeing lots of folks A/B tesst large channges recently y, and it’s sommething I’m ssure we’ll se ee more
of. I've h
helped a lot of
o people gett started withh page-level testing, and the results aare always
interestin
ing. In one reecent example, the desig gn team for an art site was testing classsic painting gs of the
old Euro opean masters vs. moderrn abstract a rtworks, and d conversion changed draastically base ed on
whetherr members off the audienc ce were in thheir twenties vs. in their fifties. It turnss out that you
unger
people d a and olderr people like the Europea
dig abstract art an masters. This
T seems to make som me sense
in hindsiight, but it wa
as testing tha
at led to the insight in the
e first place.

In summmary, A/B tessting shouldn

n't just be aboout small cha anges. You can
c do page--level testing g (and
even flow-level testin
ng) and get very
v interestiing results, often
o faster and more insiightful than the
t
incremental, small chhanges that A/B testing iis known for. So change your y testing strategy to innclude
big leapss, and you can avoid the local maxim mum that muc ch longer.

Read mo og.hubspot.c
ore: http://blo com/blog/tab
bid/6307/bid/2
/20569/Why-M
Marketers-A--B-Testing-S
Shouldn-
t-Be-Lim
mited-to-Small-Changes.a aspx#ixzz1wwWLlAl00

425 
 
 AB vs qualitative testing – Laura Klein 
http://www.slicedbreaddesign.com/blog/index.php/2009/05/ab_qual_testing 

A/B and Qualitative User Testing

Laura Klein | 05.21.2009

Recently, I worked with a company devoted to A/B testing. For those of you who aren’t
familiar with the practice, A/B testing (sometimes called bucket testing or multivariate
testing) is the practice of creating multiple versions of a screen or feature and showing
each version to a different set of users in production in order to find out which version
produces better metrics. These metrics may include things like “which version of a new
feature makes the company more money” or “which landing screen positively affects
conversion.” Overall, the goal of A/B testing is to allow you to make better product
decisions based on the things that are important to your business by using statistically
significant data.

Qualitative user testing, on the other hand, involves showing a product or prototype to a
small number of people while observing and interviewing them. It produces a different
sort of information, but the goal is still to help you make better product decisions based
on user feedback.

Now, a big part of my job involves talking to users about products in qualitative tests, so
you might imagine that I would hate A/B testing. After all, wouldn’t something like that
put somebody like me out of a job? Absolutely not! I love A/B testing. It’s a phenomenal
tool for making decisions about products. It is not the only tool, however. In fact,
qualitative user research combined with A/B testing creates the most powerful system
for informing design that I have ever seen. If you’re not doing it yet, you probably
should be.

A/B Testing

What It Does Well

A/B testing on its own is fantastic for certain things. It can help you:

Get statistically significant data on whether a proposed new feature or change

significantly increases metrics that matter – numbers like revenue, retention, and
customer acquisition

Understand more about what your customers are actually doing on your site

Make decisions about which features to cut and which to improve

Validate design decisions

See which small changes have surprisingly large effects on metrics

Get user feedback without actually interacting with users

For example, imagine that you are creating a new check out flow for your website. There
is a request from your marketing department to include an extra screen that asks users

426 
 
for some demographic information. However, you feel that every additional step in a
check out process represents a chance for users to drop out, which prevents purchases.
By creating two flows in production, one with the extra screen and one without, and
showing each flow to only half of your users, you can gather real data on how many
purchases are completed by members of each group. This allows you to understand the
exact impact on sales and helps you decide whether gathering the demographic
information is really worth the cost.

Even more appealing, you can get all this user feedback without ever talking to a single
user. A/B testing is, by its nature, an engineering solution to a product design problem,
which makes it very popular with small, engineering-driven startups. Once the various
versions of the feature are released to users, almost anybody can look at the results and
understand which option is doing better, so it can all be done without having to recruit or
interview test participants.

Of course, A/B testing in production works best on things like web or mobile applications
where you can not only show different interfaces to different customers, but where you
can also easily switch all of your users to the winning interface without having to ship
them a new box full of software or a new physical device. I wouldn’t recommend trying it
if you’re designing, for example, a car.

What It Does Poorly

Now imagine that, instead of adding a single screen to an already existing check out
flow, you are tasked with designing an entirely new check out flow that should maximize
revenue and minimize the number of people who abandon their shopping carts. In
creating the new flow, there are hundreds of design decisions you need to make, both
small and large. How many screens should it have? How much up-selling and cross-
selling should you do? At what point in the flow do you ask users for payment
information? What should the screens look like? Should they have the standard header
and footer, or should those be removed to minimize potential distractions for users when
purchasing? And on and on and on…

These are all just a series of small decisions, so, in an ideal world, you’d be able to A/B
test each one separately, right? Of course, in the real world, this could mean creating an
A/B test with hundreds of different variations, each of which has to be shown to enough
users to achieve statistical significance. Since you want to roll out your new check out
process sometime before the next century, this may not be a particularly appealing
option.

A Bad Solution

Another option would be to fully implement several very different directions for the check
out screens and test them all against one another. For example, let’s say you
implemented four different check out processes with the following features to test
against one another:

Option 1: Option 2: Option 3: Option 4:

427 
 
Yellow Background Blue Background Orange Background White Background

Three Screens Two Screens Four Screens One Screen

Marketing Questions No Marketing Questions Marketing Questions No Marketing Questions

No Up-selling Up-selling Up-selling No Up-selling

No Cross-Selling No Cross-Selling Cross-Selling Cross-Selling

Header Header No Header No Header

No Footer Footer Footer No Footer

Help Link No Help Live Chat Help Live Chat Help

This might work in companies that have lots of bored engineers sitting around waiting to
implement and test several different versions of the same code, most of which will
eventually be thrown away. Frankly, I haven’t run across a lot of those companies. But
even if you did decide to devote the resources to building four different check out flows,
the big problem is that, if you get a clear winner, you really don’t have very clear idea of
WHY users preferred a particular version of the check out flow over the others. Sure, you
can make educated guesses. Perhaps it was the particularly soothing shade of blue. Or
maybe it was the fact that there weren’t any marketing questions. Or maybe it was
aggressive up-selling. Or maybe that version just had the fewest bugs.

But the fact is, unless you figure out exactly which parts users actually liked and which
they didn’t like, it’s impossible to know that you’re really maximizing your revenue. It’s
also impossible to use those data to improve other parts of your site. After all, what if
people HATE the soothing shade of blue, but they like everything else about the new
check out process? Think of all the money you’ll lose by not going with the yellow or
orange or white. Think of all the time you’ll waste by making everything else on your site
that particular shade of blue, since you think that you’ve statistically proven that people
love it!

What Qualitative Testing Does Well

Despite the many wonderful things about A/B testing, there are a few things that
qualitative testing just does better.

Find the Best of All Worlds

Qualitative testing allows you to test wildly different versions of a feature against one
another and understand what works best about each of them, thereby helping you
develop a solution that has the best parts from all the different options. This is especially
useful when designing complicated features that require many individual decisions, any
one of which might have a significant impact on metrics. By observing users interacting
with the different versions, you can begin to understand the pros and cons of each small
piece of the design without having to run each one individually in its own A/B test.

Find Out WHY Users Are Leaving

428 
 
While a good A/B test (or plain old analytics) can tell you which page a user is on when
they abandon a check out flow, it can’t tell you why they left. Did they get confused?
Bored? Stuck? Distracted? Information like that helps you make better decisions about
what exactly it is on the page that is causing people to leave, and watching people using
your feature is the best way to to gather that information.

Save Engineering Time and Iterate Faster

Generally, qualitative tests are run with rich, interactive wireframes rather than fully
designed and tested code. This means that, instead of having your engineers code and
test four different versions of the flow, you can have a designer create four different
HTML prototypes in a fraction of the time. HTML prototypes are significantly faster to
produce since:

They don’t have to run in multiple browsers, just the one you’re testing

They don’t have any backend code that needs to be done

They frequently don’t have a polished visual design (unless that’s part of what you’re
testing)

And since making changes to a prototype doesn’t require any engineering or QA time,
you can iterate on the design much faster, allowing you to refine the design in hours or
days rather than weeks or months.

How Do They Work Together?

Qualitative Testing Narrows Down What You Need to A/B Test

Qualitative testing will let you eliminate the obviously confusing stuff, confirm the
obviously good stuff, and narrow down the set of features you want to A/B test to a
more manageable size. There will still be questions that are best answered by statistics,
but there will be a lot fewer of them.

Qualitative Testing Generates New Ideas for Features and Designs

While A/B testing helps you eliminate features or designs that clearly aren’t working, it
can’t give you new ideas. Users can. If every user you interview gets stuck in the same
place, you’ve identified a new problem to solve. If users are unenthusiastic about a
particular feature, you can explore what’s missing with them and let them suggest ways
to make the product more engaging.

Talking to your users allows you to create a hypothesis that you can then validate with
an A/B test. For example, maybe all of the users you interviewed about your check out
flow got stuck selecting a shipment method. To address this, you might come up with
ideas for a couple of new shipment flows that you can test in production once you’ve
confirmed that they’re less confusing with another quick qualitative test.

A/B Testing Creates a Feedback Loop for Researchers

A/B tests can also improve your qualitative testing process by providing statistical
feedback to your researchers. I, as a researcher, am going to observe participants

429 
 
during tests in order to see what they like and dislike. I’m then going to make some
educated guesses about how to improve the product based on my observations. When I
get feedback about which recommendations are the most successful, it helps me learn
more about what’s important to users so I make better recommendations in the future.

Any Final Words?

Separately, both A/B testing and qualitative testing are great ways to learn more about
your users and how they interact with your product. Combined, they are more than the
sum of their parts. They form an incredibly powerful tool that can help you make good,
user-centered product decisions more quickly and with more confidence than you have
ever imagined.

For more information on our approach to getting customer feedback, check out:

   

430 
 
 

Section 2: Web metrics 

Website optimisation – Conversion Rate Experts 
http://www.conversion‐rate‐experts.com/cro‐tips/?awt_l=AEDfU&awt_m=1jOmw3NnZznbKj

Google Website Optimizer 101—A quick‐start guide to conversion rate optimization 

Includes a list of 108 ways to increase your website’s profits 

Here’s how to get lots more customers—free—using Google Website Optimizer. 

Using split testing software like Google Website Optimizer is a powerful way to increase your website’s 
conversion rate (that is, its ability to turn visitors into customers). Many of the web’s most powerful companies, 
including Amazon and Google, use this technique. Here’s our essential guide to increasing your conversion rate 
using split testing software. It contains 108 simple techniques for growing your business. 

First, what does Google Website Optimizer do? 

If you had two possible headlines for your webpage but couldn’t decide which one to use, you could run an A/B 
split test in which 

Half of your visitors would see Headline A, and 

The other half would see Headline B. 

You could then tally the orders for each headline and determine which headline brought you the most. 

Google Website Optimizer lets you carry out tests like this, although such tests often take several weeks to 
finish. 

The real power of Google Website Optimizer comes from its ability to carry out many such tests 
concurrently! 

For example, while you are testing which headline to use, you can also test many other page elements (such as 
text, images, prices, offers, and buttons)—all at once. Each of your visitors will see a different combination of 
these elements, and then Google Website Optimizer will work out, on average, which of the elements 
performed the best. This information will help you put together a high‐converting “super‐page.” 

For example, if we use Google Website Optimizer on this page (the one you’re currently looking at), we can 
test the following: 

431 
 
  

And we will be testing these variables all at the same time! Not only that, but Google Website Optimizer will 
tell us which version of each page element, on average, brought in the most customers! 

Powerful, isn’t it? 

This type of testing is what’s called“multivariate testing” (which just means that you’re testing many variables 
at once). Google Website Optimizer uses a type of multivariate testing called “full factorial.” Another variation 
you might encounter is the “Taguchi method.” Both types have pros and cons. A little later, you’ll find a link 
that allows you to compare them, and others. 

Don’t let these details put you off getting started, though. Any testing is better than none. 

If you read this entire article… 

432 
 
…you’ll know more about conversion rate optimization (CRO) than 99% of web marketers! 

And you’ll see several pictures of squirrels … for reasons that will never really become apparent! 

Here’s a squirrel now. 

When we say “conversion rate,” we mean the percentage of your visitors who end up reaching a given goal. 
Maybe this badly drawn picture will help: 

Typical goals include making a purchase, submitting an inquiry form, and signing up for a free newsletter. 
(Speaking of newsletters, make sure tosign up for our newsletter. It’s as useful as this article.) 

Why you need to increase your conversion rate 

You need to make conversion rates your number‐one priority for the forthcoming year for these three reasons: 

1. There’s lots of room for improvement. Most websites are losing buckets of money every day because they 
do an atrocious job of selling products or services to their visitors. 

2. Paid search will keep getting more competitive. And increasing your bids is not the answer. 

433 
 
3. Split testing software is now highly affordable. Split testing software allows you to test changes to your 
website—and tells you which changes brought in the most customers. (To help you decide which software is 
best for you, see this comparison of multivariate testing software platforms.) It used to cost several thousand 
dollars per month. Now it’s almost free (and, in the case of Google Website Optimizer, it actually is free). 

Unfortunately, though, Google Website Optimizer doesn’t tell you what to test. That’s where our expertise 
comes into play. And this whole website gives you a taste of what we can do. 

Some exciting benefits of increasing your conversion rate 

If you double your website’s conversion rate, you will halve your “cost‐per‐acquisition” (CPA). This tool shows 
you how much extra you’ll earn. (By the way, CPA means how much it costs to get each new customer.) 

When your conversion rate does increase, however, we recommend you don’t just sit back and enjoy the 
profits (tempting as it might be to do so). Instead, we recommend you take advantage of the fact you can now 
afford to pay twice as much per visitor. This means 

1. You can pay about twice as much per click on AdWords, which can bring you a disproportionate number of 
additional visitors. 

2. You can start advertising in media that had previously been too expensive for you, such as 

Full‐page magazine ads 

Newspaper ads 

Direct mail 

Radio ads 

TV infomercials 

3. Your affiliates can earn twice as much as before, and this will cause the large affiliates to leave your 
competitors and join you. 

4. As the number of orders skyrockets, your company gets greater bargaining power with its suppliers, so its 
cost‐per‐unit‐sold tends to fall—so the company becomes more efficient because of economies of scale. This 
means the boost to your net profit is deceptively high. 

In summary, if you increase your conversion rate, your business will grow much more than you might expect! 

Why many companies can double their conversion rate 

What’s your current conversion rate? 5%? 10%? Don’t know? A 10% conversion rate means that of every 10 
visitors to your site, nine walk away empty‐handed. Do you really believe you couldn’t lower that number to 
eight out of 10? 

Look at it another way: To double your conversion rate, you just need to increase the conversion rate of your 

Ads by 19% 

Homepage by 19% 

Product page by 19% 

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Shopping cart by 19% 

(Note that the figure is 19%, not 25%, because each improvement compounds upon the previous one.) 

These increases may sound daunting, but to increase your homepage’s conversion rate by 25%, for example, 
you would have to make just a 2.27% improvement to ten aspects of your website. For example: 

Your company’s tagline 

Your headline 

Your introductory text 

Your offer 

Your guarantee 

Your picture 

Your readability 

Your usability 

Your navigation 

Your products 

Your pricing 

Your offers 

Your premium (covered in Tip 45) 

Your testimonials 

Your call‐to‐action 

Your site layout 

Your return policy 

And the list goes on… 

Does a 25% increase sound more achievable now? 

In summary, once you’ve finished reading this article, you need to clear your desk and start working on 
increasing your site’s conversion rate—and hope your competitors aren’t reading this too. 

Will these techniques work for YOUR website? 

Yes! 

We have applied these techniques to almost all kinds of websites, such as 

Business‐to‐business (B2B) and business‐to‐consumer (B2C) websites. 

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Websites in diverse industries, including finance, health, travel, technology, leisure, and food. 

Websites of all sizes, from start‐up to enterprise level. 

Websites that sell physical goods, services, and information. 

Websites for merchants, affiliates, publishers, and e‐commerce stores. 

Here we go! These are some of the techniques we’d use if we were working on your site. 

A word of warning: Don’t be daunted by this list! If you did everything on it, you’d probably be the best 
marketer in the world! In reality, doing just one of these 108 things could be enough to double your conversion 
rate. The most important thing is to do something—now! 

So, let’s get started! 

First, you’ll need to choose the kind of split testing to do: 

1. Time split tests (also known as “before‐and‐after tests”)—These stink. We put them in the list only so we 
could mention how bad they are. If your orders go up and down week by week (and whose don’t?), time split 
tests tend to lead to wrong decisions. 

2. A/B split tests—Many times, a simple A/B split test is all that’s needed. 

3. Multivariate testing—Which multivariate method should you use? Check out this free resource for choosing 
split testing software. 

Split testing software becomes much more powerful when you use it alongside other tools. Here are the other 
tools and techniques you’ll need in your marketing arsenal: 

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4. Google AdWords—AdWords is valuable as a targeted source of traffic, but it can also be used to run split 
tests by creating two identical ads with different destination URLs. However, for several reasons, it’s difficult to 
create an accurate scientific test using AdWords, so we don’t recommend using AdWords to carry out split 
tests. 

5. Live Chat—Few tools tell you anything about your “non‐customers”—that is, the visitors who arrived at your 
site but then left for whatever reason. You rarely get feedback from these people. They are unlikely to call you, 
but you might just persuade them to use a Live Chat feature. 

6. Web analytics—At the most basic level, the “Site Overlay” feature tells you where visitors to your site click, 
where they don’t click, and where they are when they leave your site. We’ve heard web analysts say, “There are 
piles of gold waiting for you in your log files,” and they are right—in a vague, over‐poetic kind of way. It turns 
out that you can learn a lot from your web analytics package. 

7. Usability testing—You can carry out this testing on pretty much anyone you can get your hands on. These 
tests are gold dust—literally. 

If we could have just one testing tool, it would be usability testing. Web analytics tell you what visitors are 
doing, but usability testing tells you why. No other tool provides so many head‐slapping, “I can’t believe I didn’t 
think of that” moments. If you want to know how to get usability tests done for free, sign up to receive our 
newsletterand we’ll tell you. 

8. Here’s a clever one: In your “Refer‐a‐Friend” program, allow customers to send a personalized note to their 
friends. You will have access to these notes (privacy policy permitting), and they are a goldmine of information 
about why a particular customer actually ordered. In addition, you get to see the exact words customers use to 
sell your product to friends. It’s like having a team of free copywriters on tap. 

9. Eyetracking—This tool shows you which things visitors to your site see but don’t click on. And it tells you 
which things they don’t click on because they don’t see them. Got that? Most eyetracking is carried out using 
custom hardware, so you need to get a company to do it for you. However, a startup called GazeHawk uses 
normal webcams to provide budget‐priced eyetracking. 

10. “Poor‐man’s eyetracking”—About five seconds into each usability test, ask testers what they have looked 
at so far. They usually find it easy to tell you. 

11. Clickmapping—A clickmap is an image of a page that’s annotated with information about where visitors 
clicked. Here are two good options: 

Crazy Egg is a service that allows you to see the parts of your page that your visitors click on, and how far they 
scroll down your pages. 

ClickTale is similar to Crazy Egg but allows you to view Flash movies of your visitors’ browsing sessions. You can 
see how far visitors scroll down your pages, view how they interact with your forms, and learn about many 
other aspects of their visit. 

12. Customer surveys—Your customers know why they ordered. And why they nearly didn’t. Ask them about it. 
Many survey services are available. SurveyMonkey is very widely used. 

13. Co‐opetition—Short for “cooperative competition,” this is a technique by which you sell your competitors’ 
products from your website (usually via an affiliate program). Co‐opetition can teach you a lot about your 

437 
 
competitors’ conversion rates. And if your visitors prefer your competitors’ products, this is an easy way to find 
out! 

Here are some tips for getting into the right mindset: 

14. Stop having debates with your colleagues about who likes what. If in doubt, test. Your mantra should be 
“Let the customers decide.” 

15. Start to think of your business as aconstantly shifting experiment. By continually carrying out tests, you will 
learn which factors increase your profits and which don’t. 

16. Learn your other new mantra. When your colleagues object to the changes you’re making, remind them 
that this is just an exploratory experiment to “learn what happens,” not a long‐term decision. Let this become 
your mantra: “It’s just an experiment; it’s just an experiment.” 

17. Copy what works for others (within limits). In particular, copy companies that appear to be tracking and 
testing. You can spot them because they are using the techniques in this list. 

18. Copy the techniques that marketers, who have been testing for decades, have developed; that is, copy 
direct‐response advertisers. The internet may be new, but your visitors aren’t. For about 100 years, direct‐
response advertisers have been running split tests to find out what works. It’s easy to spot their ads in 
magazines, newspapers, and direct mail—they have tracking codes and coupons in the bottom corner. And the 
ads often look a bit cluttered. 

19. Place bets with your colleagues about which test sample will win. You’ll be amazed at how often you are 
wrong. Only the top few percent of marketers appreciate that it’s impossible to always spot the winner. Race to 
become one of them. 

20. Make sure you have great people working on this project. This is the most important job in your company. 
You have three options: 

Do it in‐house, with your best staff. 

Get experts in, and do it in‐house. 

Outsource it to an expert who has a vested interest in making it a big success. 

21. Locate (or become) your company’s best salesperson. Your website is your electronic salesperson. It has 
the advantage of being able to sell to thousands of customers at the same time. However, only person‐to‐
person selling will teach you the reactions of prospects to certain types of arguments and approaches. It is by 
far the quickest and most effective way of finding out what appeals to your prospects and what doesn’t. The 

438 
 
words on your website need to have been tested on real people. No amount of online testing will give you this 
gut feel. So, you have a choice: Either become your company’s best salesperson, or seek out the best 
salesperson and listen to how that person sells the product. 

22. Don’t test the small stuff. Test big, bold changes. This has two advantages: 

You’ll get the results quicker (it’s a statistics thing). 

You’re more likely to achieve improvements. 

23. Test changes in two stages: 

Fix all the “broken” things (which you’ll discover during your usability testing). This is worth doing first, because 
it’s the easiest way to make quick improvements. 

Test new ideas that could significantly grow your business. Do this next. 

24. Don’t worry about temporarily lowering your conversion rate. If a test is a failure, you get one bad day of 
business. If a test is a success, you get a lifetime of success. 

25. Don’t end the test too soon! Make sure you have enough data! Some marketers say you need to test for 
two weeks. Some say you need to collect at least 30 orders. Some use gut feel. They are all wrong. The only 
correct answer is to use the right statistical tool: 

For split tests of AdWords ads, use this tool. 

For split tests using multivariate testing software, use the software’s built‐in statistical significance calculator. 

The tools we just mentioned tell you whether your results are significant—or whether you don’t have enough 
data yet and your results are due just to chance. 

26. The best place to start is to identify the weak links in your marketing funnel. Sketch out a brief overview of 
your marketing funnel, from advertising all the way through to closing the sale. This will include the following: 

Your advertising 

Your sales force 

Your homepage 

Your product pages 

Your checkout pages 

439 
 
Your “Order Confirmation” page 

Your call center staff 

How the package is sent out 

27. Test stuff that your usability testers told you to change. (You ARE going to do usability testing, aren’t you? 
Promise us!) 

Getting your message straight before you start 

28. What’s your company’s positioning? In other words, what makes you different from or better than all your 
competitors? Have you ever tested your positioning against possible alternatives? Draw up a short list to test—
and then your visitors can let you know which positioning is most important to them! 

29. Rank the top five points you want to communicate to your visitors. You want to make sure that, whatever 
else your visitors learn from your site, they definitely learn these top five pieces of information. 

30. Consider all the different types of visitors who might view your site and then try to write for all of them. You 
might find it easier to use customer archetypes (sometimes called “personas” or “avatars”) for this. A 
“customer archetype” is a single person who is used to represent a certain segment of visitors. Some tips: 

You may choose to use real people as your archetypes (for example, a customer that you know well and that is 
characteristic of a certain segment of visitors). 

Or you may choose to create fictional characters who embody the characteristics of a certain segment of 
visitors. Warning: If you choose to use fictional characters, be sure to base them on an understanding of your 
real visitors. Don’t sit in an ivory tower dreaming up people who don’t exist. 

31. For each page, make sure you know what all the “visitor intentions” are. For example, some visitors might 
be looking to make a purchase, some might be looking for customer support, and others might be trying to 
apply for a job with you. 

Instead of just guessing their intentions, survey them to find out for sure. The 4Q tool is a free, easy‐to‐
implement tool for getting started. Some of our clients choose to create their own exit surveys. 

32. Test everything! Seriously. Test everything. That’s it. We’ve finished. We’re going home now. 

What’s that? You want more details? OK, then… 

440 
 
33. Identify which products bring you the most overall profit, and then put them in a prime location on the 
page. We mean, above the fold (that is, on the upper part of the page so users don’t have to scroll down to see 
it), preferably on the left‐hand side. 

34. Headlines are extremely important. If your visitors don’t like the headline, they won’t read any further. A 
simple yet effective approach is to express your main message in a headline that 

Is worded in terms of benefit to the customer, not in terms of product features. 

Suggests that the customer will get the results with ease. 

Is believable (meaning, it contains some kind of proof). 

Is specific. 

35. What you say is more important than how you say it. You’ll achieve the biggest improvements by changing 
the core message of your headline, rather than just tweaking the wording. 

36. If you don’t know how to describe your product’s features in terms of benefits, carry out this exercise: 
Imagine customers are looking at your headline and asking, “Why should I care about that?” You would likely 
answer this question by describing a benefit. 

37. Struggling to come up with a good headline? Adapt headlines from publications such 
as Cosmopolitan,Reader’s Digest, and MSN.com, which use formulaic headlines that have been proven to work 
consistently. An MSN headline might be “Seven ADHD truths you may not know.” Replacing “ADHD” with your 
product name would give an instantly compelling headline. Our newsletter offers you some great resources for 
writing winning headlines. 

Headlines are vital: That’s why we used up four of our 108 tips on them (plus, writing 108 tips is starting to 
sound like a lot of hard work). 

38. Visitors will view the tagline under your logo almost as much as the headline itself. Therefore, make sure it 
clearly expresses distinct “positioning”; that is, it should describe what you do and how you fit into the 
marketplace. 

39. Test high and low prices, because customers don’t always seek out the lowest prices. There’s such a thing 
as “reassuringly expensive.” 

40. Test odd pricing. “Odd pricing” means prices that end with a seven or a nine. Items with these prices tend 
to sell better than those with prices that end with a zero. Would you or I be fooled by odd pricing? No, of course 
not; we’re far too smart! But someone’s falling for it, because this phenomenon has been proven valid 
repeatedly. 

41. Test different offers, such as 

A one‐month free trial 

Buy one, get one free 

Pay in installments 

Longer commitment 

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Shorter commitment 

Buy now, pay later 

First one free 

Automatic renewal 

We’ll hold your check for 30 days 

In general, do whatever you can to get the product into the customer’s hands. If you’re so confident in your 
product, prove it by taking some of the risk. 

42. Divide your product or service into a standard version (for the prospects who are price sensitive) and a 
premium version (for the ones who aren’t). This also has the psychological advantage of turning the prospect’s 
decision into an either/or decision rather than a yes/no decision. 

43. Even more extreme than creating a standard version and a premium version is to try changing what you 
sell. For example, are you selling 

The product itself? 

A catalog of products? 

A free report about the product or about the problem? 

An invitation for a salesperson to call? 

In general, the larger the purchase, the less effective it will be to attempt to sell it in one step. 

44. Many of the visitors who leave without ordering exit the site because you don’t offer the product or service 
they are looking for. The answer is often to start selling what customers are looking for, or at least become an 
affiliate for it. 

45. Test different premiums—that is, the bonuses customers get if they order. These include free reports, gifts, 
and accessories. 

46. Add a guarantee, or test different ones. Start with the bravest guarantee you dare test, and if it works, test 
a braver one. 

47. Add testimonials from happy customers. In general, a video testimonial is better than a testimonial with 
an image, which is better than a testimonial with just a name, which is better than an anonymous testimonial. 

48. Add testimonials from the media. If you don’t have any currently, try giving media outlets free stuff in 
exchange for reviews and feedback. 

49. Develop a systematic way for collecting testimonials. Train your sales staff to request a testimonial 
whenever they receive a compliment. Email your customers asking for testimonials. 

50. Test different calls‐to‐action. The “call‐to‐action” is what you want customers to do next. It is often written 
on the “Proceed” button. Test direct calls‐to‐action such as “Buy Now and Get 10% Off” as well as indirect ones 
such as “Learn More.” 

442 
 
51. Try making the “Call‐to‐Action” button nice and visible. Large, brightly colored buttons often convert 
better—they seem to draw the reader’s attention. 

52. Test different reasons why visitors should act promptly (e.g., “Offer ends Wednesday” or “Only 42 tickets 
left”). Please note, we’re definitely not suggesting you lie to your visitors—your conversion rate depends 
heavily on credibility and trust. However, if you look at your own business, you’ll probably find that you already 
have real reasons why prospects should reply promptly. If not, you can find ways of rewarding them for doing 
so. 

53. Make the right stuff pop. “Pop” just means “stand out.” You can do this in several ways, such as 

Use bold. 

Use italics. 

Highlight important words. 

Use hand‐drawn annotation, which always commands attention. (This is higher risk and depends on the image 

you want to portray.)  

Having a great layout 

54. Make sure the things your visitors see first are the things you want them to see. A single‐column layout in 
the style of a long single‐column sales letter allows you to control the order in which visitors view your site. 

55. Where do website visitors look? Ensure that your most valuable content is placed where visitors actually 
look, which you can determine using eyetracking. 

56. Remove clutter. Imagine that every pixel on your page either increases the conversion rate or decreases 
it—or just takes up space. If you can get rid of page elements that aren’t working, you create more space for 
those that are. 

57. Ensure that the layout reflects the architecture of your information. Constantly look for ways to tidy up 
your information into ordered sections. Then ensure that each section uses the principle of progressive 
disclosure, so users see only the information they need at any given point. You can hide detailed information in 
many ways, such as in a less prominent font, in tooltips, in overlays, and in subpages. 

58. Decide what to feature on your homepage. Write a list of the products or services your visitors are looking 
for. Chances are, you can divide their intentions into categories and subcategories. Allocate space on the 
webpage according to the popularity (and value) of these categories. 

59. In the same vein, consider creating a list of your top‐selling items. These lists are popular, because visitors 
find it reassuring to buy products that others have bought. 

60. Test different navigation structures. For example, reword the headings on your navigation bar so visitors 
can understand them. Or rearrange the navigation entirely so the sections are organized in a way that is more 
intuitive to users. 

443 
 
61. If you
u’re confident your visitors a
are on the moost relevant pa
age for their n
needs, consideer removing tthe 
navigatioon bar (or at lleast moving it somewheree less prominent). In such ccases, navigattion bars can b be a 
distractio
on. 

62. If you
ur website hass a “cool,” uncconventional llayout, try a cconventional llayout. Conveentions are con
nventions 
for a reasson—they ma ake it easier fo
or visitors to fifind what theyy are looking ffor. 

uitous links th at you never rreally considered your visitoors might actu
63. Does your site conttain any gratu ually click 
on? Remove any distrracting links thhat lead to plaaces you don’’t want visitorss to go! 

64. Use a
a nice, large fo
ont for your h
headline. 

65. Makee the first letteer of your bod
dy copy a dropp cap—that is,, a letter that’s much larger
er than the one
es that 
follow. A drop cap can n effectively brridge the gap  between the headline and the body copyy. 

66. Anothher way to briidge the gap iis to have youur introductorry paragraph b
be in a slightlly more prom
minent 
font size than succeed
ding paragraphs. 

67. Test d ges. The following kinds tennd to increasee sales: 
different imag

Images o
of the productt. 

Images o
of the productt being used, m
maybe by som
meone visitorss perceive as a
a role model. 

Images o
of the successfful outcome o
of the productt. 

Images o
of happy custo g the product  (that is, a testtimonial and p
omers holding product shot aall in one). 

Attention
n‐grabbing im
mages are grea
at, but only if  they help to ccommunicate your sales meessage (which they 
rarely do
o). 

68. Test g
giving your vissitors the optiion to zoom inn to see a larg
ger image of th
he product. 

weird reason, people almosst always read
69. Put captions under your imagess and test theem. For some w d the 
captions under imagess. 

70. Call‐o
outs (that is, ttext pointing tto particular pparts of the picture) can com
mmunicate a llot of informa
ation in a 
small spaace, and visito
ors tend to rea ad them. 

71. Test vviolators, whiich are attentiion‐getting shhapes such as starbursts, ovvals, and bannners. 

72. If you g and requiress scrolling, connsider repeatiing your “Call‐‐to‐Action” buutton several times on 
ur page is long
the pagee. Which remin nds us: Have yyou claimed yoour copy of ou ur valuable ne
ewsletter yet?? 

73. If you
ur page requirres scrolling, remove any “fa
false bottoms”—that is, layyout elements 
s that imply cu
ustomers 
have reacched the botttom of the pag ge when they  haven’t. 

444 
 
74. Many websites find they get higher conversion rates if their page is set out in the form of a sales letter with 
a personable one‐on‐one style of writing. Despite what your feelings might be about such websites, in some 
markets they often work. 

Body copy 

75. Marketers have been debating for a long time about how much copy to include. In general, write as much 
as it takes to communicate your entire sales message and to overcome all the likely objections. You are aiming 
to condense as many persuasive arguments and as much relevant information into as little text as possible. 
Conveying all of this information will usually require more words than most websites currently use. 

76. Use straightforward language. No reader is too sophisticated for short, simple sentences. 

77. Fill your body copy with benefits, not just product features. 

78. Include all the information that customers could possibly require in order to make a purchase. (Note that it 
doesn’t all need to be on the main product page.) 

79. Make sure to address all the common objections that your customers bring up. Compile a chart of 
objections and counter‐objections, and then rank them in order of importance. 

80. Test different font sizes to make your text more readable. 

81. Test different font shades. For body copy, black on white is usually a safe bet. 

82. Near the end of the body copy, consider having a series of bullet points (or better still, check marks) that 
summarize the major benefits. 

83. Rewrite your article for visitors who skim as they read. Disperse subheads (such as our “Body copy,” above) 
throughout, and use bold to ensure the right things pop. 

84. Consider putting the start of your order form on the product page itself. 

85. Adding audio can be a very effective method of selling your products and services. Xiosoft Audio is an easy 
way to put audio onto your website. 

86. Video can be effective too. Perhaps the easiest approach is to embed YouTube videos. 

A service called OnSite Videos can be useful. You submit a script to them and then choose one of their actors to 
read it aloud. They then send you some code to add to your website. This code displays the finished video, 
which hovers at the bottom of the browser. 

445 
 
  

You’d be surprised how many potential customers abandon their shopping carts before they reach the 
checkout. In fact, your web analytics tool will show you exactly how many do. 

87. Repeat your offer and main benefits on the first page of your shopping cart or order form. Some customers 
click on the “Buy Now” button just to see what the price and shipping cost will be, so you don’t want to miss 
out on this chance to persuade them. 

88. Don’t ask for too much information, which can be tiresome and off‐putting for customers. Do you really 
need their fax number before they place an order? Even if it loses you a small fraction of orders (which it will)? 

89. The moment that you request information is the right moment to provide timely reassurance as to why you 
need that info. For example 

Under the email field, say something like, “We hate spam as much as you do.” 

Under an email newsletter opt‐in box, have a link to your privacy policy. 

Under the “Order Now” button, remind customers of your guarantee and your return policy. 

90. Having thumbnail photos of the products in your cart can increase the likelihood of customers completing 
their orders (presumably because they feel they can’t abandon the GIFs at your checkout?!). 

91. Use Ajax or DHTML to hide the parts of forms that aren’t needed. Both of these technologies allow visitors 
to open or collapse sections of the page without needing the whole page to reload. 

92. Replace long dropdown lists with a text field that has an auto‐suggest feature. 

93. Show additional ways to order (e.g., by phone or by fax). Some customers prefer to order in a certain way. 
Sometimes the presence of the phone number itself can increase reassurance, even if customers don’t actually 
call you. 

94. Do you have an “Enter Your Coupon” field on your shopping cart page? Test whether this is turning 
customers away. (Shoppers often resent ordering when they see that others are getting a better deal.) 

A nice bit of borrowed credibility 

95. Try adding “reassurance logos” such as 

446 
 
  

447 
 
  

96. Test a different version of your“About Us” page. Show yourselves as real, likable individuals, not just 
members of a cold, faceless corporation. 

97. Make your message consistent.Do whatever you can to ensure your sales message remains the same all 
the way from ads through to order placement. 

98. Immediately after customers have ordered—or agreed to anything—they are in a particularly agreeable 
mood (seasoned salespeople refer to this phenomenon as the “yes set” or “yes ladder”). Take advantage of 
your customers’ positive frame of mind by offering them additional products or services. 

99. A good “Refer‐a‐Friend” programplaced on the “Order Confirmation” page can be very effective at 
generating new, high‐value customers. (Speaking of friends, would any of YOUR friends benefit from reading 
this article? Send them a link—they’ll love you for it!) 

100. The “Order Confirmation” page is a great place from which to sell other products (this is known as “cross‐
selling”). 

101. Be careful with entry pop‐ups and exit pop‐ups. These sometimes work well; sometimes, however, they 
just irritate users. 

Usability 

102. View your website using different browsers and screen resolutions to see how your customers see it. 
Handy tools for doing this are www.crossbrowsertesting.com, www.browsercam.com, and browsershots.org. 

103. Minimize your website’s load times (here’s a nice tool for checking your site). 

104. Get your “Site Search” feature working. Google Mini and Google Free Web Search both enable your 
visitors to search your site using Google. Then use your analytics package to discover what your visitors were 
searching for. Then, consider adding that content to your webpage—or making it more prominent. 

105. Consider making everything clickable. Visitors click on everything—pictures in particular. And if they are 
clicking on something, it’s because they expect something to happen. 

106. If you have advertising on your site, test that. With many advertising programs (such as Google’s 
AdSenseand Chitika), you can split advertising into channels. You can then test the following and measure 
which variations bring in the most revenue: 

Different sizes of an ad 

Different shapes of an ad 

448 
 
Differentt positions of a
an ad 

107. Anoother way of inncreasing the revenue per vvisitor is by inccreasing the a
average Lifetiime Customerr Value 
(LCV) of vvisitors who o
order. We address this area  in our fantastic newsletterr. 

108. Sign
n up to receivee your Converrsion Rate Expperts newslettter! It takes yyou by the hannd through ma any of 
the 108 ttips we’ve covvered in this arrticle—and letts you peek in of conversion  rate testing. It’s free, 
nto our world o
and it willl change yourr life (for the b
better). 

Or, if you
u prefer, simplly subscribe to
o our RSS feedd. 

Either wa
ay, let’s keep iin touch! 

natomy of a P
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449 
 
 450 
 
 

Landing pages that convert – Chance Barnett 
http://www.chancebarnett.com/landing‐pages‐that‐convert/ 

Landing Pages That Convert

Posted: May 20th, 2009 | Author: Chance Barnett | Filed under: Copywriting, Marketing
Strategy, Search Marketing |Tags: conversion, landing page, subscriber conversion | 23 Comments »

Hey- if you’re interested in learning about how to get your online business off the ground and convert
visitors to your site into customers, then you need to check out a video interview I did with Andrew
Warner over at Mixergy on How To Ensure Success Before You Launch.

Now, I also want to share some things I didn’t share on the call- one of which is an easy Landing
Page Formula. With the theory and insights and tips I gave about Positioning your business, finding
your market online and “framing” your product to a hungry crowd… when it comes to actually sitting
down and deciding what’s on your landing page, it can be a challenge knowing where to start.

Before I show you where to start, you should remember what I said in the interview-

Creating a great landing page (given time) is not all about being a great copywriter or designer. It’s
also a function of being a great tester. (Although talent and experience are the ultimate time savers
and leverage – considering time and expense)

So… with that, here’s a quick formula to follow as you’re developing your landing page and the
elements to include and test within:

Element #1: Lead With “Finished Story” Benefits

Every page needs a place where the visitors eyes are initially drawn that focuses their attention.
Traditionally this is a headline, image or tag line. Make sure that you have this initial element be an
attention grabber that let’s your visitor know what they’re going to get out of staying and engaging with
you. Remember, you only have a few seconds for a user to decide if your page (and your
site/service/product) is or isn’t for them.

The way to make sure that this initial attention element has the result of making your visitor stay and
then convert is to talk about what I call “Finished Story” Benefits. These are benefits about what the
finished story will be for the visitor after they engage and/or take the action you’re suggesting with
your product.

Making your visitor visualize and imagine what they will get and how they will feel after using your
product is your goal.

Again, on our call I talked about the company I helped with their business plan template marketing.
The “finished story” here wasn’t the obvious – a finished business plan. It was farther removed than
that. It was having raised money successfully with the polished and professional business plan.

Long story short, make sure you’re not talking about all the work that might go into your visitor getting
the result they’re after. Make sure you’re getting them to connect then ultimate end goal – the finished
result and REWARD.

451 
 
Do this well, and you end up tying the purchase of your product directly to their desire for that end
result. Once this happens, most resistance and objections from your visitor will have been removed.

Element #2: Social Proof

I’ll run through these quickly. There are LOTS of examples out on the web of each of these you can
find if you just do some Google searched and click on the Paid Adwords ads and see the landing
pages there.

  “As Seen On” – get your product or service talked about or reviewed on trusted sources and piggy back on 
the trust and credibility these sources already have with the masses. Present the image of these sources (CNN, 
Newsweek, etc.) early on and prominently on your landing page. And the images don’t need to be big. Just 
there next to the language “As Seen On.”

  Testimonials‐ these are the tried and true workhorses of the direct marketing and copywriting world. Use 
them. Don’t get generic ones. Get specific ones of your customers talking about actual steps or tips or action 
taken from your product or material and the end result (finished story). 

  User Count or Comments – it’s amazing, but simply displaying how many other people are using or have 
signed in or commented on your site or business raises the perceived value and credibility. 
 

Element #3: Credibility

If you didn’t know, most people online are very very hesitant to click on links that they don’t know where they’re
being taken… and they’re even more hesitant to share their email.

When it comes to buying and pulling out their credit card number, it’s a whole other ballgame.

As I’ve talked about before, for a visitor to your site, everything you want to ask them to do represents
something very “risky” to them. For more on this check out some of what I wrote about removing risk in online
marketing , along with some thoughts about how this applies to the current state of marketing music online.

Anyways, how can you reduce this risk? In short, start by demonstrating your Crediblity (building Trust)

There are a few simple ways I’ve tested, and that lots of other people have tested to this end.

An easy thing you can do and test along these lines that are likely to increase your clicks, signins, and sales is
getting approved by some of the institutions that protect consumers and make users feel safe.

Examples:

  Sign up with the Better Business Bureau and add the “BBB” approved logo

  Get on one of the verified Safe Sender programs if you’re driving emails subs and sending emails… and 
display this programs logo close to your email sign up form 

  Simply tell your visitor that you’ll never spam them or share their email (and mean it!) 

Bottom line- new visitors to your site don’t know who you are. Make it easier for them to take the risky
move of sharing something with you and inviting you into their world.

Element #4: Offer/Value

452 
 
You can write great copy on your landing page, and design a great layout… but if what you’re asking
for and offering on your landing page doesn’t boil down to a great offer then you’re wasting your time.

A lot of people these days are trying to build their list, or build their social friendships or “followers.” If
you’re asking for anything like this, let alone asking for a sale, on your landing page, you better make
you’re visitor feel like they’re getting the better end of the deal.

So what do I mean by a great offer, and what does one look like?

A bad offer, if you’re looking to drive email signups from your page, is essentially offering nothing but
the chance to “sign up” in exchange for the visitor giving up their precious email and expose their
inbox to you.

Arguably, that’s not an “offer” at all. But the crazy thing is, most people’s email sign up forms on their
landing pages are framed in this manner.

Instead, what can you create and provide in exchange for a user putting in their email? And how can
you tie this directly into their “finished story.”

This question is exactly what I love the “free report” give away or white paper type free line content. It
creates an instant “offer” that makes a visitor feel like simply sharing their email address in exchange
for this information is giving them the better end of the deal.

Element #5: Call To Action

This is what inexperienced copywriters and marketers have the most problems with. They either don’t
even use a call to action, or they make it so weak and passive that they might as well not have one.

A great call to action does the following:

Gives specific instructions on exactly what action you want the visitor to take
Tells the visitor exactly how to do this
Uses the already “anchored” benefits you’ve put in your visitors mind and reminds the visitor of what
they’ll get by taking this action

Here’s a bad call to action if you’re trying to drive email subscribers-

“Sign Up Here And Get Our Emails.”

Just what we all want, more email. No thanks!

Ok, now go out and get on the web and look at 30 or more landing pages by doing all kinds of
searches and clicking on paid ads. This will start to bring some of these 5 elements into your
awareness and give you ideas on how to go about writing and designing your landing page.

And don’t forget to test, test, test.

Let me know how it goes.

And here’s some Recommended Reading:

To better understand how and where to “frame” and place your business in your market, read Position
by Al Reis and Jack Trout.

453 
 
For a great overview of the psychological principles and operators to be aware of and use in your
landing page copy and offer read Influence: The Psychology of Persuasion by Cialdini

For design guidance and insights, go get Universal Principles of Design (design insights with the
psychology behind them) by Lidwell, Holden & Butler.

For your copywriting bootcamp, get all 3 of these books and study them regularly as you’re writing
copy: Ogilvy On Advertising, Tested Advertising Methods and The Ultimate Sales Letter.

454 
 
 Startup Metrics for Pirates:
AARRR!

Lean Startup Circle

UCSF
Jan 2010

Dave McClure
500 Hats / Founders Fund
http://www.500hats.com
http://500hats.typepad.com
http://slideshare.net/dmc500hats

Why I’m Here: To Kick Your ASS.

The Basics
• 5 Steps: Startup Metrics for Pirates (AARRR!)
• Iterate, Measure, Optimize. Build a Feedback Loop. (Loop. Loop.)
• KILL a FEATURE. Something Sucks. Find It. Kill it. NOW.

YOUR SILLY FRIGGIN THE REALITY: U SUCK,

HOPES & DREAMS, ABOUT YOUR PRODUCT SUCKS,
TO BE CRUSHED & U WILL FAIL … HARD.

1
 Startup Challenges

Startups have problems in 3 key areas:

• Management: Setting Priorities, Defining Key Metrics,
Creating Dashboard, Reporting Progress

• Product: Building the “Right” Features, Getting Product

Out Quickly, Testing for User Conversion / Adoption

• Marketing: Accessing “Web 2.0” Channels (Search,

Social, Viral, New Media), Cost-Efficient Distribution

3 Core Models:
biz model, conversion dashboard, mktg channels

• Define 1-Page Biz Model: customer segments + desired actions / behaviors

• Identify critical Conversion Events & Dashboard for each segment & prioritize
• Test & develop Marketing Channels; measure Volume (#), Cost ($), Conv (%)

 Optimize product & marketing using Fast Iteration Cycles & A/B Testing

2
 [Pardon The Blatant Commercial]

Dave McClure

2001-2009:
• Startup Investor: 500 Hats LLC, Founders Fund
• Tech Marketing: PayPal, Simply Hired, Mint
• Advisor, Angel Investor: 40+ Startups
• Conf. Organizer: Web 2.0, O’Reilly, Startonomics
• Stanford Visiting Lecturer: Facebook, Startup Metrics

80’s & 90’s:

• Entrepreneur: Founder/CEO Aslan Computing (acq.)
• Developer: Windows Apps / SQL DB Admin
• User Groups: E-Commerce, Internet, Client-Server
• Engineer: Johns Hopkins ‘88, BS Eng / Applied Math

3
 Personal Investments
(16 deals, 2004-2009, ~$25K avg)

Professional Investments
(40 deals, Dec 2008 – Dec 2009, ~$75K avg)

fbFund FF Angel
Incubator LLC
22 deals ($850K) 18 deals ($1.8M)
~$15-75K ~$50-250K

4
 Web 2.0: Hell Yes, Good Times.

1. # Users, Bandwidth = Bigger.

R.I.P.
2. Lower Startup Costs = Cheaper. *BAD*
3. PPC, E-Com $ Growing = Better. TIMES

 Collect Usage Metrics in Real-Time

 Decisions Based on Measured User Behavior

Be Bold. Be Humble.

 20% Inspiration + 80% Perspiration

 Long-term: Audacity + Creative Inspiration
 Short-term: Humility + Analytic Rigor

READ: To The Smartest Person in the Room

(Chris McDonough)

5
 Just Gimme the GOOD Metrics.
Users, Pages, Clicks, Emails, $$$...?

Q: Which of these is best? How do you know?

• 1,000,000 one-time, unregistered unique visitors
• 500,000 visitors who view 2+ pages / stay 10+ sec
the
good • 200,000 visitors who clicked on a link or button
stuff.
• 20,000 registered users w/ email address
• 2,000 passionate fans who refer 5+ users / mo.
• 1,000 monthly subscribers @ $5/mo

Lean Startup Church of Metrics:

Priests & Principles
• Progress ≠ Features (Less = More)
• Focus on User Experience (& Distribution)
• Measure Conversion; Compare 2+ Options
• Fast, Frequent Iteration (+ Feedback Loop)
• Keep it Simple & Actionable

6
 Minimize TOTAL time through the loop

IDEAS

LEARN BUILD

DATA
CODE Source:
Eric Ries
MEASURE
Startup
Lessons
Learned

The Startup Pyramid

(Sean Ellis, Startup-Marketing.com)

Growth

Transition to
Growth

Product/Market FIT!

sean@12in6.com
Blog: startup-marketing.com

7
 Design, Optimize for Conversion

Optimize 4 Happiness $$$

(both User + Business)

• Define States of User + Business Value

• Prioritize (Estimate) Relative Value of Each State
• Move Users: Lower Value -> Higher Value
• Optimize for User Happiness / Business $$$
• Achieve Low Cost + High Value @ Scale

8
 Discover Meaning
What Do Users Care About Enough to Fuck or Kill ?

Discover Meaning
Keywords, Images, Call-to-Action

Top 10 - 100 words Call-to-Action

• Your Brand / Products • Words
• Customer Needs / Benefits • Images
• Competitor’s Brand / Products • Context
• Semantic Equivalents • Button/Link
• Misspellings • Emotion

Relevant images Result

• People • Positive?
• Products • Negative?
• Problems • Neutral (= Death)
• Solutions • A/B test & Iterate

9
 KILL A FEATURE.
Something Sucks. Find It. KILL It.

• STOP ADDING FEATURES.

• Find the ONE THING that users LOVE.
• How to figure out? TAKE. SHIT. AWAY.
• When they SCREAM, you’ve FOUND it.
• Then Bring it Back… Only Better.

• Tip: KILL a Feature Every Week.

Q: What’s My Business Model?

Can be one of the following:

1. Get Users (= Acquisition, Referral)
2. Drive Usage (= Activation, Retention)
3. Make Money (= Revenue*)
* ideally profitable revenue

Note: eventually need to turn Users/Usage -> Money

10
 Startup Metrics for Pirates

• Acquisition: users come to site from various channels

• Activation: users enjoy 1st visit: "happy” experience
• Retention: users come back, visit site multiple times
• Referral: users like product enough to refer others
• Revenue: users conduct some monetization behavior

AARRR!

(note: If you’re in a hurry, Google

“Startup Metrics” & watch 5m video)

AARRR!: 5-Step Startup Metrics Model

SEO Campaigns,
SEM PR Contests Biz
Social
Networks Dev
Blogs Affiliates
Apps & Direct, Tel,
Widgets Email TV

Domains
ACQUISITION Viral 
Loops

Emails & Alerts Homepage / Emails &

widgets
Landing Page

Blogs, RSS,  Product Affiliates, 

News Feeds Features Contests

Ads, Lead Gen,  Biz Dev

System Events &  Subscriptions, 
Time‐based Features
ECommerce

Website.com

11
 Startup Challenges

Startups have problems in 3 key areas:

• Management: Setting Priorities, Defining Key Metrics,
Creating Dashboard, Reporting Progress

• Product: Building the “Right” Features, Getting Product

Out Quickly, Testing for User Conversion / Adoption

• Marketing: Accessing “Web 2.0” Channels (Search,

Social, Viral, New Media), Cost-Efficient Distribution

3 Core Models:
biz model, conversion dashboard, mktg channels

• Define 1-Page Biz Model: customer segments + desired actions / behaviors

• Identify critical Conversion Events & Dashboard for each segment & prioritize
• Test & develop Marketing Channels; measure Volume (#), Cost ($), Conv (%)

 Optimize product & marketing using Fast Iteration Cycles & A/B Testing

12
 Role: Founder/CEO
Q: Which Metrics? Why?
A: Focus on Critical Few Actionable Metrics
(if you don’t use the metric to make a decision, it’s not actionable)

• Hypothesize Customer Lifecycle

• Target ~3-5 Conversion Events (tip: Less = More)
• Test, Measure, Iterate to Improve

The 1-Page Business Model

(Users + Conversions + Priorities)

Q1: What types of people use your website?

• Visitor = Average User / Buyer
• Contributor = Content Contributor / Seller
• Distributor = Passionate Fan (unpaid) / Affiliate (paid)
Q2: What actions could they take to help you or them ?

Visitor Contributor Distributor

(aka “Share Pimp”)
Activation Watch Submit Share/Embed
a slideshow a slideshow a slideshow
Retention Visit 1x/mo. Submit “hi-qual” Share/Embed =>
for 3+ mo’s ppt (=> 1K views/yr) drive 100 visits/mo
every mo. for 3+ mo’s
Revenue Ad Click; $/mo Premium Sub; Drive
Qualified Lead Pay $$+ for traffic or 10+ Premium users;
Generated leads 1K+ Viewers

13
 TeachStreet Metrics v1:
Eye Chart Madness

TeachStreet 1-Page Business Model:

Teachers & Students

Teachers Students
Activation •Claim Profile •Contact Teacher
•Add Class •View 3 Pages

Retention •Visit 1x/mo for 3 mo’s •Visit 1x/mo for 3

mo’s

Referral •Request Review •Suggest Teacher

14
 Role: Product / Engineering
Q: What Features to Build? Why? When are you “Done”?
A: Easy-to-Find, Fun/Useful, Unique Features that
Increase Conversion (stop iterating when increase decelerates)

• Wireframes = Conversion Steps

• Measure, A/B Test, Iterate FAST (daily/weekly)
• Optimize for Conversion Improvement
– 80% on existing feature optimization
– 20% on new feature development

Example Conversion Dashboard

(note: *not* actuals… your mileage may vary)

Stage Conversion Status Conv. Est. Value

% (*not* cost)

Acquisition Visitors -> Site/Widget/Landing Page 60% $.05

(2+ pages, 10+ sec, 1+ clicks = don’t abandon)

Activation “Happy” 1st Visit; Usage/Signup 15% $.25

(clicks/time/pages, email/profile reg, feature usage)

Retention Users Come Back; Multiple Visits 5% $1

(1-3x visits/mo; email/feed open rate / CTR)

Referral Users Refer Others 1% $5

(cust sat >=8; viral K factor > 1; )

Revenue Users Pay / Generate $$$ 2% $50

(first txn, break-even, target profitability)

15
 Role: Marketing / Sales

Q: What channels? Which users? Why?

A: High Volume (#), Low Cost ($), High Conv (%)

• Design & Test Multiple Marketing Channels + Campaigns

• Select & Focus on Best-Performing Channels & Themes
• Optimize for conversion to target CTAs, not just site/landing page
• Match/Drive channel cost to/below revenue potential

• Low-Hanging Fruit:
– Blogs
– SEO/SEM
– Landing Pages
– Automated Emails

Example Marketing Channels

• PR • Email
• Contest • SEO / SEM
• Biz Dev • Blogs / Bloggers
• Direct Marketing • Viral / Referral
• Radio / TV / Print • Affiliate / CPA
• Dedicated Sales • Widgets / Apps
• Telemarketing • LOLCats ;)

16
 MAARRRketing Plan

Marketing Plan = Target Customer Acquisition Channels

• 3 Important Factors = Volume (#), Cost ($), Conversion (%)
• Measure conversion to target customer actions
• Test audience segments, campaign themes, Call-To-Action (CTAs)

[Gradually] Match Channel Costs => Revenue Potential

• Increase Vol. & Conversion, Decrease Cost, Optimize for Revenue Potential
• Avg Txn Value (ATV), Ann Rev Per User (ARPU), Cust Lifetime Value (CLV)
• Design channels that (eventually) cost <20-50% of target ATV, ARPU, CLV

Consider Costs, Scarce Resource Tradeoffs

• Actual $ expenses
• Marketing time & resources
• Product/Engineering time & resources
• Cashflow timing of expense vs. revenue, profit

One Step at a Time.

1. Make a Good Product: Activation & Retention

2. Market the Product: Acquisition & Referral
3. Make Money: Revenue & Profitability

“You probably can’t save your Ass and your Face

at the same time… choose carefully.” – DMC

17
 Startup 2.0:
“Lean Investor” Model
Method: Invest in startups using incremental
investment, iterative development. Start with
lots of small experiments, filter out failure, and
expand investment upon success.

• Incubator: $0-100K (“Product Viability”)

• Seed: $100-$1M (“Expand Distribution”)
• Venture: $1M-$5M (“Maximize Revenue”)

Investment #1: Incubate

(“Product”)
• Structure
– 1-3 founders
– $25K-$100K investment
– Incubator environment: multiple peers, mentors/advisors

• Build Functional Prototype / “Minimum Viable Product” (MVP):

– Concept->Alpha, ~3-6 months
– Develop Minimal Critical Feature Set => Get to “It Works”
– Instrument Basic Dashboard, Conversion Metrics
– Test Cust. Adoption (10-1000 users) / Cust. Satisfaction (Scale: 1-10)

• Demonstrate Concept, Reduce Product Risk, Test Functional Use

• Develop Metrics & Filter for Follow-on Investment

18
 Investment #2: Seed
• Structure
(“Market”)
– 2-5 person team
– $100K-$1M investment
– Syndicate of Angel Investors / Small VC Funds

• Improve Product, Expand Market, Test Revenue:

– Alpha->Beta, ~6-12 months
– Customer Sat ≥ 6 => Get to “Doesn’t Suck”
– Setup A/B Testing Framework, Optimize Conversion
– Test Marketing Campaigns, Cust Acqstn Channels

• Prove Solution/Benefit, Assess Market Size

• Test Channel Cost, Revenue Opportunity
• Determine Org Structure, Key Hires

Investment #3: Venture

(“Revenue”)
• Structure
– 5-10 person team
– $1M-$5M investment
– VC Investors

• Make Money, Get to Sustainability:

– Beta->Production, 12-18 months
– Customer Sat ≥ 8 => “It Rocks, I’ll Tell My Friends”
– MktgPlan => Predictable Channels / Campaigns + Budget
– Scalability & Infrastructure, Customer Service & Operations
– Connect with Distribution Partners

• Prove/Expand Market, Operationalize Business

• Future Milestones: Profitable/Sustainable, Exit Options

19
 Links & Resources
Additional References:
• Influence: The Psychology of Persuasion Robert Cialdini (book)
• Putting the Fun in Functional Amy Jo Kim (etech 2006 preso)
• Futuristic Play Andrew Chen (blog)
• Don’t Make Me Think Steve Krug (book)
• Designing for the Social Web Joshua Porter (book, website)
• Startup Lessons Learned Eric Ries (blog)
• Customer Development Methodology Steve Blank (presentation, blog)
• Startup-Marketing.com Sean Ellis (blog)
• KISSmetrics.com Hiten Shah / Neil Patel (website)
• How To Pitch a VC Dave McClure (slides, NSFW)

Appendix

20
 Startup Metrics

Activation

Activation
SEO Campaigns,
SEM PR Contests Biz
Social
Networks Dev
Blogs Affiliates Activation Criteria:
Apps & Direct, Tel,
Widgets Email TV • 10-30+ seconds
Domains • 2-3+ page views
• 3-5+ clicks
• 1 key feature usage
Homepage /
Landing Page

Product
Features

do LOTS of landing page

& A/B tests –
make lots of dumb
guesses & iterate FAST
Website.com

21
 Activation
What do users do on their first visit?

Example Activation Goals

• Click on something!
• Account sign up / Emails
• Referrals / Tell a friend
• Widgets / Embeds
• Low Bounce Rate

Activation Tips
• Less is more
• Focus on user experience / usability
• Provide incentives & call to actions
• Test and iterate continuously

Activation
What do users do on their first visit?

Key Metrics to Track

 Pages per visit
 Time on site
 Conversions

22
 Activation
Tools
Crazy Egg (Visual Click Mapping)
http://crazyegg.com
Google Website Optimizer (A/B & Multivariate Testing)
http://google.com/websiteoptimizer
Marketo.com (B2B Lead Generation Management)
http://marketo.com

Resources
Experimentation and Testing: A Primer
kaushik.net/avinash/2006/05/experimentation-and-testing-a-primer.html
Landing Page Design Toolbox: 100 Tips & Tools
http://tinyurl.com/326co6
Landing Page Tutorials & Case Studies
http://www.copyblogger.com/landing-pages/
101 Easy Easy to use Google Website Optimizer
http://conversion-rate-experts.com/articles/101-google-website-optimizer-tips/

Startup Metrics

Retention

23
 Retention
SEO Campaigns,
Automated emails: SEM PR Contests Biz
Social
Networks Dev
• lifecycle emails @ +3, +7, +30d Blogs Affiliates
Apps & Direct, Tel,
• status / “best of” weekly/monthly Widgets Email TV
• “something happened” emails Domains
BUT:
• make it easy to unsubscribe

Emails & Alerts Homepage /
Landing Page

Blogs, RSS,  Product
News Feeds Features

Tip on emails:
• > 80% or more on SUBJECT LINE
System Events & 
• < 20% or less on BODY TEXT Time‐based Features

Website.com

Retention
How do users come back? How often?

Cohort Analysis:
• Distrib of Visits over Time
• Rate of Decay
• Effective Customer Lifecycle

Retention Methods
 Automated Emails
* Track open rate / CTR / Quantity
 RSS / News Feeds
* Track % viewed / CTR / Quantity
 Widgets / Embeds
* Track impressions / CTR / Quantity

24
 Retention
How do users come back? How often?

Example Retention Goals

• 1 - 3+ visits per month
• 20% open rate / 2% CTR
• High deliverability / Low spam rating
• Long customer life cycle / Low decay
• Identify fanatics and cheerleaders

Retention Tips
• Email is simple and it works
• BUT make unsubscribe easy
• 80% subject line / 20% body text
• ACTUALLY 99% subject line / 1% body text
• Fanatics = virality + affiliate channel (bloggers?)

Retention
How do users come back? How often?

Key Metrics to Track

 Source
 Quantity
 Conversions
 Visitor Loyalty
 Session Length

25
 Retention
Tools
Campaign Monitor / MailChimp (email newsletter software)
campaignmonitor.com / mailchimp.com
TriggerMail (site-centric email management)
triggermail.net
Litmus (email and website design testing - clients / browsers)
litmusapp.com

Resources
30 free HTML email templates
campaignmonitor.com/resources/templates.aspx
Best Practices in Writing Email Subject Lines
mailchimp.com/resources/best-practices-in-writing-email-subject-lines.phtml
Learning Viral: Viral Emails of Tagged.com
okdork.com/2008/04/10/learning-viral-studying-taggedcom/

Startup Metrics

Acquisition

26
 Acquisition
SEO Campaigns,
SEM PR Contests Biz
Social
Networks Dev
Blogs Affiliates
Apps & Direct, Tel,
Widgets Email TV

Domains

Marketing Channels:
• largest-volume (#)
• lowest-cost ($)
• best-performing (%)

Website.com

Acquisition
Where are users coming from?

Acquisition Methods
 SEO / SEM
 Blogs
 Email
 Social Media &
Social Networks
 Domains

27
 Acquisition
Keyword Vocabulary

Top 10 - 100 words

• Your Brand / Products
• Customer Needs / Benefits
• Competitor’s Brand / Products
• Semantic Equivalents
• Misspellings

Things to analyze
• Sources
• Volume
• Cost
• Conversion

Acquisition
Where are users coming from?

Key Metrics to Track Example

 Quantity (#)
 Cost ($)
 Conversions (%)

28
 Acquisition
Tools
Google Analytics (web analytics)
google.com/analytics
Google Keyword Tool (keyword research tool)
adwords.google.com/select/KeywordToolExternal
SEO Book Tools (SEO related tools)
tools.seobook.com

Resources
SEO Book Blog
seobook.com/blog
The Social Media Manual: Read Before You Play
searchengineland.com/071120-144401.php
Strategies to ruthlessly acquire users
andrewchen.typepad.com/andrew_chens_blog/2007/04/10_obvious_stra.html

Startup Metrics

Referral

29
 Referral
SEO Campaigns,
SEM PR Contests Biz
Social
Networks Dev
Blogs Affiliates
Apps & Direct, Tel,
Widgets Email TV Viral 

Domains
Acquisition Loops

Emails &
widgets
Emails & Alerts Homepage /
Landing Page
Affiliates, 
Blogs, RSS,  Product Contests
News Feeds Features

Focus on driving referrals

System Events & 
Time‐based Features
*after* users have a
“happy” experience;
avg score >= 8 out of 10
Website.com

Referral
How do users refer others?

Referral Methods
 Send to Friend:
Email / IM
 Social Media
 Widgets / Embeds
 Affiliates

30
 Referral
Viral Growth Factor

Viral Growth Factor = X * Y * Z

X = % of users who invite other people
Y = average # of people that they invited
Z = % of users who accepted an invitation

A viral growth factor > 1 means an exponential organic user acquisition.

Referral
Tools
Gigya (social media distribution & tracking tool)
gigya.com
ShareThis / AddThis (sharing buttons)
sharethis.com / addthis.com
GetMyContacts (PHP contacts importing & invitation software)
getmycontacts.com

Resources
Seven Ways to GO VIRAL
lsvp.wordpress.com/2007/03/02/seven-ways-to-go-viral/
What’s your viral loop? Understanding the engine of adoption
andrewchen.typepad.com/andrew_chens_blog/2007/07/whats-your-vira.html
Metrics: Where Users Come From
slideshare.net/guest2968b8/rockyou-snap-summit-32508

31
 Startup Metrics

Revenue

Revenue
SEO Campaigns,
SEM PR Contests Biz
Social
Networks Dev
Blogs Affiliates
Apps & Direct, Tel,
Widgets Email TV

Domains
Acquisition Viral 
Loops

Emails & Alerts Homepage / Emails &

widgets
Landing Page

Blogs, RSS,  Product Affiliates, 

News Feeds Features Contests

Ads, Lead Gen,  Biz Dev

System Events &  Subscriptions, 
Time‐based Features
ECommerce

This is the part *you* Website.com

still have to figure out…
(we don’t know jack
about your business)

32
 Revenue
How do you make money?

Revenue Tips
• Don’t Rely on AdSense (only)
• Start Free => 2% “Freemium”
• Subscription / Recurring transactions
• Qualify your customers -> Lead generation (arbitrage)
• Sell something! (physical or virtual)

Revenue
Resources & Tools
Revenue Metrics (Andrew Chen)
http://tinyurl.com/47r63a
How to Create a Profitable “Freemium” Startup (Andrew Chen)
http://tinyurl.com/8z9ygk
2008 Affiliate Marketing Review (Scott Jangro)
http://tinyurl.com/86wak4

33
 Types of Measurement
1. Qualitative: Usability Testing / Session Monitoring
• Watch users, guess problems & solutions from small # of users

2. Quantitative: Traffic Analysis / User Engagement

• Track users, usage, conv %'s for empirical sample # of users

3. Comparative: A/B, Multivariate Testing

• Compare what users do in one scenario vs another
• Measure which copy/graphics/UI are most effective

4. Competitive: Monitoring & Tracking Competitors

• Track competitor activity & compare against yours (if possible)
• Compare channels, keyword traffic, demographics, user sat, etc.

34