David Crow

Marketing

Engines for Massively Scalable Growth

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Reposted from my StartupNorth post.

I was excited to attend MeshU (maybe a little too excited). I love it when events over deliver. MeshU was a fantastic conference. I saw two of the best in-the-trenches startup sessions with Sean Ellis and Dan Martell. They both presented ideas that are changing how I think about product design and go-to-market activities. April Dunford then added an updated framework for product marketing which was a great evolution of traditional product marketing. Sean Ellis added his model for Key Elements of Massively Scaleable Startups that presented a new idea of the marketing basics that need to be present for high potential startups.

Elements fo Massively Scalable Startups - A Marketing Framework based on work by April Dunford & Sean Ellis

The breaking down of 4 elements coupled with traditional strategy and tactics make for a very effective marketing evaluation of most startups.

Gratification Engine

The Gratification Engine was a new piece of the marketing activities. What differentiates must have products and services? How do you reward your customers? How does your application turn “cold prospects into highly gratified customers”? This is a change in my thinking about the role of making your users feel like rockstars.

“you can’t force customers to want, need or like what you have created. Building an effective gratification engine is an iterative process driven by a lot of prospective customer feedback. Once you get the basics right, your process of gratifying users can be optimized with tools like Performable for landing pages and KISSmetrics for full funnel tracking/improvement (I’m an advisor to both).” – Sean Ellis

It builds upon seminal work of Kathy Sierra about engaging users. The Gratification Engine pushes this out beyond the existing experience but treats the conversion and effectiveness of new users.

Making a Bestseller by Kathy Sierra How fast and how far can you take your users? by Kathy Sierra
How Fast and How Far Can you Take Your Users? by Kathy Sierra
How Fast and How Far Can you Take Your Users? by Kathy Sierra

Where this hit home for me was starting to think about the game mechanics used for upsell and cross sell offers for new customers. Dan Martell, Dave McClure, Marc Gingras and I had breakfast at StartupCampMontreal and discussed how to build effective offers for existing customers to invite their friends to an application. There was a great discussion about using game mechanics around the offer. You have existing users that if they invite new users, i.e., their friends, where if the friends sign up that both the friend and the user get new unique functionality. It changed my thinking about many times I’ve received an offer to sign up from a friend for a service, and how the effectiveness of this would change with some basic game mechanics:

“Jevon has invited you to join X. Jevon is 1 sign up away from enabling the super awesome next level feature. Sign up now and enable the feature for both you and Jevon”

This all has to be done in an open, honest and unintrusive manner. But it’s about how do you enhance the lives and experiences of customers and potential customers. There are great opportunities to use game design and mechanics to help improve the experience and conversion rates in web and mobile applications.

Putting the Fun in Functional
View more presentations from amyjokim.

Power to the Players
View more presentations from amyjokim.

Marketing metrics 101

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Reposted from my original on StartupNorth.ca

Photo by Darren Hester
Photo by Darren_Hester

Mike McDerment from FreshBooks gave  a great presentation on the basics of web application marketing metrics. He focuses on the metrics, systems and reporting that all companies should be building into web and mobile applications. It is a must read for any entrepreneur building a web application.

Metrics

Cost Per Acquisition (CPA)
How much does it cost you to get a customer? It’s a simple enough calculation, how much do you spend on sales and marketing to acquire each customer. Roll up your staffing costs, your ad buys, your outbound marketing, etc.
Average Revenue Per User (ARPU)
How much revenue do users generate? How do you track it? Does it change based on segment? How do you increase it?
Churn
What percentage of your existing customer base leave every month? This is different than CPA because this is about customer satisfaction and retention. Don’t think this is important? According to April Dunford churn is a killer. “The probability of selling to an existing customer is 60-70%. The probability of selling to a new prospect is 5-20%”
Lifetime Value (LTV)
How long does a customer continue as a subscriber? Does their ARPU change over time? Do you have ways to increase their spend or reduce their churn?

These basic metrics are expanded by Dave McClure in AARRR! Startup Metrics for Pirates. Where the metrics are divided into 3 main categories:

  1. Get Users (Acquisition, Referral)
  2. Drive Usage (Activation, Retention)
  3. Make Money (Revenue)
Startup Metrics 4 Pirates (Montreal, May 2010)
View more presentations from Dave McClure.

It seems so simple on surface, but as CEOs and startups we need to be committed to building the systems and metrics into our products. I was just floored at MeshU when I heard Dan Martell talk about the Flowtown.com Startup Immune System where they are beginning to use the lower level business performance metrics to automatically rollback design changes based on performance against the baseline. You can only start doing if you’re building on top of metrics. The idea of having automated your software deployment and sufficiently built business metric baselines that you could autoroll back poor performing changes. At Nakama, I wanted this so much. Not because I had bad developers but because we often made design decisions based on limited customer feedback and I wanted the system to protect me from my own hubris.

Metrics are good place to start. One of the best ways to understand how your company is performing is to begin measurement. Mike has done a great job

MeshU – It’s worth the price of admission

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MeshU, May 17, 2010It’s time again for MeshU. I wrote about why startups should consider attending MeshU over on StartupNorth. This is a great opportunity to learn and connect.

Learning

There are a lot of smart, talented, successful and engaging people at MeshU. You want my list of who I can’t wait to see:

  1. Bill Buxton
    Bill is a colleague of mine at Microsoft. He also had a profound influence on my career. I was training to be an academic. I wanted to do research like my idols (including Bill Buxton), but Bill’s session at CHI’97 in Atlanta is where he espoused that we’re all designers. We’re all designing and building and shipping software that people use. Imagine that. He is an exciting, engaging speaker that any startup, executive, designer, developer should listen to.
  2. Sean Ellis
    The #leanstartup thing has become a movement. Whether you’re lean or you’re fat, you there’s something to learn about product development and marketing from the guy that brought Xobni, EventBrite and Dropbox to market. I think every startup and every marketer needs to at least listen to what Sean Ellis is saying.
  3. Aza Raskin
    I’ve never met Aza, but he works with 4 people that I think are top notch at Mozilla (I’m looking at you Beltzner, Shaver, Lilly and Surman). I’ve written about his work at Humanized, I used his product Enso as my launcher in Vista. And one of my close friends actually worked on the Canon Cat with Aza’s father, Jef. Aza is the creative lead for Firefox. If you were looking to learn from someone that is helping to build the fabric of every web experience (well technically 24.69% of all web experiences ;-), there’s a good chance that Aza will teach you something.
  4. Diana Clarke
    Diana is a developer rockstar. She’s moving the entire backend at Freshbooks from PHP to Python. This is a crazy project. Switching languages in real-time with the application still running. This is like performing a heart transplant with the patient still conscious. You can learn something about engineering complex systems from Diana.
  5. Dan Martell
    Profitable in 2 months at Flowtown, that’s crazy. Hopefully that includes founder salaries. But you get to hear from the trenches about building a startup using customer development. You’ll learn about “customer development, feature prioritization, split testing, product metrics and agile development as approaches to increase your probabilities of succeeding”.
  6. Joe Stump
    Geolocation infrastructure startup with “the” set of investors (Ron Conway, First Round Capital, Chris Sacca, Kevin Rose, Tim Ferriss, Shawn Fanning people). He was the lead architect at Digg. So if you don’t think you can learn something from the guy who built the infrastructure that created the tsunami that spawns “The Digg Effect“. Then forget about scalable architectures and ask him about raising money.

And this is only 6 of the 13 speakers. There are world class people coming to Toronto. Hopefully everyone from Montreal to Waterloo realizes that this a big deal. The speakers are of the calibre that you’ll find at a conference in Silicon Valley, San Francisco, New York , Austin, Vegas, where ever.

Connecting

MaRS only hold 400 attendees. This is an incredibly small conference venue. If you’re smart, lucky, outgoing without being douchey, you have a pretty good chance of meeting the speakers and other attendees that are pretty awesome.

The thing to remember is that a chance meeting at a conference with any of these individuals isn’t going to change the course of our startups. You’re looking to make some initial connections. I feel like I tell a lot of entrepreneurs that you don’t have to get everything about your startup on the table in 30 seconds. None of these people have the power to change your life in 30 seconds. It’s like dating, as much as you want to “hop on the good foot and do the bad thing”, it does require a little bit of conversation. (If you really need instant gratification, there are a lot of consultants/charlatans/snakeoil salesmen that will take your money and tell you that if you do these 3 things you’ll be more awesome). 

Events like MeshU aren’t tradeshows. You’re not likely to find customers. You’re not going to find booth candy. You’re probably not going to find an investor (though if I was a Canadian angel or early-stage investor I’d be there just to meet the entrepreneurs and maybe learn something to help my portfolio). You’re there to meet potential hires, other entrepreneurs that you can share war stories and lessons. The whole point of an ecosystem is to enable the exchange of value. The value can only be exchanged between connected nodes in the network. The ecosystem gets strong and more valuable the more connections we build.  

My advice is to start thinking about the connections and the learnings that will justify the price. Then go register for MeshU.

I’ll see you there.

Demand Generation

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Photo by </arpy>
Photo by </arpy>

Brydon asked me about my tips for DemoCamp presenters. The advice is very simple, it’s all about understanding the audience, your possible outcomes/next steps, and maximizing the audience engagement with the goal of achieving your outcome. It doesn’t sound very complicated. The other advice I can give to presenters is to watch other presenters with a critical eye. You can see a pitch fest or a demo almost anywhere. Need help finding one to watch: check out Demo, TechCrunch50, or even some of the previous DemoCamps.

What to expect?

Demos are 5 minutes + 5 minutes of Q&A (more if the crowd is engaged and asking good questions).

How to get the most out of my demo slot?

  1. Set realistic expectations.
    This audience is a great place to find talent, to connect with potential early adopters, or get feedback from a very savvy crowd. Decide what you want to accomplish, i.e., we want to see potential early adopter reactions, we want to get potential hires engaged, we just want to be cool. This crowd will be blogging, tweeting, talking to each other, thinking about beer, etc. It’s kind of like a TechCrunch50 or Demo light (just one calorie – tastes great and less filling).
  2. Do the coolest thing first!
    I’ve got the greatest bread slicer. Then show me the freaking sharks with lasers attached to their heads slicing the bread. Once you’ve done that, then talk about the boring stuff. You want the audience engaged. So the audience the reason that you will win (and please don’t let it be a log in box
  3. Don’t use slides unless absolutely necessary.
    This is called “Demo” Camp. People want to see functioning software. There are certain things that are hard to convey in a demo, i.e., funders, strategic relationships, etc. But if you start with the big WOW! then a few slides to convey the other details won’t get as many heckles.

This is all about demand generation. I’m happy to help you understand the audience and how to succeed. We want great demos. Demos where people go “holy shit, that was built in Canada, I want to _____” work there/buy it/make my company more like those guys.

Demo Resources

MEIC and NextMedia

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I realize that I sit on the Board of Directors for the MEIC and on the Board of Advisors for NextMedia, however, I didn’t know about this great partnership and opportunity. It’s a contest focused on taking early concepts for tablet computing and media consumption, the goal isn’t to build the technology, it’s to get people to sketch and explore new opportunities enabled by mass penentration of tablets.

This is a fun contest for designers (and aren’t we all designers). All you need to submit is an outline of the value proposition, the initial design concepts including IA or prototype screens, the audience and the business model. It’s a great

  • goal of the application, and specifics of functionality
  • audience target
  • intentions for development
  • information architecture or up to five screen shots

The prize

The winner will recieve a development deal worth $25,000 in development services from Trapeze to go from concept to reality. And business development, strategic relationships and incubation with the MEIC.

Strong versus weak connections

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I missed the Malcolm Gladwell conversation at F5 Expo in Vancouver last week, however, there has been a lot of buzz about the ideas presented. Christopher Holt summarizes Gladwell’s talk:

Fidel and Che didn’t use Facebook to change their world. They didn’t even have fax machines. They built strong trust ties, not loose networks like those that most people have with their Twitter  buddies.

So here’s the idea about social media — it’s a load of tripe that ain’t gonna change nothin’. You want to change the world? You need to spend time, build strong networks based on reputation and authenticity, and develop very close trusting relationships

Basically he’s saying that in order to change the world you need to build strong networks based on reputation, authenticity and trust. And strong networks are not built online. That social network connections tend to be of the weak variety, i.e., easily broken because of the lack of trust and reputation. This is counter to the evidence presented by Veenhof, Wellman, Ouell and Hogan [PDF], who suggest that social media tools are transforming relations with family, with friends, with community relations.

“Rather, research is showing that the Internet is fostering participation with community members and in social organizations. To a great extent, this is basically an enhancement of existing relationships— people now have other media to connect them.”

The data from Veenhof et al. supports the separation of strong and weak connections, however, social media (Internet usage) augments and supports existing relationships. What is missing are the tools for establishing trust, reputation, and authenticity online. The majority of the data continues to support existing familia and friendship relationships as strong ties.

What are strong versus weak connections?

Social network analysis often partitions one’s contacts with other people into strong ties and weak ties. While there is no precise boundary, strong ties generally provide one or more of the following: intimate social support (measured as those with whom one “discusses important matters”), help in times of need, or regular and intentional social contact (that is to say, they actively seek each other out regularly, rather than ‘bump into each other’). Weak ties are those individuals who are socially close to a person, but not close enough to fulfil those criteria (Boase et al. 2006).

How do you critically evaluate the reputation of others online? Is it their academic or corporate pedigree? Is it the number of followers? Is it through personal connection? What about as the number of levels of degrees of separation increase in your social graph? You know who your friends are and presumably you trust them, do you trust their friends?

Who are the people that you actively seek out?

Trust like knowledge is an emergent property

I think that Stowe Bowd has captured my biggest concern about trust management:

Stowe Boyd, Craig Newmark on Trust

Trust — like knowledge — is an emergent property of social networks, an attribute of social relationships. That I trust a friend and that friend trusts me is a construct of emotions and thoughts, based on interactions over time, and the result of past experiences…Attempts in the past to suggest that knowledge can be managed as an asset have largely been fruitless. I predict the same will be true of trust and reputation. And not just because it can be gamed, or that it is highly contextual, but because it won’t connect with our minds well, and how we think and feel about trust.

And this is consistent with Gladwell’s comments at F5 Expo and the work from Veenhof et al, that strong connections are incredibly well supported by digital communication tools. I keep wondering if there is an opportunity to build a trustworthiness score, something like a credit score. However, the ability of the financial industry to operationalize a measure of the riskiness of a consumer is probably much more easily accepted than other industries to accept a computed trust measure.

Additional Reading