The 50% Rule for Traction
"the biggest mistake startups make when trying to get traction is failing to pursue traction in parallel with product development."
(This is guest post by Justin Mares, Co-author of Traction. If you build a great product in the forest, it will die too in the forest, unless you also build inroads to your product.
In this post, Justin shares this key lesson for when and how to pursue channel building while running lean.
If you’re starting a company, chances are you can build a product. Almost every failed startup has a product.
What failed startups don’t have are enough customers.
Marc Andreessen, founder of Netscape and VC firm Andreessen-Horowitz, sums up this problem:
“The number one reason that we pass on entrepreneurs we’d otherwise like to back is their focusing on product to the exclusion of everything else. Many entrepreneurs who build great products simply don’t have a good distribution strategy. Even worse is when they insist that they don’t need one, or call [their] no distribution strategy a ‘viral marketing strategy.’"
A common story goes like this: founders build something people want by following a sound product development strategy. They spend their time building new features early users say they want.
Then, after months of heads-down product development, they launch, only to become frustrated when customers don’t flock to them.
Having a product your early customers love but no clear way to get more traction is frustrating. To address this frustration, spend your time building your product and testing traction channels in parallel.
Traction and product development are of equal importance and should each get about half of your attention.
This is what we call the 50% rule: spend 50% of your time on product and 50% on traction.
This split is hard to do because the pull to spend all of your attention on product is strong, and splitting your time will certainly slow down product development. However, it won’t slow the time to get your product successfully to market. That’s because pursuing product development and traction in parallel has several key benefits.
Faster Market Feedback Loop
First, it helps you build a better product because you can incorporate knowledge from your traction efforts. If you’re following a good product development process, you’re already getting good feedback from early users. Traction development gets you additional data, like what messaging is resonating with potential users, what niche you might focus on first, what types of customers will be easiest to acquire, and major distribution roadblocks you might run into.
You will get some of this information through good product development practices, but not nearly enough. All of this new information should change the first version of the product for the better.
This is exactly what happened with Dropbox. While developing their product, they tested using AdWords and found it wouldn’t work for their business. They were acquiring customers for $230 when their product cost $99. That’s when they focused on the viral marketing channel, and built a referral program right into their product. This program has since been their biggest growth driver.
In contrast, waiting until you ship a product to embark on traction development usually results in one or more additional product development cycles as you adjust to real market feedback. That’s why doing traction and product development in parallel may slow down product development in the short run, but not in the long run.
A Solid Launch Platform
The second benefit to parallel product and traction development is that you get to experiment and test different traction channels before you launch anything. This means when your product is ready, you can grow rapidly. A head start on understanding the traction channel that will work for your business is invaluable. Phil Fernandez, founder and CEO of Marketo, a marketing automation company that IPO’ed in 2013, talks about this benefit:
“At Marketo, not only did we have SEO [Search Engine Optimization] in place even before product development, we also had a blog. We talked about the problems we aimed to solve… Instead of beta testing a product, we beta tested an idea and integrated the feedback we received from our readers early on in our product development process.
By using this content strategy, we at Marketo began drumming up interest in our solutions with so much advance notice we had a pipeline of more than 14,000 interested buyers when the product came to market."
Marketo would not have had 14,000 interested buyers if they just focused on product development. Their focus on traction early on was the difference between significant customer growth on day one and just a product they knew a few people wanted.
Comparison to Lean
Many good product development methodologies exist, but don’t deal explicitly with getting traction. The Lean Startup framework is a popular one. This approach involves creating testable hypotheses regarding your product, and then going out and validating (or invalidating) those hypotheses. It’s an approach that demands a great deal of interaction with customers, discovering their needs and understanding the types of features they require.
Testing your traction hypotheses works hand-in-hand with Lean. What Lean is to product development, this testing approach – known as the Bullseye framework in our book – is to traction. With Lean, you figure out the right product to build. With this approach, you figure out the right traction channel to pursue.
To reiterate, the biggest mistake startups make when trying to get traction is failing to pursue traction in parallel with product development.
Many entrepreneurs think that if you build a killer product, your customers will beat a path to your door. We call this line of thinking The Product Trap: the fallacy that the best use of your time is always improving your product. In other words, “if you build it, they will come" is wrong.
You are much more likely to develop a good distribution strategy with a good traction development methodology (like Bullseye) the same way you are much more likely to develop a good product with a good product development methodology (like Lean). Both help address major risks that face early stage companies: market risk (that you can reach customers in a sustainable way) and product risk (that customers want what you’re building).
Pursuing both traction and product in parallel will increase your chances of success by both developing a product for which you can actually get traction and getting traction with that product much sooner.
To Pivot or Not to Pivot
You may come to a point where you are simply unhappy with your traction. You may not be able to raise funding or just feel like things aren’t taking off the way they should. How do you know when to “pivot" from what you’re doing?
We strongly believe that many startups give up way too early. A lot of startup success hinges on choosing a great market at the right time. Consider DuckDuckGo, the search engine startup that Gabriel founded. Other search startups gave up after two years: Gabriel has been at it for more than six.
Privacy has been a core differentiator for DuckDuckGo (they do not track you) since 2009 but didn’t become a mainstream issue until the NSA leaks in 2013. Growth was steady before 2013, but exploded as privacy became something everyone was talking about.
It’s important to wrap your head around this time-scale. If you are just starting out, are you ready to potentially do this for the next decade? In retrospect, a lot of founders feel they picked their company idea too quickly, and they would have picked something they were more passionate about if they realized it was such a long haul. A startup can be awesome if you believe in it: if not, it can get old quickly.
If you are considering a pivot, the first thing to look for is evidence of real product engagement, even if it is only a few dedicated customers. If you have such engagement, you might be giving up too soon. You should examine these bright spots to see how they might be expanded. Why do these customers take to your product so well? Is there some thread that unites them? Are they early adopters in a huge market or are they outliers? The answers to these questions may reveal some promise that is not immediately evident in your core metrics.
Another factor to consider before you pivot: startup founders are usually forward thinking and as a result are often too early to markets (that’s why it’s important to choose a startup idea you’re willing to stick with for many years). Granted, there is a big difference between being a few years too early and a decade too early. Hardly anyone can stick around for ten years with middling results. But, being a year or two early can be a great thing. You can use this time to improve and refine your product. Then, when the market takes off, you have a head start on competitors just entering your space.
How can you tell whether you are just a bit early to market and should keep plugging away? Again, the best way to find out is by looking for evidence of product engagement. If you are a little early to a market there should be some early adopters out there already eating up what you have to offer.
(If you enjoyed this excerpt from Justin’s and Gabriel’s book: Traction,
make sure to pick up your copy here.
Shared from Pocket
September 5th, 2014