Connect with us

Entrepreneurship

Scaling Startups When The Product Sucks

Published

on

We have exactly $325,710 left in our bank account.

The cash is burning fast, and we’ve already wasted a big portion of our seed investment trying to market a product for which we thought we had already found a product/market fit.

“Four out of ten,” shouts Lauren, breaking the silence we’ve had for almost twenty minutes in our meeting room.

Things were finally looking promising, with the new version of our product we’ve been testing over the last weeks.

“Four out of ten people repurchased our new product! And some even brought their friends. Now, imagine we achieved such a high repeat rate and word of mouth in all the locations where we’ll be launching.”

Sitting today in this meeting room in Singapore and seeing Lauren’s excitement over those four out of ten people, I remember, once again, how reading those powerful lines from Sam Altman had hit me back in 2013:

“… if you want to be a great company someday, you have to eventually build something so good that people will recommend it to their friends-in fact, so good that they want to be the first one to recommend it to their friends for the implied good taste. No growth hack, brilliant marketing idea, or sales team can save you long term if you don’t have a sufficiently good product.”

I’ve helped quite a few startups with growth, but this was probably one of the rare ones where the founder’s entire focus was on organic growth, driven by customer satisfaction and word of mouth.

It was really rare, though. Usually, the first months at a startup begin with a ‘exploration phase’ where you often hear ‘oh yes, we just got the first $500K investment, let’s hire as many good people as we can and spend the money on exploring growth channels like Facebook ads.’

Then, this attitude quickly disappears as the runway gets shorter.

Soon, things get serious and it’s time your HR brings on board an analyst to understand where those dollars went and which of those random traction channels brought growth.

And if what starts as a simple analysis turns into a decision to restructure your entire startup, the marketing team is likely to be the first to get kicked out the door, so those not-yet-fired can make the product work with the rest of the cash left in the bank account.

But why hire and fire fast or focus on growth too soon, before understanding whether your product was working in the first place?

It turns out this often-overlooked dilemma is more complicated than it seems.

Product vs. Growth

It’s obvious: The first step to building a great company starts with making something worth talking about.

But what is not so obvious is at what stage of building your startup do you understand whether what you’ve made is something worth talking about?

When you’re still small, it’s easy to fool yourself (and investors) and bring month-over-month growth by spending money on inorganic growth channels such as ads, marketing, or getting featured on TechCrunch.

But as you grow bigger, it gets increasingly difficult to sustain such growth rate by buying your way through if the word about your product isn’t spreading organically.

At this stage, you might take different routes, among which also lie these two options:

  • Step back to understand what exactly isn’t working with your product and iterate/pivot or have the guts to start over if necessary.
  • To sustain the same growth rate, set more aggressive targets for marketing and sales teams.

“… if your product isn’t quite working, but you have to hit these really aggressive targets, you end up forcing it… even if you hit the numbers, they won’t be real. You spent a lot of money to get there. And what is the point in acquiring all those users, if they leave once they see the product?”

That’s Andrew Chen, part of the growth team at Uber, once again, repeating that, without a great product, there is no growth.

And he isn’t alone, either. According to Bill Macaitis, the legendary CMO of hyper-growth startup Slack, when measured solely on aggressive short-term metrics, the sales and marketing teams then have an incentive “to do bad things to people — to put them in those prison landing pages and start calling them before they’re ready.”

This is especially important for seed-stage startups thinking about how best to position themselves for their series A, as they get confused about whether to focus on traction or on product.

According to renowned investor, Rob Go, when startups focus exclusively on a growth solves (nearly) all problems strategy, things get sacrificed in favor of growth. “You might do unscalable, hacky things to get customers. You might do tons of stuff manually to fulfil the promise of your service instead of taking more time and using more resources to build software. You will probably make decisions to sacrifice margin for growth,” he adds.

But wait, this isn’t a zero-sum game

This isn’t either growth or product.

You still need growth or some traction, at the very least, to find the few early customers who will use your product and help you understand what they want.

And many founders will also confess focusing only on product and ignoring marketing failed their startup, never mind those experts recommending why you should start marketing the day you build your product.

In his best-selling book Traction, DuckDuckGo founder Gabriel Weinbergpoints to ‘The 50 Percent Rule’ and suggests spending 50 percent of your time on product and 50 percent on traction.

Hence, the problem isn’t focusing on growth.

The problem is focusing on growth too much, too soon.

Having the guts to start over

Airbnb took almost 1000 days to find a product people loved. Since then, their organic growth via word of mouth has been phenomenal and still continues today.

Slack, referred to today as the startup with ’insane’ growth, started with games, kept making games for four years, failed at making games, pivoted its entire team toward communications, started building the Slack we know today toward the end of 2012, and only by August of 2013 was it running in private beta.

We easily forget building something great takes time, and instead, try to staff up very quickly the minute money is in the bank, just because the people we found available for hire are great, regardless of whether we actually need them or have a position to fill.

Before stepping on the gas aggressively, why not measure if what you’ve built is worth talking about?

Most startups set Net Promoter Score (NPS) as their number-one metric to measure user love. Some startups have also been sharing lessons from sending their survey to measure NPS.

And next to NPS, a few others, such as Slack, also use CSAT (customer satisfaction) as long-term metrics.

As Sam Altman concluded last month in a follow-up post he published after three years:

“Startups are defined by growth, but growth isn’t step one in building a great company. If you focus on trying to grow before you make a product people love, you are unlikely to succeed…

…so if you’re already growing a company around a mediocre product, fix it now. Don’t try to avoid the problem by raising capital for growth– the problems will still be there, with higher expectations. And if you’re just starting out, take the time to build a product your users love, no matter how long it takes. When they actively recommend your product to friends, you’re in the right place.”

Don’t hurt your company by focusing on growth too much, too soon.

_____________________________________________________

About the Author 

This article was written by Ali Mese, who helps startup clients grow at http://GrowthSupply.com.

Continue Reading
Comments

Entrepreneurship

Women on Top in Tech – Daphne Ng, CEO of JEDTrade

Published

on

(Women on Top in Tech is a series about Women Founders, CEOs, and Leaders in technology. It aims to amplify and bring to the fore diversity in leadership in technology.)

Daphne Ng is the CEO of JEDTrade, a blockchain technology company focused on trade, supply chain, and financial inclusion projects in ASEAN. She is also the Scretary-General at ACCESS and Exco. of Singapore Fintech Association

What makes you do what you do?
I was introduced to blockchain technology in 2016 after I left my corporate banking career after 10 years. It was my mentor who first got me interested in this technology, which I then went on to delve further into, on its potential applications in the lending and trade finance space – domains where I came from.

How did you rise in the industry you are in?
Being in the space for 2 years and actively involved in the ecosystem, I was able to bring on the projects, network and a good degree of thought leadership in this vertical. Early on in the startup journey, our team faced many challenges. And to me, the key to rising above failures are two essential factors – resilience and support. While resilience is innate, I received a lot of help be it in terms of connections or advice. ‘Nobody succeeds without help’ rings very true for me.

Why did you take on this role/start this startup especially since this is perhaps a stretch or challenge for you (or viewed as one since you are not the usual leadership demographics)?
From the start, I focused on my domain expertise in trade finance and the application construct of how blockchain and DLT can be applied to these use cases. Also, my strategy from the start was to build a technology company made up of 80% tech and engineers, which is also our key competitive advantage today. At the end of the day, deliverables are about strategy and execution, which includes building and leading an ‘A’ team.

Do you have a mentor that you look up to in your industries or did you look for one or how did that work?
I have many mentors, which includes our company advisors (all of whom are well-known in this industry) and mostly informal mentors I meet via my connections, and on various occasions and circumstances. Creating opportunities also means putting myself in the right place, at the right time. And in my case, these were mostly organic and genuine friendships formed from the initial connection.

How did you make a match if you and how did you end up being mentored by him?
To me, a match in values is very important. It also takes humility to ask for help and be willing to listen to advice, which is important in order for mentorships to be successful – be it formal or informal.

Now as a leader how do you spot, develop, keep, grow and support your talent?
I love this question! I am passionate about building strong teams and helping my people grow. I abide by the 3Rs when identifying talents: resourcefulness, resilience and right values. And then I invest in the ‘potential’ and this means giving them room to lead, make decisions and take risks.

Do you consciously or unconsciously support diversity and why?
My support of diverse talents, skillsets and characters can be seen in the make-up of our core team – all helming specific roles and each bringing their own value to the table. We need the sum of all parts to build a great company.

What is your take on what it takes to be a great leader in your industry and as a general rule of thumb?
Great leaders emerge in times of failures and challenges, never abandoning the team, and always putting the team’s interests before her own. And I consciously live by these mottos every day.

Advice for others?
My advice to other entrepreneurs: be resolute and dare to be different. If you are going to follow others, then you will end up on the same path as them. No right or wrong; but I would rather chart my own path. This June, we are officially launching our blockchain project, Jupiter Chain (www.jupiterchain.tech), which have garnered much interest in the industry, even before we made it public. We believe this project is the epitome of marrying innovation with practical implementation, and we want to be the first to truly operationalize blockchain for our ecosystem projects in this region.


If you’d like to get in touch with Daphne Ng, please feel free to reach out to her on LinkedIn: https://www.linkedin.com/in/daphne-ng-%E9%BB%84%E7%91%9E%E7%8E%B2/

To learn more about JEDTrade, please click here.

Continue Reading

Callum Connects

Jace Koh, Founder of U Ventures

Published

on

Jace Koh believes cash flow is the lifeblood of your business. Understanding it will enhance your ability to run and manage your business.

What’s your story?
My name is Jace Koh and I am the Founder of U Ventures. I’ve always been inclined towards investment and entrepreneurship. I’ve played a hand in starting businesses across these industries – professional services, cloud integration, software and music. I believe that succeeding in business is tough, but that’s what makes the rewards even sweeter.

What excites you most about your industry?
Everything excites me. These are my beliefs:

  • Why is accounting important?
    The accounting department is the heart. Cash flow is like blood stream, it pumps blood to various parts of the body like cash flow is pumped to various departments and/or functions in a business. It is vital to the life and death of the business.
  • Is accounting boring?
    Accountants are artists too. They paint the numbers the way they want them to be.
  • What makes a good accountant?
    A good accountant can tell you a story about the business by looking at the numbers.
  • Why is budgeting and projection important?
    Accountants are like fortune tellers, they can predict the numbers and if you wish to understand your business and make informed decisions, feel free to speak to our friendly consultants to secure a meeting.

What’s your connection to Asia?
I was born and raised in Singapore, and here’s where I want to be.

Favourite city in Asia for business and why?
Singapore is my favourite city. We have great legal systems in place, good security and people with integrity. Most importantly, we have a government that fosters a good environment for doing business. I recently went for a cultural exchange programme in Hong Kong to learn more about their startups. I found out that the Hong Kong government generally only supports local business owners in terms of grants. They’ve recently been more lenient and changed the eligibility to include all businesses that have at least 50% local shareholding. But comparing that to Singapore, the government only requires a 30% local shareholding to obtain government support. In the early days of starting a business, all the support you can get is precious. It’s great that we have a government that understands that.

What’s the best piece of advice you ever received?
The best time ever to plant a tree was 10 years ago as the tree would have grown so big to provide you with shelter and all. When is the next best time to plant a tree? It is today. Because in 10 years time, the tree would have grown big enough to provide you shelter and all.

Who inspires you?
Jack Ma. His journey to success is one of the most inspiring as it proves that with determination and great foresight, even the poorest can turn their lives around. I personally relate to his story a lot, and this is my favourite quote from him, “If you don’t give up, you still have a chance. Giving up is the greatest failure.”

What have you just learnt recently that blew you away?
I’ve faced multiple rejections throughout my business journey, and recently came across a fact on Jack Ma about how he was once rejected for 32 different jobs. It resonated very deeply and taught me the importance of tenacity, especially during tough times.

If you had your time again, what would you do differently?
Nothing. I live a life with no regrets. Everything I do, regardless of whether it is right or wrong, happy or sad, and regardless of outcome, it’s a lesson with something to take away.

How do you unwind?
I love to pamper myself through retail therapy and going for spas. I also make a conscious effort to take time off work to have a break outside to unwind as well as to uncloud my mind. This moment of reflection from time to time helps me see more clearly on how I can improve myself.

Favourite Asian destination for relaxation? Why?
Taiwan! Good food with no language barriers and the people are great!

Everyone in business should read this book:
I don’t really read books. Mostly, I learn from my daily life and interactions with hundreds of other business owners. To me, people tell the most interesting stories.

Shameless plug for your business:
We’re not just corporate secretaries, we’re “business doctors.”
U Ventures is a Xero certified advisory firm that goes beyond traditional accounting services to provide solutions for your business. You can reach us on our website: http://uventures.com.sg/

How can people connect with you?
Converse to connect. You can reach me via email at [email protected] or alternatively, on LinkedIn here: https://www.linkedin.com/in/jacekoh/

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started,
built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

Continue Reading

Trending